Bulgaria Faces EU Crime Test After Bombs Rock Party Offices

Bulgaria will today receive a European Union report on its readiness to join the bloc’s passport-free zone as authorities in the Balkan country investigate blasts at opposition party offices.

Bulgaria and Romania were told in February to boost efforts to fight crime and corruption to be admitted to the so-called Schengen region. Today’s report will criticize Bulgarian institutions for their lack of coordination and failure to provide evidence to convict arrested criminals, the Sega newspaper said yesterday, citing a draft.

The poorest and newest members of the 27-nation EU rank as the most corrupt after Greece, according to Berlin-based Transparency International. Bombs exploded at the offices of two Bulgarian opposition parties yesterday before a no-confidence vote in Prime Minister’s Boiko Borissov’s minority Cabinet this week. No casualties were reported.

“The bomb explosions show the links between politicians and terrorist methods employed by the criminal world have not been completely severed,” Tatyana Burudzhieva, a political scientist at the Sofia University, said by phone yesterday.

The explosives went off at the headquarters of the Order, Law and Justice party and an office of the Democrats for a Strong Bulgaria party in central Sofia, police said. The blasts damaged doors and windows in both buildings. The timing and the amounts of explosives used indicate the bombs were aimed to intimidate rather than kill, Sofia Police Chief Valeri Yordanov said.

‘Do Everything’

Borissov’s Gerb party came to power in June 2009, pledging to jail corrupt politicians and crime groups. He faces his third no-confidence vote later this week, for failing to curb crime and win EU approval to join the Schengen zone. He has ensured majority backing by rallying the support of the nationalist Attack party and several independent lawmakers.

“We trust that the Bulgarian authorities will do everything to bring the perpetrators of this act to justice,” Pia Ahrenkilde Hansen, spokeswoman of the European Commission, the EU’s executive, told reporters in Brussels yesterday. “We will make a presentation of the report and focus on the substance tomorrow.”

The EU’s Feb. 18 interim report said Bulgaria needs to focus on the adoption of an effective law on asset forfeiture and the establishment of an authority to identify and sanction conflicts of interest. Romania has to start an independent review of its judicial system and prepare a new legislative framework in civil and criminal law, it said.

‘Specific Proposals’

EU warnings have prompted probes of Cabinet ministers, business leaders and lawmakers. Neither nation has managed to convict a senior politician, except for minor corruption cases involving mayors and police officers.

“We all want to see Bulgaria as a country where laws are respected and people trust the judicial system,” Kristalina Georgieva, the EU commissioner responsible for International Cooperation, Humanitarian Aid and Crisis Response, told reporters in Sofia yesterday. “The report includes specific proposals that will require government actions.”

After the report, countries opposing the two Black Sea nations’ Schengen entry, including France, Germany and the Netherlands, will make a decision on their admission.

Romania and Bulgaria joined the EU in 2007 with repeated warnings that they had to step up the fight against corruption to ensure fair distribution of EU aid. Romania, the bigger of the two, stands to receive 32 billion euros ($45 billion) in EU aid through 2013. Bulgaria may get 11 billion euros.

Arrested Ministers

In the past two years, Bulgarian police arrested ministers on corruption charges and criminal groups involved in kidnappings, smuggling and racketeering, which didn’t result in convictions.

Many of the arrested individuals, including former Defense Minister Nikolai Tsonev, have been cleared of most of the charges and are suing the police for brutality and human-rights violations. That prompted the opposition to demand the resignation of Interior Minister Tsvetan Tsvetanov, who also manages Gerb’s election campaign.

Bulgarians will vote in presidential and municipal elections on Oct. 23. The Order, Law and Justice party, which has seven lawmakers in the 240-seat Parliament, set up 100 billboards throughout Bulgaria, saying “I will fire Boiko Borissov,” party leader Yane Yanev told reporters last week. Yesterday’s bombings are part of the campaign, the premier said.

Against Government

“Given the timing, the bombs are aimed against the government and the country, rather than the offices,” Borissov said in an interview with the TV7 television station yesterday. “This kind of negative publicity badly affects investment.”

The benchmark SOFIX index (SOFIX) rose 3.25 percentage points to 421.16, while the cost of insuring Bulgarian debt in the credit- default swap market fell 2.3 percentage points to 253.97.

Investors shrugged off the bombings because of the size of Bulgaria’s fiscal reserves, which would help shield the country from the euro area’s debt crisis, said Timothy Ash, chief economist for emerging markets at Royal Bank of Scotland Group Plc in London.

“What matters at the moment is Greek and Italian bank links and the ability of the Bulgarian government to manage any potential pressure on the banking system,” he wrote yesterday in an e-mailed note. “We tend to think Bulgaria is relatively well placed given the size of the fiscal reserve.”

Bulgaria’s fiscal reserve was 5.2 billion lev ($3.8 billion) at the end of June, according to the Finance Ministry. Bulgaria is recovering from its worst recession in more than a decade. The economy grew 3.4 percent in the first quarter from a year earlier and the six-month budget gap narrowed to 0.9 percent of gross domestic product from 2.2 percent in January- June 2010.

Fitch Ratings in May raised the outlook on Bulgaria’s credit rating to positive, citing improved economic and financial stability. Moody’s Investors Service said April 5 it may raise Bulgaria’s credit rating because government finances are “healthy.”

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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