Bulgarian Election Shows Need to Clean House

Megan Greene is the chief economist at Maverick Intelligence, which advises governments and companies on political, policy and macroeconomic developments. She was previously was director of European economic research at Roubini Global Economics.
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It looks as though the center-right Citizens for European Development party won Bulgaria's early elections, the same party that triggered the vote by resigning from government amid protests in February. So has anything changed?

The short answer is yes. The elections show that Bulgarians have lost all faith in a corrupt elite, and the next government -- whatever shape it takes -- is likely to be weak and unstable.

The previous Cabinet, led by Prime Minister Boyko Borissov, resigned after violent protests around the country. The immediate impetus for this outburst of public anger was high energy prices, but the subtext was disappointment.

Bulgaria has been, in many ways, a model of fiscal probity in recent years. The country's public-debt burden and government deficit are among thelowest in the European Union. Growth has been modest but positive since the shock of 2008-2009. The unemployment rate is almost 12 percent, which compares favorably with most other southern EU countries.

At the same time, though, Bulgaria is the poorest EU member state, with an average monthly wage of only 400 euros ($519). There is widespread disappointment in the Balkan country that EU membership (Bulgaria joined in 2007) hasn't noticeably improved living standards. As Ivan Krastev and Georgi Ganevargued on Bloomberg View last month, the austere safety-first economic policies that reassure wealthy Germans have the opposite effect on Bulgarians, for whom lack of change means continued poverty.

According to preliminary results, Borissov's party has emerged as the largest, but failed even to get close to a majority. His party, known as Gerb, scored 31 percent -- with about 70 percent of votes counted -- compared with 40 percent at the last parliamentary vote in 2009. The Bulgarian Socialist Party came second with 27 percent.

Gerb will therefore need to form a coalition. The Movement for Rights and Freedoms, which represents Bulgaria's ethnic Turks, won 11 percent of the vote, while the ultranationalist Attack party won 7.6 percent. The negotiations are likely to be protracted and are unlikely to satisfy voters. Turnout appears to have been at least 10 percentage points lower than in 2009, indicating a high degree of voter dissatisfaction with the political process.

One just has to look at some of the recent news coverage of the Bulgarian elections to see why. During the election campaign, a wiretappingscandalbroke when the former interior minister was accused of illegally eavesdropping on political opponents. Five former opposition parties demanded that an independent vote count be conducted, after previous elections prompted accusations of vote rigging. More than 250 international observers were brought to Bulgaria to monitor the elections.

Clearly trust in Bulgarian politicians is low. On May 11, prosecutors discovered more than 350,000 ballots in excess of the amount ordered by the government for the vote, and prosecutors say they have opened investigations into 17 allegations of vote buying.

It is unclear what new policies can be implemented to stimulate growth that weren't already introduced by the previous Gerb government. With such a weak mandate, and such low reserves of public trust, it will be difficult to implement anything remotely controversial or painful.

There is something vitally important that the government could achieve, though. In the 2009 election campaign, Gerb promised to eradicate political corruption, but it made very little progress on this while in power. Given a second chance to run the country, Gerb should make cleaning up the countries' political institutions its top priority, and this time carry through.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Megan Greene at mgreene40@bloomberg.net