ECONOMY

Sofia has to do more

SOFIA – Investors have welcomed Bulgaria’s invitation to join the European Union next year not with a sigh of relief, but with a call for faster reforms. The EU Commission’s green light for membership on January 1, 2007 will grant Bulgaria access to the bloc’s common market and boost the Balkan state’s business climate. Investors are thankful that Bulgaria had made enough political and economic progress to avoid a possible one-year delay, but they insist that entry will by no means serve as a silver bullet for a litany of woes the country still faces. Pressure from Brussels has pushed police to crack down on criminal gangs who control much of the economy and prosecutors to purge corrupt officials from the graft-riddled state administration. But business leaders and analysts say corruption persists, while across-the-board reforms are needed in state administration, education and other sectors to transform Bulgaria into a state worthy of EU membership. «Corruption among both central and local authorities is still high,» said Bozhidar Danev, head of the Bulgarian Industrial Association. «The gray economy is a problem. The slow and ineffective judiciary does not solve trade issues, and the education system… does not produce a well-trained work force.» The Socialist-led ruling coalition says booming economic growth of 6.5 percent in the second quarter and a steady inflow of foreign investment are proof its policies are bearing fruit. But Bulgaria will be the poorest EU member with just over 30 percent of the bloc’s economic output per capita when it joins, and it still trails regional peers such as Romania or Slovakia, which had second-quarter growth of 7.8 and 6.7 percent respectively. Weak government Bulgaria’s leaders insist the country is as ready to join the EU as the eight ex-communist states which joined in 2004. But few diplomats fully agree, saying potholed roads, persistent graft and indifference to foreign investment are evidence the country of 7.8 million has a lot more work to do. Instead, they say Brussels offered EU membership – along with a threat of «safeguard clauses» that could exclude Bulgaria from common EU policies, such as open borders and markets – to prevent a backslide on reforms. «It was the only way to ensure the reforms will still take place,» said a diplomat from an EU country. Analysts welcome the EU’s monitoring scheme and threat of sanctions. But some fear it will lead policymakers to focus on «ticking boxes» for Brussels and prolong more vital changes, such as more concrete steps against graft or overhauling the crumbling healthcare, pension, and education sectors. «We need to have a forward-looking agenda and we still don’t have one… because the government has just enough capacity to respond to the EU’s requirements,» said Ognian Shentov, head of the Center for the Study of Democracy. A Cabinet shake-up is possible, but not before next year, analysts say, as the ruling Socialists do not want to sully their EU entry victory or undermine their ally, President Georgi Parvanov, who appears set to win re-election in October 22 polls. Business leaders also say that without faster reforms, the huge gap between Bulgaria and the richer West can only grow. «The reform tempo is slow compared with other countries,» Danev said. «There are changes but we are still lagging behind.»