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Bulgarian report
by Euro Reporter
2014-10-02 10:53:46
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Bulgaria goes to the polls (again)

Bulgaria has changed governments four times in the last 18 months. On October 5th Bulgarians will vote for another one. After nearly two years of political instability, which began after anti-poverty protests led to the resignation of the centre-right government of GERB in February 2013, the poorest member of the European Union seems to have come full circle. GERB and its leader, Boiko Borisov, a former prime minister, are tipped to win more than one-third of the votes even if they will be short of a majority. The Socialists, whose embattled government resigned on August 6th after a year in power marked by mass protests, are distant second with about 22% of the vote, according to Alpha Research, a pollster. The ethnic Turkish party, DPS, which was part of the Socialist cabinet is currently polling third at around 12%. Four more parties are flirting with the 4% threshold to enter parliament, including the rightist Reformist Bloc and the populist “Bulgaria without Censorship” of former journalist-turned-politician Nikolay Barekov. Mr Borisov, a burly former firefighter, will thus face a challenge to form a stable government in a starkly polarized parliament. But a stable government is urgently needed in Bulgaria as the country is facing a host of problems, including a still-unresolved failure of a major bank, a sluggish economy and an increasing Russian pressure over a gas pipeline.

The case of the Corporate Commercial Bank (CCB) appears most pressing. CCB, the fourth largest lender in the country, has been closed since June 20th after a run. Alarmed by news reports of dubious deals by the bank’s main shareholder, Tsvetan Vassilev, customers withdrew more than one-fifth of the bank’s deposits. Prosecutors have charged Mr Vassilev, who is currently residing in neighbouring Serbia, with embezzlement. He denies any wrongdoing. While politicians are still wrangling whether the state should bail it out, let it fail or wait for its shareholders to recapitalize it, the bank’s fate remains hostage to the political vacuum. (An interim cabinet with limited powers it is in power until the elections). More worryingly, over 200,000 depositors have had their money blocked at CCB for more than three months now and hundreds of them have been staging protests in the past weeks demanding access to their accounts. A significant chunk of the economy, from small firms to much of the country’s military industry, municipalities and schools that have parked their money at the bank, has also been affected. This threatens to derail an already shaky recovery.

Bulgaria has seen its growth prospects falter amid the domestic political uncertainty, poor weather this summer that will affect the harvest and the crisis in Ukraine. That conflict has already resulted in declining exports to Russia and Ukraine because of the trade sanctions. A further tightening of the sanctions (for example, a more rigorous EU visa regime) would badly affect tourism. Russians are the single largest group of tourists in Bulgaria. But Russia’s engagement in Bulgaria goes way beyond tourism. It supplies as much as 90% of Bulgaria’s natural gas and is deeply involved in its energy sector. Bulgaria is one of the key countries along the route of South Stream, a planned pipeline crossing the Black Sea to bring Russian gas to the Balkans and to Western Europe. So when earlier this year the European Commission urged Bulgaria to stop work on the Gazprom-led pipeline as it was in defiance of EU rules on energy liberalisation, Russia, in turn, increased its pressure over the country to continue with the work. And although the interim government confirmed in early August that the construction has been frozen, news reports later suggested that parts for the pipeline were still being delivered. “Russia is currently exerting huge pressure over Bulgaria,” said Tihomir Bezlov of the Centre for the Study of Democracy in Sofia. “The Russians still think in their old imperial models.” Mr Borisov has already declared that Bulgaria would back the South Stream project only if it got the EU's approval. But with the pipeline becoming entangled in the geopolitics of the Ukraine crisis, a quick resolution seems unlikely. The new government, like its last four predecessors, will have a rocky start.


KTB depositors threaten to foil Bulgaria's elections

Depositors at troubled Corporate Commercial Bank (KTB) have demanded that the bank be open before October 5, the date of early elections for Parliament in Bulgaria. They have also insisted that Bulgarian National Bank (BNB) Governor Ivan Iskrov step down immediately. "On [October] 5 we can blockade Regional Electoral Commissions or the Central Electoral Commissions (CEC). The deadline is October 5. If KTB is not opened - [there will be] no elections!" BGNES news agency quoted one of the initiators as saying. Demonstrators have also vowed to set up a protest camp if their calls are not heeded.

On Monday Finance Minister Rumen Porozhanov said the financial evaluation of KTB was to be complete early in October. Bulgaria’s central bank (BNB) seized control of KTB and Victoria Bank in June following a deposits run, suspending all of their operations and ordering an audit of their books that has to be completed by October 20. After the special supervision was extended until mid-November, the EU started infringement proceedings against Bulgaria due to the way it handled the crisis.

With depositors at the two banks having had no access to their money for more than three months and with BNB’s decision of 16 September 2014 to extend the period of special supervision over KTB and Victoria Bank to 20 November and 22 November, respectively, “the current situation may undermine public trust in the deposit guarantee scheme in Bulgaria,” the Commission said.


Bulgaria to face new, bigger refugee wave

“A new, bigger refugee wave is expected but Bulgaria is prepared and can cope with it,” said Vasil Varbanov, Deputy Chairperson of the State Agency for Refugees said. According to Mr Varbanov, Bulgaria can handle the new refugee flow because the country has done serious preparatory work and boosted its capacity from 1,230 to more than 6,000 accommodation places at the territorial centres of the agency.

The official commented further that there was an increase of the sheltered refugees reported in September. “Until the beginning of the month there was certain balance – we accepted almost as many refugees as those, who left Bulgaria – now there are 3,045 accommodated refugees, some 1,040 of whom are children. At the same time, with regard to the fact that the number of arriving people is very big and we cannot manage to register them immediately, there are at least 200 more people, who are not registered but are at the territorial units,” Varbanov commented further.

He added that most of the refugees were from Syria – 78%, followed by Afghanistan – 14%, and Iraq – 2% and remarked that the number of refugees from Afghanistan and Iraq was increasing. “The majority of the refugees that arrived here last year have already left for the West. They consider Bulgaria a transit country and prefer other EU member states,” the expert said. Commenting on the refugees, who preferred to stay here, Mr Varbanov said that they were now working mainly in the tailor’s and food industry.

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