A New Government at Last

The Economist

by G.K.

PLAMEN ORESHARSKI is not promising his fellow Bulgarians a bed of roses. “Bulgaria is in a deep institutional crisis, continuing economic depression and worsening disintegration of society,” said Mr Oresharski as his government was sworn in yesterday. "Maybe we won't be able to become rich and prosperous in our term, but our minimum task is to give Bulgarians bigger hope.”

Many Bulgarians have lost hope in recent months. In February, the largest demonstrations in 16 years ousted the previous center-right government as Bulgarians grew frustrated with widespread poverty and rising unemployment. At about €400 (0) per month, the country has the lowest average wages in the European Union. The unemployment rate is touching 14%, a ten-year high.

Following a campaign mired in controversy and scandals, GERB, the centre-right party of Boyko Borisov, the former prime minister, won the May 12th elections with a slim margin. In the following weeks GERB was unable to muster a majority in the highly polarised parliament. This paved the way for the second-strongest party, the Socialists (BSP), to form a government backed by the DPS, the party of ethnic Turks. As their coalition was one vote short of majority, however, Mr Oresharski’s new government became reliant on the ultra-nationalist Ataka party. While publicly refusing to support any government and promising to become “a nightmare for everyone”, its shrill leader, Volen Siderov, became the kingmaker of Mr Oresharski’s cabinet. An exercise in parliamentary arithmetic saw some of his deputies not registering for the vote yesterday thus lowering the majority threshold.

It is Ataka’s silent support that is at odds with the government’s otherwise pro-European stance. Mr Oresharski mentioned “close cooperation with the EU” as one of his biggest priorities. Kristian Vigenin, a member of the European Parliament, is the new foreign minister and Zinaida Zlatanova, who has headed the European Commission’s representation in Bulgaria, will be minister of justice. She will also oversee the absorption and use of the EU funds as a deputy prime minister.

"The choice of Zinaida Zlatanova is a message that Bulgaria will comply with the commitments to the EU and protect its funds," says Daniel Smilov from the Center for Liberal Strategies, a think-tank. European funds have been partially frozen in the past over corruption concerns. They are however crucial for Bulgaria’s feeble economy: according to official estimates, 65% of GDP growth in 2011 was a result of their absorption.

Boosting growth while maintain fiscal stability is another priority of the new government. Mr Oresharski, an economist, has been finance minister from 2005 to 2009 overseeing the introduction of a 10% flat tax. He now pledges to keep the levy intact despite calls by the Socialists to abandon it as “socially unfair”. Mr Oresharski’s plan also includes a review of energy prices, faster government payments to businesses and an increase of social benefits. The new finance minister, Petar Chobanov, former chairman of the country’s financial regulator, is also seen as fiscally conservative.

“Maintaining financial and economic stability is achievable, especially since Mr Oresharski has a proven track record in this regard,” according to Georgi Angelov, senior economist at Open Society Institute in Sofia. “The real challenge for the government, however, will be the reforms as BSP and DPS have no majority of their own and some more difficult reforms could be blocked by Ataka and GERB,” Mr Angelov said.

While portrayed as an independent technocratic administration by the Socialists, the new cabinet looks more like a political compromise: key posts such as the defense, economy and education departments go to BSP deputies, the Turkish ethnic party DPS has got three ministries while the new minister of interior, Tsvetlin Yovchev, is seen as close to Rosen Plevneliev, the president, and even to Mr Borisov.

“The government looks like a big non-standard political coalition: with the mandate and ministers of the Socialists but headed by a former right-winger and with several ministers from various political circles but with established non-party experts,” wrote Antoni Todorov, a political analyst. According to Mr Todorov, it is unclear how long such a government will last. Given the unstable parliamentary footing, many observers predict a one-year term for the new government.

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