Articles

Greece has not been extremely successful for the last few months - the 2010 budget deficit is expected to exceed 4 times the maximum allowed by the Maastricht Treaty and the economy to shrink for a second consecutive year in 2010. Besides that, the constant strike activities in the private and public sector are going to increase even more the expected negative growth as they have not been taken into account.

Greece has not been extremely successful for the last few months – the 2010 budget deficit is expected to exceed 4 times the maximum allowed by the Maastricht Treaty and the economy to shrink for a second consecutive year in 2010. Besides that, the constant strike activities in the private and public sector are going to increase even more the expected negative growth as they have not been taken into account. Moreover one could add disclosures of national statistics manipulations and generally growing suspicion in the country’s stability.

Recently the French President Nikolas Sarkozy gave his introductory speech at the forum in the Swiss town of Davos. The speech was assessed with different epithets such as „a key one“, „revolutionary“ and „the most socialist speech by a center-right president“. There were several distinguished aspects in his speech: new regulations for the financial sector plus transaction tax known as the Tobin Tax (which was not surprising as Sarkozy withstands his position on bank bonuses from a long time), the creation of a new world monetary order and the formation of some kind of a world government that should be capable of imposing internetional organizations’ decisions to all countries.

The initiative for reducing the administrative burden started back in 2007 after the suggestion of Commissioner Gunter Verheugen (European Commission - Enterprise and Industry). At the same time the European Commission identified the current superfluous legal regulations and in January 2007 suggested an ambitious program for reducing the unnecessary administrative burden on the business in the EU. In march 2007 the European Council approved a decision that the burden originating from the European legislation, including the national acts aiming at its implementation or transposition, should be reduced by 25% by 2012. The Council urged the member-states to simplify their national legislation aiming “relatively similar goals”.

According to the European legislation, 50% of all the broadcasts on air, regardless whether the channels are private or public, should be produced in the EU. Whether national or European, protectionism suppresses the free market and the competition principle. The media sector does not make an exception.

This week there was dispute which affected a lot of producers of tobacco from various countries, including Bulgaria. On one hand, the European Parliament insists on extending the period for assistance to the tobacco producers until 2013. On the other, the Commissioner on agriculture Mariann Fischer Boel stated that the assistance must stop during 2010. The result was the grumbling of the tobacco producers, which even stated protests.

The mistaken logic of EU financing creates problems, some of which are showing up in Bulgaria. That does not necessarily mean that Bulgaria is not to blame. Quite the opposite, corruption is all over the place, bureaucracy – devouring all funds, while the attempts of a significant number of people in our society to live off of us or of the European taxpayer are daily, persistent and continuous.

...The eventual conclusion is that there is significant proof for lasting negative effect from the structural funds on the economy. The more optimistic conclusion is that there is a need to show explicitly the positive net effects in order to be sure that we are not destroying our societies by encouraging such behavior by the administration and all possible recipients.

More than two years ago, when Bulgaria was still not a member of the European Union, we at the Institute for Market Economics attempted to warn the public in the country, that the effects of the expected subsidies may not be necessarily positive. At that time we could not start a serious debate, since the position not to take money, which is given for nothing, would not be popular. These funds were viewed as the means for fast and easy way to enrichment at somebody else’s expense (the European taxpayers), which is possible, but only for a very limited number of people and very often by not very legal means.

During the past few years in Bulgaria there has been continuous talk about the EU money. People wake up and fall asleep with the term “put the funds to use” in their minds. The impression is created that this money is vitally important to the lives of Bulgarians – without which there would be no infrastructure, there would be no agriculture and human resources would not develop and over all everything would go to hell. However such perception is fundamentally wrong!

Corruption exists all over the world. This is a phenomena, which when is noticed, could be cured if the political will is present and technical means available. The reports of the European Commission and the public reaction in Bulgaria show not only that a point of intolerance has been reached, but also that there are no doubts that total and absolute corruption is present in Bulgaria at all levels.

During the past few days there has been no way not to ask the following question – to what extent is the role of the EU funds decisive for the Bulgarian economy? We could be more extreme in our assessment – do we really need of the European taxpayer’s money in order to develop our economy and to increase the standard of living of the population? In contemporary scientific literature there is no proof aid assists in economic growth and makes the people richer.

How is the EU money spent? The efforts to integrate the Roma in Bulgaria during recent years give a very good answer to this question. During the last 10-15 years a lot of State organizations, international organizations and associations have tackled this problem. All sorts of programs and projects, related to Roma people, have been financed with State, European and private money. This is gives us a very good foundation to assess how effectively the public funds have been spent.

During the period 1950-1988, before the economic boom, Ireland had unsatisfactory rates of economic growth due to the combination of bad political decisions in the area of economics and ineffective government institutions. These initial conditions include low levels of quality human resources, bad physical infrastructure and low levels of investment in research and development activities, similar to those in Bulgaria.

The present EU budget revenue system is too complex and the use of multiple revenue streams inefficient and unjustified. The VAT and GNI-based revenue streams overlap, causing double taxation of the value added component. The EU budget's revenue sources must be reformed and built on the following maxims: national contributions to ensure democracy; proportionality to encourage fairness and neutrality; simplicity and transparency to create accountability; and a low administrative burden to increase the effectiveness of payments.

The threat of not being able to master the money from the EU Structural and Cohesion Funds and from the agricultural subsidies is one of the widespread and extensively discussed topics in the public space. Although our country joined the EU on 1 January 2007, the programs of the EU Funds, as well as the application process, have not started functioning yet.