Economic Policy Review ISSN 1313 - 0544

Another Sort of Occupy Movement: Bulgaria

Author: Krassen Stanchev* / 06.12.2013
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On October 25, law and history students occupied the main building of the Sofia University, one of the city's landmarks.  The reason: their professor, country's Constitutional Court chairman, did not show up for a lecture after it was announced that he should answer questions on illogical and seemingly unconstitutional decision. The very same day, most professors supported the students and occupation spread to other universities, although with lesser resolve. 

Simultaneously, "The Constitutional Court of Bulgaria" was offered for sale on E-Bay as something "useful for crooks, cronies and Mafiosi".  The bidding price (at the time of cancelation) reached $250 thousand.

The students' call was not for free loans, more education subsidies, lower fees and higher stipends. They asked for "rule of law", clean hands' politics, cabinet's resignation and fresh elections.  On November 18, the occupation was scaled down to the University's main hall, out of respect to those who pay and work to study.

Attempting to slake down the resolve authorities used provocateurs led by Socialist MPs and martial arts sportsmen, propaganda pressure, police intimidation, and (soft) violations of university autonomy. Now, from the university main hall the students go out to the streets every day and join the general protest movement, of students' involvement is just most sympathetic flash.

Since June 14, every day Sofioters demonstrate for the resignation of the government, calling for fresh elections.

This is not an anti-capitalist or anti-austerity movement.

In fact, businessmen, bank clerks, IT engineers, university professors, business lawyers are part of it along with social activists and general public. May 12 general elections produced no stable majority in the parliament but garnished a cabinet of seemingly professional experts. "Life's never perfect", middle class folk gave a green light to the Premier Oresharski and packed for vacation. Mr. Oresharski was a promise for no major disaster: in 2005, he defected from the democratic camp to the ex-Communist one; but in 2007 and 2008, as finance minister of a tricky coalition of Socialists, Monarchists and politicians elected by Bulgarian Muslims, he introduced the 10% flat tax on corporate and personal income.

A key feature of the incumbent parliament is that a previously fringe faction of ATAKA, holds both the balance and the veto on the quorum.

The foreign press wrongly describes this party is far right. In reality it is extreme populist, nationalist in Nazi sense, uses NSDAP-like regalia, advocates nationalization of industries and land, expel of foreign investors, sterilizing gypsies and restricting the rights of Muslims, central planning of exchange and interest rates, prices and wages, getting the country out of NATO and the EU. It is also extremely pro-Russian, founded by ancient regime State Security Committee (SSC - a Bulgaria's analogue of KGB) collaborators. In these respect ATAKA similar to its parliamentary partners, the Bulgarian Socialist Party (BSP) and the Movement for Rights and Freedom (MRF, a party without competition in the Muslim constituency, with at least 10% of seats in every legislature since 1991). The forth party in-there is Citizens for European Future of Bulgaria, or GERB, a member of the European Peoples Party, has the largest faction but BSP, ATAKA and MRF refused to cooperate forming the executive and now treat GERB as a boxing pillow.

What triggered the protests was

the appointment of a notorious crony

with a bandit outlook, Mr. Peevski, as head of State National Security Agency (SNSA). It happened on June 14. In a matter of two hours, communicating via social media, a crowd of 35 000 gathered in front of the Council of Ministers.

The appointment revealed why the first act of the newly elected parliament was to grant SNSA extraordinary powers not only in foreign intelligence but also to include fighting organized crime and investigation; the law was amended to fit Mr. Peevski's for the job . He was elected 15 minutes after the amendments were adopted, without any debate whatsoever. Later it became known that he already had a classified information clearance.

The public did understand this act as a post electoral coup d'etat, converting the parliament into a front-stage for mafia-type redistribution of wealth and decision making. Ever since mid-June, no one bothered to answer who nominated Peevski and why. The only explanation by the Socialist Party leader was that "Mr. Peevski underwent through profound catharsis".

At times, the protesters' rally was 70-thousand strong - a phenomenon not seem since 1989, typical summer day crowd was 4-5 thousand, growing occasionally up in response to authorities arrogance but downsizing to several hundred in bad weather, weekends and autumn. In an unprecedented join open letter ambassadors of France and Germany supported the protests and expressed accountability concerns on how the country is governed.

The arrogance, however, keeps popping in, sometimes with a degree of sophistication.

Although Mr. Peevski resigned amidst first demonstrations, soon it has become immediately obvious that Mr. Oresharski is no master of his own cabinet. About 20 appointees to key government positions on national and district level were SSC agents, PM's own security advisor and Foreign Affairs Ministry secretary are top ranking agents that fought the West during their entire career. The foreign affairs minister declared at the first day in office that his intention is to restore ex-SSC collaborators to diplomatic positions (they were replaced by the previous minister and the president). Some of the appointees for senior government office were affiliated with semi-Mafiosi, after being exposed they were promptly replaced.

One minister, Ivan Danov, was disclosed by French Bulgarians as embezzler of France welfare state while running a good business in Bulgaria.[1] Mr. Oresharski found Mr. Danov fit for the post of one of the key distributors of EU funds.

Individuals with unquestionable reputation were dismissed from public office.

One example. Mr. Martin Ivanov, was a chairman of State Archives. He is a historian known for his path-breaking work on three Communist government defaults on foreign debt - in 1960, 1978 and 1990.  As Archives chief since 2010, he managed to disclose and put on Internet enormous amount files, including some of the Communist Party and SSC. Spotted among protestors, Mr. Ivanov was fired. His substitute is ex-SSC officer who took part in the destruction of Bulgarian KGB files in 1990, before the first elections.

The committee and the law that make SSC agents, collaborators and files public is a major impediment to the incumbent visions to run Bulgaria. BSP plans to shut down the committee and discontinue the law - to no one's surprise but to public outrage. 

The background is the following.

The MRF founder, Mr. Dogan (his file is now public), is a long-standing SSC agent, owns his entire scientific career to SSC and worked against Bulgarian Turks when their names were changed to Christian ones by force in 1984-1985. His replacement, Mr. Mestan (one of the god-fathers of Oresharski's cabinet) is a similar case but his file was destroyed. The BSP leader who promoted Oresharski, Mr. Stanishev, 49 (since December 2012 also a chairman of the European Socialists) has a fiddly background too.  He is a son of an ex-Communist functionary who headеd the department of cooperation with friendly communist parties in 1970 and 1980's, was born in Ukraine and until about 10 years ago kept his Soviet/Russian citizenship, never had a job outside his party, if not counting his prime-ministership in 2005-2009. He has always opposed the opening of Bulgarian KGB files; the BSP cabinet of 1995-1997, which brought the country into a hyper-inflation and a new bankruptcy, had 23 members agents of SSC, including the PM.

Messrs. Stanishev and Mestan masterminded "counter-protest" movement: they recruit tugs, sport activists and party functionaries and sympathizers to spread lies about protesters, haters to blog and publish in Mr. Peevski owned media (about 50% of the circulation) made up stories about protest leaders. They also attempted to replace directors of public TV and Radio, and threatened private ones of repealing advertisement contracts (mostly informing about EU programs). The Ministry of Interior was spotted at drafting and disseminating "talking points" about those who do not trust and criticize the government, be they students or just common protesters. Beloved clichés "funded by foreign interests", "agents of foreign foundations and/or failed political parties" and "representatives of nouvou riches".  Then, the points are used in parliamentary speeches and media coverage.  The cabinet invites "counter-protesters" to consult policies as "representatives" of the civil society and occasionally appoints them to public ad hoc committees, for remuneration.

Protesters are being illegally filed and then intimidated by the police or the prosecution. Such violations of privacy happen in a modest scale have not lead to any significant follow up but aim at discouraging street action. The policy law is being amended to allow for harder intimidation.

Amidst Sofia University occupation, the Deputy Speaker of the parliament, Mr. Biserov resigned "for personal reasons". He was a long-standing MP, No 2 in MRF, head of many important committees - overseeing the security service, law drafting, etc. Few days later Bulgarians learnt that he is under investigation for money laundering, tax misreporting and evasions.  His suspicious operations were disclosed by a Swiss security agency, reported to Bulgarian SNSA, from where the information leaked to Mr. Biserov and his party fellows before even reaching the prosecution. The Deputy Speaker had some useful time to put out of sight documents and evidence.

All this is well covered by the media. Mr. Biserov is not the last individual cause for public discontent and outcry. Such cases are typically several a week, sometimes several a day...

As Mr. Oresharski's cabinet moved into day-to-day routine, it started making continuous attempts to buy voters approval in the context of unparalleled 6% credibility of the parliament and 20% of the cabinet. Protests' motivation has become more complex, but their approval rates hover around 60% although the steam has evaporated. 

Without any obvious reason, and after declaring that no state budget amendments were needed, in mid July the PM announced the need to increase the budget deficit by 0.4% to 1.8% of GDP and increase the government debt allowance by €500 mln., or by 0.8% of GDP, from 18.5 to 19.3% to GDP. This motivated a three-week strong July-August rallies against budget amendments vetoed by the President for lack of justification and transparency of allocations. The international press has interpreted these events as protest against austerity but nothing is further from truth. Although the lack of credibility fueled the rallies - not so much libertarian and pro-austerity moods, there is a strong element of those too. The public tried circle the parliament building and not to allow the amendment and this was the first instance the police used force to free MPs to go home.

Another interesting move were the amendments to the energy law in order to allow for direct interference in electricity prices and use the power sector as social policy instrument. The amendments were hastily adopted, without required cost-benefit analysis, and aggravated further mess in the power sector, and will postpone its liberalization according to the EU directives. It will cost penalties in two years and a jump in the electricity prices in 2015 or 2016. But the act lowered the household’s electricity bills by 4% in September 2013 while there was a need of at least 10% hike, to stop the arrears and allow for competition.

These are only two examples of the panic to buy people's confidence through fiscal illusions and false economy.

It gives some effects:

sporadic leftist slogans almost completely disappeared from the streets.

Most often used international cliché about Bulgaria is "the poorest country in the EU". This is misleading, and Bulgarians already understand it. They know that relatively low levels of national income per capita resulted from the Communist legacies, not at least due to the default on the foreign debt in 1990 and the next default on domestic debt in 1997. Since 1998, the country enjoyed its longest period of economic growth since 1880's. The real household income grew by 8-9% per annum until 2009 and is still the one with a stable positive dynamics in the EU.

The consistent attempts to bribe the public continued with the next year state budget. Mr. Oresharski started dismantling the 10-percent-flat tax system; the parliament has stopped the pension reform while pay-as-you-go system deficit is 50% and continues to rise; the healthcare deficits are also rising and bankrupted state owned electricity company, railways and weapons' factories are bailed out with taxpayers money and new government debts.

A tacit and parallel government agenda is also in place: projects of Russian state owned companies are given a green light without due legal and economic procedures. Among those are the "Blue Stream" of GASPROM and the NPS "Belene" of ROSATOM. The latter started with Mr. Stanishev government in 2006 but was stopped last year for lacking economic viability and being corrupt. Now this decision is contested by ROSATOM in the international courts. The long-negotiated "Blue Stream", besides obvious contradictions to EU law, has started at price estimates at two-three times above the market, but with no records of the talks between Mr. Oresharski and GASPROM, no contract and no financial projections available to the public - "no records were made", responded the cabinet when access to information was requested.  At the same time the government is taking loans to pay past arrears in the energy sector.  The public suspicion in Sofia is that these $2 billion will be split among friends in Bulgaria and Russia.

In such circumstances

the call for resignation is a common denominator of different public moods.

It is being reinforced by students occupying the university, by Sofia University Professors, most popular artists and novelists, and by different unexpected groups.  When students restricted their activities to the main hall, 36 members of the Bulgarian Association of Software Companies, BASSCOM, an industry that grows at 10% per annum and is totally independent from the local market, issued a proclamation: "Resign! Now!". In between other things software companies owners stated that "continuous decay of statehood and total loss of legitimacy of most important public institutions plunder our country not only economically and socially, but first of all morally".  3 400 software professionals supported them and, according to public opinion polls, 60% of the Bulgarians would undersign this statement.

However, "Resign!" is an intricate mobilization slogan, especially if there is no political alternative.  And there is no prospect that some political party formulates a positive mobilizing agenda. The reasons are complicated but obvious.

In the last twenty years, Bulgarian have tried numerous fancy political insights, voted in favor of numerous odd new comers, even they elected their former king, Simeon the Second, a prime minister in 2001.

Now it seems they do not trust anyone. It is very different from all previous experiences. When in 1997 the socialists, for a second time since 1989 brought the country to hyperinflation and 2-digit economic slowdown, the public went out to the streets and the choice was obvious - United Democratic Forces that implemented similar to Poland reforms in 1991 - 1992.  Now splinted UDF is part of the extra-parliamentary Reformers Block, with remnants of other parties; they are supported by 7-8% of the voters.  

Students and protesters distance themselves from the reformers, holding them liable for failures to perform better. The problem here is that reformers led the country into NATO and EU, and these great tasks – although often reduced to ticking boxes in the harmonization agenda - unschooled them of thinking of local needs and agendas.  

The political fatigue with the EU and local vacuum opened room to populists and nationalists, at the expense of traditional post-Communist transition parties.  GERB, the previous government party is no alternative either: they were similar populist product of the fatigue, did not cooperate with anyone but ad hoc with ATAKA, and used methods similar, though not that outrageous, to those applied now by BSP and MRF.  Old loyalties and the option to play rescuers of the country against idiotic promises of ATAKA keep them together.

What is common for these three political parties (SSC backgrounds, pro-Russian or rather - pro-Russian-state-owned-companies sentiment, and the sense of failure) keeps them together.  They know they would never have the opportunity to run the country without a parliamentary opposition, and they are seizing the moment. The public does not have much of a choice but to continue protesting.

What to expect, eventually?

The parliamentary debate on 2014-2018 macroeconomic framework and the next year state budget revealed several warring trends.

  • public finances, contrary to the philosophy of 1998-2012, will be handled with deficits above expected growth rates of GDP; the deficit and the government debt may squeeze out of control irrespectively the fact they are no plans to brake the EU rules;
  • The mission of the state budget is already the apparent creation of fiscal illusions to buy voters' confidence while redistributing economic influence and private assets through government policies;
  • The first to be hit is the power sector, a flagship of FDIs in the last ten years; then other sectors may follow the suite: the idea is that seemingly chaotic policies brings the assets value down, western investors leave and the void is fill by local and eastern (Russian state owned companies including) friends of the current ad hoc majority; the industries at stake are mining, banking, and foreign retail chains.

 

* Dr. Stanchev is an associate professor and Sofia University and board chairman of the Institute for Market Economics.

 


[1] See: http://www.lexpress.fr/outils/imprimer.asp?id=1284844