Alternatives & Analyses: The EU Recovery Fund – a boon or a bane in oligarchic Bulgaria

The good news came these days from Brussels – Bulgaria could receive as much as EUR 15 billion from the EU COVID Recovery Fund, of which only EUR 3 billion will come as credit, payable after 2028 !? The crowd is singing praise!

The preeminent cheers came from the Bulgarian EU-bureaucratic and indigenous elite, that wasted no time in calculating in their minds how much of this financial boon  could line their own pockets.

Not a grain of concern about the impact of such financial deluge on the existing governance matrix, the economic structural and functional deficits, and democracy, in general.

Let us recall once again – this is not a Marshall Plan replica; no one is recovering from the ruins.

The European COVID Recovery Fund contains the bureaucratic vision on the way out of the crisis, with some strategy lines and strings attached. When carefully examined, enthusiasm cools off, with many questions emerging as to the effect of such “cornucopia” pouring on unreformed and flawed social and institutional fabric of the countries in this region.

Thank God, this is still virtual money, more promises, and intent, plans for some distant future. The EC still has to raise this EUR 750 billion in the global capital markets. So there is time to ponder all this thoroughly.

Germany changed its mind on the EU corona bonds issue to save its export-oriented economy by protecting the purchasing power of EU consumers of German goods and services. With German exports down by more than 31% year-on-year in April, the largest drop since 1950, Berlin realized that, at this level of interdependence, the recovery of the EU’s largest economy  is impossible at a national level.

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Here is where trouble looms – it is doubtful that the EU bureaucrats could design a market-oriented recovery plan based on grants, relying on the state to distribute them.

Evidence abounds with past state grand plans leading to a more dirigiste, in Bulgaria’s case, an oligarchic economy. One does not need to look that far back with evidence such as the recent plans for a state oil company, a state water supply, and sewerage group, the prominent role of the State Bank for Development, in Bulgaria.

Bulgaria has yet to leave behind the bonds linking it to the mindset of a socialist country and a new state-run economy, where heirs of the communist nomenklatura are the appointed millionaires by the status-quo forces. This disdain for the organically grown business elite has produced the ugliest version of crony capitalism, social inequality, and stratification. The oligarchy is destroying the base for healthy market-based capitalism. Against this backdrop pouring EUR 15 billion to be distributed by Bulgaria’s state oligarchy, will generate more inequality and more extensive cracks into the facade of Bulgaria’s failing economy and democracy.

Money distributed through the state administration suffocates private initiative, entrepreneurship, and business sense as pillars of growth and prosperity. The resources from the EU Recovery Fund will not end up with the bright, law-abiding, enlightened, and daring segment of the business community, but with bureaucrats and oligarchs with privileged access to the decision-making process. A decent share of the money pie will go to the intermediaries in EU projects, which have made navigating the labyrinth and verbiage of Brussels bureaucracy a lifetime occupation.

Bulgarians envy Americans when they celebrate the achievements of private entrepreneurs like Elon Musk. All Bulgarians are offering their kids as a role model at home is the story of the “young state capitalist,” the media mogul Delyan Peevski.

This EU Recovery Fund is likely to enforce transactional integration “from the top” under the “cash for nod” scheme. After the money is spent, Europe will likely become more statist, left-wing, less entrepreneurial, and competitive versus the United States and Asia.

To wit, all this is happening while “rightist” governments are in power in most EU countries !?

These EUR 15 billion are already creating a political, social, and business gravity of their own, setting the stage for a new level of the oligarchy-centric economy, more profound media and institutional capture, embedded prosecutorial justice, which spells the demise of the Bulgarian democracy.

The hope that the European bureaucracy and newly elected EU prosecutor Laura Kovesi will enforce European standards of governance and democracy in Bulgaria is a fetish. If otherwise, they should have been able to hit the nail of corruption on the head earlier, with tens of billions of EU funds already disbursed to more willing-to-listen governments and less arrogant oligarchy.

Whenever it was time to act on behalf of the EU, political expediency overrode other considerations as the Brussels bureaucracy preferred to get along with the local Tzar and his boyars.

Once the funds are captured, as an economy on grants is neither competitive, nor sustainable, the need for fresh, easy cash will follow. As the COVID case will cease to justify new EU grant injections, national-level subsidies will supersede with higher taxes on the private sector and the population’s incomes.

An EU of grants, subsidies and the easy money could quickly destroy the basic business ethics and become a bane if the government  of Borissov and Peevski distributes the new billions.

When and if this happens, I will call for Bulgaria to leave such a European Union, which runs counter to the founding fathers’ beliefs and hopes.

It is no coincidence that soon after the announcement of the new EU Recovery Fund, the political turf wars sharply intensified. No mention of strategies, action plans, and shared common interests – just deals on who gets what.

Here are the additional “extras” – the coined phrase – fiscal harmonization. In the bureaucratic jargon, it means raising Bulgarian taxes to Germany and France’s level to avoid tax competition. The EU elite will dangle the bait of EUR 15 billion in front of our statesmen’s eyes and nourish their dream to become the next oligarchs. The same modus will apply when the EU funds are spent to enforce climate change policies, again in the name of the “higher global good”, with little regard to the specific harm inflicted to real people and real regions.

Bulgaria’s burning issues as a society and an economy, from the demographic catastrophe to well-being and public health, are not contingent on the lack of favorable terms capital but on the lack of vision, strategy and, above all, on inefficient management, dipped in endemic corruption at the state and public level.

Bulgarians are one of the strongest supporters of the EU and probably will be the last to leave it, but they have learned to distinguish between hopes and reality over time.

Ilian Vassilev

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