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Russia’s Energy Monopoly Topples the Bulgarian Government

Posted on 04 March 2013. Tags: Boyko Borisov, Bulgaria, Bulgarian government

SOFIA — Another government on Europe’s periphery has collapsed under pressure from its angry citizens. On February 21, the Bulgarian government of Prime Minister Boyko Borisov resigned following large-scale public demonstrations against electricity prices. Borisov and his center-right Citizens for European Development of Bulgaria (GERB) party had been relatively successful in their attempts at implementing strict austerity policies and balanced budgets in the aftermath of Europe’s economic crisis. But while budgetary discipline was sustained, almost half the companies on the market went bankrupt and unemployment and poverty rose dramatically. Yet this is only the most obvious manifestation of the economic and political crisis that has stricken the EU’s poorest member, a popular target of criticism for institutional inefficiency, high levels of corruption, and an inadequate judiciary.

The electricity prices that angered millions of Bulgarians are an effect of an energy system that is under the full control of corporate oligarchies in Moscow and in Sofia. Bulgaria has a special position in Moscow’s energy strategy. Strong pressure has been exercised upon successive Bulgarian governments since the early 2000s to accept several large Russian energy projects on Bulgarian soil. The Burgas-Alexandroupolis oil pipeline was developed in the early 1990s, and a framework agreement between Russia, Greece, and Bulgaria was signed in Athens in 2007. The project envisaged almost no benefits for Bulgaria but posed high-level environmental risks and other liabilities for the Bulgarian Black Sea coast, a popular tourist area. The GERB government consequently revoked Bulgarian participation in the project in 2010. The South Stream gas pipeline is the second major Russian project in Bulgaria, inked by a contract between Sofia and Moscow in late 2012. It was an attempt by Russian President Vladimir Putin to offset the implementation of the EU’s third energy package, made effective on January 1, 2013.

But the most controversial Russian project in Bulgaria is the Belene power plant, designed to be the first Russian-technology nuclear site on EU soil. For a decade after 2002, Belene developed as a corrupt and completely illegitimate business project, aimed at producing abundant and expensive electricity in a country with excess capacity in a region of declining electricity demand. Bulgaria will not need additional electricity capacity before the late 2030s, nor can the country export its electricity surplus at the cost levels foreseen for Belene-produced electricity. As the Bulgarian government terminated the Belene project in early 2012, pro-Russian energy lobbies opened a noisy campaign in favor of the project, which ended up in a referendum on nuclear energy that failed to produce clear results. The doubling and tripling of electricity bills in January is widely believed to have been an orchestrated manipulation aimed at provoking open public discontent and protests in the streets of the country.

The Bulgarian crisis might prove a case study for destabilization in Eastern Europe. The post-communist transition model in many countries such as Bulgaria combines a Western-style democratic political system with a Russian type of oligarchic economy, a recipe for corrupt public institutions. The governing oligarchy model is still sustainable in Russia because of two major factors: the immense natural wealth of Siberia and the authoritarian power maintained by the Putin regime. The other countries of Eastern Europe do not command a pool of natural resources comparable to Siberia, nor can their fragile democratic regimes sustain brutal oligarchic control over national economies and public institutions. Mass-scale corruption and the criminal appropriation of funds by local oligarchies in countries such as Bulgaria are a curse for national economic development and for the improvement of their low living standards.

The clash between the Russian oligarchic model of economic and political control and a Western-style democratic system produces structural instability in the Eastern part of Europe, which may prove a strategic challenge for the EU and the transatlantic security system. The Russian strategy of energy monopolization is aimed, first, at charging extraordinarily high prices and, second, at undermining the Western strategic periphery in Eastern Europe. Both Brussels and Washington seem to be heedless to the effects of this strategy. The instability and fragility of Eastern Europe could be compensated for by efficient policies of investment, institutional development assistance, and diversified energy supplies through projects like the Nabucco pipeline from Turkey. Yet the improvement of relations with Moscow at any price seems to be a bigger priority for the EU and the United States, rather than the guaranteed security and stability of Europe’s eastern periphery.

Ognyan Minchev is a non-resident fellow with the German Marshall Fund of the United States’ Balkan Trust for Democracy.

Области в България

Violence in Bulgaria - Out in the streets - Anti-Roma rioting spreads across the EU’s poorest country

Attack of the goons

GROWTH is slow and recession looms. The country’s attempt to join the European Union’s passport-free Schengen area has been slapped down by the Dutch and the Finns, who cite concerns about corruption (see Charlemagne). The fight against organised crime is weakening. Good news is in short supply in Bulgaria. With presidential and local elections due later this month, the last thing that Boyko Borisov, the prime minister, needed was a week of racially charged rioting.

Two weeks ago, Angel Petrov, a 19-year-old, was killed in an apparent hit-and-run incident in the village of Katunitsa. The driver of the car was an associate of Kiril Rashkov, a local Roma (gypsy) bigwig. Tsar Kiro, as he likes to be known, is a wealthy man with no obvious source of income. (He has been accused of running a moonshine operation, but was last charged with a crime back in the communist era.) Enraged villagers began protesting outside Mr Rashkov’s palatial residence. Things turned particularly nasty when they were joined by far-right football supporters from nearby Plovdiv, Bulgaria’s second city. The demonstrators torched the building, forcing local police to escort Mr Rashkov and his family to safety.

The protests spread to other cities, bringing young people on to the streets chanting slogans against Bulgaria’s Roma and Turkish minorities. They died down after Mr Rashkov was arrested (on suspicion of making death threats), but not before over 350 other arrests were made in Bulgaria’s worst disturbances for years.

Mr Borisov insists the riots were about criminality, not race. The inhabitants of Katunitsa say that their problem is with Mr Rashkov rather than the Roma in general. “We are powerless and the institutions are not helping us”, says one villager who travelled to the capital, Sofia, to join the demonstration. Other protesters seemed more angered by the culture of impunity around powerful figures like Mr Rashkov than motivated by ethnic hatred.

But Ataka (“Attack”), a far-right party that holds 21 seats in Bulgaria’s 240-seat parliament, spied an opportunity. Party members in black T-shirts bearing the slogan “I do not want to live in a gypsy country” distributed anti-Roma pamphlets at demonstrations held under the banner “Gypsy crime—a danger for the country”. Dimitar Bechev, of the Sofia office of the European Council on Foreign Relations, a think-tank, says that “if the boss in question hadn’t been Roma it would have caused local outrage, but not become a national issue.”

Tackling corruption and organised crime was Mr Borisov’s main promise when he took office in 2009. At first the former policeman, who likes to cultivate a strongman image, oversaw swift progress. A series of televised arrests put a stop to a spate of kidnappings. But local barons such as Mr Rashkov, only some of them Roma, remain in towns and villages across the country.

At a time of economic insecurity, patience in the EU’s poorest country is wearing thin. Despite the rigorous fiscal policies of Simeon Djankov, Bulgaria’s finance minister, growth forecasts for this year have been cut. The country’s woes are exacerbated by those in neighbouring Greece, a vital market for Bulgaria’s exports. A third of Bulgaria’s banks are Greek-owned.

Mr Borisov hopes that a big road-building programme will bring his party, Citizens for the European Development of Bulgaria, victory in this month’s elections. But although Bulgaria needs the infrastructure, opposition parties have been ridiculing the prime minister for cutting ribbons on new stretches of motorway when people are worried about jobs and crime. Volen Siderov, leader of Ataka, is campaigning with a simpler message. “I am your weapon,” he says. “Use it.”

Elections in Bulgaria Bulgarians say: more of the same, please

WITH most of the votes counted, it is clear that voters in Bulgaria’s local and presidential elections have given a thumbs-up to the status quo.

Rosen Plevneliev, the candidate of Boyko Borisov, the prime minister, did not get the majority of votes he needed to win the presidency outright yesterday and will face his Socialist rival, Ivailo Kalfin, in a run-off next Sunday. But his first-round score of 40% should be enough to see him through.

Strikingly, in both the presidential and the local polls, Mr Borisov’s party, Citizens for the European Development of Bulgaria (GERB) was able to hang on to almost the same share of the vote it received in the last general election, two years ago. This is despite Bulgaria's increasingly dismal economic outlook and an election campaign that was punctuated with some nasty episodes of racially charged rioting.

In fact, most of the major voting blocs had good news to report. Mr Kalfin's 30% score yesterday, although it is unlikely to win him the presidency, is a major improvement on the Socialists’ performance in the last parliamentary elections. And Meglena Kuneva, Bulgaria’s European commissioner in Brussels, exceeded all expectations, winning 14% of the vote on a technocratic, liberal ticket.

Happily, that suggests that even if voters are dissatisfied, they do not believe the answer lies with the far right. Volen Siderov, presidential candidate for Ataka, the anti-Roma party that hoped to do well out of last month’s rioting, won less than 4% yesterday. The ethnic-Turkish party Votes for Rights and Freedoms also underperformed, with much of its base choosing to stay at home after a series of rows within the party.

“The extremists weren’t able to capitalise on the anger resulting from the weak economy and the rioting," says Kiril Avramov, a political analyst. He predicts Ms Kuneva’s unexpected success will lead to the emergence of a new, centrist project in Bulgarian politics.

The result reinforces Mr Borisov’s mandate for the next two years. Without the threat of a presidential veto, Bulgaria’s strongman prime minister is free to pursue his plans to improve Bulgaria’s creaking transport infrastructure and pursue an eye-catching anti-corruption agenda.

It won’t be easy. As the riots showed, road-building programmes mean little when unemployment is on the rise and slow growth threatens to turn into recession. And, as widespread allegations of vote-buying in these elections show, there is much to be done on corruption too.

http://www.economist.com/blogs/eastern-approaches/2011/10/elections-bulgaria