Bulgaria's Push for Euro Adoption Amidst Populist Resistance
Bulgaria nearing Euro adoption: Obstacles to overcome
Bulgaria is lurking on the brink of realizing its long-held dream of joining the euro currency union and bolstering its ties with the wealthier nations of Western Europe. However, the government faces a turbulent backlash from the populace on the eve of a crucial European Union decision.
Fear mongering, misinformation, and disillusionments are percolating, mixed with distrust and uncertainties, rocking the foundation of the euro. Social media is a breeding ground for discontent, with party-led disinformation campaigns aimed at turning the masses against the single currency.
The country's economic future is hanging in the balance, as nationalist and pro-Russian figures seize the opportunity to exploit the rising anti-EU sentiment.
"Adopting the euro will thrust us into the precipice of poverty. The prices will be in euros after all," voiced 78-year-old Tanya Ignatova, a retiree.
"Bulgaria is not ready for the euro. We may be ready someday, but not now," echoed Mario Georgiev, another retiree.
Thousands rallied in the capital on the weekend, urging a referendum on transitioning from the lev currency to the euro. The leader of the pro-Russian Varazhdane party, Kostadin Kostadinov, addressed the crowd, "Bulgaria has risen and declared: Freedom, we choose the Bulgarian lev!"
The Pro-Euro Faction
On the other hand, some Bulgarian citizens believe the country already reaps the benefits of EU membership and that the currency isn't a crucial concern.
"We have inflation even now, and it will exist in the future," asserted 26-year-old Konstantin Bozhinov.
Despite the uproar, the government is proceeding with its plan to deepen European integration amid rising geopolitical tensions. It has requested a review of its adherence to the criteria of low inflation, financially sound administration, and alignment with EU institutions. The European Commission will announce the outcomes on Wednesday.
Upon a positive evaluation, other member states will decide on Bulgaria's candidacy in the coming weeks. Last year, Bulgaria failed to meet the inflation requirement. However, inflation has since dropped significantly.
President Rumen Radev has been encouraging the anti-euro camp by advocating for a referendum on the currency, citing public concerns over inflation and purchasing power. This came after a protest in February that left the EU's executive commission offices in Sofia marked with red paint and set afire.
The president's proposal was declined by the pro-European parliamentary majority, who accused Radev of aiming to sabotage the euro adoption in favor of Russia.
According to the EU's multi-country Eurobarometer survey released last week, 43% of Bulgarians support the adoption of the euro, while 50% oppose it. In contrast, trust in the euro is burgeoning across the rest of the EU.
Due to political instability and corruption, Bulgaria has fostered euroscepticism among its 6.4 million citizens. Analysts allege that disinformation campaigns from foreign entities have stoked fears of economic alterations that could exacerbate poverty.
Rumors claiming the EU intends to seize citizens' savings if they don't spend them within a set time frame or that plans to introduce a digital euro are part of a plan for control have pervaded social networks.
"An illusionary fear manipulation is being executed, lies are being spread recklessly and shamelessly," asserts Ognyan Minchev, director of the Institute for Regional and International Studies in Sofia.
The risks and benefits
Joining the euro will not brin gsignificant changes to Bulgaria's economy immediately. The government has pegged the currency to the euro by law, maintaining a fixed rate of 1 lev for every 51 euro cents.
Adopting the euro may provide lower borrowing costs, a more straightforward comparison of domestic and foreign prices, and no need for currency exchange when vacationing in other euro countries. Moreover, it symbolizes an integration into the EU and its substantial economy. Members gain a seat on the European Central Bank's interest rate-setting committee.
Countries typically join the euro concurrently with their EU membership, but only 20 out of 27 member states have taken the step thus far. Croatia was the most recent country to join in 2023.
Bulgaria holds very little debt at 24.1% of GDP - the second-lowest in the EU and well below the 60% level in euro membership criteria. This stark contrast is observable when compared to Greece, which entered the euro in 1999 with high debt that was hidden through intricate financial transactions. Greece's financial crisis ultimately triggered a eurozone-wide crisis.
Bulgaria's government has been "fiscally super conservative ... the risk of Bulgaria becoming a fiscal risk to the eurozone is virtually zero," assessed Zsolt Darvas, senior fellow at the Bruegel think tank in Brussels.
Concerns about inflation are partially warranted. Studies show that a changeover from a national currency to the euro often results in a minor inflation effect, typically less than 1%. This increase mainly occurs as service providers like restaurants, which adjust prices infrequently, take advantage of revising menus and pricing lists to levy hikes during the transition.
Economists predict that the benefits of joining the euro will far outweigh the drawbacks, offering a secure foundation for Bulgaria's economic growth and wider integration with the EU.
The finance ministry is closely monitoring the impact of the anti-euro sentiments on Bulgaria's business sector, as the populist resistance against adopting the euro poses a significant challenge to the government's economic strategy.
The ongoing political debates and misinformation about Bulgaria's readiness for the euro have initiated discussions in the realm of general-news, with analysts questioning the country's long-term economic prospects if it chooses to stay outside the eurozone.
