Charlemagne

Bulgarian rhapsody

Why the European Commission imposed sanctions on its poorest Balkan member

FOR a man facing the threat of bankruptcy in six months’ time, thanks to European Union sanctions on his country, Stefan Petrov has pretty warm words for Brussels. Mr Petrov is a dairy farmer from the rolling hills of northern Bulgaria. Two-and-a-half years after his country joined the EU, his business is in peril after €800m ($1.1 billion) in transitional aid for new members, including farm aid, was frozen by the European Commission last year, amid complaints about fraud, contract-padding and conflicts of interest. About €220m of the frozen money has been lost for ever, after a deadline for spending the cash expired in November. The pot of €110m that includes Mr Petrov’s grant is due to expire at the end of this year. Yet the farmer does not quarrel with the logic of the decision to freeze Bulgaria’s aid, which is the toughest sanction ever imposed on any EU member. “Those who govern us tried to steal the funds, and partly succeeded,” says Mr Petrov, when asked why the European money was blocked. The EU, he insists, is “good for farmers”.

To meet European standards, Mr Petrov had to connect his cowsheds to the water mains. He has just installed a gleaming new Swedish milking parlour, replacing an old system of pipes and pumps that, to the amateur eye, seemed to be held together by rust and cobwebs. He had an EU grant equivalent to €50,000 approved last autumn. That was why a local bank lent him money with minimal fuss, even though he had to put up his four cowsheds—large barns from an old collective farm, filled with twittering swallows and the sweet smell of dung—as collateral. A former trolley-bus driver under communism, he started with one cow in 1991 and now has 230, making him one of the biggest farmers in his district, near Pleven. His EU grant application included a chunk of money for a new, Czech-built tractor, to increase his business’s profitability.

The tractor is already roaring about the farmyard, but the EU money is another story. The grant awarded to Mr Petrov comes from a special pot of transitional farm aid, known as SAPARD funds. The Bulgarian government says it has fixed problems identified by the EU, and will pay urgent grants out of national coffers. Gloomy European officials say Bulgaria still seems in no hurry to fix the problem, as different ministries squabble and continue to protect cronies. Mr Petrov was expecting his grant two months ago. With milk prices low at the moment, he thinks he can make loan interest payments for another six months, then he will go under. Yet he still declares: “Our hope is with Europe.”

His views are widely shared. Most Bulgarian voters tell pollsters they trust EU institutions. As many as three-quarters say they distrust their national parliament and government. But will Bulgarian tolerance last if funds remain frozen much longer or if other bits of EU funding have to be frozen in the future? It is a question which resonates far beyond Bulgaria.

Plenty of diplomats and politicians in Brussels say that Romania and Bulgaria were admitted too soon, arguing that once such countries get into the club, the EU loses most of its leverage over them. (Many say much the same of Cyprus as well.) The counter-argument is that admitting countries like Romania and Bulgaria is the best way to protect and encourage internal reformists who are the best hope for the future.

Either way, what is clear is that the decision by the European Commission to freeze funds for Bulgaria was not just a technical measure. It was a deeply political experiment—nothing less than an attempt to claw back leverage over governments after they entered the union. The success of the experiment matters. The next countries hoping to join the EU mostly come from the Balkans, and many will display the same problems as Bulgaria and Romania in even more extreme form. If the EU can use the tough love of frozen funds in Bulgaria and yet still maintain voter support, that will be a boost not only to reformers in that country, but also to the whole cause of future enlargement. If, on the other hand, EU sanctions trigger a backlash against Europe in Bulgaria, the commission’s experiment could turn out less well.

When sanctions work

The fate of EU funds has become a big political issue in Bulgaria, which will hold a general election in July, a month after the election of a new European Parliament. Although the current Socialist-led government trumpeted the release of €115m in EU road cash on May 12th, much more money remains frozen. Opposition leaders such as Boyko Borisov—an ex-wrestler and police chief who now serves as mayor of Sofia—say that government corruption gave Brussels “no choice” but to impose sanctions. Mr Borisov, whose party leads in the polls, offers few concrete plans for cleaning up the system, but he makes such stirring promises as “we will do what it takes for Europe to approve of us.” Mr Borisov also notes the “paradox” that Bulgarians’ trust in European institutions “actually increased when the money was frozen”.

Back on the farm, Mr Petrov signals that his patience is not infinite. The freezing of EU funds was the “right” sanction, he admits. But the EU should think of another way of delivering money, he says, bypassing the government in Sofia if need be. A local mayor says 50 of his neighbours are in the same boat at Mr Petrov. The road to the nearest town was going to be fixed with funds that are now frozen, the mayor adds: yet locals still trust the EU.

The next wave of EU spending planned for Bulgaria adds up to more than €10 billion. If that money flows smoothly, EU popularity should not be a problem. But if Bulgarian corruption forces Brussels to freeze even bigger sums, plausible political consequences could range from a reformist revolution to a slide into nationalism. EU enlargement was always something of an experiment: it may be poised to enter uncharted territory.