Analysis: Bulgarian crisis ill omen for struggling emerging Europe

Thu Feb 21, 2013 10:45am EST
 

By Michael Winfrey

SOFIA (Reuters) - The violent protests that forced Bulgaria's cabinet from power this week underscore the lose-lose situation facing the European Union's newest members as they struggle to stop economic downturn and stem growing public anger.

Ruling parties which stick with strict austerity programs to win investor trust risk being bounced from power by voters fed up with cost cutting and tax hikes.

Governments which loosen the fiscal screws or try unconventional ways to rebuild support before elections may alienate investors and invite more pain down the road.

Whichever path they take, ordinary Bulgarians, Slovenes, Czechs and Hungarians, all of whom get the chance to vote this year or next, face rising unemployment and stagnating wages.

It is a poisonous combination for any ruling party's election chances and also increases the likelihood of political stalemates stalling decision making, unconventional, untested policies and a rise in support for the political fringe.

Tim Ash, an analyst at Standard Bank, said the Bulgarian government's fall, the latest in long line in Europe, may not be the last in the continent's former communist east. "I suspect we have to expect more of this across the region," he said.

IT'S THE ECONOMY

Many of the 100 million-odd people who joined the European Union in the last decade hoping for western-style living standards are losing hope.   Continued...

 
Supporters of the ruling Bulgarian GERB party wave flags outside the parliament in Sofia February 21, 2013. REUTERS/Stoyan Nenov