Bulgaria is rich but very poor. How can that be?

Opportunities fight with challenges as the EU’s poorest country seeks to close the gap in wealth and standards with its richer western neighbours, says Rhys David

Rila Monastery, a treasury of sacred images

 

As Wagner’s majestic music from Tristan und Isolde and, several days later, Parsifal, washes over you, a seat in Sofia’s beautiful, bijou opera house is a good place to reflect on the EU’s most recent member country.

 

Bulgaria is a small to medium-sized, under-populated country of roughly 70,000 sq. miles, with just 7m people. Yet, it is full of surprises. Its Wagner festival is not the Met, Covent Garden or La Scala but few similar-sized countries would be able to cast such an event almost entirely from within the country’s own musical resources. Few performers, too, would want, as several did here, to sing important roles in both operas – a total of 11 hours on stage across only a few days.

 

Bulgaria, poor as it is, manages also to produce musical talents not just for its own opera houses but, like other eastern European countries, for many of the more renowned houses around the world. It is a tradition that goes back a long way, embracing such names as the basses, Boris Christoff and Nikolai Ghiaurov.

 

Its schools and universities, too, seem to have no trouble in producing near-fluent English speakers many of whom have never visited an English-speaking country. In Bulgaria those choosing to study languages are taught their other subjects as well through the medium of their chosen foreign language. This helps the best to develop an impressive grasp of vocabulary and idiom.

 

Since opening to the world with the fall of Communism in 1989 and entry into the EU in 2007, Bulgaria has experienced unprecedented new levels of prosperity. Its economy has been growing in recent years at more than 3 – 4 per cent a year and will match that performance again this year. Services now account for nearly 60 per cent of the economy, with much of that due to an annual 8m a year visitor tourism sector. Manufacturing accounts for 24 per cent – still considerably higher than the western European average but now more focused on modern light industries than in the past. Agriculture at 5 per cent is also higher than in more advanced EU member states and less mechanized but includes a strong export-orientated wine sector.

 

In the increasingly vital tourism sector, the country been seeking to capitalize on its outstanding cultural and archaeological heritage. Investment has taken place in new high standard tourism facilities, including hotels, and in the development of important sites. Just in the last few decades important new discoveries of Roman antiquities have been made in the capital Sofia, the ancient Roman Serdica. These include an 3rd-4th century amphitheatre, preserved under the city’s 5-star Arena di Serdica Hotel outside the former city gates, and Roman ruins preserved in an underground display under the modern city centre. The visitor can walk along slabs polished by generations of shoes in the Roman era, including no doubt by the Roman emperor, Constantine the Great, believed to have had a special affection for the city.  

 

Seat of the monarchs for seven decades after the  liberation of the city from the Ottoman Turks with Russian help in 1878, Sofia also has a not very distinguished-looking royal palace, and, in several monumental blocks that formerly housed Communist ministries, banks and party headquarters, a reminder of grimmer days past. (There is a Museum of Totalitarian Art for those interested in Communist-era paintings, sculptures and monuments.)

 

Its churches, which largely survived the Communist era, remain one of its glories, however. Saint Alexander Nevski with its highly decorated interior was named after the Russian patron saint to honour the role played by Bulgaria’s Slavic cousins in securing freedom. The 6th century Sophia Basilica, a contemporary of Hagia Sophia in Constantinople is one of the most important examples of early Christian architecture in south eastern Europe. The 4th century St. George rotunda church, the oldest preserved building in the city, has frescoes dating back to the 10th century. More than 80 per cent of the population profess to be Orthodox believers in a country which embraced Christianity in the 9th century and translated the Bible into Bulgarian, a close relation of Russian shortly after.

 

There are other towns and cities with an equal claim to demonstrate the varied history of a country that has seen not just ancient conquerors but power in the hands of Bulgar, and, for two centuries from the 10th and 11th century, Byzantine overlords as well. In Plovdiv a Roman theatre, one of the best preserved in Europe was uncovered in a landslide in the 1970s and restored well enough for a range of events to be held there, just as in Roman times. Nearby, in the centre of Plovdiv, excavations uncovered a stadium, a part of which has been exposed, most of its vast length unfortunately having to remain under the main shopping street.

 

Plovdiv, formerly Greek and Roman Philippopolis, once the capital city of Philip the Second, father of Alexander the Great, lays claim to be the oldest continuously inhabited city in Europe, its origins going back even further to Trojan times, and hence older than Rome or Athens. Its old quarter houses an important group of streets lined by merchant properties from the early 19th century in Bulgarian National Revival style, the most visited of which is the Balabanov house, originally built for a wealthy textile merchant, Hadji Panayot Lampsha. This year the city of roughly 350,00 people has been celebrating as 2019 European Capital of Culture.

 

There are world heritage sites, too, on Bulgaria’s Black Sea coast, where Soviet bloc aristocracy (and more recently bargain-hunting western Europeans have flocked for sun sea and sand. Varna on the Black Sea coast offers more ancient remains, including nearby  Odessos, home to a huge Roman bath complex, and,  a little further away, Nessebur, ancient Messambria, another Thracian, Greek  and then Roman town, which later became an important trading centre with strong links to Constantinople, and now a Unesco World Heritage site.

 

There are two other jewels, however, contributing to the remarkable array of treasures on offer in Bulgaria, somewhat surprisingly third after Greece and Italy in the number of cultural and archaeological sites contained within it. The Thracian plain, south of the Balkan Mountains that run east west across Bulgaria, roughly parallel with the Danube as it flows towards the Black Sea, was home to warlike tribes who were allied to the Trojans during their famous war with the Achaeans.

 

The Thracians, who lived in this area from around 1000 BC, were highly skilled craftsmen, producing exquisite jewellery, workshop and household items, and military equipment. Their work is on display at the national archaeological museum in Sofia and in a smaller but still very impressive museum on site in Kazanluk. Much of this gold has been discovered in the unique conical burial mounds that cover the Thracian plain, or Valley of the Thracian Kings, a replica of one of which with stunning internal decoration on its walls and cupola ceiling can be seen near Kazanluk.

 

There are other towns which have played an important part in Bulgarian history, such as the old capital, Veliko Tarnovo, situated on a bend in the river and protected by surrounding hills, and 140 monasteries, the spectacular Rila and Bachkovo settlements among them, and like many of the others  offering accommodation to visitors.

 

It would be hard not to wish this country of friendly and enthusiastic people well as they integrate further into the EU but difficult, too, not to feel some apprehension. The population has fallen from a figure of 9m under Communism. It could hardly be otherwise when so many of the young and most able have left for Germany, Italy, Britain and other countries in search of well-paid employment and to escape youth unemployment of 12 per cent. The birth rate, too, is too low to be self-sustaining.

 

Average incomes are around Euro5000 a year, though higher in Sofia where newer sectors such as information technology have seen growth. Old people who used to be able to afford a holiday – the country was a big Communist-era holiday destination for citizens of the former Soviet Union countries – now say they are no longer able to do so and whereas in western Europe the older generation is helping its youth with the high cost of housing and other expenses, in Bulgaria younger people – or those in good jobs at any rate – are supporting their parents, many of whom also rely on remittances from overseas Bulgarians.

 

Economic growth is helping and is expected to be faster than the EU over the next few years. Indeed, Bulgaria has gone from living standards of around one third of the EU average to more than half. The economy will need to grow at a much faster rate, however, to close the gap and is being hampered by the loss of its most talented people in the engineers, doctors, IT professionals and other graduates who have headed West.

 

The politics they have left behind is another impediment. The current strongman Prime Minister, Boyko Borisov, is a former Mayor of Sofia who has been a firefighter, police academy professor, professional footballer, national team karate coach and bodyguard to former Communist dictator, Todor Zhivkov, and former king, Simeon II. The government of GERB, the centre right party he founded has been criticised in EU capitals in the West for allowing bad practices to flourish. The concern is over the close ties that exist between government officials, and local businesses that have resulted in contracts being given to a handful of privileged companies.  When officials can exert their influence through excessive regulation, or over who gets jobs, school places or other privileges and permissions, a climate is created into which bribery, corruption and organised crime can enter. Such interference, too, puts sand in the wheels, slowing down development and hence economic growth while ed tape and excessive bureaucracy are negotiated and permits and other favours are bargained for.

 

In the meantime, Bulgarians are having to live with a disconcerting jolt away from the familiar pattern of previous centuries not least the break with their former liberator (and subsequent Communist overlord) and fellow Orthodox Slavs in Russia.

 

Derelict buildings, especially in the depopulated countryside are common, and are only slowly being replaced by Western investment. One of the biggest new investments is a huge sanitaryware plant outside Plovdiv built by US group Ideal-Standard. Putting to one side the ubiquitous Lidl supermarket group, there are few other signs of large scale new investors capable of filling the gap left by previously protected domestic concerns. Russia can still exert its influence over the country, however, through its strong position in the energy sector. It is an important operator of refineries on the Black Sea coast and its oil company Lukoil has a large share of the domestic fuel market.

 

The successes have been in sectors such as IT that have concentrated in Sofia, offering higher wage levels that have given the capital’s citizens higher wage levels than the Euro5000 average in the country. The result has been, like emigration, to draw away young people from the country at large.

 

Tourism, too, has been a success but is subject to its own ups and downs. The country draws in large numbers from neighbouring countries and has an increasingly wealthy western clientele using its large, international hotels. This year, however, has seen declines so far from Russia (largely as a result of price competition from neighbouring Turkey) and some EU countries, though not the UK.

Shops selling souvenirs have proliferated at tourist sites and in parts of Sofia where the intention has clearly been to attract higher end businesses. The shopkeepers, however, report a slow year even for Bulgarian speciality products such as those based on the country’s centuries- old rose cultivation sector.

 

EU funding since membership has contributed substantially to rates of growth and is evident in some of the new roads that now link major centres in the country and beyond. Varna is on the designated trans-European E-route linking it (in theory) all the way to Coruna, and Sofia is connected by its E routes to Lisbon, Riga and Thessaloniki. There is the challenge of reduced funding from the EU to be faced as well. Bulgaria received Euro10bn under the EU’s 2014-2020 funding package, but this level of support is set to decline as the EU seeks to adapt to more difficult conditions elsewhere in the bloc and to the loss of UK contributions.

 

Polls have shown consistent support for the EU, coupled, however, with disappointment at the impact it has had on the domestic economy. Therein lies the country’s dilemma: polls have shown a principal reason for the EU’s good standing in the public estimation is the freedom it has given Bulgarians to move abroad in search of a better future. It is the loss of those who might be best equipped to contribute to its transformation economically and politically that is likely to hold it back.

 

August 2nd, 2019

Rhys David is chair of Nova Cambria, the Welsh policy institute

 

 

 

 

 

 

 

Europe, Collaborate or Collapse

It is not just Brexit – Europe faces even more serious problems, or so Dr Ian Kearns, author of Collapse: Europe after The European Union believes.  Kearns, a former specialist adviser to the Joint House of Commons/House of Lords Committee on National Security Strategy delivered his chilling assessment in a recent talk to the RSA in London on the theme Can the EU Survive in the Age of Trump?

https://soundcloud.com/the_rsa/can-the-eu-survive-in-the-age-of-trump

Kearns thesis is that because of recent geopolitical trends there is a realistic prospect the EU could collapse and that it is possible to identify certain trigger scenarios. Such a collapse would be a disaster, leading to economic chaos, nationalist scapegoating, protectionism, and the destruction of Nato. This would lead to a major increase in the influence of Russia and China, and a big advance in the politics of reactionism and authoritarianism.

The threats to the European Union come first from the East, from a resurgent Russia, which only this week has been branded a rogue state by senior politicians following its reckless use of deadly chemicals to attack its enemies and its criminal cyber warfare activities in Britain, the Netherlands and elsewhere. Added to this there is the potent threat from the South to European unity, from the mass migration of individuals from poverty-stricken countries in Africa and the war-torn Middle East. This has put a strain on the politics of countries across Europe struggling to cope with the influx, leading to the rise of anti-immigrant right-wing groups almost everywhere.

Just as importantly, Kearns outlines, in the podcast above, threats from the West, in the form of Trumpism. Under the 45th president the US commitment to Nato and its allies has come under its most severe questioning since the end of World War Two. Trump, Kearns notes, is openly hostile to the EU, regarding it is a vehicle for German interests that compete with those of the US. The possibility that the US could pull back from the defence of Europe is, therefore, now a real one.

Just as damagingly, his foreign policy has been incoherent, with a failure to plan adequately to deal with the turmoil in the Middle East, leaving a vacuum into which Russia and other regional players, such as Turkey and Iran, have stepped.   Trump has also shown himself hostile to a range of international institutions, such as the World Trade Organisation, preferring to fall back on a protectionist agenda. His hostility to the WTO, creating the real risk it could be side-lined poses a special threat to the UK, Kearns argues, as Britain hopes to rely much more heavily in its post-Brexit future on WTO rules.

The EU has hobbled itself, according to this view, by adopting Eurozone straitjacket rules and regulations that have forced austerity on weaker members. As a result, the centre ground in European politics has been hollowed out, with populists on the right and left saying the same – that they alone are offering a solution that is different and will work.

In this perilous situation the EU has balked at introducing the reforms needed to ensure it can take more effective action economically and politically, and in defence. It has not been able to achieve internal agreement on, for example, sanctions against Russia, or on how to deal with migration crisis. On defence it brings together nations which do meet their spending commitment to Nato, such as Britain and Greece, with others, such as Germany, that do not, and includes some nations – Ireland and Finland, for example – that, while relying on the Nato umbrella for their ultimate defence, have opted for neutrality.

The triggers for the possible collapse Kearns fears are worryingly many. Turkey is currently being paid to stop the flow of migrants into Europe but its authoritarian President Erdogan could re-open the taps if the EU displeases him. This could lead to more barriers being thrown up at the borders in the affected countries on the route into the prosperous northern EU members and to a resurge in populism across the Continent.

There could also be further advances for Euroscepticism in core EU countries, as in Italy where the new governing parties are decidedly less enthusiastic about the European project than their predecessors. The Italian Government is being put under extreme pressure by the European Central Bank to keep its budget within Eurozone borrowing rules but may decide not to. If it fails to do so, Italy may find itself unable to borrow in the markets and might be forced out of the Eurozone, triggering a collapse of its highly vulnerable banks with consequences for the banking system in other countries as well.

The Catalan crisis, too, remains to be resolved and if secession again becomes a possibility this could have a very serious impact on the Spanish economy, which relies heavily on Catalonia, the wealthiest part of Spain. The Madrid government could then find it, too, would be shunned by the markets and unable to borrow at reasonable rates.

The Domesday scenario is an unmanageable rout spreading through Europe and in its wake the serious undermining of liberal values and democracy as populists begin to argue that it is pluralist institutions that have led to the crisis, and that stronger more authoritarian rule is required (as in countries that have concentrated power in dominant leaders such as China, Russia and Turkey).

If all this happens, the Nato community might not be able to respond to threats to the territorial integrity of the block. Countries might not be willing to go to each other’s aid in cases where they have already accepted significant financial or other support from Russia or China. Greece, for example has become heavily dependent on China for the rebuilding of its infrastructure and there is sympathy with Russia within Italy’s ruling parties. Even Germany might find itself compromised because of the heavy dependence it is developing on Russia to meet its energy needs.

These pressures, coupled with the assaults being made on international organisations such as WTO, could take the world back to the power-based politics setting one nation against another which caused so much trouble in the 20th century.

We may, of course, muddle through as so many times in the past. Nevertheless, whatever view is taken on Brexit and its part in Europe’s current woes, Kearns’ warnings should be heeded by policymakers before it is too late.

Rhys David, October 5th 2018