Strong focus on Eurozone leaves new members worried

Bulgarian European Community Studies Association
Many experts focused their attention on the repercussions of Brussels’ decision to block EU funds allocated to Bulgaria on the country’s economy. It had lost 220 million Euros in pre-accession funds, whereas another 500 million Euros were frozen. They pointed out that, unfortunately for Bulgaria, those coincided with the unfolding global financial crisis. Thus, the cash cut-off could never be compensated, especially in the context of the crisis-ridden world economy,[1] which aggravates the impact of all of these developments. Especially in such a difficult period, when the most serious sectors in Bulgaria were affected and many people were losing their jobs. Other Bulgarians were being thrown out of companies across Europe – for example in Spain or the UK, and had to return to Bulgaria.[2] However, the possibilities to create new jobs were reduced by the firm line of Brussels.
In the observed period, the European search for answers to the global financial crisis was increasingly moving into the focus of media attention. A watchful eye was kept on the quest of the French Presidency for concrete decisions and measures to cope with the crisis, especially on the summit in mid-October in Brussels. It took place immediately after the meeting of the Eurogroup with the objective to extend the healing plan, drawn by the 15 Eurozone countries for the recovery of confidence in the banking system, to all member states. It implies the re-capitalization of financial institutions under difficulties, state guarantees for inter-banking loans and improved deposit protection schemes. Bulgarian journalists also accentuated the complaints of the new EU member states that the plan did not offer any aide to countries outside the Eurozone.[3] New member states advocated European solidarity because they rely hugely on foreign capital. They expressed their worries that the 15 Eurozone members will apply the doctrine of competition and soften up the Stability and Growth Pact for their benefit alone.
Bulgarian officials highlighted that, in accord with the French efforts, the country committed itself to the need of discussing and agreeing on European level coordinated activities to maintain the stability of the financial system and to limit the mistrust among economic agents in Europe. Tsvetan Manchev, Bulgarian National Bank’s Deputy Governor, took the view that even a prospective discussion of the flexibility of the current Stability and Growth Pact rules will seriously damage the fragile confidence.[4] He also outlined the importance of the participation of the European leaders in the international dialogue about the future of the global financial architecture.[5]
Are Brussels’ decisions adequate to the situation? Are the anti-crisis measures Europe is undertaking sufficient for coping with the crisis? To what extent can European citizens rely on their own institutions to protect them from the raging financial crisis? Which are the most endangered, and which are the best-protected countries? Similar questions dominated the Bulgarian media landscape. According to the experts, Europe is quite unprepared for this crisis, because there are not many possibilities for maneuvering. The measures could stop the melting down and the collapse of the financial system but they cannot annihilate old mistakes and problems, related to the fact that the EU is not yet the most competitive and dynamic economy. With a view to the situation, besides protecting the system from a catastrophe, Europeans should also give it the chance to develop.[6]
Another hot topic was connected with the prospects of expansion of the Eurozone, in order to protect the countries of “small” currencies from the influence of the financial storm. On the one hand, the states, which were opponents of the Euro, began to gravitate toward the adoption. On the other hand, because it will be more difficult to enter the Eurozone for countries that wish to do so. Analysts also claimed that thanks to the crisis, the supremacy of politicians over the influential personalities from the financial sphere was resumed because they are the only persons that are institutionally entrusted to approach the problems. In the European context, if they prefer to go their separate ways and to give different responses to the crisis, then all will certainly sink together. In such a negative scenario, the multiform aspects of the crisis could even undo already achieved agreements for unity.

[1] See Radio Bulgaria: Bulgarian MPs comment on cancelled financing from EU funds, 28 November 2008, available at: (last access: 6 January 2009).

[2] See Radio Bulgaria: EC criticism resonates strongly across Bulgaria’s political divides, 3 December 2008, available at: (last access: 6 January 2009).

[3] See Standart News: A plan to save 15 or 27, 16 October 2008, available at: (last access: 6 January 2009).

[4] Bulgarian National Bank: Tsvetan Manchev: Rule-based versus discretionary policy responses to the recent financial crisis, 8 December 2008, available at: (last access: 6 January 2009).

[5] Bulgarian National Bank: Tsvetan Manchev: The financial crisis and the initial EU, 25 November 2008, available at: (last access: 6 January 2009).

[6] Radio Bulgaria: The European answer to the world financial crisis, 4 December 2008, available at: (last access: 6 January 2009).