Bulgaria is being forced to adopt the euro, whether citizens like it or not

Yahoo

6 days ago

The boulevards of central Sofia were a sea of red, white and green Bulgarian flags at the weekend, as thousands joined a march through the capital. The target of their indignation: the euro.
The protest took place just days before the European Central Bank (ECB) and European Commission announced that Bulgaria had passed all the economic tests to become the eurozone's 21st member.
A confirmation vote of the bloc's finance ministers on July 8 will pave the way for Bulgaria, which joined the EU in 2007, to switch from the lev to the euro on New Year's Day next year.
European officials portray this as a technical and administrative process that requires Bulgaria to adopt the euro after it signed up to the EU treaties.
In Bulgaria, though, it is anything but simple.
The population is divided over the bloc's common-currency project, fuelling an intense political standoff involving the president, parliament and courts.
Accusations of disinformation and Russian meddling are also flying.
Unlike the technocratic talk in Brussels, the rhetoric in Sofia is feverish.
'Bulgaria has risen and declared: Freedom! We choose the Bulgarian lev!' populist politician Kostadin Kostadinov reportedly told the weekend protest.
There are disputes about the size of the anti-euro demonstration, but the polling is clear. The most recent Eurobarometer survey, issued last month, found only 43pc of Bulgarians in favour of the euro, with 50pc against.
Local pollster Trend Research reported 21pc support for adopting the euro next year, with 33pc backing a later switch, and 38pc set against it. A majority of people also backed a referendum on the issue.
Revival, Kostadinov's party and the third largest in Bulgaria's parliament, also pushed for a referendum. This was knocked back by the Constitutional Court, which effectively backed the Brussels view that adopting the euro is a requirement of EU membership.
Ordinary Bulgarians' biggest worry is that introducing the euro will push up prices at a time when people can least afford it.
In the Eurobarometer survey, 47pc of Bulgarians said the most important issue they faced was inflation and the cost of living.
'They're really scared because they've been bombarded with messaging that prices would double, that we're not ready, that this would lead to a lot of instability, that the banking system would collapse, that their savings would be wiped out,' says Emilia Zankina, a Bulgarian political scientist and dean of Temple University Rome.
The same worries over inflation bedevilled Croatia before its adoption of the euro in 2023. Croatians worried that businesses would exploit the repricing of everything in euros and use the confusion to jack up prices.
Research a year later by the Croatian central bank concluded that the changeover had pushed up prices by 0.4 percentage points. However, the bank also pointed to offsetting benefits such as lower interest rates and cheaper cross-border transaction costs.
The ECB is in no doubt that Bulgaria is ready.
Its report on Wednesday showed that Bulgarian government debt is just 24pc of GDP, its budget deficit is 3pc of GDP, its inflation rate is in line with the eurozone, and its currency has been pegged to the euro for years.
Overall, there are still half a dozen holdouts against the euro.
Denmark has a formal opt-out, and its voters knocked back the single currency in a referendum in 2000. Sweden also held a referendum three years later that kicked the issue into the long grass.
Poland, Hungary and the Czech Republic are all stalling, mostly for political reasons, while Romania has not yet jumped through all the economic and regulatory hoops.
This is frustrating for Brussels and the ECB, which are on a mission to elevate the euro's role in the global economy.
Christine Lagarde, the ECB president, last week said Donald Trump's economic upheaval, which could shake markets' faith in the dollar, could be a 'moment of opportunity' for the eurozone.
Paschal Donohoe, the Irish finance minister who chairs the eurozone ministerial group, also used a speech this week to talk up the single currency, calling it 'a powerful symbol of our shared sovereignty, that you can feel in your wallet, see in your purse'.
He pointed to the Eurobarometer finding that across the bloc, the euro has a record 83pc support.
'Public support for our currency should give us confidence about how to develop it, and make the case for us,' he said. He urged euro supporters not to 'step back from the shouting voices' of their opponents.
In Bulgaria, the opponents are certainly shouting.
However, the government is hoping to ride it out, promising mechanisms to monitor price gouging, and building a myth-debunking website.
Even if Bulgarians are wary of losing the lev, they are still largely pro-EU: the Eurobarometer suggests they trust Brussels more than their own parliament or government.
The political scientist Zankina shares their scepticism. In a country that has had seven elections in the past four years, she reckons the politicians leading the charge against the euro are motivated less by genuine belief than by tactical opportunity.
'These populist parties manage to maintain the polarisation, even when the issue that they were polarised over no longer exists, or it's no longer polarising,' she says.
'If I had to put my money on something, I would say the euro will be adopted. Then we will probably just move on to another divisive issue.'
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