On New Year’s Day, Bulgaria becomes the 21st country to join the European single currency union (the euro), a step that strengthens its integration within the European Union. However, this historic milestone comes amid political instability and skepticism among segments of the population, fueled by fears of rising prices.
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Supporters of the transition from the old national currency, the lev, to the euro praise the move as one of the country’s greatest achievements since its 1989 transition from a Soviet-style economy to democracy and a market economy. They hope it will make Bulgaria more attractive to investors and reinforce its orientation toward wealthier Western Europe.
On the other hand, concern prevails among many in a country where corruption is widespread and trust in authorities is low. Chief among the fears is that retailers may round prices upward or exploit the currency changeover in ways that exacerbate inflation, at a time when inflation has risen again to 3.7%.
A March Eurobarometer survey by the European Union showed that 53% of 1,017 respondents opposed joining the eurozone, compared with 45% in favor. Another survey conducted between October 9 and November 3 on a similar sample found that about half of Bulgarians opposed the single currency, compared with 42% in favor. The margin of error in the March survey was approximately ±3.1 percentage points.
Between Welcome and Apprehension
The government succeeded in completing the path toward euro adoption after reducing inflation to 2.7% earlier this year to comply with EU rules and secure approval from European leaders. But clearing that hurdle was followed by a new chapter of political turmoil: the government resigned less than a year into its term amid nationwide anti-corruption protests. This left the country without a regular budget for the coming year, hampering long-delayed structural reforms and decisions on the use of EU support funds. New elections—the eighth in five years—are expected next spring.
Nevilin Petrov, 64, said he welcomes the euro: “Bulgaria is a full member of the European Union, and its natural place is alongside advanced and democratic European countries.” He added: “I am convinced that adopting the euro will contribute to our country’s long-term prosperity.”
By contrast, Darina Vitova, who runs a pedicure salon in Sofia, believes the pace of change is too fast, even though she supports it “in principle.” She said: “The standard of living and incomes in our country are far from those in the wealthiest European countries, while prices are rising here and life will become harder for the average citizen.” She acknowledged that paying in the same currency would be more convenient when traveling to the nearby beaches of Greece.
Bulgaria, with a population of 6.4 million, is among the poorest of the EU’s 27 member states. The average monthly wage is 1,300 euros (about $1,530).
Countries joining the European Union commit to adopting the euro, but actual entry can take years, and some members are in no rush. Poland stands out as an example, having achieved strong economic growth since joining the EU in 2004 without adopting the euro.
Pro-Russia Politicians Stoke Discontent
Opponents of euro adoption have fueled fears that the changes would—according to their claims—lead to greater poverty and a loss of national identity. Misinformation has spread on social media, including false claims that the euro could lead to the confiscation of bank accounts. Nationalist and pro-Russia groups have exploited these fears.
European Central Bank President Christine Lagarde said countries typically experience a slight and temporary price increase of 0.2% to 0.4% immediately after joining. Price increases may appear more noticeable than they actually are, as cafés and hair salons sometimes delay printing new price lists until just before the changeover, making the increases deferred rather than caused by the euro.
Anti-euro protests were organized in May and September by the pro-Russia Vazrazhdane party, but they remained smaller than the large demonstrations that brought down the government. While anti-euro protests tended to draw more support from older people driven by economic concerns, the protests that toppled the government appeared to represent a younger demographic weary of corruption and aspiring to closer integration with Europe.
Analysts: Euro Adoption Is a Strategic Gain
Dimitar Kiranov, program coordinator for Central Europe engagement at the German Marshall Fund in Berlin, said anti-euro disinformation campaigns promoted by pro-Russia politicians and social media aim “to reduce support for the European Union, NATO, and Ukraine.” He added that Bulgaria’s European integration “does not serve Moscow’s interests at all, and if it can polarize society and weaken support for the EU, that is exactly what it seeks to do.” He viewed euro adoption as another way to counter Russian influence: “The more Bulgaria advances in its European integration, the harder it becomes for Russia to influence the country.”
Petar Ganev, an analyst at the Sofia-based Institute for Market Economics, said the resignation of the outgoing government sent a signal of uncertainty to foreign investors. In an interview with the Associated Press, he said: “Instead of leveraging euro adoption as a strong and positive signal to the international community—investors, debt holders, and those investing in Bulgarian assets and economic activity—we risk sending the opposite message.”
Ganev believes that eurozone membership should be seen as an opportunity and an additional mechanism to address corruption and the rule of law, but that it alone is insufficient to resolve Bulgaria’s chronic cycle of elections, political fragmentation, and instability.
Agencies
