Bulgarian parties form coalition under Socialists

By Michael Winfrey

SOFIA (Reuters) – Bulgaria’s three largest parties formed a
coalition under a Socialist prime minister on Monday, resolving
seven weeks of stalemate threatening to hold up the Balkan
state’s aspirations for EU entry in 2007.

The Socialists, who won June 25 national polls without a
clear majority, agreed to rule with the incumbent centrist
National Movement for Simeon II (NMS) of ex-king Simeon
Saxe-Coburg and the smaller ethnic-Turkish MRF.

“The stability of this government will bring EU membership
closer. This is the driving force for this coalition,”
Socialist leader Sergei Stanishev, tapped for prime minister,
told journalists after signing the pact.

Talks for a similar deal broke down last month, mainly over
NMS demands that Saxe-Coburg keep a leading role in government.

But on Monday, the centrists agreed to the deal, which also
puts western-oriented reformists in key posts.

“This is a positive signal to Europe, and I think and hope
that with a common effort, we can achieve (EU) integration, the
goal we have been working for years,” Saxe-Coburg said.

A fourth party in the talks, the small right-of-center BNU,
has refused to join the ruling grouping, which should control
169 of parliament’s 240 seats.

If approved as expected, the proposed cabinet should
receive a green light from President Georgi Parvanov later on
Monday and face a confidence vote in parliament as soon as
Tuesday.

Markets, which have closely watched the dispute for signals
as to whether Bulgaria’s EU efforts could be delayed, reacted
positively to the news.

The benchmark JP Morgan Emerging Markets Bond Index Plus
(EMBI+) showed its sovereign debt narrowing by 6 basis points
to 71 basis points over U.S. Treasuries.

DEADLOCK BROKEN

Saxe-Coburg — banished at the age of nine in 1947 by the
Socialists former incarnation, the Communist Party — returned
to win 2001 elections and run what analysts say was Bulgaria’s
best government since the fall of communism.

But his failure to end rampant corruption, organized crime
and poverty pushed him to second place in this year’s vote.

Average wages in Bulgaria are only 150 levs a month, and
the country is the poorest EU member or candidate besides
Turkey.

The deadlock between the Socialists and centrists had
paralyzed the process of reform in Bulgaria, which like its
neighbor Romania missed the EU’s “big bang enlargement,” when a
host of mostly ex-communist European countries joined last
year.

Brussels has warned the country of eight million people to
form a cabinet and finish changes to its laws and institutions
soon or the bloc will keep its gates shut until 2008.

The parties said they had united around Plamen Oresharski
as finance minister. He was deputy finance minister in charge
of foreign debt under the 1997-2001 right-of-center government.

Ivailo Kalfin, a respected economist and adviser to
President Parvanov, will lead the foreign ministry, while
Meglena Kuneva, a force behind Saxe-Coburg’s success at
wrapping up EU talks, will keep her position as EU affairs
minister.

Political commentators said resentment left over from the
stalemate could still hamper reform.

But they said the new cabinet should have plenty of support
to push through EU-required measures before the end of
September, when the European Commission is scheduled to issue a
report on Bulgaria’s readiness for membership.

“This coalition significantly increases Bulgaria’s chances
of entering the EU on time because it will secure the needed
constitutional majority to implement changes in key laws and
fulfil EU requirements,” said Gallup analyst Kancho Stoichev.