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Bulgarian parties form coalition under Socialists

Posted on: Monday, 15 August 2005, 09:49 CDT

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.

Source: REUTERS

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