Банкеръ Weekly

Briefs

THE WRONG RECKONING WITHIN THE COALITION

Calmness in the allegedly united three-partite Government of the European integration, as described by the leaders of the Bulgarian Socialist Party (BSP), the National Movement Simeon II (NMSII) and the Movement for Rights and Freedom (MRF), is about to explode because of the appetites for getting control over the European funds which are now harder to conceal. Even though the gold fish that costs as much as EUR11.1BN (this is the amount planned for payment to Bulgaria from the budget of the European Union (EU) between 2007 and 2013) is still in the sea, political forces are already preparing their fishing nets. Initially, the former prime minister Simeon Saxe-Coburg-Gotha proposed that a special minister be elected to coordinate the utilization of the funds that are to enter the country after 2007 under the Structural Fund and the Cohesion Fund as well as under the general agricultural policy. And even though the idea was rejected by BSP and MRF, a few men unofficially declared their willingness to assume the heavy responsibility.
Even without penetrating the delicate relations within the three-partite coalition it is clear that the debate that followed the idea is merely political bargaining. One needs to just glance through the 2007-2013 National Development Plan, approved in the beginning of the year, under which the European money will be absorbed, in order to understand what makes the NMSII so anxious. In practice, the EUR11.1BN which may not be thoroughly absorbed by the administration will pass through seven ministries and their subordinate structures. These are the financial ministry which will be the national coordinator of the assistance, the Ministry of Labour and Social Policy, the ecological one, the ministries of economy, transport, education, and public administration. The NMSII controls only two of them (the ministries of education and public administration). However, the funds the two royal ministries will allocate amount to less than 5% of the Brussels subsidy. The ruling parties may have reasons to be pedantic in their plans about how to cash down their contribution to the country's coming EU integration. But it is true that the community countries have not seen a special minister in charge of the European funds so far. According to the Regional Policy General Directorate at the European Commission in Brussels, the money launched under the Structural and the Cohesion Funds is usually coordinated by the respective financial and regional ministries. Among the ten new member states from Central and Eastern Europe that joined the EU in May 2004, there are only two exceptions of the rule - Slovenia and Cyprus. For example, there is a special service working with the government in Ljubljana on the structural policies and regional development. In turn, rulers in Cyprus decided to create a Planning Bureau which would occupy with the money launched from the EU single budget to the country.
The possible appointment of a new minister to duplicate the present functions of the top financier Plamen Oresharski would not only create confusion, but would also cost the country a delay in the negotiations with Brussels on the Regional Policy chapter. This is among the chapters that were included in the so called red section of the European Commission's monitoring report launched last October. One of the few points in this chapter about which the Brussels experts had no objections was the structure voted back in 2002.
Actually, when the parliamentary elections were held last June this scheme was questioned by the resigning cabinet Saxe-Coburg-Gotha. While talks continued on the forming of a new government, the previous cabinet quietly changed the ordinance on coordination of the country's integration activities. One of the amendments elegantly replaced the text entrusting the EU funds coordination to the financial ministry. Both the minister of public administration Nikolay Vassilev and the Council of Ministers administration declared their willingness to coordinate the money from EU. Eventually, the mistake was corrected with a resolution of the Stanishev cabinet early last December which confirmed the leading role of the budget department.
Whether or not there will be a minister of the European funds is a less important question compared to the conduction of an active debate on the model of absorbing the billions from Brussels. There is almost no debate in fact. The reason for this strange inertness may also be the lack of reliable information about the contents of the National Development Plan prepared by the Government. It became clear when the plan was adopted that six programs will be operating in supplement to the document (regional, competitive power, human resources, ecology, transport and administrative capacity). However, in the meantime the financial ministry changed several times the percentage in which the money under the Structural and the Cohesion Funds would be distributed among the programs. According to the latest plans of Oresharski's experts, 34.5% of the European money after 2007 will be spent on regional growth. 22.5% of the assistance will be used for encouragement of the economy's competitive power. The same amount is planned for the program aiming at increasing the workers qualification. The ecology and transport will be financed with 8% of the assistance under the European Regional Fund and 50% under the cohesion one for each of the two. Three per cent of the money will remain for improving the work of the public administration.
These plans are subject to final approval by both the Council of Ministers and the European Commission. However, it is impressive that this way of distribution aims at satisfying all parties concerned. But it does not give an answer to the question what the Bulgarian model of absorbing EU funds will be. Everybody knows how Ireland succeeded - after joining the community, it invested most of the EU assistance in increasing the competitive power of its economy and in development of the education and high technologies. Bulgaria's southern neighbour, Greece, became famous for the huge amounts it spent on building highways and roads, including those built for the 2004 Olympics in Athens.
According to the financial minister Oresharski, at least at this stage the country has no capacity to compete with the excellent performers among the ten newly-joined member states which only absorb about 35% of the money launched from the single budget. These words can hardly be accepted as a compliment on the part of the top financier towards his subordinates. Moreover, the most recent figures about how money under the PHARE and ISPA pre-joining programs is being utilized inspire optimism. For example, the money absorbed fluctuates around 80-90% of the amount negotiated with Brussels under PHARE, and exceeded 40% under ISPA.
The low targets put by the financial ministry may also be interpreted as a kind of insurance against the wrong coalition reckoning that hide surprises.

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