It's strange, but Bonobo readers seem to get into everything. John from Canada recently sent me this revealing mail:
I've just returned from an extended holiday in the UK with my family. In the middle of it I spent a week visiting my company's software development partners in Hungary and Bulgaria. Both groups of course mentioned the depreciation of their currencies against the dollar. I agree with your comments about the wisdom of Hungary's approach, but was most interested by your comments about Bulgaria. I spent three days there earlier this month and did find it significantly more expensive than last year, while still of course quite cheap compared to the West.
I wrote back explaining that I was pleased with his observation about Hungary, but that he had misunderstood the situation in Bulgaria. The Bulgarian leva is pegged to the euro, and is inevtably rising. Hence the 'expensive' comment. What is even more preoccupying for me is the fact that this peg is being sponsored by the IMF and encouraged by the EU. All this sounds awfully reminiscent of Argentina to me. Why cannot they learn the simple message that it is not appropriate for a relatively small economy to have a fixed peg with a much larger neighbour (and this of course also applies to Spain Greece and Portugal who are inside the euro), especially when that neigbours currency may be subject to relatively violent fluctuations which will reflect no underlying fundamentals in the small neighbour. Now back to John's second mail:
I did not know that the leva/euro peg was an IMF requirement; that certainly explains some things. Bulgaria itself seems to be improving marginally, but the whole place smells, as before, of corruption.
And now let's go south a little, to Thessalonika where the EU is having a big metting to decide on it's constitution, and Bulgaria is looking for an accession timetable, but things don't seem to be too promising. Incidentally, note the growing Spanish connection at the end, as I am trying to suggest, this may be more than mere coincidence. Solomon Passi is Bulgaria's foreign minister.
The three-day summit, where the accession of Balkan countries to the EU is a key item, ends on June 22. Bulgaria and Romania were not invited to join the EU in May 2004 along with 10 other eastern and southern European nations because of their slow economic progress, but hope to join in 2007.
Passi said that it would not be easy for the EU to recognise 2004 as the year to end negotiations, but this would create a positive precedent if it happened, Bulgarian National Radio said. "The other countries which joined the EU did not have any dates fixed in advance. I cannot promise at this time that we would be able to achieve this goal, but if we are not successful now, we will have to try again at the summit meeting in Rome at the end of the year", he told BNR in an interview.
Passi was speaking just a day after he returned from Brussels where he paid a working visit to EU headquarters. Statements by senior officials there were not very encouraging. The EU's Employment and Social Affairs Commissioner, Anna Diamantopoulou, told Passi that it was doubtful that Bulgaria would be given a fixed accession date in Thessaloniki. EU enlargement commissioner Guenther Verheugen was even more straightforward: "Bulgaria cannot expect to receive a set date for finalisation of the accession talks at thesummit in Thessaloniki," he said after meeting Passi in Brussels.
The regular report of the European Commission, which will make an objective assessment of Bulgaria's progress in negotiations and in meeting the criteria, is traditionally announced in October, Verheu-gen said. However, Verheugen assessed Bulgaria's political programme for finalising the talks in 2004 as realistic and attainable. Talks were proceeding smoothly, he said. Passi also met EU Foreign Policy and Common Security Commissioner Javier Solana, who noted Bulgaria's hard work towards joining the European institutions.
"The EU wants to maintain with Bulgaria the most intensive possible political dialogue," Solana told reporters on June 12. However, Bulgaria got a sign of support for its effort to determine 2004 as the year to end negotiations with EU. Spanish foreign minister Ana Palacio, who accompanied King Juan Carlos on a state visit to Bulgaria at the beginning of June, said that Madrid would back Sofia's efforts to conclude its negotiations on joining the EU next year. "We hope that at the Thessaloniki summit we can confirm Bulgaria's timetable for negotiations so that these can be concluded in 2004," Palacio said.
Source: Sofia Echo