Every time I return to Sofia, I see new things, new entrepreneurs and young people who have returned from the West. This attractiveness is due to the currency board and the attachment to the euro, economist Stefan Kolev tells DV.
How do you explain that the topic of adopting the euro is so polarizing in Bulgaria?
We live in an era of identities that are being reinvented. Certainly, currency is something that emotionally, but also rationally affects a person's identity. Few things in the economy are so close to everyday life. Moreover, the lev is something that has developed well as an institution in Bulgaria over the past 30 years. I understand that there are people who have an attachment to it. The question is which political entrepreneurs understand this and use the currency to accumulate political capital.
There are also such sentiments in Germany. They gained momentum during the Euro crisis in 2009-2010, but to this day some Germans are nostalgic about the brand. What are your observations?
"There were similar emotions in Germany too"
I remember when the euro was introduced, because I was already in Germany. I remember that back then there were similar emotions to the Bulgarian ones - a sense of loss, a sense of insecurity, etc. The question is whether this nostalgia today is for the brand or for the time when it existed. The currency is also a symbol of an era.
You are referring to some years that we can define as golden for the West, for example the 1980s, which are associated with great prosperity.
Not only prosperity, but also security. Nowadays, many people have the feeling that so many crises have accumulated that the feeling of security and control is lost. They are also associated with the currency, which was then controlled by the Bundesbank and, according to some observers, even had a quasi-religious character. Prosperity mixed with security - this is the DNA of the German social market economy.
If we focus on the euro in Germany - what has it brought and what has it taken away from the Federal Republic in the last 23 years?
It is difficult to answer precisely because we do not know how the national currency would have developed. The real effects of the euro on trade in the European Union are not huge. The hope when this currency was introduced was that despite the different levels of the different economies, they would move in sync - that at a certain point all economies would be in a boom or all in a depression, which means that a single currency policy could be pursued. Unfortunately, this did not happen. We have a common currency policy in Frankfurt, which, however, does not always suit everyone. The euro crisis and its consequences have reduced confidence in the euro. It could still be strengthened if the European Central Bank, for example, sold the large quantities of government securities that the Bundesbank would not buy.
"Final step of Bulgarian integration into the EU"
What will be the advantages for Bulgaria from joining the eurozone?
I think that neither the advantages nor the disadvantages are particularly great. If there were no currency board, the effects would be much more difficult to predict. In my opinion, entry has a symbolic plus and this is the final step of Bulgarian integration into the EU and the West. It is possible that the government securities that Bulgaria issues will have a slightly lower interest rate in the future. It is possible that control over Bulgarian banks will be better, because it will be entirely in European hands. The feeling of inflation is also a risk - regardless of whether there will really be one. And the more serious risk is that the eurozone will enter a crisis and the debt crisis in question will have to be extinguished by the European stabilization mechanism, i.e. we will take on our percentage of the guarantees for the countries that are in crisis. This is the only serious risk.
But won't a European debt crisis cause damage to Bulgaria anyway, even if we are not in the eurozone?
Yes, it does. The question is whether these problems will be “only” for the private sector and the banks or for the state as well. By joining the eurozone, we become part of this club and as a country we take on some of the responsibility for its other members.
The debate about the euro has also become a debate about Bulgaria's geopolitical orientation. In your article in the “Frankfurter Allgemeine Zeitung“ you write that while in Ukraine we see a rush towards European integration, in the eastern member states this enthusiasm is rather cooling down. Where did Europe go wrong in communicating with its new citizens?
"Many people have stopped being proud of the West"
There are two questions - one is how our perception of the West has changed. The other is whether the West has objectively changed. I think that in the last 35 years the West has made one fundamental mistake - it stopped believing in itself. Despite the criticism of the history of colonialism, for example, I think that in modernity the West is the most successful project, but in the last 35 years many people in Western countries have somehow stopped being proud of it. And when someone stops being proud of themselves, they become less attractive. The generation of Thatcher, Reagan and Kohl believed in the West. Today, that is not the case.
The largest partner in Western alliances is increasingly withdrawing from them. This is a process that did not start with Trump, but he certainly catalyzed it. This probably contributes to it.
There is a great separation from the concept of the West, both on the right and on the left. First it was from the left - on an American and Western European university campus this concept has become an association of colonial guilt and wrongdoing. There is also a retreat on the right spectrum, for example in the new right-wing critique of globalization. I think that what we are discussing is happening in a similar way in America and in Europe. We have radically changed this concept - “West“. And so I hope that the Ukrainians, dying for this concept every day, will remind us that it is not so meaningless.
What happened to us, the Bulgarians, is that as a closed, hermetic society until 1989, we did not know what was happening in the West. There were myths and legends of all kinds. In this sense, to a certain extent it was logical that there would be some disappointment - yes, life is good in the West, but it is not paradise. And what has happened since 2015 is that many of the crises have been used to instill various anti-Western narratives. For example, that the West is sending us migrants that we don't want. It's been 10 years since the refugee crisis and 11 since the annexation of Crimea. When 10-11 year old anti-Western narratives are filled with a new tone, it's not surprising that this has an effect on both young and old.
"The Handbrake of Corruption"
What does Bulgaria look like from Berlin? Are you confident about Bulgaria's European and democratic future?
When I was at a conference in the US in November 2019 on the occasion of the 30th anniversary of November 9 and 10, I titled my presentation on Bulgaria “Transition with the Handbrake on“. I think our transition is quite successful - the Bulgarian economy is developing extremely dynamically, the younger generation has nothing to do with us then, but all this is happening on the handbrake. If we release it - that is, if the quality of the institutions becomes better - these processes, which are obvious at least in the big cities, would be even more obvious and more convincing.
Who pulled this handbrake and still keeps it down?
The shaky start in the early years of the transition was, of course, a very big problem. The old elites in the first years corrupted this transition. It is perhaps now banal to talk about corruption, but it is part of the handbrake. We have a constantly poor quality of institutions, which I hope will change. The European funds that have been pouring in for 20 years, in my opinion, are already doing more harm because they are feeding this parallel state that lives off of them. However, I continue to be optimistic and every time I return to Sofia I see new things, new entrepreneurs and young people who have returned from the West. This attractiveness is due to the currency board and the attachment to the euro, as well as low taxes. Despite the handbrake, things are developing in a way that in 1999, when I left Bulgaria, I did not think possible.
The answer to your question is: I am not calm about the democratic future. I believe that every generation must fight for our Western orientation, because there are emotional and rational moods, including incited ones, which will always maintain a division about the East-West relationship. Every democratic society must fight, have a debate, including about the alternatives. If someone says they want us to become a satellite of Russia, let them say it openly and let's discuss it.
But are you optimistic about Germany, where a series of structural problems have pushed the economy into recession and called into question the country's place as a political leader in Europe?
"There is an understanding of the seriousness of the crisis"
I am always an optimist. In my opinion, the reforms of what you describe can happen under two preconditions. The first is the understanding of the seriousness of the crisis. I believe that it is present. The second is the extent to which the political actors in the center manage to convince people of their visions. I hope that this government will have one, or why not two visions - center-left and center-right - to lead the debate in the next few years. The two big questions are the economy and migration. If answers are found to them, the state can move on. Germany today reminds me of 1999, when I arrived. The depression in the debate and the despair over the economic model were similar then.
„The Sick Man of Europe“, as the „Economist“ calls it...
Yes. I am particularly optimistic that the centre-right has good answers that can attract a larger number of people from the periphery of the political space to the centre again. If we have a debate between the centre and the extreme periphery, this debate cannot be won by the centre, because due to its moderate rhetoric it is boring in such a conversation. But if we have a debate in the centre - between the centre-left and the centre-right - I think that citizens can again believe that this centre can solve some of their problems. It will not be easy, but I see in the new coalition in Berlin an awareness that if they do not succeed, this would mean the end of the centre of the German political space in its traditional sense. I hope that this is sufficient motivation for a fruitful debate and energetic action.
Stefan Kolev is academic director of the "Ludwig Erhard" Forum in Berlin and a lecturer at the University of Applied Sciences in Zwickau. Alexander Detev spoke to him.