by Andrew Jay Rosenbaum
ANKARA
On April 25 the European Commission will formally celebrate Bulgaria’s and Romania’s historic accession to the trade bloc.
The two former communist nations joined the European Union on Jan. 1, 2007.
However, despite the outpouring of joyous rhetoric at the time from the countries’ leaderships, things have not been plain sailing for the former Eastern Bloc states.
"This is a day of historical justice because Bulgarians have always been Europeans in spirit and identity," the country’s then-president Georgi Parvanov said at the time.
"It was hard, but we arrived at the end of the road. It is the road of our future. It is the road of our joy," Romania’s leader Traian Basescu said.
However, EU membership has proven a mixed blessing for both countries, experts say. Pressure for change from Europe has not led to decisive reforms, and, after an initial growth spurt, neither country’s economy is seeing increased prosperity.
“Joining the EU has not made Bulgarians happy,” complains Dimitar Bechev, an expert on Southeastern Europe at the London School of Economics in an interview published on his website on April 2.
“It’s seen as a necessary evil and perhaps expectations were higher; they thought it was the silver bullet,” he writes.
“For Romania, openness to the global economic space cannot, in itself, ensure economic development and provide a substitute for an economic development strategy, nor a public policy geared to favor the development of human capital and infrastructure,” wrote David Turnock, in a 2013 book on the country’s economy.
Some analysts disagree, pointing out that both Bulgaria and Romania are relatively stable.
"Seen from afar, the situation of Bulgaria and Romania has improved," said François Frison-Roche of France’s National Centre for Scientific Research, in an interview with EurActiv.
"If I were a pensioner in Bulgaria or Romania, I would say that my country's EU accession has brought very little improvement – if any – in everyday life. But on a macroeconomic level, both countries look pretty stable, unlike their Greek neighbor," Frison-Roche said.
Bulgaria struggles to achieve EU standards
Both Romania and Bulgaria experienced initial spurts of economic growth after joining the EU which, unfortunately, were not sustained.
In Bulgaria, from 2000 to 2009, economic growth averaged about 3 percent per year, according to World Bank statistics. In the 2000 - 2009 period, the value of exports to the EU and imports from the EU increased almost three times.
But trouble started for Bulgaria not long after accession. In 2007, the EU started providing aid that, in the first year of the country's membership, amounted to €200 million euros ($215 million). But in early February 2008, a European Commission interim report concluded that "Bulgaria had continued its efforts to overcome the shortcomings, but in the crucial areas such as the fight against high-level corruption and organized crime the country had not achieved any real results."
What’s more, EC monitoring had found that funds distributed under the pre-accession Phare program, intended for investment in key economic sectors, had not been managed properly.
The EC cut off nearly €600 million in aid, and set up a monitoring authority to judge when conditions would permit distribution of aid in the future, called the Cooperation and Verification Mechanism.
However, as Bechev pointed out, the monitoring did not lead to improvements: “Even today, the Cooperation and Verification Mechanism has not achieved much in overhauling corruption.”
Bechev noted, however, that cutting off aid funds had a terrible effect both on nascent Bulgarian industry and on the country’s agricultural development. Much-needed aid, to help push forward development in Bulgaria toward EU levels, was not available.
This brake on development may also have restricted foreign direct investment in the country. FDI into Bulgaria has been extremely low, at about $3 billion per year until 2008 when it dropped to about $1 billion per year, according to World Economic Forum statistics.
“By and large, the track record in implementing the reforms in Bulgaria has been unsatisfactory. In early 2010 the country had concluded contracts worth €1.4 billion, but the real utilization of these resources barely amounted to €200 million," according to economic historian Venelin Tsachevsky of Finland’s Turku School of Economics, published in 2010.
The frustrating fact is that up to that point Bulgaria has actually used only 1.5 percent of all EU funding, including the remaining pre-accession aid and the Operational Programs.”
Currently the country's economic performance is expected to remain subdued, as it has been since 2009, as the EC wrote in its most recent report on the country published at the end of 2014.
Bulgaria is lagging behind, the report said, revealing that the country’s growth potential is low because productivity is hampered by numerous interconnected weaknesses.
These vary from complicated regulation and weak administrative capacity, to high compliance costs for businesses, high energy intensity coupled with low energy efficiency and the poor quality of rail and road infrastructure.
Meglena Kuneva, deputy prime minister of Bulgaria, complained at the end of 2014 that “the economy is poor, but it is difficult to see how we can use our EU membership to do more.”
Romania: a ‘drab’ EU member
Romania has not fared much better. That country made its application for full membership in 2000.
After 10 years of membership, Romania still has the highest rate of poverty in the EU, according to World Bank statistics.
A 2015 assessment of Romania by the U.S.-based Heritage Foundation think-tank claimed the country’s status “as a transitional economy is still apparent.”
“Judicial independence is precarious, and the government has struggled to meet EU anti-corruption requirements. Despite progress, the business environment remains inefficient, a remnant of the country’s Communist past,” the foundation claims.
The first two years after accession saw an economic spurt, wrote economists Parean Mihai Olimpiu and Vadasan Ioana in a paper published in 2010.
“In 2008, although GDP increase was significant, one can notice that the economic crisis started to hit the national economy: unemployment, budgetary deficit and external debt have increased, while labor productivity has decreased,” the two economists at West University of Timisoara said.
Since then, the economists claim “Romania has been a drab EU member” with reform programs being inconsistent.
“Romania’s difficult situation is reflected by the existence of some major economic and social risks: the part of the external debt in the GDP, excessive bank lending, the low level of GDP per capita, low labor productivity, the increase of the current account deficit,” they noted.
A concentration of agriculture in the hands of a few has also been a consequence of EU membership, according to World Bank statistics. The number of owners with less than 2.5 acres has dropped by 14 percent in the past five years. Meanwhile the price of land has continued to surge.
A decade ago, an acre cost barely $40. Today, the price of that same acre has soared to an average of $1,000 – still a fair price for foreign investors, but completely out of reach for the majority of Romanian farmers whose average monthly salary is barely $135.
Today, economic growth is low. The IMF forecast the Romanian economy to grow 2.7 percent this year and 2.9 percent in 2016, fuelled mainly by private consumption. But weak public infrastructure was hindering higher growth.
“The Romanian politician is also a business person. Thus, in implementing the economic measures and European directives there has not been much enthusiasm,” the two economists suggested.
