In The Dumps – A Bulgarian Lesson In Economic Survival (Travels in Eastern Europe #7)

Bulgaria may be a member of the European Union, but economically it has a long way to go before it arrives at parity with the rest of the union. For a first time visitor such as myself, the tenuous economic circumstances of Bulgarians was one of the most dramatic and noticeable aspects of the capital, Sofia. Within minutes of leaving the city’s gleaming airport my eyes were assaulted by the nearby Roma mahala (quarter) with its corrugated shacks, collapsing houses and men congregating aimlessly in dilapidated doorways. It looked like a scene straight out of a Third World country. This was followed by the looming concrete apartment blocks that house an outsized proportion of Sofia’s citizenry. The lots surrounding these were largely vacant, with plastic bags blowing across dun colored earth. They looked like the kind of place where grass could not be grown, the soil contaminated with skepticism. Litter was strewn about and the ubiquitous stray dogs of Sofia roamed the surroundings. In any other European city these blocks would have been either repainted and spruced up (see Berlin, Budapest and Bratislava for examples) or labeled as derelict, no go zones. In Sofia they were a place called home.

The haves and the have nots - Kids searching through trash bins in Sofia

The haves and the have nots – Kids searching through trash bins in Sofia

Stealing From Themselves – The Plague Of Corruption
In direct contradiction to such scenes were the classy, upscale shopping areas and glitzy fashion boutiques in the city center. Sofia’s economic situation left me with an impression of three classes, rich, poor and a middle class just trying to get by. The latter group was in the majority, perched between relative prosperity and a precarious existence. They had the most to gain after the fall of communism with the transition to a democratic capitalist system and membership in the European Union. And yet disparities in wealth and income have persisted into the 21st century for a variety of reasons, the main one being endemic corruption. Transparency International’s 2015 Corruption Perceptions Index placed Bulgaria 68th in the world out of 169 nations. This was the lowest ranking for any EU member state. Seven spots lower than wealthy Europe’s chronically corrupt problem child Italy. Eleven spots below both Romania and Greece, nations notorious for corruption. Bulgaria tied with Jamaica.

Alarming examples of economic deprivation occurred even in the touristy sections of Sofia, where I noticed time and again people digging through trash bins in an effort to procure necessary household items or recyclables that might be sold for a meager amount of money. Astonishingly, they scavenged without a hint of self-consciousness. They did not beg or even seem to notice passersby, instead they combed through heaps of refuse with a stoic determination. It was tragic to the point of heartbreak. From such behavior I discerned that this was the only job most of these people could find. Such scenes were mind boggling. Bulgaria was just as much an EU member as Slovenia or Hungary let alone Great Britain or Germany. Sofia was the capital city of an EU nation the same as Budapest or Berlin, Ljubljana or Bratislava. Those cities seemed a world away from Sofia. The EU has been good for Bulgaria, but obviously no short term solution for its economic ills. The disparity in its standards of living compared with other EU members is glaring and from a statistical standpoint bears a closer look.

Going Backwards Forwards – Coming Out From Behind The Iron Curtain
It would be unfair to compare Bulgaria, far and away the EU’s poorest member to western European countries. The differences in historical, political and economic development are huge. A better comparison can be made with fellow EU members that were sealed off by the Iron Curtain for over forty years. These countries, all former Warsaw Pact nations had centrally planned, state controlled, communist economies. The most prosperous of these, the Czech Republic, has a nominal GDP per person one and a half times larger than that of Bulgaria. GDP per person in Bulgaria is only about 55% of what is in Poland or Hungary. Bulgaria comes closest to Romania in this regard, but its GDP per person is still 30% lower. It does retain decided advantages over non-EU neighbors Serbia and Macedonia, though the former is still recovering from a decade of war and the latter is a European backwater par anonymous.

Bulgaria fares much better when GDP per person is measured at Purchasing Parity Power (PPP), a figure that takes into account such things as the cost of living and exchange rates. At PPP its income is half that of the EU average, whereas it is only 20% of the average when measured by nominal GDP (GDP at current market prices). The Bulgarian economy was bolstered by a series of reforms that started after economic crisis hit hard in the mid 1990’s. These business friendly laws brought in a great deal of foreign direct investment. This led to a rise in overall living standards prior to the 2008 financial crisis. Since then the economy has stalled and a period of political instability exacerbated the situation. All along corruption has continued to plague Bulgaria, with well-connected politicians and oligarchic business men stealing from the public purse.

Another problem hurting the economy is demographic difficulties that are set to worsen. Bulgaria has the fifth oldest median age (43) for a population in the world. It is also fifth in the percentage of elderly citizens, over a quarter of Bulgarians are 60 or older. This, coupled with a low birth rate and the third highest death rate in the world, has led to a dramatic decline in the population. When the communist system collapsed in 1989 Bulgaria’s population was 8.7 million, today it is 7.1 million, a decline of nearly 20%. The population has fallen every year since the change of system and will continue to plummet. The National Statistical Institute of Bulgaria forecasts that by 2060 the population will drop to 5.3 million. This will have widespread ramifications for economic productivity and the already struggling social welfare system.

Bulgarian population since 1887

Bulgarian population since 1887 (Credit: Wikipedia)

The Search For Prosperity – Past Is Future, Future Is Past
Bulgarians have a tough economic future ahead of them.  Viewed through the wider lens of history, this is nothing new. Bulgaria has always been a tough place to earn a living in the modern era. Since it gained independence in 1878, the country has been riven by a vicious cycle of war, radicalism and corruption. These have upset the economy time and again. The search for economic prosperity continues to be a never ending process in Bulgaria. It is little wonder that many people have resorted to sifting through trash bins in order to make ends meet.

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