Eastern Promises

WORDS BY CRAIG TURP

Joining the EU may not have made Romania and Bulgaria better places overnight, but they both have a new-found spring in their step. A year after they acceded, we take a look at life in this newest corner of Europe

Vika Kostadinova has been selling fruit at Sofia’s Zhenski Pazar, or Women’s Market, for many years. Like the majority of the other women who sell their wares here, Bulgaria’s first year of European Union (EU) membership has by and large passed her by. “What has the EU done for people like us?” she repeats my question. “Not all that much. It put a smile on a few faces for a bit, but since then, nothing. I didn’t vote in the European elections, neither did my husband. It’s none of our business really. We are a long way from Europe here.” She means Europe as in Brussels of course, but the point is taken. The Zhenski Pazar, which in winter buzzes from long before dawn until well after dusk, has for decades been the best place in Sofia to take Bulgaria’s pulse.

If they don’t care much for the EU here, chances are the rest of the country doesn’t care all that much either.

Bulgaria, together with northern neighbour Romania, joined the EU on January 1st, 2007. Bulgarians celebrated with one of the biggest parties Sofia has ever seen: hundreds of thousands took to the streets waving blue EU flags, though whether that was to manifest their sincere joy at EU membership or simply to enjoy the biggest free firework display the city has witnessed is another question.

In Romania’s capital Bucharest, where EU membership had become little less than an obsession—especially when neighbour Hungary joined in 2004— the party-like atmosphere was dampened by the failure of the government, led by Calin Popescu-Tariceanu, and the country’s president, Traian Basescu, to put aside their petty political squabbling even for one night. As a result those Romanians who came out on to the streets of Bucharest to celebrate were forced to choose between two entirely separate parties (one organised by the government, the other by the president). What’s more, the two events took place just 200 metres from each other, each one drowning out the sound of the other. Political loyalties can be fickle in these parts, and few Romanians knew which event to attend. Mihai-Razvan Ungureanu, then the serving foreign minister and one of the key figures in securing Romania’s EU membership, was confused enough to choose the president’s event. He would lose his job less than a month later: the two things were not unconnected.

The EU dignitaries present (most of whom were ushered by security men towards the president’s party) just looked embarrassed. Romanians watched on television—mainly in horror and mild shame—as attention moved dizzyingly from one event to another. In hindsight, however, given Romania’s schizophrenic love-hate relationship with the EU in the year that has since passed, having two events seems perhaps to have been the right thing to do.

“There seems to be a consistent pattern in the new Europe that once a country becomes an EU member, politicians feel they are off the hook,” says Sorin Ionita, director of research at the Romanian Academic Society, the country’s leading think tank and a driving force in the country’s civil society movement. “Once over the hump of integration, politicians try to make up for the lean years before accession, when the European Commission had stronger leverage and the margin of manoeuvre was tighter. Maastricht criteria on budget deficits, or promises to reduce corruption are forgotten. Romania is probably the most Kafkaesque example, with an acting minister of justice being investigated for corruption while simultaneously initiating laws to dismantle the prosecution unit investigating him.”

Walk through Varna, Bulgaria’s Black Sea hub and its second largest city, and the benefits of EU membership are immediately obvious: real estate agencies abound and the bulk of property is being bought by EU citizens–Brits and Germans in the main. “What looked increasingly like a bubble towards the end of 2006 has been given a new lease of life by EU membership,” says Petya Mihailova, chief consultant with HIB, a large Varna real estate agency. “Prices—especially for seaside properties at the lower end of the market—have risen steadily throughout the year, and though the big money has been made already, there appears to be a new wave of cautious investors who simply refused to buy property here before we joined the EU.”

Stories in the UK’s Sunday supplements have promoted the Bulgarian real estate market all year, but there is reason for caution, according to Amelia Balazs, a journalist with Prague-based investment journal CIJ Europe. “Sure, you can still make money in this part of the world but you really have to be careful about what you are buying. I’ve heard of Brits buying apartments in Romania and Bulgaria without even visiting the place, in ‘city centre’ developments that are in fact a long way from the centre of any city. You just can’t help feeling that some of them will get their fingers burnt.” The message is clear that only careful investors who do proper research can expect to find a good investment in these newest EU countries.

As prices in the main cities continue to grow, so too does the gap between rich and poor in what have long been two of Europe’s poorest countries. While expatriates in Bucharest rejoiced at the drop in prices of luxury goods that membership brought (the price of Champagne fell by 20%), locals bemoan sharp increases in the price of basic goods produced locally: bread has all but doubled in price during the past year.

This dichotomy is confirmed in conversation with Matei Paun, managing partner at BAC, an investment bank with interests in Romania, Bulgaria and Serbia. “For most people, there has been little in terms of real change,” he says. “EU membership itself has done little to affect or even improve the lives of ordinary Romanians and Bulgarians.” Paun is more upbeat, however, when talking about the overall investment climate. “There is no question that EU membership has given foreign investors a glow, a slightly pinkish feeling of warmth and familiarity.” Even here though, his optimism is tempered: “Truth is, the core decision factors such as infrastructure, wages and education have hardly budged. In fact, some, such as wages and labour, have deteriorated as wages have increased and Romanian workers have moved abroad in droves.”

It is this migration of workers that has had the most detrimental impact on both countries, though Romania has been most aversely affected. In November last year Romanian Economics Minister Varujan Vosganian declared that the country was facing a 500,000 shortfall in its workforce. “We need more engineers and mechanics,” he said, adding “emigration is not helping Romania.”

As many as two million Romanians have left to work abroad—mainly in Spain and Italy—since 1990. The vast majority emigrated after 2002, when visa restrictions on Romanian citizens were eased, and as many as 250,000 left in 2007. So bad has the situation become in some industries that factory owners have taken to shipping in Chinese workers: a textile factory in Bacau, in the northeast of Romania, led the way, its Italian patrons claiming they simply couldn’t find any local labour.

While it’s difficult to find anyone in either Romania or Bulgaria with a genuinely good word to say about the EU, it is equally tough to find anyone who will condemn it outright. Like Vika Kostadinova and her colleagues in Sofia’s markets, indifference tempered perhaps with a little mild optimism is the overriding sentiment. “There is still much grinding poverty in both countries,” sums up Matei Paun. “But the idea that the best is yet to come is a feeling shared by both ordinary people and investors. A year on, it’s obvious that the EU is no panacea, but that pinkish glow is still just about there.”