Bloomberg
July 24, 2012
Earlier this month, German Chancellor Angela Merkel cited Bulgaria as an exemplar of fiscal virtue in its response to the financial crisis.
It isn’t every day that Bulgaria, still the poorest country in the European Union, is held up as a role model. The only way to understand Merkel’s praise was as a parable for her belief that countries that spend more than they earn have to go through a period of harsh austerity if they are to grow sustainably.
To Bulgarians, if not their Greek neighbors, whom Merkel presumably had in mind as Bulgaria’s pupils, the thinking makes sense.
Greeks and Bulgarians had a lot in common until relatively recently. Both spent centuries under Ottoman rule; both fought for their independence and became poor backwaters of Europe. Their paths began to diverge only after World War II, when Bulgaria was folded into the Soviet bloc and Greece remained part of Western Europe. Once Greece joined the EU -- then called the European Economic Community -- in 1981, it was showered with money, as the communists next door stagnated.
Then, in 1989, the Soviet bloc collapsed. A new Bulgarian democracy was born, but with no money in the state treasury to pay for it. The nation’s savings were insignificant, shops were empty, unemployment was high and infrastructure was rudimentary. Austerity was just a fact of life.
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