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Bulgaria at the Boil: Frustration with the Status Quo Pulls People to the Streets

Bulgaria at the Boil: Frustration with the Status Quo Pulls People to the Streets

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Already struggling with the international coronavirus pandemic, Bulgaria has recently found itself dealing with a major internal political crisis as well – one which, ironically, despite the general incentive towards social distancing, has brought people outside of their homes and onto the streets of the nation’s major cities.

The primary target of the protests, which continue now to disrupt Bulgaria’s major cities well a month after they began, is Prime Minister Boyko Borisov, who is facing demands that both he and the country’s chief prosecutor resign. Borisov maintains his innocence, instead portraying himself as the country’s best hope of moving on a pro-EU trajectory, while accusing the country’s socialist party – led by President Rumen Radev – of pursuing a personal vendetta against him.

The public outrage represents a boiling over of frustration with the ongoing corruption and political favors that Bulgaria is famous for, along with – in the words of Politico– “how unaccountable oligarchs have wrapped their tentacles around key institutions such as the judiciary.”

According to Pavel Hristov, Partner at Hristov Partners, “Bulgaria is currently in a political and institutional crisis.” The tipping point, he says, came on July 9, 2020, “when representatives of the General Prosecutor's office, supported by armed police, raided the Office of the President of Bulgaria and arrested a couple of the President's advisers.” According to him, “the President … publicly accused the current Government and the General Prosecutor of corruption and requested their resignations.”

This political crisis comes, perhaps not coincidentally, as the country struggles economically. Bulgarian journalist Elena Yoncheva – a Member of the European Parliament – has summed up the country’s manifold challenges in stark terms: “Every year the country is becoming poorer. Foreign direct investment has collapsed, as the country is seen to have a weak judicial system that won’t protect investors. Powerful oligarchs seem to have a hold on most of the economy. Education and health systems are also in decline, with people feeling a general drop in their standard of living.”

All this as the country continues to suffer significant damage from the COVID-19 pandemic, which continues to take its toll on public health and the nation’s economy.

One lawyer we spoke to declined to go on the record, explaining that “the situation in Bulgaria is so brutal that I feel that my professional and moral obligation to the firm excludes replies to these questions. The level of hostility against lawyers in Bulgaria is unprecedented – colleagues were thrown in jail, others are being blackmailed by the authorities, etc.”

Times are tough in Bulgaria, and the light at the end of the tunnel seems to be, if anything, getting further away.

We reached out to prominent Bulgarian Lawyers Kostadin Sirleshtov, Alexandra Doytchinova, Pavel Hristov, and Victor Gugushev to get their perspectives on their country’s struggles. 

How the Lawyers See It

“The Government and the Executive Prosecutor are under huge pressure,” says Victor Gugushev, Partner at Gugushev & Partners. “People are furious, as they have witnessed numerous actions clearly breaking the law as well as clear signs of corruption, and special prosecution enjoyed by certain Government-related individuals getting special protection. They are not wrong. We really do see a strong link between the prosecutor’s office and the country’s executive branch, which is, to say the least, unacceptable. The only state institution that is working in the nation’s best interests seems to be the Presidency.”

Alexandra Doytchinova, Managing Partner at Schoenherr in Sofia, explains that the conflict between the country’s two political leaders is nothing new. “Bulgaria's president and government have been locked in confrontation since day one after the presidential elections in 2016,” she says, “leaving no one impartial to their actions and/or inactions.” According to her, “the state’s handling of the COVID-19 crisis was also a source of discord as the lockdown, without effective and prompt economic support to businesses, left whole sectors wandering between mass dismissals and bankruptcy.”

The three Ps that seem to be troubling Bulgaria at the moment – protests, political instability, and pandemic – aren’t the only things keeping investors away. According to Pavel Hristov, “in recent years the quality of laws passed by the Parliament has visibly deteriorated, which is an opinion shared by practitioners, academics, and former lawmakers.” In addition, he says, even the good laws that do exist are often ignored or violated, with few consequences. “Too many state regulators have failed to diligently and proactively enforce the law, public trust in the judicial system has fallen to very low levels, and public media freedom has been restricted.” He points to the inevitable effects on FDI, as “these are all factors that investors evaluate and take into consideration.”

Doytchinova admits to frustration with the failure to address these problems over previous decades. “Unfortunately, we haven't witnessed clear political will and real action to implement the necessary reforms for more than 30 years since Bulgaria's transition to democracy and market economy.” In her opinion, “a change in mindset is needed.”

It’s Going to Be a Bumpy Night

Hristov believes that the protesters are taking the streets to effect that change in mindset. “The protests challenge the status quo and are focused on two main goals: anti-corruption and rule of law,” he says. “Both would necessarily require a change of guard and replacement of the key players and judicial reform.” In his opinion, any judicial reform “must achieve both the independence of the judiciary from political and economic influence and ensure the accountability of the general prosecutor, who in the current system cannot be controlled or corrected by any other institution or any elected body in event of malpractice or unlawful conduct.”

“The regulators,” Hristov continues, “such as the Bulgarian National Bank, the Financial Supervision Commission, the Competition for Protection of the Competition, the Energy Commission, and the Water Regulatory Commission, must revise their policies and enforcement practices and start exercising their powers effectively.” According to him, “a stronger and competitive economy will only be feasible if the authorities and the courts create and maintain a level playing field, legal certainty, and justice, effectively and proactively. It is time for a new generation of regulators to step in and replace the old guard.”

And, CMS Sofia Managing Partner Kostadin Sirleshtov insists, the public display of outrage has already had positive effects. “The recent protests have affected the Government and there is already a significant change,” he says. “The key ministers of finance, economy, healthcare, interior, and tourism were replaced and there is some expectation for further changes in the coming weeks.”

For her part, Doytchinova is unsure whether the protest will lead to any significant change, and even though she agrees that “the widespread dissatisfaction and recent scandals have managed to unify the population against the political status quo,” she says that the prime minister is unlikely to resign. Ultimately, she says, “finding a successful solution of the political entanglement will require a political consensus, engaging in dialogue, and reaching mutual understanding.”

Victor Gugushev points out that “recently, pictures of the prime minister’s private bedroom have been leaked, showing a wardrobe full of money behind him. These pictures have been presented to the European Parliament, with verification and confirmation of their authenticity.” In this context, he says, “protestors have every right to be on the streets.” Still, he warns, “I am unsure this is the best period to do so – not because of the coronavirus, but because it’s summer, people are travelling, and the determination to stay on the streets deteriorates.” Ultimately, he counts himself among those who are less confident in a positive result. “The outcomes are uncertain at this point, but I’m not convinced it will actually lead to resignations.” 

Corruption Takes its Toll

The protesters taking to the streets of Sofia and other Bulgarian cities do so for many different reasons – but a common source of frustration is the still-pervasive amount of corruption in the country. Journalist Elena Yoncheva has declared that, “all countries have some corruption, but Bulgaria has become a mafia state,” and Bulgaria once again has the lowest score in the EU on Transparency International’s Corruption Perceptions Index.

According to Alexandra Doytchinova, much of the progress the country claims to have made is illusory. “The European Commission has assisted Bulgaria through its Cooperation and Verification Mechanism to make progress with the rule of law through judicial reform and combatting corruption and organized crime, yet clear results remain on paper only, and further efforts remain necessary in order to ensure the full implementation of the EC's recommendations.”

Doytchinova says that “Bulgaria has put reforms aside to focus on ad hoc measures. And this refers not only to handling the COVID-19 crisis. Bulgaria deserves a positive restart and rule of law is a must. Success may take years of hard work and the true criterion for success will be the citizens’ trust in institutions.” She adds that another problem which requires fixing is “lack of an impartial and efficient judiciary and prosecution, [which] are among the most significant impediments to economic growth and to establish a level playing field for all economic participants.” She believes that “ensuring an independent judiciary, demanding transparency and accountability of the prosecution as well as between the different institutions, and increasing the efficiency and effectiveness of the judicial process is a must.”

Tomorrow is Another Day

Looking into the future, Doytchinova and Sirleshtov express different amounts of hope. For his part, Sirleshtov says that “he is very optimistic about the future.” According to him, “before 2007 Bulgaria had a national goal – NATO and EU membership. Foreign investment was growing and there was a clear blue sky.” Unfortunately, he says, “following 2007 Bulgaria failed to define new priorities,” but he insists that “still, it is never too late, and in my opinion, Bulgaria will need to open up for foreign investment and transparent business practices. Bulgaria needs to develop and maintain its middle class as the foundation of modern civil society.”

For her part, Alexandra Doytchinova says, “there is a good reason to worry: an economic downturn has already begun, as the fall in investment began largely due to the collapse of a large Bulgarian bank, due to the red tape, corruption, undeniable administrative burden, and recent anti-money laundering restrictions on opening bank accounts of foreign entities.” As a result, she says, “we could be facing a crisis worse than the one in 2008.” Still, she says, “while this outcome is likely, it is not unavoidable. We’ve put a lot of effort into providing a sustainable business environment and attracting foreign investors, now we need to make them stay in Bulgaria through the adequate legal and economic framework. Now is the time for a ‘great reset’!”

Kostadin Sirleshtov insists that “it is somewhat unrealistic to expect any significant reforms to happen before elections,” but he notes that, while institutional reform may have to wait, the government cannot be accused of inactivity. “There are some very important projects and initiatives which are expected to conclude in the coming weeks,” he says, “including important railway infrastructure tenders, a new oil & natural gas offshore tender, a nuclear power plant tender, the Plovdiv airport concession tender, construction of highways, and important international greenfield investments and the like.”

“The country is moving forward,” Victor Gugushev says, “not because of the diligent policy of the government, but because of the diligent vision of the private sector – both local and international. Still, he laughs that it’s generally hard to predict the future, perhaps now more than ever, as these days “one can’t even predict a week, let alone a month.” However, he concedes that Bulgaria is going through a rough period, with “COVID and protests, an unstable international environment, and problems all around.” Indeed, he says, “the hardest is yet to come, given that the economic impact will be large, and that things won’t be better at least until 2021.” Still, he says, change will come. “Even though tough are ahead, they will not, as history has shown multiple times, last forever.”

Finally, Hristov concludes that “Bulgaria has achieved a lot in the past few decades: its entry into the EU in 2007 is the apogee, and the next big steps will be joining the Eurozone and the Schengen area. Bulgaria's future is closely related to the future of the EU. This is the future of our country: a common future, common values, and shared responsibilities in a reformed and stronger EU.”

This Article was originally published in Issue 7.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Bulgaria Knowledge Partner

Schoenherr is a leading full-service law firm providing local and international companies stellar advice that is straight to the point. With 15 offices and 4 country desks Schoenherr has a firm footprint in Central and Eastern Europe. Our lawyers are recognised leaders in their specialised areas and have a track record of getting deals done with a can-do, solution-oriented approach. Quality, flexibility, innovation and practical problem-solving in complex commercial mandates are at the core of our philosophy.

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