Thursday, February 21, 2013

Bulgarian parliament accepts government's resignation

By Michael Winfrey and Tsvetelia Tsolova

SOFIA (Reuters) - Bulgaria's parliament on Thursday accepted the government's decision to resign in the face of anti-austerity protests, leaving the European Union's poorest state with political uncertainty that may persist beyond early elections.

Outgoing Bulgarian Prime Minister Boiko Borisov (2nd R) looks at supporters as he walks outside the parliament in Sofia February 21, 2013. Bulgaria's parliament accepted the government's resignation on Thursday after a spate of violent protests over high utility bills, opening the way for an early election and underscoring anger in Europe over weak growth and austerity. Borisov, who had won praise from investors by cutting the Balkan state's budget deficit, is now struggling to rebuild support among voters weary of persistent poverty and graft. REUTERS/Stoyan Nenov

Outgoing Prime Minister Boiko Borisov, who had won praise from investors by cutting the Balkan country's budget deficit, lost support among voters weary of persistent poverty and graft. Those voters may now seek solace from more populist politicians.

After mass protests set off by high energy bills, Borisov stepped down on Wednesday -- the latest administration to fall in Europe's four-year-old debt crisis.

Parliament voted on Thursday to accept the move and President Rosen Plevneliev will now ask the three biggest parties if they want to form a government to rule until a parliamentary election due in July.

But both Borisov's GERB party and the main opposition Socialists have said they have no interest in participating in a caretaker cabinet, and analysts say that means Plevneliev could schedule an election for as early as April.

"Big change can come only through new elections, which should come as soon as possible," said Socialist leader Sergei Stanishev.

The cabinet's departure brought calm after a chaotic week of rallies against the government and foreign-owned power utilities and a threat by Bulgarian officials to strip one of them, Czech power group CEZ, of its licence.

Boriana Dimitrova, an analyst with pollster Alpha Research, said it could push voters towards the political fringe.

"The two key political powers are not strong enough to form a stable government," she said. "The recent protests indicate there is growing support for radical, populist parties, which will also make it harder to form a cabinet."

CALM, FOR NOW

Borisov, a former guard to Soviet-era dictator Todor Zhivkov, won adoration from voters by building highways and improving roads so badly pot-holed that cars could lose wheels and travel across the small country could take up most of a day.

Around 2,000 Bulgarians waving GERB party flags, including farmers driving tractors and a truck full of pigs, cheered in front of parliament in support of Borisov.

Entering parliament just before the vote, Borisov called for them to go home and maintain public order: "I want to thank everyone who supported us and those who did not. And let's try to keep the peace in the next few months."

His administration also impressed foreign portfolio investors by freezing wages and pensions and cracking down on the grey economy by digitally linking firms ranging from the largest factory to the smallest kiosk to the tax office.

But those moves angered many in the Black Sea state of 7.3 million, who are also frustrated at his failure to make good on his 2009 election pledge to stamp out endemic corruption.

"Am I pleased with Borisov's resignation? He's just the same as the ones before. They're all corrupt and they don't care about people," said Filip Ivanov, a 37-year-old taxi driver.

Borisov's popularity has suffered due to growing frustration over the slow plod from poverty of a country which has failed to grow convincingly since it plunged into recession in 2009.

It just avoided the double-dip contraction that hit the EU's east last year but is still stuck with living standards of about 45 percent of the EU average, the bloc's lowest.

For many here, where wages average about 400 euros a month and pensions about half that, the final straw was winter power bills that at times exceeded incomes due to price rises that began to bite as temperatures fell.

In protests this month, tens of thousands blocked roads and in some cases clashed with police and attacked the offices of power distributors CEZ, Czech Energo Pro and Austrian EVN .

The utilities say the increase was in line with a government approved hike prices last year and they had done nothing wrong.

Borisov's threat to strip CEZ of its power distribution license has also put Sofia at odds with fellow European Union member the Czech Republic and raised eyebrows over its adherence to the bloc's stipulation that its members follow due process.

But Bulgaria's power regulator appeared to soften its stance slightly on Wednesday, saying CEZ may be able to keep its license if it reverses violations of the public procurement law. CEZ shares fell 2.8 percent on Thursday to a four-year low.

Before stepping down, Borisov tried to appease voters by sacking Finance Minister Simeon Djankov, a lightning rod for criticism for his leading the charge on belt tightening.

The government decided to free up 1 billion euros in EU farming subsidies that Djankov had held back. Borisov has also unveiled a plan to cut power bills by 8 percent this year.

For their part, the Socialists have pledged to raise taxes on the rich and scrap a flat 10 percent income tax rate it introduced in 2009 that has been a draw for foreign investors.

They also want to raise the minimum wage and will consider renationalising utilities, a prospect Borisov has rejected.

"We should have a strong state in the economy as a regulator and investor and a new social state that will defend Bulgarians," Stanishev, the leader of the Socialists, said.

(Reporting by Tsvetelia Ilieva; writing by Michael Winfrey; editing by Philippa Fletcher)

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Thursday, February 21, 2013

Bulgarian parliament accepts government's resignation

By Michael Winfrey and Tsvetelia Tsolova