Bulgaria is set to become the latest member of the European single currency. The move is painted as an almost natural march of progress — with little to no public debate on what it really means for Bulgarians’ living standards.
While the world’s eyes are set on the dismantling of the Euro-Atlantic alliance, Bulgaria seems set to finalize its accession to the eurozone amid an atmosphere of peak anti-politics. The government declares that “membership in the most developed monetary union in the world brings significant political and reputational benefits” and that “Bulgaria will take a major step forward in separating itself from the EU’s ‘periphery.’”
Yet the eurozone is in fact a currency union wracked by inner tensions. It seems sure that the euro’s inbuilt mechanism of capital and value extraction from small, uncompetitive economies is not going to spare Bulgaria. The lack of awareness about these prospects and the ill-informed discussion and decision-making on all sides — added to the virtually nonexistent resistance from the Left — don’t bode well for Bulgaria’s path forward.
Risks and Benefits
Bulgaria’s road to euro membership was enshrined in its 2007 European Union Membership Agreement — an arrangement that Denmark and Sweden were allowed to opt out of, while the Czech Republic, Hungary, and Romania have delayed this step.
Bulgaria has already been part of the European Exchange Rate Mechanism (ERM) and under European Central Bank supervision since 2020. Today it fulfils three “Maastricht criteria”: public debt under 60 percent of GDP (in fact around 20) and a budget deficit of no more than 3 percent of GDP; stable currency exchange rates; and long-term convergence of interest rates with eurozone levels. Only inflation slightly exceeds the target value of 2.53 percent. Thе achievement of all but one criterion and the broad cross-party political consensus behind the move make Bulgaria’s eurozone accession appear merely a matter of awaiting the EU leadership’s approval.
The pro-accession consensus across political camps was barely affected by anti-euro protests and the vandalizing of the EU Commission and Parliament building in Sofia by the Revival (Vazrazhdane) party on February 22. Nor was it hampered by this party’s attempt to force renewed debate of the accession plan by blocking parliamentary proceedings. These disruptions were condemned by virtually all other parties, as Revival’s full palette of right-wing politics and its disruptive methods are already well-known. Having made its first electoral appearance in 2021, it is today Bulgaria’s third-strongest party — scoring 13.4 percent support in last November’s elections. This is a result of the mutual estrangement of politics and society (voter turnout has just rebounded from the all-time low of 34 percent in June 2024) and people’s continued search for alternatives to the transatlantic integration agenda proffered by most politicians.
The impossibility of left-wingers collaborating with or supporting Revival has been clear from the start. This is a party that routinely uses racist and homophobic rhetoric and actively endorses Germany’s staunchly right-wing Alternative für Deutschland (AfD) as part of the European Parliament group “Europe of Sovereign Nations.” Yet even if at a party-political level Revival seems to be alone in claiming an anti-euro-accession stance, things are not as clear-cut. The problem facing Bulgarian society, the Left, and any critical thinker is that joining the euro may, indeed, bring more problems than improvements. The lack of in-depth research and debate on this matter doesn’t suggest that politicians, let alone broader society, are aware of the call they are making.
One widespread argument, also among Bulgaria’s (nominal) Left, holds that euro accession does not present a significant change. Already after the 1998 inflation crisis, the International Monetary Fund currency board imposed the pegging of the Bulgarian lev to the deutsche mark. Its eurozone integration process since 2020 has long since established an economic straitjacket anyhow.
However, such excuses fall short of appreciating the experience of neighboring states and the obvious risks of eurozone accession. The 2023 introduction of the euro in Croatia — like Bulgaria, a low-export economy with little high-added-value manufacturing — mostly promised a spillover of recession, stagnation, and other challenges. As argued by Mislav Žitko, it entailed a “deterioration of the position of labor in relation to capital, as costs of labor and poorer working conditions became the adjustment mechanisms needed for attracting capital.” This was most painfully expressed in an above-average inflation of 4.5 percent as of December 2024, which has hit especially hard in the food and retail sector and led to a series of supermarket boycotts in Croatia that spread across Southeast Europe.
There is little sign that the current cost-of-living crisis faced by Bulgarians will not be further deepened by euro accession. In fact, while Bulgarian consumer prices are high in absolute terms, they are still relatively low by EU standards. Once the last remaining barriers of the currency conversion fall, prices are set to soar — before adjusting in the midterm, if at all. The superior market position of an oligopoly of food retailers will further cement rather than alleviate this situation. Harmonised Index of Consumer Prices (HICP) data demonstrates the price hike following Croatia’s euro accession. This does not look to be any more moderate in Bulgaria, where the HICP already exceeds the current Croatian one and the eurozone average.
Inflation and HICP Developments in Croatia and Bulgaria (and the Eurozone) Since 2021
Another expected effect of joining the currency union is the further aggravation of the already overheated Bulgarian real estate market, where prices run high as housing serves as investment objects for anyone from private savers to money launderers. Further inflow of capital from across the eurozone would thus logically further reduce the availability of affordable housing while adding pressure to related commodity and service markets. Even more problematically, monetary union could lead to the spillover of risky financial assets into Bulgarian banks, facing lower requirements regarding equity capital (i.e., hard currency deposits to be held in relation to money borrowed to debtors) and higher competition across the eurozone.
Apart from these risks, the absence of functioning labor unions in Bulgaria means that workers will not benefit from the positive effects of any new investments. To keep up with rising living costs, they will only be able to work longer hours or work several jobs, or to migrate in the hope to access higher salaries in the European Union, thus again fueling inflation. Against this background, the lack of connection between the current supermarket and bank boycott and calls for resistance against euro accession could not be more ironic.
There Are Alternatives
A more fundamental question is why this process — and the corresponding assumption that euro accession is only the final step in an already trodden and irreversible path — goes so unchallenged. Making the comparison with other Eastern EU member states, it becomes clear that nonparticipation in the ERM and its benefits is not as far-fetched an option as it is portrayed in Bulgaria.
First and foremost, Poland, the Czech Republic, and Hungary have demonstrated that less tight integration and a floating exchange-rate regime can be advantageous in navigating both long-term development and economic crises. Economists and economic policy scholars — while pointing to the downsides of exchange-rate volatility — admit this and the general “weaknesses and unsustainability of the former mainstream policy patterns in the [Central-Eastern European] countries [i.e., their neoliberal rejection of an active state role in economic policy].”
The need to deal with brain drain, population decline, simultaneous anti-immigration sentiment, and the fallout of the financial crisis each appear to have vindicated a more active state role in economic policy. This approach has already been propagated in Chalmers Johnson’s idea of the “developmental state” in the context of Japan‘s and other East Asian countries’ so-called economic miracles in the 1980s.
While seemingly ruled out by the EU’s neoliberal diktats, the developmental state is not all that distant. In fact, political economists Ilias Alami and Adam Dixon demonstrate the ubiquity of state capitalism in the shape of “new forms of intervention and modalities of government-business cooperation.” This has been especially true during the financial and COVID-19 crises but is also needed to tackle new challenges in digitalization, large-scale industry, logistics, and raw material supply chains.
Thus, while Germany and other economic powerhouses preach the gospel of the free market and nonintervention, Alami and Dixon point to the increasingly central role of “more assertive and muscular forms of statism (encompassing techno-industrial policy, spatial development strategies, economic nationalism, and trade and investment restrictions)” that become more acceptable given the threat of “rogue states” and their national companies.
An active state role in economic and currency policy may be hardly imaginable in Bulgaria’s current state of peak anti-politics, where political contest and debate as well as the public realm as such are effectively eradicated. But this is precisely why ideas about an active state policy must be brought back onto the table, so that the country’s fate is not yielded to free-marketeers and social Darwinists.
Such arguments have in fact been made and need to be taken up when considering Bulgaria’s options. This is most obvious in Cornel Ban and Clara Volintiru’s comparative study of Bulgaria and Romania. It shows how Bulgaria effectively “paid for the currency board with falling behind Romania on many economic metrics” including GDP per capita and wage growth (over the 2008–2018 period), corporate indebtedness and nonperforming loans, and finally, in the rates of employment and the population at risk of poverty.
To facilitate societal debate about these questions, in 2022 the leftist Movement September 23 (Dvizhenie 23 Septemvri) hosted a conference discussing the above criticisms and alternative approaches. It is continuing its protests against the currency union. In the wider EU context, Brexit has made even EU enthusiasts aware that a “differentiated integration” with more possibilities to opt out of policy conditionalities and different depths of integration is needed in order to maintain the EU as a viable project.
Unlearned Lessons of the Eurozone Debt Crisis
If these arguments don’t make the need to reconsider Bulgaria’s eurozone integration obvious enough, then the unlearned lessons of the Greek debt crisis should do. Hidden in plain sight, the Greek government has fully paid back IMF loans, while institutional and private lenders have received over €80 billion in repayments and interest. Nevertheless, the outstanding €413 billion obligations are arguably unsustainable, despite the sacrifices imposed on the country’s population and economy. Foreign investments generate limited government revenues as they are concentrated in real estate, privatizations, and the buying up of the still numerous nonperforming loans. This leads to the economically weak being further dispossessed of their assets and to the extraction of capital from the economy (often to offshore financial centers).
No actual development of Greece’s productive and export-oriented, high-value-added economic sectors has occurred, given both the competitive pressures of the eurozone and the de facto ban on active investment and steering industrial development. It is thus no wonder that the national debt-to-GDP ratio has been decreasing but is set to stagnate around 135 percent, raising doubts over the prospects of paying off all debt by 2060. There are even prognoses of a fresh debt crisis by 2032 when a deferral of interest payments for a 2013 European Financial Stability Facility (EFSF) loan expires.
This means that the harrowing conditions under which most Greeks work and (barely) live are set to remain as they are, if not worsen. On top of working the longest average hours and receiving the third-lowest wages in an EU comparison, it introduced the six-day workweek without clear regulations for wage adjustments. This looks to increase business profits and out-migration of skilled labor amid a general population decline of 20–30 percent, surpassed only by Latvia and Lithuania.
The important conclusion for Bulgaria and any other eurozone accession candidates is that, even if the Greek scenario does not materialize, there is no exit mechanism from the path of value extraction and deepened marginalization that small peripheral countries are facing. Arguments by euro-accession advocates that Bulgaria would have a say in decisions concerning its fiscal and financial policy are quite absurd, as shown by the revelations in Yanis Varoufakis’s Adults in the Room. The Greek ex–finance minister’s memoir tells all about the strictly scripted conduct of decision-making in the Eurogroup and about Germany’s de facto veto power. Exceptions seem unlikely.
Above all, what is needed are debates to engage with this topic. It must be acknowledged that Bulgaria’s eurozone accession is not without alternatives. Meanwhile, a path of depopulation and peripheralization upon adopting the euro surely is a likely prospect. The Left (or what is left of it) ought to take up these issues and establish ways of defending workers’ and lower-class interests from the impending encroachment of business interests and an apathetic political class. The latter seem to have forgotten, or never understood, how to maintain and explore alternative policy paths in a world that insists that there is only one consensus.