Bulgarian Deputy PM: Eastern Europe could replace China in sectors critical to the EU

Tomislav Dontchev in Brussels [Council Newsroom]

The countries of Central and Eastern Europe do not have the huge human resources of China, but they do have plenty of advantages that must be used after the end of the pandemic, said Bulgarian Deputy Prime Minister Tomislav Donchev in an exclusive interview with EURACTIV Bulgaria.

“Central and Eastern Europe is the EU own territory, and developing critical industries within the community would give it sustainability and flexibility that would save lives, jobs and wealth in today’s situation,” Donchev said when asked if the region could become a “small EU China” to palliate shortcomings identified during the pandemic.

Donchev is the most powerful figure in the Bulgarian government after Prime Minister Boyko Borisov. He is responsible for economic policy and has a significant influence in the EPP-affiliated ruling GERB party.

He predicts that after the crisis, Europe will make efforts to become more self-reliant to preserve strategic industries such as textiles, mechanical engineering, electronics, and pharmaceuticals.

“In such a context, the Bulgarian companies have a unique comparative advantage, because unlike other member states, Bulgaria has preserved such productions, and even developed them in recent years,” he said.

Increasingly, economic experts see the crisis as an opportunity for Eastern Europe. The outbreak of the epidemic in China in January showed the EU that it is over-dependent on the relocation of critical manufacturing facilities in Asia – medicines, sanitary supplies and medical equipment, produced elsewhere, were lacking in Europe. In addition, trans-continental production chains in many sectors were interrupted.

“Central and Eastern Europe has gone through a process of re-industrialisation in the last ten years or more. Exports of increasingly sophisticated products and the share of industry are growing steadily, and this gives optimism that the new member states would be even more important to the European industry when the EU recovers from the external shock of the pandemic,” Donchev added.

He said that the crisis has highlighted the best of Bulgarian society, with the country’s people showing that they can mobilise and be responsible, and that they are not indifferent to other people’s suffering.

The Bulgarian government is proud of the measures it took in terms of confinement. Bulgaria has less than 900 officially registered Covid-19 cases as of 17 April, and the death toll stands at 40.

“We are also really looking for opportunities in the crisis. Part of the Bulgarian business is working and even developing. Dozens of companies have literally reorganised their production within days and are now producing protective clothing, masks, disinfectants. And in addition to meeting Bulgaria’s needs, they are already able to export to other member states,” the Deputy Prime Minister said.

European solidarity

Bulgaria has not yet decided whether it will participate in the new EU SURE instrument. The country wants to speed up the process of accession to ERM-2, the eurozone waiting room, to be able to benefit from the support of the European Central Bank.

“For our part, the benefits of SURE are to be assessed before we decide whether we will participate in the proposed mechanism,” Donchev says. According to the Bulgarian Deputy Prime Minister, “an old problem” has manifested itself politically in the EU – the inability of the EU to explain what it is doing. At the same time, he says the European institutions have responded well to the challenge.

“The European institutions have responded adequately. There was a manifestation of solidarity between the member states, but this did not become public. As for the solidarity that Bulgaria and the Bulgarians would show, this is already a fact. It is only natural that we will first provide everything necessary for the Bulgarian medics, those who are on the front line, but very soon we will be able to export protective equipment to other European countries as well,” he said.

He also proposed that following the crisis, the EU should develop a common European pandemic response plan.

State aid

The Deputy Prime Minister said Bulgaria has taken measures to support its economy at a rate of 5-6% of its gross domestic product, but if needed, state aid can reach over 10% of GDP (over €6 billion). Until now, representatives of the Bulgarian government had not officially announced the possible amount of state aid for the economy.

The government’s first objective is to prevent mass bankruptcies. 50,000 workers in companies that stopped work will benefit from a measure that foresees 60% of wages being paid by the state and 40% by the employer. The banks will issue interest-free loans to the unemployed amounting to €750 per month with a long grace period. The state is also launching a micro-enterprise grant scheme, which will offer up to €5,000 of quick liquidity support to businesses.

[Edited by Benjamin Fox]

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