Letter from the EKIP to the President regarding the process of joining the eurozone

On 22.06.2021, the EKIP sent a letter addressed to the President, the Prime Minister, the Minister of Finance and the Minister of Economy. Addressing President Radev directly, we called for a careful assessment of the potential risks for Bulgaria related to the possible accession to the eurozone. To this day, institutions such as the Ministry of Finance and the Bulgarian National Bank have not provided a detailed assessment of the effects that the change of our currency system may have on the country's economy.

We call for the preparation of such an analysis and the holding of a broad public discussion with experts and representatives of civil society organizations, which would prepare Bulgarian society for the holding of a national referendum regarding our accession to the eurozone. Sociologies on the topic show that the majority of Bulgarian citizens want such a referendum to be held and ignoring this fact would call into question the democratic legitimacy of the entire process.

You can read the text of the letter in its original form at this link.

DEAR MR. RADEV,

In your speech at the appointment of the caretaker government, you emphasized the need for transparency, efficiency and accountability of governance in the name of a democratic, dignified and prosperous Bulgaria.

We all now clearly see the completely opposite picture of the previous cabinet's governance, revealed by a caretaker government. Gradually, society is learning how the state and the economy were controlled, serving specific businesses and party-affiliated groups. Behind the facade of formal legality and fulfillment of formal criteria, including for presentation outside the country, lies economic collapse. Against this background, the likelihood of Bulgaria ceasing to be the poorest member state of the European Union becomes even lower.

Among the many strategic risks and problems related to Bulgaria's economy and finances, with this letter we would like to draw your attention to a process "invisible" to the general public - the accession to the ERM 2 Exchange Rate Mechanism (known as the "euro area waiting room") and to the Banking Union in 2020, as well as the planned by the previous government, under the manipulative pretext of implementing the EU Membership Treaty, the subsequent introduction of the euro in Bulgaria.

We take this opportunity to emphasize that the EU Membership Treaty requires member states (except Denmark, which has negotiated an exception to this clause) to adopt the euro, but each country retains the sovereign right to determine the appropriate moment when its citizens and economy would receive real benefits from the single European currency. For example, more developed than us and providing a higher standard of living for their citizens, countries such as Sweden, the Czech Republic, Poland and Hungary, consistently exercise this sovereign right.

Abandoning the national currency and replacing it with another currency cannot be a goal in itself. At the same time, replacing the lev with the euro would be a step with strategic, long-term and difficult to reverse consequences for every citizen and enterprise in Bulgaria. Such a process, therefore, requires in-depth and very broad discussions and analyses. Instead, in recent years we have witnessed how this same process is proceeding in an extremely undemocratic and unfair manner towards Bulgarian society, shrouded in total opacity and driven through backstage conversations and decisions in the interests mainly of small groups of politicians and businessmen associated with them from the regime that ruled the country until the last parliamentary elections.

Following membership in ERM 2 and the Banking Union, the introduction of the euro will represent an act of significant transfer of national sovereignty. However, the process is planned to be carried out in a non-transparent manner, without informing and without consulting the Bulgarian people.

This would reinforce the undemocratic tradition in Bulgaria that the issue of replacing the Bulgarian lev with the euro has never been put up for public discussion. Such an action puts us in the same group as only Romania and Cyprus, while in all other member states this issue has been subject to referendums - directly with a question for/against adopting the euro, or indirectly as part of discussions before referendums on membership in the European Union.

Based on the above, we call on the ministers appointed by you in the caretaker government to carefully examine the broader context and the established course of the euro adoption process so far. One of the important issues that the political class is obliged to clarify for voters in the run-up to and during the upcoming elections is related, for example, to the amendments to the BNB Law, which were illegally and secretly introduced into the National Assembly in January 2020, which dealt the strongest blow to the currency board since its introduction 25 years ago. Another important issue on this topic is the scandalous recapitalization by the Bulgarian Development Bank of a private bank in the summer of 2020.

In 2020, we at the EQUIP issued an Appeal for the Security and Future of Our Money and Savings. This Appeal, which we attach to this letter to you, contains a detailed argumentation of the concerns related to the opaque and irresponsible management of the process of joining the Monetary Mechanism, the Banking Union and the Eurozone.

The risks associated with this process today are even greater, but the current political situation gives hope for a return to the principles of transparency, efficiency and democratic governance and policymaking in Bulgaria. That is why now again, as in our 2020 Appeal, we call for your attention and statesmanlike support for the following:

1. Bulgarian institutions should take responsibility for preparing and publishing a detailed analysis of the benefits, costs and risks associated with membership in ERM2, the Banking Union and the euro area. This analysis should include an assessment of the future of the euro area itself and offer clear conclusions in favor of one or another strategy for Bulgaria's behavior.
2. Based on this analysis, a broad discussion should be initiated with the participation of experts from the country and abroad, including academic representatives, independent researchers, representatives of various public groups and businesses.
3. Based on the analysis and the discussion held - to organize a survey of all citizens of the Republic of Bulgaria regarding their opinion on the question of whether they support (at this stage) replacing the Bulgarian lev with the euro and joining our country to the eurozone.

The Expert Club for Economics and Politics (ECOP) is an organization of young economists, financiers, lawyers, academics and professionals with interests related to public issues and policies on topics important to Bulgaria. And as such, we are addressing you.

We remain at your disposal for further discussions and assistance on the above-mentioned topic, which is so important for our economy, society and every Bulgarian citizen. We trust that here too you will apply your high standards of transparency and accountability in making decisions in the interest of Bulgarian citizens.

WITH RESPECT,

STOYAN PANCHEV

CHAIRMAN OF THE BOARD OF DIRECTORS,

EKIP

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