TREMOR OF INTENT

Even Boyko Borisov, popularly referred to as "Batte Boyko," or Big Brother Boyko, was surprised at the scale of his victory in the recent general election. The mayor of Sofia's party, GERB, or Citizens for a European Bulgaria, garnered 39.72 percent of the vote, trouncing the Bulgarian Socialist Party.

The BSP, leader of the outgoing ruling coalition, garnered only 17.7 percent. As a result, GERB sends 116 deputies to the 240- seat parliament, just shy of an absolute majority, and almost three times as many as the BSP's 40. The BSP's coalition partner, the liberal NDSV, or National Movement for Stability and Progress of former King Simeon II, prime minister between 2001 and 2005, experienced electoral wipeout, polling only 3.02 percent, thus failing to reach the 4 percent threshold for entering parliament.

The third party in the previous government, the DPS, or Movement for Rights and Freedoms, supported largely by ethnic Turks and Muslims, increased its vote share to 14.45 percent, giving it 38 seats. It was ejected from power nonetheless by the resurgence of the right, which is deeply suspicious of it.

The result was a resounding rejection of the government of BSP Prime Minister Sergey Stanishev, which had been beset by difficulties and controversy after a positive start. The administration presided over Bulgaria's entry to the EU – a process largely initiated by its predecessors. But on its watch, the country's reputation was tarnished by a string of corruption allegations, many wellfounded, that led to Brussels docking more than half a billion euros in much-needed funding. Evidence of cabinet ministers' relations with organised crime, questionable tender awards and the siphoning off of European cash led some to question whether Bulgaria's accession to the EU had been premature and not well thought-out.

Having run a reasonably tight economic ship, the government was also hit by the global economic crisis. It was accused of underestimating the impact the situation would have on Bulgaria. A pre-election spending splurge focused on what the BSP argued were vital social programmes, but its opponents saw it as unsustainable pork-barrelling aimed at the Socialists' core constituencies, most notably pensioners.

Many analysts also argued that the election result was significantly influenced by anti-DPS sentiment. While that party's loyal vote base, consisting mainly of Turks living both in Bulgaria and in Turkey, held firm as ever, anger among other Bulgarians about its perceived corruption, disproportionate influence on the nation's politics and manipulation of its voters appears to have tarnished both the BSP and its junior coalition partner, the NDSV.

To outline the issues that brought down Stanishev's government is not merely to recapitulate history. It also highlights the serious challenges that lie ahead for the Borisov government. The mayor and his party have, thus far, largely traded on his charisma and Man of Action persona, as well as the fact that he comes from outside the traditional post-Communist political class. Wearing jeans, straight-talking and novelty value alone, however, will not fix Bulgaria.

According to Svetla Kostadinova, executive director of the Sofia-based Institute for Market Economics (IME), the first task for the new administration will be to delve into Bulgaria's public finances to assess the fiscal legacy it has inherited. The consensus is that what it finds will not be pretty, and that serious cuts will have to be made to get the state back on an even keel. In the aftermath of the election, GERB's Biser Boev warned that "We must act very bravely." Merging ministries to cut bureaucracy is likely to be one of the government's priorities, but that alone is unlikely to be enough to maintain Bulgaria's admirable recent record of fiscal surpluses, which have helped underpin its success in attracting foreign direct investment.

The need for a bold economic policy has rarely been more pressing. Bulgaria faces its toughest year for more than a decade. Just as signs were emerging that the international economy might have bottomed out, with renewed growth expected in 2010, the outlook for Bulgaria worsened sharply. In July, the IMF revised its forecast of GDP shrinkage to 7 percent for 2009, predicting a further 2.5 percent contraction next year. The country will require 25 billion euros of external financing this year, according to Capital Economics, a macroeconomic research consultancy. This is at a time of exceptionally tight global liquidity, and a wariness towards the emerging market of Eastern Europe among investors and foreign governments alike. Such is the severity of the situation that another of the government's priorities will be defending the lev currency link with the euro – another anchor of macroeconomic stability over the past decade – from pressure to devalue to boost external competitiveness. The long-term economic gains of currency stability should outweigh the pain of the next 18 months, but the authorities will have to move quickly to scotch pressure to abandon the peg.

The good news is that the investment community seems to be upbeat about Borisov's election. Despite the former bodyguard's unpolished image, he is surrounded by well-regarded and internationally experienced technocrats including Simeon Djankov, latterly a senior economist at the World Bank. Kostadinova argues that the new administration is well aware of the importance of reinvigorating reform to boost investment. Indeed, Boev has stressed the importance of cutting red tape to improve the business climate. GERB is not expected to rest on the laurels of the previous government's introduction of a 10 percent flat rate tax on personal and corporate income, seen by the business community as a positive step but on its own not enough to maintain Bulgaria's competitive edge.

A renewed appetite for supply-side reforms must also be partnered with a drive to mend relations with Bulgaria's European partners, not least to unfreeze funding needed for longawaited infrastructure investment. This will involve renewed efforts to tackle corruption and organised crime – a promise that successive governments have made but failed to fulfil. One of Borisov's first moves was to meet Bulgaria's prosecutor general to discuss moves to prosecute those accused of graft.

This seems likely to involve cases against members of the previous administration, including the DPS and its long-term leader, Ahmed Dogan.

Whatever the merits of these cases, however, Borisov faces the risk of appearing to use the judicial system to settle political scores, an accusation levelled at Romania's self-styled corruption-fighting President Traian Băsescu, another no-nonsense former mayor. While taking alleged perpetrators to court seems straightforward enough, rooting out corruption in a country which has, to an extent, developed the perception that graft is inevitable is likely to be a longer-term challenge that even the maverick Borisov will find difficult to grapple with.

The government also faces the delicate issue of ethnic relations. Bulgaria's post- Communist society has, in the main, been commendably free of the communal strife that has blighted the former Yugoslavia, and even Romania. However, the Roma minority remains unintegrated socially and economically, while the DPS is deeply unpopular with many, probably most, Christian Bulgarians. Borisov has made some unguarded – though also exaggerated – comments about both Roma and Turks that have raised eyebrows internationally. Conciliatory in his post-election statements, his policies towards minorities remain unclear.

Political analyst Ivan Krastev has argued that the DPS's departure from government could help ease ethnic tensions, by removing the party from the spotlight (and access to central government funds) and reducing the conflation between Dogan's party and Turks as a group in the public mind.

It remains to be seen whether GERB can become established as Bulgaria's right-ofcentre force over the long term. Since the fall of Communism, a stable ideological differentiation in party politics has yet to emerge, with only the BSP consistently maintaining its position on the centre left. Borisov will have one eye on the experience of previous movements elected on a wave of enthusiasm – the rightwing SDS, or Union of Democratic Forces, in 1997, now reduced to a potentially fractious "Blue Coalition" which polled 6.76 percent in June; and the liberal NDSV, in power 2001–2005, and now possibly finished as a national force.

To an extent, the failure to establish solid parties is due to the electoral system and the lack of a muscular anti-Communist opposition movement in the 1980s – there is no Bulgarian Václav Havel or Lech Wałęsa. And even democracies of a century's standing see once-great parties fade, like the UK's Liberals and Canada's Progressive Conservatives. The emergence of a more constant party system would be further evidence of Bulgaria's increasing political maturity.