The Bureau of the European People's Party-European Democrats Group in the European Parliament is meeting in Sofia on March 19-20 at the invitation of Rumiana Jeleva MEP, Head of the Bulgarian Delegation to the EPP-ED Group. The economic crisis, the challenges to regional policy and the important role played by small and medium-sized enterprises top the agenda.

Othmar Karas MEP, Vice Chairman of the EPP-ED Group, said at the opening that common European solutions were needed to combat the financial crisis. The EU has two key responses, which can also apply to the crisis: one is enlargement, which strengthens the internal market, and the other - the euro - is the basis of economic and financial stability, which makes currency speculation almost impossible, Karas said.

In the first discussion, on the response to the economic and financial crisis, Tsvetan Tsvetanov, Chairman of the Bulgarian GERB Party, said it was aware of the governance responsibility it would have to shoulder. What GERB's Bulgarian opponents believe - that the crisis gives the Socialist Party a chance because leftist ideas are an alternative to the liberal market model - is dangerous because it does not set the right direction for emerging from the crisis, Tsvetanov said. It is not the failure of the liberal model but the poor effectiveness of financial market regulation that caused, in part, the build-up of excessive risks in the financial system.

Tsvetanov added: "We support businesses by suggesting that they should keep more money back instead of paying higher taxes on labour."

Daniel Gros, Director of The Centre for European Policy Studies (CEPS), said there had been a property price bubble in Europe too, which was just as dangerous as in the United State. The choice to rescue banks was made at an EU Summit, which stressed that there were national packages for combating the crisis. This is a fundamental decision - everyone will fend for themselves.

The decentralized approach resulted in a secondary crisis in Central and Eastern Europe, Gros said. He argued that nothing was being done about the financial markets at the European level. He opined that the creation of a European council for assessment of system risks would help to react to risks in the financial system.

Rounding up the subject, Rumiana Jeleva said that specific, although simple and effective actions and policies were needed. The strengthening of banks would allow them to stay and operate in the countries of Central and Eastern Europe where the secondary effect of the crisis will be felt in the coming summer, Jeleva said. The crisis also opens up opportunities, including a great potential for joint European projects as a manifestation of European solidarity in areas including energy security and support for SMEs, she said.

The second discussion for the day focused on securing the results of economic transition.

Struan Stevenson MEP, Vice Chairman of the EPP-ED Group, said that under its EU Accession Treaty, Bulgaria can apply for safeguard measures for countering serious economic difficulties. He said he had heard that two of the four reactors of the Kozloduy nuclear power plant could be restarted, and advised Bulgaria to act now rather than wait for the next gas crisis. He said that under its Treaty with the EU, Bulgaria can invoke the clause on recommissioning of the reactors by January 2010.

Ivo Prokopiev, Chairman of the Confederation of Employers and Industrialists in Bulgaria, said that the main thing that happened in the financial markets in the last six months was a total loss of confidence. This triggered a massive process which showed that the global financial system generated a global crisis, while the political and regulatory instruments remained local. He noted that a new division into Old and New Europe should not be allowed. The euro and the enlargement of the Eurozone should be the main tool of support for New Europe. The East European countries need a clear roadmap in order to stop speculation in the financial markets, Prokopiev said.

Garabed Minassian of the Institute of Economics of the Bulgarian Academy of Sciences said the serious risks to Bulgaria were internal rather than external. The signs of a crisis were most markedly manifest in the last quarter of 2008 when an exodus from the lev was noted. Investment in Bulgaria had been growing in property sales, construction, trade and car repairs, which are at the core of the financial crisis around the world, Minassian said, adding that investment activity had not dropped so far.

Source: BTA