Leftovers are sweet: Bulgaria may become the last new member of the eurozone
On January 1, 2026, the list of eurozone countries will be replenished with another one — Bulgaria. In recent years, the expansion of the monetary union has been slow and difficult: most of the new members, like some of the old ones, are not eager to join. And in Bulgaria itself, which is currently the poorest state in the European Union, the prospect is not exciting. About why the Eastern European members of the EU do not like the euro and why Brussels seeks to introduce it in as many countries of the continent as possible, as well as about the price of this introduction for "old Europe" — in the Izvestia article.
Balkan Switzerland did not take place
At the beginning of this year, Bulgaria became one of the last EU countries to enter the Schengen area. It is ironic that this happened against the background of regular suspensions of the Schengen agreements in certain states of the union in recent years. The next step in European integration will be joining the eurozone next January, and it is proving to be much less popular.
When Bulgaria was just admitted to the EU in 2007, there was hope for the country's transformation into a "Balkan Switzerland." The expectations were not destined to come true: After 18 years, Bulgaria is the poorest country in the EU by most indicators.: GDP per capita, the proportion of citizens below the poverty line, average salary, etc. In many respects, Bulgaria is even inferior to its non-EU neighbors, for example, Turkey. All this is accompanied by a rapid decline in the population: the number of Bulgarians has decreased by more than a quarter. Since joining, the European Union has sent 16 billion euros in subsidies to the country, but almost all of this money went directly to the capital, while the country outside Sofia received crumbs.
Although there is no strong euroscepticism in the country, joining the eurozone, unlike joining the EU in the 2000s, does not arouse much enthusiasm among the population. According to polls, only about 20% believe that the republic should accept the euro as its national currency. About 40% are sure that the euro is not needed at all, while the rest suggest taking their time. Joining the euro area is more likely to benefit Sofia residents, some of whom conduct business abroad, rather than people living their lives in small municipalities or rural areas.
There are no more takers
It is not surprising that Bulgaria is an exception among the relatively large states of Eastern Europe. Poland, the Czech Republic, Hungary and Romania are categorically against joining the eurozone. All these countries show good development indicators. The standard of living in Poland and the Czech Republic has already surpassed the results of most Southern European countries and is approaching Western levels. Hungary and Romania are also showing rapid development rates.
All these countries have the opportunity to regulate the level of their currency without being held hostage by the monetary policy of the European Central Bank or the state of affairs with the euro. By the way, this is largely why Eastern Europe grew especially intensively in the 2000s, when the euro was exceptionally strong. In theory, this situation is considered temporary, and "someday" all of them should join the eurozone (at least, such obligations are laid down in the Maastricht Agreement). However, greater financial independence and good economic performance postpone this issue for an indefinite future. There is no plan to adopt the euro in these countries, and there is almost no chance that momentous decisions in this direction will be made in the next 5-7 years.
Actually, this applies not only to Eastern Europe. The Scandinavian countries, Denmark and Sweden, are also in no hurry to join anywhere. In Sweden, the euro was directly rejected in a referendum, and Denmark included a clause on the non-acceptance of the European currency in an agreement with Brussels back in the 1990s. Copenhagen and Stockholm have decided that their currencies are strong enough not to make themselves dependent on a foreign issuing center. The benefits, such as simplifying transactions and making life easier for tourists, migrants, corporate managers and businessmen, were not worth the potential problems, in their opinion.
The Euro as a source of crises
For many, this was obvious back in the 1990s, but the European debt crisis and especially the situation with Greece had the most negative effect on the prospects of the euro. It turned out that the EU economy is not so strong at all, and joining the euro area carries serious risks. Greece was tied hand and foot. She could not devalue the currency, which would trigger the process of economic recovery through shock therapy. The result was a decade of economic turmoil, and even now the country's GDP per capita is a quarter less than in 2007. It is unlikely that the absence of the euro in Greece would have changed everything, but such severe consequences could most likely have been avoided.
But if the euro was one of the causes of the severe crisis for Greece, then in Italy it was the source of many years of stagnation. As recently as 2021, the GDP per capita of the third EU economy was lower than in 1999, on the eve of joining the eurozone. Due to the growth of recent years, it has slightly moved away from these indicators, but in comparison with most of its neighbors, it can be considered that there is no growth at all. The same situation is reflected in the average earnings of Italians, which have fallen over the past quarter century.
The reasons for Italy's problems are clear: although foreign trade has grown significantly since the turn of the century, the euro has deprived the state of any opportunity to create a comparative advantage for its producers. As a result, the country, which boasted of a real economic miracle in the 1980s and 1990s (by 1998, the per capita GDP of Italy and Germany was almost equal, although historically it had always been much lower in Italy), began to pass one lost decade after another. In this sense, the situation in the country's economy was and is much worse than, for example, in Japan, which is considered the standard of such permanent stagnation. Another consideration is that Italy still had significant domestic debt by the end of the 1990s. But it was denominated in lira and could be easily monetized. After the adoption of the euro, Rome obviously no longer has such an option.
As practice shows, in Eastern Europe, enthusiasm for the euro is shared only by small countries that, in fact, do not have their own developed financial system and industry. For residents of the same Baltic states, the convenience of traveling with the euro pays for any problems with using this currency. That is why they tried to join the eurozone earlier than the much more economically powerful Poland or the Czech Republic. In addition, they are politically dependent on Brussels, and the EU leadership is determined to maximize the expansion of the eurozone.
All power to Brussels
Why is Brussels trying so hard to increase the circulation of the euro, even if its results so far look ambiguous? The formal reason is the expansion of trade, but at the moment it does not look convincing. Initially, it was believed (tacitly) that the introduction of the euro should curb the ambitions of Germany, which increased dramatically after the unification. In France, in particular, it was feared that the reliability and strength of the Deutschmark would lead to the fact that, as integration progressed, French (as well as Italian, and many others) depositors would leave for German banks. This, in turn, will make Germany not just a leader, but an economic hegemon of the EU, upsetting the balance of power.
Now other factors have come into play. The expansion of the euro area naturally pushes the states of the continent towards more active federalization, which is the dream of Brussels officials. The risks to the financial system are not particularly considered at the same time — the case of Greece has not taught anyone anything (however, the EU was able to shift the brunt of the crisis onto the Greeks themselves, avoiding the domino effect that would inevitably overtake the financial systems of Germany and France if it were decided to share the damage). The strengthening of the positions of the ECB and Brussels is an inevitable consequence of the aggressive expansion of the eurozone.
Another question is that a significant advance of the euro is extremely unlikely now. Bulgaria is likely to remain the last relatively large acquisition of the eurozone for the foreseeable future. The decline of industry, the loss of a crucial partner in Russia, tariffs and generally difficult relations with the United States, the rapid growth of the debt burden and, finally, the growing political instability in key European countries make the euro an increasingly less attractive asset. The expansion of the eurozone increasingly looks like an element of inertia, reminiscent of the late, very modest acquisitions of the Roman Empire on the eve of its decline.
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