Bulgaria and Kristalina Georgieva: 30 years on, the walls continue to fall

Professor Amelia Hadfield and Christian Turner[1]

On November 9th, leaders from across Europe and the world, will gather in Berlin, Germany to mark the 30-year anniversary of the collapse of the Berlin Wall. Like so many defining moments in the 20th century, that day in 1989 was televised across the world, captured in iconic photos that have since featured in everything from politics textbooks to posters in student digs. The image itself is synonymous with the collapse of communism across Eastern Europe which took place in the weeks that followed, culminating in the brutal show trial and death of Romanian President Nicolae Ceaușescu. Todor Zhivkov, the de-facto leader in neighbouring Bulgaria was also pushed aside by the Bulgarian Communist Party the very day after the collapse of the Berlin Wall, in a desperate attempt to hold onto power. The BCP attempted to reform, by transforming into the Bulgarian Socialist Party, at the beginning of a period that would bring further, far-reaching political and economic reforms.

The decade that followed would see democratisation and privatisation brought in as Bulgaria shifted from one-party rule to the beginnings of a more liberal democracy. A number of key factors explain the shift: the collapse of Communism across Europe, the seismic shifts of government from the  neighbouring Soviet Union into the Russian Federation, the steady push by the European Union from the 1993 Maastricht Treaty towards integration and enlargement, and ongoing volatility in the Europe-US division of labour regarding Europe’s own security and defence. For some, this period heralded political advances and increasing social equality. For others, the period witnessed serious setbacks. Critical hyperinflation for instance saw Bulgaria turn to the International Monetary Fund for a $700 million loan, along with former Warsaw Pact allies in Poland, Hungary and Romania.[2] Living conditions also declined drastically for a period whilst constitutional reforms were undertaken across the former Eastern bloc. Many of these reforms of the 1990s, and their socio-economic impacts  continue to have seismic affects to this very day, including political instability, challenges over the separation of powers – including the role of the judiciary – independent press, tolerance for freedom of expression both publicly and within institutions of higher education.  

The visible desire for Western support from Eastern European countries accelerated during the mid to late 1990s as Russia itself struggled with a declining economy domestically, and diminishing  authority on the global stage. Keen to construct a strategy that transformed new neighbours into new members, the EU’s Copenhagen Criteria set out a must-have list of political, economic and judicial reforms that candidate states wishing to join the EU were required to undertake as part of the long-term goal of accession. Most Warsaw Pacts states joined the EU in 2004 within the ‘Big Bang’ expansion into Central and Eastern Europe. Bulgaria and Romania joined in 2007, delayed by problems in effecting the full raft of criteria and specific concerns of ongoing corruption. Some improvements in governance have certainly taken place, though Bulgaria has also witnessed ongoing political instability, principally over stagnant living conditions and an inability to deal effectively with corruption.

More recently, Prime Minister Boyko Borissov has attempted to bring about an increased presence of Bulgaria on the global stage. Part of this improved global image has been buoyed by the choice of Kristalina Georgieva as the first non-Western European Managing Director of the IMF, on the 29th October 2019. Hard on the heels of Bulgaria’s first EU Council Presidency in 2018, which saw it act as a not insignificant bridge-builder between the West and Visegrad Four (Poland, Hungary, Slovakia and the Czech Republic) during the difficult negotiations over the key EU roles, Georgieva’s appointment marks another ‘coming of age’ for Bulgaria.  

Who is Georgieva?

For anyone that follows the ins-and-outs of international institutions, Georgieva is a familiar name. After graduating with a PhD in Economics, Georgieva did a spell in academia before joining the World Bank as an Environmental Economist. She quickly rose up the ranks to the position of Vice President and Corporate Secretary during the time of the global recession. However, she resigned in 2010, after being nominated as Bulgaria’s designated choice for European Commissioner, following the withdrawal of Rumiana Jeleva, after a tough hearing process and gaps in her financial statement.

Whilst very much a technocrat, Georgieva has enjoyed the support of Bulgarian Premier Boyko Borissov, who has sought to increase and deepen cooperation between Western and Eastern European member states. Georgieva initially held the dual posts of Commissioner for International Cooperation and Development, and Commissioner for Humanitarian Aid and Crisis Management under Jose Manuel Barroso’s second Commission, before becoming Vice President for Budget and Human Resources under Jean-Claude Juncker in 2014, after narrowly missing out on the role of High Representative to Federica Mogherini. Controversy arose in 2016, when Borissov withdrew support from Bulgaria’s Irina Bokova in the race for United Nations Secretary General and instead nominated Georgieva.

However, as withdrawal can only be done at the discretion of the candidate themselves, Bokova refused, with the result that both Bulgarians sought simultaneously to become the first female, Eastern European Secretary General of the UN. Sadly, this lack of support, against the backdrop of increasing global tension between Russia, Europe and the US, alongside other inter-institutional politics, saw Georgieva miss out on the post, which instead went to the former Portuguese Prime Minister Antonio Guterres. Georgieva subsequently came in for criticism from Members of the European Parliament for her absence during the UN selection process for the Secretary General post itself, as well as use of EU funds for her travels to Security Council member states.[3] On the back of such criticism, Georgieva decided to return to the World Bank in 2017, managing to secure additional funds from the isolationist Trump administration.[4] In 2019, she then assumed the role of Acting President, after the resignation of Jim Yong Kim, until his replacement by David Malpass. Many commentators thought Georgieva was unfortunate in not having been nominated for this post herself, but as per the long-standing Bretton Woods agreement between the USA and Europe regarding the selection of the IMF and World Bank, it fell to the Trump administration to make the selection.[5]

In June, Georgieva briefly emerged as a surprise contender for President of the EU Council, as part of a deal that would have seen Frans Timmermans installed as President of the EU Commission, but considerable pushback from Poland, Hungary, Slovakia and the Czech Republic over the choice of Timmermans saw the deal quickly collapse. In the end, the charmed third attempt has succeeded, with Georgieva being nominated in 2019 for the role of IMF Managing Director, following the selection of Christine Lagarde as President of the European Central Bank. On this occasion, Georgieva enjoyed considerable support from Paris and French President Emmanuel Macron in particular, facing down a tough challenge from former Dutch Finance Minister, Jeroen Dijsselbloem and lobbying from London for former Chancellor George Osborne.[6] Georgieva’s path became far easier in early September when she was confirmed as the sole contender, with the Executive Committee of the IMF having removed its age limit of 65 years old (Georgieva recently turned 66).[7]

What awaits Georgieva?

As Georgieva formally assumes the role of Managing Director, she faces a mountain of issues unlike any of her predecessors. First and foremost, she will likely attempt to renegotiate the financing of the IMF to keep its budget above the symbolic $1 trillion.[8] With elections looming in Canada and the USA this year and next, and political and financial instability in France, Germany, Spain, the UK and Italy, this will not be an easy task. She may further focus attention on growing instability in global markets more broadly, as signs of economic slowdowns begin to appear in North America, Europe and Asia, including China. The trade war between the USA and China remains a particular concern, as it now appears to be sparking further examples of protectionism in other formerly globalist economies, include Japan and South Korea.[9]

There is also the long-term issue of dealing with serial offenders such as Argentina, the Ukraine and Pakistan. Often trapped inside the so-called ‘Debtors Prison’, these states alongside many others have found themselves in a constant cycle of requesting IMF support every few years in exchange for tough conditionality, often in the form of austerity and privatisation measures. Indeed, some hope that Georgieva may shift away from the so-called Washington Consensus policies of old, with her experience of the IMF loan that Bulgaria received in 1997, although this is unlikely to be the case given her years of experience as a World Bank technocrat.[10]

Finally, the upcoming Argentinian President elections may prove something of a baptism of fire, as Alberto Fernandez continues to gather support over his extravagant promises, including defaulting on IMF loans.[11] Whilst this wouldn’t be the first Argentina has defaulted, it would be the first time it has done so in such a deliberate manner. Georgieva will be fully aware of the implications of allowing one of the IMF’s largest debtors to attempt to renounce its obligations.

Overall, Kristalina Georgieva’s assumption to the Head of the IMF is an historic moment, both personally and politically. She becomes the first Eastern European to head a major international institution, only the second female to manage a Bretton Woods institution. She also represents a major political victory for both Bulgaria, and Prime Minister Boyko Borissov, in carving out a more explicitly global role it. Given that no Eastern European was awarded a significant role during the EU Council meeting in June, this will help to appease some as the symbolic anniversary of November 9th arises. As such, Georgieva will have to walk the delicate line between fiscal policy and political manoeuvrability in the minefield that is global politics. In many ways, she has a lot to lose and little to gain, with the IMF often seen as a controversial institution. Georgieva will need to remain open to reform, if she is to become anything other than a symbolic ‘first’ in heading an international institution.

Bringing down the walls in gender and geography

As we reflect on the 30 years since the fall of the Berlin Wall, it is also important to consider the falling of barriers for women around the world. In 1989, Margaret Thatcher largely stood alone as a female leader on the world stage. Georgieva’s confirmation as head of the IMF showcases the gradual and overdue trend of women at last filling high-ranking national and international posts. Ursula Von Der Leyen for example emerged as the surprise compromise candidate for President of the European Commission, part of the electoral package of four posts that also created the IMF vacancy left by Christine Legarde’s departure for the European Central Bank. Progressive gender balance is supposed to extend to Von Der Leyen’s College of Commissioners, although it now appears likely that it will be slightly more male dominated as the European Parliament has rejected various candidates. 2019 has also seen an increasing number of women in both legislatures and executive offices around the world, though still with a preponderance in Europe and the North America than in other regions. However, there is undeniably far more progress to be made. The walls need to continue to fall, both in terms of geography, and gender.

[1] Professor Amelia Hadfield is the Head of the Department of politics at the University of Surrey. Christian Turner is a graduate in International Relations with American Studies from Canterbury Christ Church University (2018) and International Law from the University of Kent (2019); he worked with Professor Amelia Hadfield at CCCU’s Centre for European Studies (CEFEUS) as a postgraduate research analyst on a range of UK, EU and international issues and outputs.

[2] https://www.ft.com/content/6356a992-d5fd-11e9-a0bd-ab8ec6435630

[3] https://www.euractiv.com/section/eu-elections-2019/news/epp-source-georgieva-is-backed-by-orban-cannot-be-next-eu-commission-chief/

[4] https://www.ft.com/content/0586f2b2-b6a0-11e9-8a88-aa6628ac896c

[5] Ibid

[6] https://www.independent.co.uk/news/uk/politics/george-osborne-imf-job-boris-johnson-trump-a9076811.html

[7] https://www.politico.eu/article/georgieva-in-one-horse-race-for-imf-top-job/

[8] https://www.ft.com/content/5b444782-d30f-11e9-a0bd-ab8ec6435630

[9] https://www.bbc.co.uk/news/world-asia-49330531

[10] https://www.batimes.com.ar/news/world/bailed-out-nations-to-finally-get-one-of-their-own-at-top-of-imf.phtml

[11] https://www.ft.com/content/f283db90-c8e1-11e9-af46-b09e8bfe60c0