The Harvard-educated economist has been part of Bulgaria’s caretaker cabinet of experts since May and he is intent on cleaning up the corrupt mess left behind by the previous government. The former prime minister, Boyko Borissov, resigned this spring after a total of 10 years in power when his party, GERB, suffered heavy election losses.

After speaking to Vassilev for an hour, one begins to wonder if it is such a good idea for Bulgaria to join the common currency in the first place. In early June, Sofia presented a concrete plan for the introduction of the euro, with Jan. 1, 2024, identified as the day it will switch currencies.

And the chances of that plan becoming reality aren’t bad at all. Bulgaria fulfills all of the formal criteria for joining the European common currency zone. Its budget deficit, sovereign debt and inflation rate all exceed the criteria laid out for joining the euro. And the country’s currency, the leva, is already pegged to the euro.

Last year, Bulgaria joined Croatia in becoming part of the ERM II, Europe’s exchange rate mechanism, and the European banking union. And that means that the path to the euro is irreversible. Even the European Central Bank no longer has veto powers. Only the precise timing can be adjusted.

Bulgaria’s membership would mark the first expansion of the eurozone since Lithuania joined in 2015, becoming the common currency area’s 19th member. But does it really make sense to accept a country that has had lasting problems with corruption, money laundering and financial oversight?

Creating Another Problem

"Of course, Bulgaria is more than welcome to join the euro, but it first must get a handle on its problems in the area of money laundering and corruption," says Sven Giegold, a Green Party member of European Parliament who traveled to Bulgaria together with party ally Daniel Freund to investigate the country’s readiness for the common currency. The EU, says Giegold, must prevent a situation in which a member state becomes a hub of large-scale money laundering, as has happened in the past in Cyprus or the Baltic states.

But could the EU block Bulgaria from joining? Once such an accession process starts, it tends to be difficult to stop. In summer 2020, even before the current caretaker government came into office, European Commission President Ursula von der Leyen insisted that "we will continue to stand with (Croatia and Bulgaria) as they take their next and final steps towards joining the euro area."

It seems as though the European Union could be in danger of creating yet another problem for itself – almost as if it learned nothing from the euro crisis.

Even leading politicians in the country believe that the Eurogroup should reexamine its intention of soon accepting Bulgaria into the common currency zone. "Bulgaria has a number of sectors where the combination of corruption, mismanagement and direct or indirect state control has led to accumulation of loses and factors of instability," says Christo Ivanov, head of the anti-corruption party Yes, Bulgaria! Ivanov and others are quick to recall the problems encountered by the eurozone following the accession of Greece.

At the time, Athens concealed its true sovereign debt levels and the size of its budget deficit. The country then almost went bankrupt in 2010, which magnified the severity of the euro crisis. Despite the Greek economy being extremely small relative to the entire eurozone, the country’s problems almost resulted in a collapse of the common currency zone.

"I'll Take Care of the Job"

European parliamentarian Freund, though, sees eurozone accession as an opportunity for the country. "Developments in Bulgaria are going in the right direction under the current government," he says. The European Commission and the European Central Bank, he says, need to use the opportunity presented by the introduction of the euro to get Bulgaria’s financial sector up to snuff.

That presupposes, however, that the reformers have political control. But the current government doesn’t have a majority in parliament. And new elections are scheduled for November, the third general election this year.

It is completely unclear whether Finance Minister Vassilev and his fellow cabinet members will be able to carry on their cleanup efforts. It is quite possible that Borissov’s GERB party – which belongs to the conservative European People’s Party group in the European Parliament alongside German Chancellor Angela Merkel’s Christian Democratic Union (CDU) – will return to power. And that would be a disaster for Europe. Borissov has already begun firing sarcastic barbs: "If you can’t handle it, bring me back. I’ll take care of the job for you."

The long-time head of government in Bulgaria single-mindedly eroded democracy in his country. He made inroads on judiciary independence and handed out public contracts to Bulgarian oligarchs. Because he was more discrete about it than the governments in Poland and Hungary, Borissov was largely able to avoid censure from Brussels or Berlin. His legacy will be with the country for a long time.