The Lambo and the Lada: the story of wealth inequality and political crisis in Bulgaria7 min read
If you ever find yourself stuck in traffic in Sofia, the World Bank’s assessment that Bulgaria is plagued by wealth inequality will become abundantly clear to you. It is likely that to your left you will see the latest Lamborghini Urus and to your right, you will notice a Lada Niva. The Lambo is valued at around half a million lev (250,000 euros), while the Lada was produced in the 1990s, likely bought third-hand, and costs roughly around 500 lev (250 euros) – or the equivalent of the minimum salary in the country. Such puzzling experiences are common in the EU’s poorest member state, but they also provide a key perspective on how Bulgaria ended up entangled in a political crisis.
For Bulgaria, 2021 has been a year of political turmoil. New political actors managed to secure a sizable amount of votes at the standard parliamentary elections in April, essentially ousting the ruling party Citizens for European Development of Bulgaria (GERB), which had been in power for over a decade. However, the three ‘protest’ parties, which promised to bring about change — namely, There Are Such People (ITN), Democratic Bulgaria (DB) and Stand Up BG! We Are Coming (IBGNI) — did not see eye-to-eye and failed to form a government. The snap elections in July resulted in even greater support for the new parties, but still, no parliamentary majority was agreed upon. As the next election cycle approaches shortly in November, the dawn of political fragmentation in the country is undeniable, but the rampant wealth inequality in the state can provide some valuable insight as to how we got here in the first place.
The income gap
There is a vast gap between the rich and the poor in Bulgaria. This is a state where the wealthiest 10% earn around 32.6% of the total income, while the bottom 10% hold roughly 17 times less than that at 1.9%. To put this in perspective, Bulgaria scored the worst in Europe on the World Bank’s Gini Index with a 41.3 deviation from perfectly equal distribution of wealth among European countries, excluding Turkey. Even Russia, traditionally seen as the poster child of wealth inequality, has a lower score at 37.5. So if 10% of the population are living with a third of the total income at their disposal and over 20% of the population is living below the poverty line, what is left in the middle?
According to the scarce official data released by the Ministry of Finance and mostly derived from taxation records, the middle class in Bulgaria is made up of around 250,000 people with a monthly salary between 2,000 lev (1,000 euros) to 6,000 lev (3,000 euros). Data on voting behaviour in Bulgaria suggests that the highest voter turnout in the state is among the urban middle class. With a population of almost 7 million, that is an alarmingly small group of people to bear the responsibility for political change. This holds further significance considering it is the educated working voters living in big cities who are the ones voting for the new parties. Regardless of breakthroughs such as ITN’s success of securing 17% of the vote upon their first-ever participation in elections, the middle class is too small to secure a working majority for any of the new parties and this is a major contributor to the current crisis.
Moreover, voter turnout in Bulgaria as a whole is fairly low. This could also be interpreted as one of the consequences of wealth inequality. Over time, the more income inequality increased, the lower the voter turnout became in Bulgaria. While this is not a clear cut case of cause-and-effect, it is important to account for the shift that has occurred; voter turnout has fallen from 60.6% in 2009, when the ratio of income inequality was 5.91 to the current level of 42.19% with an increased inequality ratio of 8.01.
One reason for the link between the two is that the more people rise out of poverty and join the middle class, the more likely they are to participate in civic matters. Thus, in the Bulgarian case, the more the gap between the poor and wealthy grows and the middle-class shrinks, the fewer the voters. Alarmingly, low voter turnout is likely to become an even more persistent issue for the state as political fragmentation and voting fatigue also can result in non-voting behaviour by citizens. Just between the regular parliamentary elections in April of this year and the snap elections in July voter turnout fell by 8%.
Another factor facilitated by wealth inequality that has a tangible effect on political results in the country is migration. Many Bulgarians who have left the country in search of better economic opportunities now form an electoral diaspora; during the last round of elections over 170,000 votes were cast from abroad, a new national record. These numbers represent only 6% of the overall votes, but give a perspective into the potential voting behaviour of those who could be considered middle class by Bulgarian standards. While the majority of diaspora votes go to the new parties, especially ITN with 35%, the numbers are not enough to be meaningful due to the logistical technicalities of voting abroad, such as the threshold of registered voters needed in a given area for there to be a local voting station. While efforts to ease the procedure of voting abroad might have a positive impact on diaspora turnout, the root of the problem remains domestic and without addressing wealth inequality, the political stalemate is likely to persist.
The roots of the political crisis
The current political crisis is not only the result of a shrinking middle class. While society in a democratic country is meant to rely on its representatives in parliament to better the redistribution of wealth, in Bulgaria the public is often reminded that their MPs have very little incentive to change just about anything when it comes to who gets to be in the Lada or the Lambo. The anti-government protests sweeping across the country in 2020 and 2021 are a testament to this. One of the main political scandals to facilitate mass demonstrations were the leaked photos of the former Prime Minister, Boyko Borissov, sleeping next to a handgun, stacks of money and gold ingots. For many Bulgarians, these photos clearly signified which group he belongs to. Borissov’s political demise is the result of several events over the last several years, however, having an estimated 1 million euros in cash in your nightstand was perhaps the last nail in the coffin.
A consequence of this significant intersection between wealth and political life is that MPs not only fail to redistribute wealth, but they also hoard it and use their political status for benefits and protection, perpetuating the concentration of income at the top. One example of this is that former politician, Ahmed Dogan, was being guarded by the National Service for Protection, an institution that receives its orders from the government. This incident only further ignited the protest movement. Delayn Peevski, a media mogul and one of the wealthiest men in the country, has also been a long-term irritant for many Bulgarians. His decade-long political career seems outrageous in light of him being sanctioned under the Magnitsky Act and his offshore assets being recently revealed by the ‘Pandora Papers’. And yet, he stands for re-election in November. Thus, if the wealthy have unchecked power and get to change the rules of the game in a society, which already suffers from unequal wealth distribution, a political crisis is inevitable.
Inequality created the current crisis
Through the lens of wealth inequality, the current political crisis in Bulgaria was unavoidable. Initially, the former ruling party GERB lost electoral support due to its apparent facilitation of an unequal redistribution of wealth and because people have grown tired of oligarchs such as Peevski having political power. This has led to a political vacuum, whereby new anti-establishment parties took centre stage. However, the vast income gap in the state has caused the middle-class to shrink. It has also meant parties who rely on urban middle-class voters, such as ITN, DB and IBGNI, receive enough support to have a presence in parliament but no clear majority is attainable for any of them. As the November elections draw closer, those stuck between the Lambo and the Lada will need to either put all their eggs in one basket and give a majority to one of the new parties or the crisis will persist. Unfortunately, the latter option is more likely.