SOFIA, Bulgaria—Mass protests in Bulgaria against austerity measures and energy costs forced out the government in February. Elections set for Sunday could lead to more political turmoil.
Recent public-opinion surveys indicate that the conservative party that led the previous administration and its main, left-leaning challenger are running neck-and-neck, complicating prospects for the formation of a governing coalition.
Unhappiness with low living standards and perceived corruption in the European Union's poorest member state boiled over this past winter, leading to nationwide demonstrations, initially over rising electricity prices....Elsewhere in Europe : Merkel's cabinet on Wednesday endorsed legislation putting the ECB in charge of supervising eurozone banks. But Berlin is hostile to further moves that would share risk and liability across the eurozone banking sector, such as pooled funds for winding up failed banks and spreading responsibility for guaranteeing savers' deposits. The latter is viewed as a no-go area in Germany while Berlin takes the view that a bank resolution system should be essentially national rather than European. The German finance ministry has been arguing for the past fortnight that a full eurozone banking union would need a renegotiation of EU treaties, an arduous and lengthy process. The eurozone agreed in June last year to create the banking union and to use bailout funds to recapitalize weak banks directly without adding to governments' debt levels. But the Germans then delayed and diluted the policy which is to be revisited at an EU summit next month. Washington voiced exasperation. "It is important to move forward with full banking union. Last year, European leaders vowed to break the feedback loop between banks and sovereigns, but momentum has waned," said the senior official.