No quick end to Bulgaria's election deadlock

SOFIA - Bulgaria's Socialists searched for allies on Monday to form a coalition government to implement reforms needed for EU membership in 2007, but weeks of uncertainty were possible after an inconclusive national ballot.

Most small right-wing parties have turned down the Socialists, leaving the leftists the option of talking to former king turned Prime Minister Simeon Saxe-Coburg's centrist National Movement for Simeon II (NMS) or poaching deputies.

Many analysts said the Socialists' lack of a clear majority should temper their plans to hike state wages and social spending in favour of an approach more similar to that of Saxe-Coburg's budget-balancing, debt-slashing government.

They said efforts to spare the poor Balkan country (population 8 million) of lengthy political wrangling, hinged on either the Socialists or NMS showing a willingness to yield the top job of prime minister. But no one saw any quick compromise.

"A grand coalition is a logical way out of the jam that could last well into July," said an EU diplomat who requested anonymity. "The central point is who will be prime minister."

Protracted uncertainty could delay economic and social reforms essential for EU entry in 2007 and raise the danger of a one-year postponement -- something that could unsettle investors and financial markets.

Led by Sergei Stanishev, 39, the Socialists won Saturday's election with 31 per cent, a disappointing performance after opinion polls that gave them 40 per cent. Analysts said their support had been eroded by the unexpectedly strong performance of a militant nationalist group that garnered protest votes.

The Socialists have called on other parties to co-operate in a "broad" government.

"We must not miss the opportunity to forge a solid majority government," said deputy Socialist party leader Rumen Petkov.

The Movement for Rights and Freedoms, a mostly ethnic Turkish party which finished third with 12.68 per cent, backed the Socialists. But analysts said five or six more seats were needed for a majority in the 240-seat parliament.

The NMS won 20 per cent, a far cry from the 43 per cent in a 2001 landslide win when Saxe-Coburg promised to make Bulgarians rich in 800 days.

Despite ushering Bulgaria into Nato and to the EU's gates, achieving high economic growth and reducing unemployment, Saxe-Coburg paid the price for his unfulfilled pledge. Bulgarians' per capita GDP is 30 per cent of the EU average.

His party has not ruled out cooperation with the Socialists but insists the former monarch must be prime minister.

The Socialists are unlikely to accept Saxe-Coburg, 68, as prime minister.

Brussels wants to see fast reforms in Bulgaria to avoid delaying its EU entry for a year -- a prospect that would rattle investors betting on the country's euro zone convergence.

The EU says Bulgaria must implement reforms in areas such as deregulation of services, corporate law, agriculture, environment and justice and home affairs.

All major parties have vowed to keep to the EU path and ruled out cooperation with the nationalist Attack party, which ran on a xenophobic ticket and won 8.18 per cent of the vote.

Growing sentiment in Western Europe against further EU enlargement after the rejection of the 25-member bloc's constitution by French and Dutch voters in the past few weeks has raised the stakes in Bulgaria's EU entry drive.

The Socialists have pledged to immediately withdraw Bulgaria's 450 troops from Iraq, rather than at the end of the year as Saxe-Coburg's pro-US government had agreed.

President Georgi Parvanov has promised to convene parliament quickly to try to ensure a speedy formation of a government.

The mandate goes to the largest party but if there is no success after a week the baton passes to the second biggest. If there is still no success, the president may choose any of the remaining parties.

If they fail, the president appoints a caretaker cabinet, dissolves parliament and calls a new election in two months.

- REUTERS