“While Eastern Europe is largely implementing the necessary reforms, Southern Europe does almost nothing—except complain,” said Bulgarian Finance Minister Simeon Djankov in an interview, a withering blast aimed at neighboring Greece.

And in Greece, “The risk of bankruptcy is still existent,” said Fotis Kouvelis, the leader of Democratic Left, smallest of the three parties in the coalition government. His way of reminding the bailout Troika—the EU, the European Central Bank (ECB), and the IMF—to open the money spigot all the way, or else! The Troika inspectors are scheduled to return to Athens next week to have another look.

In September, armed with the inspectors’ final report, the Troika will decide whether or not to make the next bailout payment to Greece. If the decision is no, Greece will default and most likely return to the drachma.

“We demand an extension,” Kouvelis said, summarizing eloquently the strategy since the June elections. Instead of implementing with fiendish dedication the reforms that the prior government had agreed to in exchange for the second bailout package, the new government insists on renegotiating those reforms and then delaying those renegotiated reforms, while insisting on the continuous flow of other people’s billions. He complained about the recession, and that therefore structural reforms couldn’t be implemented.

But neighboring Bulgaria is one of the EU’s fastest growing economies. It has the second lowest national debt of all EU countries and even sports a budget surplus. Individual and corporate income tax rates are 10%. And it’s one of only three EU countries in compliance with the financial stability criteria in the Maastricht treaty. The very criteria that were supposed to have prevented the debt crisis ravaging the Eurozone. So the fiscal union treaty, pushed through by Chancellor Angela Merkel but hung up in the German Constitutional Court, is supposed to accomplish the same thing that the Maastricht treaty already failed to accomplish: force countries to obey limits on deficits and debt.

But Bulgaria has been in compliance, in part due to Djankov, who became Finance Minister in 2009, after a 14-year stint at the World Bank. When asked if his country, still one of the poorest in the EU, wasn’t balancing its budget at the expense of the people, he said: “That is a false and dangerous contradiction that the Southern Europeans recently added to the debate. Countries like Germany, Finland, or also Bulgaria have growing economies and still adhere to the deficit rules. Balanced budgets and growth are not a contradiction. Prerequisite is that the necessary reforms are implemented.”

Spain has been trying to do that. But people resist. With unemployment at 24.4%, their government on the brink of financial doom, and their banks collapsing, Spaniards have turned to protests. Yesterday, firefighters were on the forefront. While some battled the police, others protested with a good laugh, making their point with perfect visual clarity—and with a lot of bare skin.

And in Greece, reforms just aren’t implemented. Even the privatization of bloated state-owned enterprises is bogged down. 28 projects by 2015: electricity provider DEI, the postal service, airports, railroads, ports, hospitals…. For €19 billion, an amount that keeps shrinking. But this year, only two projects are on the list: the national lottery and the former International Center of the Olympic Press, a mere building.

And so, Costas Mitropoulos, the frustrated CEO of the Hellenic Republic Asset Development Fund, which was put in place a year ago to implement the privatizations, resigned. “The newly elected government has not given the support needed,” Mitropoulos wrote in his letter of resignation. “Instead, they have indirectly yet systematically reduced the prestige and credibility in the eyes of potential investors.”

And the argument that Bulgaria has an advantage over Greece because it has its own currency doesn’t hold water. After losing value at an exponential rate, the lev was pegged to the Deutsche Mark in 1999 at 1:1 and then to the euro at the DM’s conversion rate. And the peg has held! Alas, Bulgaria was scheduled to adopt the euro by January 1, 2012. A deadline that came and went. So was Djankov hesitating to adopt the euro? “Hesitating?” he said. “More than that. We put the process on ice. We first want to see what the future rules of the Eurozone look like.”

If it sticks around. In December 2001, when I was in Germany on business, bank showcases were filled with feel-good euro agitprop. Euros would enter circulation on January 1, and this was part of the campaign to persuade Germans to surrender their Deutsche Marks. Some were apprehensive, but my business contacts were gleeful: the euro would become the dominant reserve currency, and oil would be priced in it! Read…. Now Even Counterfeiters Are Giving up on the Euro.

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