Bulgarians had almost everything under the sun thrown at them in 2008. The year started with high hopes that the country would finally benefit from its long-awaited European Union membership. This was supposed to be a calm period ahead of the 2009 parliamentary elections. Unfortunately, 2008 ended with the European Commission freezing a billion euro worth of funding over doubts about Bulgaria's efforts to tackle what many thought of as the country's biggest challenge: corruption.

Ambitious start
On January 1 2008, Bulgarians were told that a new super agency, the State Agency for National Security (SANS), had been formed at the initiative of Prime Minister Sergei Stanishev. Stanishev presented it as the state's way of fighting organised crime and top level corruption, hence it was burdened by high public expectations. The agency was given money, resources and legal power to intervene in almost any sphere of life to crack down on corruption and organised crime. The creation of SANS, although welcomed by the European Commission, was not so popular with now-former interior minister Roumen Petkov because it created a second front against crime.

The higher than average level of SANS employees' salaries triggered tension among police officers. At the end of the year thousands of them protested against low pay and poor working conditions. This was the first-ever protest by police officers in Bulgaria's recent history. Next to that SANS had no other option but to attract a number of people working for the Interior Ministry, depriving the latter of several portfolios of investigations. Given Stanishev's firm support for SANS and the ministry's poor record of fighting crime, Petkov was forced to accept the agency's existence and pledge his support.

The opposition, on the other hand, questioned the wide range of authority given to SANS and its lack of effective parliamentary control. Although the latter was stipulated by law, it did not happen in 2008 because the opposition refused to join the specially set-up parliamentary committee on SANS in protest at the ratio of seats offered to them by the ruling majority. All of this meant one thing: SANS and its head Petko Sertov had to work hard to justify its existence.

SANS' concrete achievements proved a moot point. Its first action was against a website publishing anonymous stories with allegations about the personal lives of various top politicians, including President Georgi Purvanov. The website had been operating for several months when SANS said that the information on it contained classified information and had to be shut down. But SANS still refused to say who was leaking the classified information to the website or to describe its contents.

On the other hand, SANS managed to secure the arrest of several top Government officials accused of conflict of interest, abuse of power or taking bribes. Such was the case with Ivan Lekov, deputy head of the State Agency for Youth and Sport and Marius Tsakov, deputy governor of the Sofia region, both arrested in September. That was also the month when SANS' greatest controversy to date occurred.

Without a parliamentary committee on SANS, Parliament's only control over the agency was through the committee on internal order and public security covering all special services, chaired by Mincho Spassov, from the ruling coalition partner the National Movement for Stability and Progress (NMSP). In September, Spassov announced to the media that SANS had raked through his and other MPs' phone records without reasonable grounds, triggering paranoia in Bulgarian society. SANS' head Petko Sertov initially refused to comment but eventually had to admit it was true. He blamed it on the individual actions of his subordinates who were duly dismissed. This left everyone wondering if the country's super agency was mired in chaos rather than operating as a well organised fighting force.

Cabinet reshuffle
Unlike 2007 - when Bulgaria held two elections, one for mayors and municipal councillors and the other for members of European Parliament - 2008 was a prelude to this year's general elections for the Bulgarian Parliament.

In their final year in power the three ruling parties - the Bulgarian Socialist Party (BSP), the NMSP and the Movement for Rights and Freedoms (NMRF) - had little need to worry about the stability of the Government since none of the opposition parties wanted to risk being left out of Parliament as a result of early elections. The main party in opposition, Sofia mayor Boiko Borissov's the Citizens for the European Development of Bulgaria (abbreviated as GERB in Bulgarian) also concentrated on building power bases around the country in the light of upcoming elections. Surveys continued to show it was the country's most popular political party.

In such a situation the biggest threat to the three ruling parties came from a potential internal split. Such a possibility emerged in April shortly after the resignation of interior minister Petkov. Petkov was forced to quit after admitting he had had personal meetings with people under police investigation at the time, the controversial businessmen Plamen Galev and Angel Hristov, commonly referred to by the media as the "Galevi brothers".

Petkov's resignation was followed by a no-confidence motion filed against the Government which was rejected by Parliament. The NMSP abstained from voting and did not support the Cabinet, triggering an angry reaction from Stanishev and the most serious crisis the Government has experienced since its formation in 2005. NMSP explained its actions by citing the row surrounding Petkov. Commentators, on the other hand, interpreted it as a sign that the party, amid declining popularity, was trying to find its identity ahead of the 2009 elections.

The situation was resolved quietly between the leaders of the three parties, Stanishev (BSP), Simeon Saxe-Coburg (NMPS) and Ahmed Dogan (MRF), resulting in a Cabinet reshuffle. Four ministers were replaced without a clear explanation. A new Cabinet post was created - deputy prime minister without portfolio, but with the task of supervising the spending of EU funds. Meglena Plougchieva, ambassador to Germany, was summoned back to take the post.

The opposition
During 2008 the opposition was as disunited as it had been throughout the previous eight years. Most of the turmoil surrounding the three ruling parties stemmed not from opposition pressure - with the exception of Petkov's resignation where the Democrats for a Strong Bulgaria, played a key role - but as a result of internal party quarrels. Such was the case with Ahmed Dogan and his MRF, which mainly represents Bulgarians of Turkish descent, and has been in power since 2001.

In October, Dogan's secretary Ahmed Emin shot himself in a house belonging to the party in a room next to one occupied by Dogan at the time. Emin's suicide is still being investigated but it led to questions about Dogan's aggressive control within the party, strengthened by accusations made by former MRF members. It was a serious blow to the party's electoral ambitions, hence Dogan's suspicions of a conspiracy against him.

Corruption
Bulgaria's ability to present its financial dealings as legal and above board was bound to be a key litmus test of its effectiveness. Sadly, Bulgaria failed to score many successes in 2008. It was billed as the year in which Bulgarians would reap the benefits of long-awaited EU membership. Optimists had hoped that money would be floating in from almost all directions - as some populist politicians had claimed when Bulgaria was still an EU candidate.

The EU had very different ideas. A series of negative European Commission reports on Bulgaria's efforts to fight corruption turned communication between Bulgaria and the EC into a constant drama of carrot and stick with the EC demanding action and threatening sanctions and Bulgaria making promises but delivering little.

Several top-level corruption scandals in 2008 proved that Bulgaria still had much to do to avoid being singled out for its waywardness, a feeling that intensified with each new EC interim report.

The first and - so far - most prominent scandal of alleged corruption involved Vesselin Georgiev, head of the state-owned National Road Infrastructure Fund (NRIF). The scandal erupted in January after a report by Bulgarian-language Kapital weekly which saw Georgiev involved in a serious conflict of interest. Georgiev's younger brother, Emil Georgiev, and the company he ran, Binder, had been assigned work worth 120 million leva of EU funds by the NRIF. Instead of taking action, the respective Cabinet ministers of Finance and Regional Development refused to act for weeks even though it was perfectly clear that a relative of Georgiev was the main beneficiary of the NRIF. It was not until the EC remarked on the scandal that Georgiev resigned. And it was not until October that prosecutors decided to charge him with violation of the Public Tenders Act.

Another pending court case of great public interest given a green light during 2008 was that of the Mario Nikolov/Lyudmil Stoykov group that allegedly embezzled millions of euro from the EU's Sapard programme. The case is based on an investigation that the European Anti-fraud Office (Olaf) started in 2006. In July 2008, a report on Bulgaria's deficient handling of European Union funds, conducted by Olaf, said that it suspected that millions of euro were being embezzled by "a criminal network composed of more than 50 Bulgarian, European and offshore companies, controlled and/or financed by [Bulgarian businessmen] Mario Nikolov and Lyudmil Stoykov, suspected of having close ties to the current Government".

On October 20, the court gave a green light to the case filed by the State Agriculture Fund against Nikolov and eight other defendants, including his wife. They are accused of tax fraud aimed at embezzling EU money under the EU Sapard programme managed by the fund.

Bad ending
In light of the above, it was not a big surprise when in July the EC decided to freeze about 800 million euro in funding.

The EC also suspended two Bulgarian Government agencies from the EU funds process and reproached Bulgaria for failing to instigate judicial reforms and act against organised crime and corruption. Despite the brave words of Stanishev and Plougchieva and the action plan adopted by the Government to improve control over EU spending in November, Bulgaria suffered another costly blow.

The country irrevocably forfeited 220 million euro of EU funds, earmarked under the Phare pre-accession aid programme after the EC decided that the Bulgarian Cabinet had not done enough to fight corruption in two Government agencies. This was hardly the best end to the year given talk of the looming financial crisis and pending job cuts.