World

Bulgaria’s coalition government collapsed Wednesday after just six months when it lost a vote of confidence among MPs, bringing fresh political turmoil and the increased likelihood of an early general election.

But analysts say there is no guarantee that another national vote in this country of 6.5 million people, which last year went through three such polls, would end its political instability.

In the most recent elections last November, the party of liberal Kiril Petkov came out ahead and went on to form an unwieldy coalition government with three other parties.

An energetic, pro-European prime minister, Petkov promised to end Bulgaria’s endemic corruption after a decade of rule by the controversial conservative Boyko Borisov.

But cracks in the coalition began to appear soon after Russia’s invasion of Ukraine, and earlier this month the anti-establishment ITN party led by entertainer Slavi Trifonov withdrew its support.

Borisov’s conservative GERB party swiftly filed a no-confidence motion citing “the failure of the government’s economic and financial policy” as consumer inflation soared.

On Wednesday evening 123 MPs in the 240-seat chamber voted in favour of the motion, two more than it needed to succeed, while 116 voted against. One MP missed the vote through illness.

Petkov told MPs that “it was an honour for me to lead a government overthrown by Borisov, (Delyan) Peevski, Trifonov and (Eleonora) Mitrofanova,” referring to a well-known oligarch and the Russian ambassador to Sofia as well as the other party leaders.

“This vote is a small step on a long road. They did not understand that this is not the way to win the Bulgarian people,” Petkov said of his opponents, before promising to continue fighting for Bulgaria to be a “normal” European state.

Thousands of Bulgarians meanwhile took to the streets on Wednesday in a demonstration of support for Petkov’s drive for reforms — which now looks doomed.

– Aggravated tensions – 

In a country with strong historical ties with Moscow, the Ukraine conflict has “accentuated divisions and weakened the government”, said Ruslan Stefanov of the Center for the Study of Democracy think-tank.

Despite Bulgaria’s heavy dependence on Russian gas and oil, Petkov opposed Moscow’s demand to open a ruble account to pay for Russian gas — a response to European Union sanctions. The country faced a cut in supplies in response.

This meant “Bulgarian oligarchs who pocketed commissions” on energy deliveries found themselves deprived of income, said Ognyan Minchev, head of the Sofia-based Institute for Regional and International Studies.

And that, he said, “aggravated tensions within the coalition as well as between business circles and the government”.

Another source of tension was Ukraine’s appeal for arms to fight the Russian invasion.

While most of the parties in Petkov’s government were ready to authorise such deliveries, the Socialists — also part of the ruling coalition — remained opposed.

The final straw however came from the EU’s drive to settle longstanding historical and cultural disputes between Bulgaria and neighbouring North Macedonia.

It was Petkov’s advocacy of rapprochement with Skopje that the ITN says prompted them to quit the coalition.

– Fragmented landscape – 

President Rumen Radev will now have three attempts to see if any party can form a governing majority among MPs.

Petkov’s party is expected to receive the first mandate from Radev to try to gather a majority, followed by GERB and then another party of Radev’s choosing.

If no workable majority can be found, parliament will be dissolved and politicians will go back to campaigning for elections that would have to be held within two months.

But even if there are fresh elections, they would be unlikely to provide a durable solution to a political landscape that remains highly fragmented, says Dimitar Ganev of the Trend polling institute.

Wall Street stocks climbed Wednesday as the US Fed chief stressed the need to combat decades-high inflation, but elsewhere equities and oil prices tumbled on mounting recession fears as central banks hike interest rates.

Wall Street was moderately higher in late morning trading, while European and Asian markets closed in the red, a day after healthy gains.

Federal Reserve boss Jerome Powell began two days of testimony to US lawmakers on Wednesday, warning that the US economy faced an “uncertain” global environment and could face further inflation “surprises”.

His testimony to Congress this week will be pored over for an idea about officials’ plans for fighting runaway prices, which are being fanned by supply chain snarls, China’s Covid lockdowns and the war in Ukraine.

Powell once again stressed that the Fed was committed to bringing down inflation — which has reached a 40-year high — with higher interest rates.

But the world’s largest economy “is very strong and well positioned to handle tighter monetary policy”, he said.

Most observers expect the Fed to aggressively hike US interest rates several more times this year, having recently carried out the sharpest lift in almost 30 years.

Powell said rapid interest rate increases were meant to cool demand and bring inflation down, but he acknowledged the risk that the hikes could trigger a US recession.

“It’s not our intended outcome at all, but it’s certainly a possibility,” Powell said in testimony to the Senate Banking Committee.

“The ‘R’ word is likely to come up a lot today and the Chairman will have a tough time dodging it, especially with mid-terms in five months,” said OANDA market analyst Craig Erlam, referring to recession.

“Naturally, he’ll do his best to remain apolitical but I’m not sure investors will be able to ignore so much recession chat,” he added.

Expectations of more rate hikes have been handing support to the dollar, which pushed the yen briefly to a fresh 24-year low Wednesday, before sliding against major rivals.

The Bank of Japan is holding back from lifting interest rates, in sharp contrast to other major central banks.

Oil prices were feeling the heat from recessionary fears, with both main contracts tanking more than six percent at one point.

“Concerns about a global slowdown appear to be outweighing any concern over supply issues derived from Russia’s invasion of Ukraine, and the prospect that Chinese demand could return,” said market analyst Michael Hewson at CMC Markets.

Crude and gas prices have soared in recent months after major economies lifted pandemic lockdowns and following the invasion of Ukraine by major energy producer Russia.

Surging energy costs are fuelling global inflation, with official data Wednesday showing the British annual rate hitting a fresh 40-year high above nine percent.

In the United States, President Joe Biden asked Congress on Wednesday to suspend the federal gas tax for three months as skyrocketing prices cause widespread anger among Americans just months before crucial mid-term elections.

A senior administration official noted that US gas prices — averaging near $5 per gallon — had jumped almost $2 since Russian President Vladimir Putin began building up forces on the Ukrainian border earlier this year.

– Key figures at around 1530 GMT –

Brent North Sea crude: DOWN 3.7 percent at $110.39 per barrel

West Texas Intermediate: DOWN 110.39 percent at $104.86 per barrel

New York – Dow: UP 0.3 percent at 30,623.29 points

EURO STOXX 50: DOWN 0.8 percent at 3,467.26

London – FTSE 100: DOWN 0.9 percent at 7,089.22 (close)

Frankfurt – DAX: DOWN 1.1 percent at 13,144.28 (close)

Paris – CAC 40: DOWN 0.8 percent at 5,916.63 (close)

Tokyo – Nikkei 225: DOWN 0.4 at 26,149.55 (close)

Hong Kong – Hang Seng Index: DOWN 2.6 percent at 21,008.34 (close)

Shanghai – Composite: DOWN 1.2 percent at 3,267.20 (close)

Euro/dollar: UP at $1.0594 from $1.0535 late Tuesday

Pound/dollar: UP at $1.2304 from $1.2273

Euro/pound: UP at 86.10 pence from 85.80 pence

Dollar/yen: DOWN at 135.89 yen from 136.64 yen

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“Massive” Russian bombardment of Ukraine’s battleground eastern Lugansk region and key city Severodonetsk has been “hell” for soldiers there, Kyiv said, while insisting that defenders would hold “as long as necessary”.

Moscow’s troops have been pummelling eastern Ukraine for weeks and are slowly advancing, despite fierce resistance from the outgunned Ukrainian military.

With President Vladimir Putin’s forces tightening their grip on the strategically important city of Severodonetsk in the Donbas, its twin city of Lysychansk is now coming under heavier bombardment.

“The Russian army is… just destroying everything” in Lysychansk, Sergiy Gaiday, governor of the Lugansk region, which includes both cities, wrote on Telegram.

“It’s just hell out there,” after four months of shelling in Severodonetsk, across the Donets river, he wrote later.

“Our boys are holding their positions and will continue to hold on as long as necessary,” he added.

Pro-Russian separatists claimed they were close to surrounding both Lysychansk and Severodonetsk.

“Over the past several days enormous work has been accomplished,” Andrei Marochko, an officer in the separatist army of Lugansk, told Russian state TV.

– ‘Outrageous lack of care’ –

Russian forces have been occupying villages in the area. Taking control of the two cities would give Moscow control of the whole of Lugansk, allowing them to press further into the Donbas.

After being pushed back from Kyiv and other parts of Ukraine following their February invasion, Moscow is seeking to seize a vast eastern swathe of the country.

In a briefing Wednesday, the Russian defence ministry claimed responsibility for a missile strike it said killed a number of Ukrainian troops in southern Mykolaiv.

City mayor Oleksandr Senkevych told Ukrainian television that the strike hit two firms and a school as well as starting a blaze that authorities could not put out.

In the central Ukrainian city of Zaporizhzhia, women were training to use Kalashnikov assault rifles in urban combat as Russian forces edged nearer.

“Of course, when you can do something, it’s not so scary to take a machine gun in your hands,” said Ulyana Kiyashko, 29, after moving through an improvised combat zone in a basement.

In his daily address Tuesday, Ukrainian President Volodymyr Zelensky accused the Russian army of “brutal and cynical” shelling in the eastern Kharkiv region, where the governor said 15 had been killed Tuesday.

Aid group Doctors Without Borders (MSF) said it had gathered accounts of an “outrageous lack of care to distinguish and protect civilians”.

Most patients it had evacuated by train blamed Russian or Russian-backed forces for a spectrum of gruesome injuries, it added.

– ‘Simply destroys’ –

On the Russian side, officials said Wednesday two drones had hit an oil refinery in the Ukraine-bordering Rostov region, causing an explosion and a fire but no casualties.

Away from the battlefield, Moscow summoned Brussels’ ambassador in a dispute with EU member Lithuania over the country’s restrictions on rail traffic to the Russian outpost of Kaliningrad.

The territory is around 1,000 miles (1,600 kilometres) from Moscow, bordering Lithuania and Poland.

By blocking goods arriving from Russia, Lithuania says it is simply adhering to European Union-wide sanctions on Moscow.

The United States made clear its commitment to Lithuania as an ally in NATO, which considers an attack against one member an attack on all.

And Germany urged Russia not to “violate international law” by retaliating against Lithuania.

Also Wednesday, a Turkish cargo ship left the Russian-occupied city of Mariupol on Ukraine’s Sea of Azov coast.

Although Moscow and Ankara have negotiated for weeks over getting millions of tonnes of desperately needed grain out of the warzone to worse-off countries in Africa and the Middle East, it was not immediately clear whether the Azov Concord was carrying wheat.

Turkey’s defence ministry said four-way talks would be held “in the coming weeks” between Russia, Turkey, Ukraine and the UN, with media reporting the meeting could happen next week.

– ‘Marshall Plan’ –

With US-Russia tensions soaring, the State Department on Tuesday confirmed a second American, 52-year-old Stephen Zabielski, was killed fighting for Ukraine.

A White House spokesman, John Kirby, voiced alarm at Russian statements that it would not apply the Geneva Conventions on the humane treatment of prisoners to two other Americans captured last week, calling suggestions of a death sentence “appalling”.

Reporters Without Borders (RSF) said in an investigation published Wednesday that a Ukrainian photojournalist, Maks Levin, had been killed and possibly tortured by Russian troops after his capture on March 13.

In Brussels, ministers unanimously agreed Tuesday to grant Ukraine and neighbour Moldova candidate status for membership in the European Union.

German Chancellor Olaf Scholz told parliament in Berlin on Wednesday that Ukraine “needs a Marshall Plan for its reconstruction”, a reference to the post-World War II aid from Washington that helped a devastated Europe get back on its feet.

Scholz added that Ukraine and Russia were “still far from negotiations… because Putin still believes in the possibility of a dictated peace”, urging Kyiv’s Western allies to keep up their military and financial support.

Moscow meanwhile complained that its delegates to an Organization for Security and Cooperation in Europe (OSCE) assembly in Britain next month had been refused UK visas.

The Kremlin was Wednesday turning to other members of the so-called “BRICS” grouping that also includes Brazil, India, China and South Africa.

Russia is “actively redirecting its trade flows and external economic contacts towards reliable international partners, above all the BRICS countries,” Putin told a business forum by video link ahead of a virtual leaders’ summit Thursday.

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The US economy remains strong but a series of aggressive rate hikes meant to cool soaring inflation could eventually trigger a recession, Federal Reserve Chair Jerome Powell cautioned Wednesday.

Powell, whose testimony before senators was closely watched by investors and analysts, also said the world’s largest economy faces an “uncertain” global environment and could see further inflation “surprises.”

The Fed chair again stressed that the US central bank understands the hardship caused by rising prices and is committed to bringing down inflation, which has reached a 40-year high.

Last week, the Fed announced the sharpest interest rate increase in nearly 30 years and promised more action to combat the price surge, with gas and food costs skyrocketing and millions of Americans struggling to make ends meet.

But when peppered with questions about the prospect of a recession, Powell admitted it could not be ruled out.

“It’s not our intended outcome at all, but it’s certainly a possibility,” he told the Senate Banking Committee.

“And frankly, the events of the last few months around the world have made it more difficult for us to achieve what we want, which is two percent inflation and still a strong labor market.”

In his opening remarks, Powell insisted the US economy “is very strong and well positioned to handle tighter monetary policy.”

“Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” the Fed chief said in his semi-annual appearance before Congress.

Policymakers “will need to be nimble” given that the economy “often evolves in unexpected ways,” he said.

The Fed is facing intense criticism that it was too slow to react to the changing economy, which benefited from a flood of federal government stimulus.

Last week’s super-sized 0.75-percentage-point increase in the benchmark lending rate was the third since March, taking the policy rate up a total of 1.5 points. Powell at the time said more such increases were likely in July.

“I think it’s going to be very challenging. We’ve never said it was going to be easy or straightforward,” Powell said when asked about efforts to stave off recession.

– ‘Essential’ to curb inflation –

In addition to easing the financial strain on less-wealthy American families, the Fed chief said tamping down inflation was “essential… if we are to have a sustained period of strong labor market conditions that benefit all.”

The US economy recovered quickly from the Covid-19 pandemic, helped by robust consumer spending, and has continued to create jobs at a strong pace, averaging 408,000 in the past three months. 

Unemployment is near a 50-year low.

But the buoyant demand for homes, cars and other goods clashed with transportation and supply chain snarls in parts of the world where Covid-19 has remained a challenge.

That fueled inflation, which got dramatically worse after Russia invaded Ukraine in late February and Western nations imposed stiff sanctions on Moscow, sending food and fuel prices up at a blistering rate.

Powell said the fallout from the conflict “is creating additional upward pressure on inflation.”

In addition, “Covid-19-related lockdowns in China are likely to exacerbate ongoing supply chain disruptions.”

But he noted that the issue is not unique to the United States.

“Over the past year, inflation also increased rapidly in many foreign economies,” he said.

In fact, many major central banks have joined the Fed in beginning to tighten monetary policy — with the notable exception of the Bank of Japan.

Powell pointed to signs that rising rates are having an impact, as business investment slows and “activity in the housing sector looks to be softening, in part reflecting higher mortgage rates.”

Average home loan rates jumped to 5.23 percent in May for a 30-year, fixed-rate mortgage, from 4.98 percent in April, according to Freddie Mac, while the median price for homes topped $400,000 for the first time.

“The tightening in financial conditions that we have seen in recent months should continue to temper growth and help bring demand into better balance with supply,” Powell said.

Prince William on Wednesday unveiled a new national monument to the “Windrush” generation of Caribbean migrants who moved to Britain following World War II, praising their “immense contribution” to national life.

The 12-foot (3.65-metre) bronze statue, which depicts a man, woman and child standing on top of suitcases, will greet millions of rail commuters at London’s Waterloo station.

“Over the past seven decades, the Windrush Generation’s role in the fabric of our national life has been immense,” said William.

“Every part of British life is better for the half a million men and women of the Windrush Generation.

“I want to say a profound thank you to every member of that generation, and the generations that have followed,” he added.

The decision to erect a monument followed a scandal that first emerged in 2017 and caused much soul-searching about racism past and present in Britain.

Campaigners revealed that thousands of Britons of Caribbean origin, who arrived legally between 1948 and the early 1970s, had been wrongly detained or deported under the government’s hardline immigration policies.

The government then announced “Windrush Day” would be celebrated each year on June 22, and that it was contributing £1 million ($1.22 million) in funding for a national statue.

Jamaican artist Basil Watson was chosen by a Windrush Commemoration Committee from an initial long list of 16 artists to create the work.

The community is named after the MV Empire Windrush ship, one of the vessels that brought workers from Jamaica, Trinidad and Tobago, and other islands to help fill post-war UK labour shortages during that period.

One of the Windrush passengers, Alford Gardner, said the statue dedicated to his generation that “worked hard” was one of a kind.

“It means everything. I never expected anything like this,” the 96-year-old told AFP after the unveiling.

Gardner said while the statue was a “big contribution”, he called for government compensation over the scandal be delivered “quicker”.

The Guardian newspaper on Wednesday reported that only one in four applicants to a compensation scheme had received payments.

– ‘Wonderful acknowledgement’ –

The artist said the monument recognised the “dreams and aspirations, courage and dignity, skills and talents” of the Windrush generation.

“My parents, along with a great many others, took the long arduous voyage from the Caribbean with very little or nothing other than their aspirations, their courage and a promise of opportunity for advancement,” Watson said.

“This monument tells that story of hope, determination, a strong belief in selves and a vision for the future,” he added.

Watson’s own parents were members of the Windrush generation and he spent part of his childhood in Britain.

Angela Wilson, whose parents also came to the UK from the Caribbean, told AFP the statue was a “wonderful acknowledgement” of their contribution.

“It’s nice to know that every time someone walks past the statue, they will remember that the Windrush generation put on their best clothes… and set out for the UK to help rebuild what they considered to be our home.”

But she said she also “looked forward to the Home Office righting the wrongs to make sure everyone has the documentation they need to prove themselves to be British citizens and that they are compensated if they have suffered any loss or injustice”.