Bulgaria's three largest parties formed a grand coalition under a Socialist prime minister on Monday, ending seven weeks of deadlock threatening to delay the poor Balkan state's 2007 European Union entry, reported Reuters.

The Socialists, who won June 25 national polls without a clear majority, agreed to rule with the incumbent centrist National Movement for Simeon II (NMS) of ex-king Simeon Saxe-Coburg and the smaller ethnic Turkish MRF.

"Our goal is to meet the expectations of Bulgarians, to give Bulgaria the possibility of joining the EU and to improve living standards," Socialist leader Sergei Stanishev, named prime minister, told journalists after signing the pact.

Talks for a similar deal broke down last month, mainly over NMS demands that Saxe-Coburg keep a leading role in government. However, on Monday the centrists agreed to the deal, which also puts Western-oriented reformists in key posts.

"This is a positive signal to Europe, and I think and hope that with a common effort, we can achieve (EU) integration, the goal we have been working for years," Saxe-Coburg said.

President Georgi Parvanov gave Stanishev the green light to present his cabinet for a confidence vote in parliament, where the coalition controls 169 of 240 seats, on Tuesday.

Markets, which have closely watched the dispute for signs as to whether Bulgaria's EU efforts could be delayed, reacted positively to the news.

The benchmark JP Morgan Emerging Markets Bond Index Plus (EMBI+) showed its sovereign debt narrowing by 6 basis points to 71 points over US Treasuries.

Reform paralysed

Saxe-Coburg -- banished at the age of nine in 1947 by the Socialists former incarnation, the Communist Party -- returned to win 2001 elections and run what analysts say was Bulgaria's best government since the fall of communism.

However, his failure to end corruption, organised crime and poverty pushed him into second place in June's vote.

With economic output at only a third of the EU average and purchasing power still lower than that of communist times, the country is the poorest EU member or candidate besides Turkey. Wages average about € 150 (US$186) a month.

The deadlock between the Socialists and centrists had paralysed the process of reform in Bulgaria, which like its neighbor Romania missed the EU's "big bang enlargement", when a host of mostly European countries joined last year.

Brussels has warned the country of eight million people to form a cabinet and finish changes to its laws and institutions soon or face being held back to 2008.

Analysts said the new cabinet should have plenty of support to push through EU-required measures before the end of September, when the European Commission is scheduled to issue a report on Bulgaria's readiness for membership, but they warned in-fighting could remain a problem.

"This coalition significantly increases Bulgaria's chances of entering the EU on time because it will secure the needed constitutional majority to implement changes in key laws and fulfill EU requirements," said Gallup analyst Kancho Stoichev.

(Chinadaily.com via agencies August 16, 2005)