* Bulgaria joined EU in 2007 but made little progress
* Half the population at risk of poverty or social exclusion
* Sudden rise in power prices tipped people over edge
By Sam Cage and Angel Krasimirov
BLAGOEVGRAD, Bulgaria, Feb 22 Bulgaria's government has bowed to popular anger over high electricity prices and poor governance, but the spirit of protest in struggling towns like Blagoevgrad has not been quenched.
Blagoevgrad's Lyudmila Manova has become known as a kind of Joan of Arc for leading the demonstrations in the town of 70,000 that quickly spread across the European Union's poorest state.
"We have no intention of stopping," said the 35-year-old blonde who, jobless for several years, is typical of the average Bulgarian struggling to make ends meet.
"We are not only protesting against high electricity prices... we demand more rights for citizens," she told Reuters.
Austerity measures in Bulgaria have been mild compared with some European countries like Greece, with salaries and pensions frozen rather than cut, and Prime Minister Boiko Borisov, who resigned on Wednesday, avoided the kind of bailout that neighbours Greece, Romania and Serbia were forced to take.
But the relative economic stability in recent years has come at the expense of living standards: the average monthly pension is $180 and the average salary $550, less than half the EU average. The official 11.9 percent unemployment rate does not include the many thousands who have been out of work for so long that they no longer get benefits.
For many the final straw was winter power bills which at times exceeded incomes due to a 13 percent price hike in July 2012 that began to bite as temperatures fell. Some bills rose by more than half in December.
Sirma Antonova's pension and benefits covered barely half of her December electricity bill of 270 levs ($180). A widow who lives in a two-room apartment with her two children, she has been unemployed since 2008.
"We sold everything we had at home and we cannot survive any more," said Antonova, 54, on the verge of tears outside Blagoevgrad town hall, where she had come to appeal to authorities for help.
Hundreds gathered on Thursday night at the central square of the town, famous as the hometown of soccer star Dimitar Berbatov. More protests were planned around the country on Friday evening, as well as over the weekend.
SECOND CLASS EU MEMBER
For many Bulgarians, joining the European Union in 2007 held the promise of rising prosperity and a chance for their country to catch up with western Europe after decades of communist neglect. But the economy has not yet returned to its peak from 2008, when a credit bubble burst and plunged the country into a deep recession.
The journey south from Sofia to Blagoevgrad shows how governments since the 1989 fall of communism have consistently failed to address Bulgaria's problems.
A new motorway was supposed to run through the town to the Greek border in time for the 2004 Athens Olympics. Instead it peters out after 40 km into a potholed two-lane road through dusty towns scattered with abandoned houses, factories and shops.
Many voters are deeply frustrated that successive governments have failed to clamp down on widespread corruption and organised crime, which has left the country effectively a second-class member of the EU.
Bulgaria is excluded from the bloc's passport-free Schengen zone and the justice system is under special monitoring from Brussels because of concerns over graft and organised crime. No administration since the end of communism has managed to win a second term.
Borisov's rightist GERB still has a chance of returning to power after an election, which will now probably be brought forward from July. But they are barely ahead of the opposition Socialists in the polls and many people say they simply have no political options.
President Rosen Plevneliev has begun talks with the main political parties on the prospect of creating a government ahead of the election.
"I'm really sick of all the parties and their promises," said Emil Antov, 56, who now collects wood and rubbish to burn for heating.
Bulgaria bills itself as a low cost and high skill location for investment with a flat tax of 10 percent, but most ordinary people do not benefit. Nearly half the population are at risk of poverty or missing out on basic rights and opportunities such as housing, healthcare and jobs.
"All this suggests that the next government, no matter what its political motivation, will have to focus on reducing poverty as one of its main policy priorities," said Kristofor Pavlov, an analyst with bank UniCredit.
Before he resigned, Borisov promised an 8 percent cut in electricity bills as of March, but the energy regulator said a decrease would not be possible before April at the earliest.
So the protests are likely to continue, for now.
"I've been jobless for three years now," said Antov. "I'm collecting food from the garbage pails and I'm shivering at home because I cannot afford to pay the electricity bill."