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Bulgaria

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  BULGARIA

REPUBLICAN REFERENCE

Area(sq.k.m)
110,600

Population
7,707,495

Capital
Sofia

Currency
Lev

President
Petar Stoyanov

Private sector
% of GDP

40%

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Background:
Bulgaria earned its independence from the Ottoman Empire in 1878, but having fought on the losing side in both World Wars, it fell within the Soviet sphere of influence and became a People's Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multi-party election since World War II and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. Today, reforms and democratisation keep Bulgaria on a path toward eventual integration into NATO and the EU - with which it began accession negotiations in 2000. 

Update No: 066 - (22/10/02)

The Bulgarian government under Premier Simeon Saxe-Coburg Gotha, former king as Simeon II, has been in for over a year. It is inexorably following the fate of its predecessors, coming in with high expectations, but unable to deliver half or even a quarter of its promises. Despite winning international plaudits for its persistence with reforms (its predecessor was just as reform-minded) it is increasingly unpopular at home. Suffering the fate of the former government, defeat at the next election looks more or less inevitable, although there is still an outside chance of victory.

Simeon recidividus
The premier is the key figure, even if the day-to-day governance of the country is in the hands of highly educated technocrats, namely Economy Minister Nickolay Vassilev and his colleagues. For Simeon has set the goals, one of which was a rash promise to double living standards in 800 days by late 2003, the sixtieth anniversary of his accession to the throne in 1943 (at the age of six). This is well before the next elections.
He did not reign long of course and was not exactly ruling at the time. But still he makes a very good figurehead for a country striving to return to a pre-communist past, the only person still alive, apart from ex-King Michael of Romania, who was a European head of state in 1945. Hence why he might have been wise to stand simply for the ceremonial post of president.
But that is only if he was considering his own pre-eminence on the scene. He genuinely sees himself as capable of making a real contribution. Firstly that is as the ideal promoter of Bulgaria's image and profile abroad. His foreign interlocutors are mightily intrigued to meet a recidivus rex or almost that in person. A recent trip to Moscow was symbolic, 'Tsar' Putin welcoming 'King' Simeon.
He has a strong sense of duty, working 18-hour days. He can, in his own person, invoke patriotism, national spirit and the sense of historic destiny to the task of revitalising the country. He can to some extent rise above politics, taking a pragmatic approach in a low-key fashion, rather than the strident partisan style of previous administrations. He is a 'one-nation' figure, the leader of the Simeon II National Movement, whose sole objective was to fight his cause in the last year's elections, where he was spectacularly successful.

Charisma versus reality?
Simeon can tap into nationalism like no other Bulgarian leader, without seeming divisive in doing so. Indeed he draws on experts from the left as well as the right.
But there are huge drawbacks in this personalisation of party political power. He is not after all king. He cannot give an institutional stability to his party - now known simply by its initials - since it has no coherent ideology except support for the former monarch. He is slow to realise the need for delegation - hence the gruelling work-load and his increasingly haggard countenance.
Simeon needs to realize that he is not a Tsar or King personally responsible for all his subjects, but a modern democratic premier. The technocrats in charge of the economy are already being left to get on with the reforms. But other areas need their own experts to be left in charge too, once a policy line has been adopted.

Depression could be the saviour? 
Ironically, if the world economic downturn continues and the depression afflicting most of Europe deepens, this could let Simeon off the hook of his first and most unrealistic promise, the doubling of living standards in 800 days. He could legitimately attribute at least part of the problem to world-wide forces beyond the premier's control.
He could point to figures showing Bulgaria bucking the trend. Annual GDP growth is set for 3% this year and 4% in 2003, much higher than elsewhere in Europe. He could also commend Vassilev for winning the "minister of the year" award from the IMF in 2002. Foreign direct investment, which is set to be around US$800m this year, is above the 2001 figure of US$641m.
But Bulgarians have heard all this positive talk before, while their living standards remain woefully low. If Simeon is to win again, he needs to broaden his appeal and get some definite results.

NATO and EU membership
In the absence of substantial results for the population in material terms it would be one fillip at least if he could secure NATO and above all EU membership, or at least a very definite prospect of the latter, in time for the next election. For then he could still offer that vital ingredient of a successful politician, hope. 
He could apologise for the past failings with all the graciousness a former monarch can assume, able to point to the world downturn as partly responsible, while promising to do better next time, having learned on the job and pointing to EU entry as the imminent prize, the guarantee of eventual prosperity. An EU report on Bulgaria's progress towards membership is due imminently, while the EU summit in Copenhagen later this year might indicate dates for the end of talks and accession itself.

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AVIATION

Minister wants to establish new company to replace Balkan Airlines

"The best way to protect the interests of the state and taxpayers is to establish a new airline which will replace Balkan Airlines," Finance Minister Milen Velchev told the press on 19th September. "Balkan's creditors may thus be satisfied to a larger extent than if the current situation is preserved," BTA web site has reported.
"The state should not be financially committed to the future company any more than by virtue of the receivables which it currently expects to collect from Balkan," he said. It is up to the Transport Ministry to decide on possible suspension of Balkan Airlines flights, he said. 
Earlier in the day Transport Minister, Plamen Petrov, confirmed that Sofia Airport had sent Balkan a second notice urging them to repay their debt.
"Any creditor could be expected to make such a request," Petrov said. According to press reports, Sofia Airport is planning to force Balkan Airlines to suspend operation on 19th October due to a 1,467,000-leva [approx. US$732,000] debt.

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ENERGY

Bulgaria, Turkey open second link between two countries' power grids

Bulgarian Energy Minister, Milko Kovachev, and his Turkish counterpart, Zeki Cakan, officially commissioned on 28th September the 400 kV Sakar power line, a second link between the two countries' power grids. At the Hamitabat power plant in Turkey, the two ministers pressed a button for the symbolic launch of the power line, BTA web site has reported. 
The new facility will increase power exchange and secure Bulgarian power supplies to Turkey amounting to some 4,000m KWh a year with a maximum capacity of 700 MW. 
The power line was built under a 1999 long-term agreement on electricity export between Bulgarian electricity supplier NEK and the Turkish energy company, TAES. The Bulgarian part of the project was funded by NEK and cost 53m leva. 
After the commissioning of Sakar, Bulgaria will be exporting electricity to Turkey via two direct links: the 400 kV Edirne power line from the Maritsa Iztok 3 power plant to the Babaeski plant in Turkey; and Sakar from Maritsa Iztok 3 to Hamitabat. 
The Sakar power line is 150 km long, of which 60 km are on the Bulgarian side and 90 km on the Turkish. 
Apart from increasing supplies, the new power line will also improve the management of power transmission from Bulgaria to Turkey, NEK chief engineer and Board of Directors membe,r Mityu Khristozov, said at the ceremony. He explained that Sakar will also secure the reliable operation of the Turkish power grid in parallel with the European electricity system, UCTE, through the Bulgarian power grid. 
"If we remained lone players, our two countries would have been thrown out by the globalisation and the dynamics of the energy market," the Bulgarian Energy Minister said. According to him, the new era requires partnership and coordination for implementing projects of major importance for the region.

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FOREIGN INVESTMENT

Bulgarian minister hopes for US$2bn US investment

Economy Minister, Nikolay Vasilev, expects American investment in Bulgaria to reach US$2bn by the end of his government's term, BTA web site has reported. 
This emerged at Vasilev's 27th September meeting with Janet Bogue, US deputy assistant secretary of state for European and Eurasian affairs, where the two discussed the investment climate and US investment in Bulgaria, the Economy Ministry told BTA. 
At the moment the US is the sixth biggest foreign investor in this country. 
Vasilev listed the main sectors that can offer a potential to investors, including machine building, the defence industry, electronics and intellectual property. 
Janet Bogue commended Bulgaria for the low levels of corruption and the tight control over the arms trade. 
Later Vasilev met with Stanley Fischer of Citigroup, Jacob Scott of JP Morgan and representatives of Salomon Smith Barney.

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FOREIGN LOANS

Bulgarian economists welcome proposed "protective" agreement with IMF

Economists Krassimir Angarski and Stoyan Alexandrov, hail Bulgaria's idea to make "protective" its agreement with the IMF. They talked about it on the Nedelya 150 show on Bulgarian National Radio on 29th September, BTA web site has reported.
The idea was proposed by Finance Minister, Milen Velchev, at a meeting in Washington DC with IMF Mission Leader for Bulgaria, Jerald Schiff.
If both sides accept it, they will continue the negotiations on the size and timing of the tranches, and the money will be made available but will be utilized only if and when Bulgaria absolutely needs to. According to Angarski, independence from the IMF is a matter of appropriations in next year's budget. 
Alexandrov said that the idea of the Bulgarian government is not unique and mentioned the Czech Republic as an example. 
Bulgaria has a two-year agreement with the fund for a total of US$300m in nine tranches, of which three have already been remitted...

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NUCLEAR ENERGY

Russia to supply US$35m worth of nuclear fuel to Bulgaria by year end

Russia will supply to Bulgaria fresh nuclear fuel worth US$35m by the year's end as part of its debt payments, BTA web site has reported. This was ordered by President Vladimir Putin despite some difficulties experienced by Russia, Deputy Prime Minister and Minister of Regional Development and Public Works, Kostadin Paskalev, said in an interview with national radio on 22nd September. He was on Purvanov's delegation during his three-day working visit to Russia. 
Agreement was reached with the Gazprom leadership to increase fourfold Russia's gas supply through Bulgaria to Greece. An agreement on transit to Yugoslavia may be signed. Negotiations are starting on gas transit to Italy, Paskalev said. 
The Bulgarian delegation obtained Russia's consent for Bulgargaz to build a branch of the transit gas pipeline to southwestern Bulgaria with a view to the installation of gas service. 
Gazprom will assign Glavbolgarstroy to do construction works worth US$51m, Paskalev said... 
Speaking in the same programme on national radio, Foreign Minister, Solomon Pasi, called the results of the presidential visit to Russia "a remarkable breakthrough" and "steady progress" in Bulgarian-Russian relations. 
Pasi said his Russian counterpart, Igor Ivanov, was scheduled to visit Bulgaria before the March 2003 visit to be made by Vladimir Putin...

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TELECOMMUNICATIONS

200m Euro offer for majority stake in BTK

An Austrian-based consortium offered 200m Euro (US$196m) for a 65% stake in the Bulgarian telecommunications company BTK, the national privatisation agency said recently. The Viva Ventures, a holding registered in Vienna, offered 20m Euro more for the majority stake than the second bidder, a Turkish consortium of Turk Telecom and KOC Holdings, New Europe reported recently.
However, the decision regarding the sale would not be based on price alone - but on investment, business and employment plans, the agency said. This is the second attempt to privatise BTK - the first deal shattered two years ago just before its signing. At that time a consortium of the Dutch KNP and the Greek OTE offered US$650m for the 65% stake with a GSM mobile network licence included in the package.
The sale of BTK is one of the largest items on the Bulgarian privatisation agenda for this year. Prime Minister, Simeon Sackskoburggotski's, government has already secured the sale of the Biochim Bank, the country's fourth largest, to Bank Austria and of the state insurance company, DSI, to a local investor. The privatisation of the national tobacco company, Bulgartabak, was provisionally halted recently due to a flurry of lawsuits from unsuccessful bidders.
Moreover, according to local reports the aggregate value of Viva Ventures Holding offer amounts to 250m Euro with investments of 400m over the next five years. In its social arrangements Viva Ventures is committing to 22,000 on the payroll during the first year, to be reduced to 19,000 and 16,000 during the next two years. The Turkish consortium is also committed to 400m Euro of investments for a five-year period. The headcount is set at 24,000 during the first year, to be reduced to 22,300 and 20,530 over the next two years.
Currently, BTC employs 24,800. The two bidders proposed to raise the capital by 50m Euro. Representatives of the two potential buyers, as well as Finance Minister, Velchev, and Transport Minister, Petrov, were present at the opening of the final bids at the Privatisation Agency. The third bidder for a stake of up to 65% in BTC, AIG, quit the procedure. 

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