Update No: 064 - (27/08/02)

The Bulgarians are disillusioned with their new government, just over a year after electing it in March 2001. The National Movement of Simeon II, the former king, shot to prominence in a matter of months and defeated the incumbent, Ivan Kostov, of the Union of Democratic Forces.

Backlog of history
The Bulgarians are in a difficult position. No economy can make an easy transition to market capitalism; it is always accompanied by pain. In Bulgaria's case this was always likely to be severe, as with Romania. For these two had particularly hidebound Communist dictatorships.
Bulgaria was tied closely into Comecon, making fork-lift trucks and the like for its communist brethren in exchange for an array of shoddy goods. It was also a favourite tourist spot, especially its Black Sea coast, the proletarian camp's rival to the Riviera.
It is ironical that Bulgaria of all ex-communist countries should have turned to its ex-monarch to rule over it. For it never had an aristocracy, unlike Wallachia in neighbouring Romania or Bohemia in the Czech lands or Hungary and Poland. Still, it did have a genuine monarchy with Saxe-Coburg-Gotha lineage to boot. But it is not clear that more than a half century of living as a royal exile is the right preparation for ruling a country in transition.

Government hurdles
Simeon II is surrounding himself with well-trained experts and financiers from Wall Street and the City of London. Fluent in English and the ways of the IMF, they are well thought of abroad. But this does not make them popular at home.
It is doubtful if any government could possibly be in their situation. Bulgaria has not attracted the attention or investment of foreigners, FDI to date being barely US$1bn. This is far below the FDI Hungary, the Czech Republic and Poland have achieved. Bulgaria still has an unfortunate image problem here.
Yet in fact the clichés are by no means true. Bulgaria has a highly-educated population, with a particular penchant for the mathematical and natural sciences and engineering. Bulgarian computer buffs are highly sought after by international firms. But there's the rub - they are coaxed to go abroad, which they are now free to do, crating a classic "brain-drain."
The economy has been growing sturdily on official figures, 4% of GDP growth and over for several years now. But this has still not brought down unemployment of well over 10% of the work force or improved people's dismal wages. Socialism did not work for Bulgaria - but nor is capitalism yet.

Government bulletin
It is obviously going to take time, indeed generations perhaps for Bulgaria to overcome all the hurdles to a successful market economy functioning there. Gradually incremental progress can be made.
The government naturally claims that it is already happening. Simeon addressed the nation on the government's first year in office in July. He pointed out that corruption has been reduced, the tax burden alleviated and 200,000 hectares of farmland have been reclaimed and put under crops. Unemployment, he claims, has been reduced by 4.8%.
The risk of corruption has been lowered by a streamlining of the licensing regulations, abolishing one fifth of them and easing one third of them. There has been a threefold increase in allocations for training and retraining, improving employment prospects.
Bulgaria is being helped by a wide range of EBRD and other institutional investment projects. These concern the Bourgas-Alexandroupolis oil pipeline, the Sofia Airport, a second bridge over the Danube, the port of Bourgas and the Upper Arda hydro-power complex. They should combine to improve Bulgaria's advantages as a strategic location in the Balkans.
The monarchical prime minister ended by pointing to Bulgaria's wide-ranging cooperation with NATO, both in the Balkans and Afghanistan. It expects a timetable for entry into the organisation to be discussed at NATO's next meeting in Prague. Given the Macedonian situation, Bulgarian cooperation would be of great help.
But of more aid to the Bulgarians would be entry into the EU. That will have to await more tangible results in the economy, which yet should be forthcoming.

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FOREIGN ECONOMIC RELATIONS

Yugoslav, Bulgarian officials to discuss economic cooperation

Cooperation within the framework of the Stability Pact for Southeastern Europe, infrastructure projects, such as the Sofia-Nis highway, and ways to enhance trade and economic contacts between Bulgaria and Yugoslavia will be discussed at a 27th July meeting of the two countries' economic teams in Nis, BTA web site has reported. 
Deputy Prime Minister and Economy Minister, Nikolay Vasile,v will lead the Bulgarian delegation, the Economy Ministry said. 
The two countries are discussing projects for cooperation in ferrous and nonferrous metallurgy, the chemical industry, fertilizers and pharmaceuticals, mechanical and electrical engineering, the food and light industries. 
Bulgaria and Serbia are actively involved in the drawing up of joint energy projects in the framework of regional and international integration.
A free trade agreement is expected to be signed by the year's end. The next round of negotiations will be held in Belgrade in the second half of August. 
The Federal Republic of Yugoslavia, and particularly the Republic of Serbia, is a major trading partner of Bulgaria in the region. It is one of Bulgaria's biggest trading partners in the Balkans after Greece and Turkey.
The Bulgarian delegation includes Energy and Energy Resources Minister, Milko Kovachev, deputy ministers of the economy, Kaloyan Ninov and Sofiya Kasidova, of transport and communications, Lyubomil Ivanov, and of finance, Kiril Ananiev. 
The Serbian delegation to the Nis meetings consists of ministers of trade, tourism, finance, the economy and energy, and leaders of the privatization agency.

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FOREIGN LOANS

China visits Bulgaria with full hands

Documents on a US$600,000 grant for funding joint projects, were to be delivered by a Chinese delegation which visited Bulgaria in mid-July. State Councillor Wu Yi, who is in charge of economic affairs in the Chinese government, headed the delegation.
During the visit, the guests toured the Balchik, Albena and Golden Sands resorts and were welcomed at the Dimyat winery to taste local wines. Meetings with Economy Minister Vassilev, Prime Minister Saxe-Coburg and President Parvanov were also scheduled, novinite.com reported.

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PHARMACEUTICALS

Sopharma acquires Pharmahim Holding

The Privatisation Agency Supervisory Council have affirmed the contract on the 100 per cent sell-off of Pharmahim Holding capital and 45.89 per cent of the capital of the National Investigation Chemical-Pharmacy Institute (NICPI) with Sopharma. Pharmahim Holding exports Bulgarian medical goods, antibiotics, chemical therapeutic and original Bulgarian products with ecologically clear origin, pharmaceutical products, bio-technologies and phito-chemical sustention for humanitarian medicine and veterinarian practice, ethereal oils and synthetic aroma products, perfumery and cosmetics and others.

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TRANSPORT

Bulgarian parliament ratifies Danube second bridge financial package

Parliament ratified on 31st July two documents related to the construction of a second bridge across the Danube river at Vidin-Calafat, BTA web site has reported. 
The MPs ratified a financial arrangement with the French Development Agency under which the Agency would provide grant aid of 5m euros to fund the expenditure for the Danube bridge construction project. The arrangement was signed on 9th April 2002. 
Amending its resolution of 1st December 2000, parliament gave its consent to the government for negotiating a financial agreement with the German Credit Institute for Reconstruction amounting up to 18m euros as a component of a financial package of loans and grant aid. The money will be used for the Danube bridge construction project... 
Parliament also ratified various other international documents to which Bulgaria is a party.

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