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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: 069 - (28/01/03)

The Bulgarians are in a very difficult situation. Things are not going well for many citizens and through no fault of their own. Poverty and crime, unemployment and low wages are common afflictions. But, then there is endemic corruption, for which individuals also bear a responsibility.
The government - and likely enough any government at the moment - are deeply unpopular. The cabinet of Simeon SaxeCoburgGotha has the highest disapproval rating - 64% - since it took over in July 2001. Eighteen months is enough for people to form a provisional judgement, necessarily an adverse one today. Simeon, the former King Simeon II, was unwise enough to commit himself to the target of doubling of living standards for all within 800 days of his assumption of office, that is by mid 2003, the 60-year anniversary of his accession in 1943. It was scarcely ever a realistic goal.

Blaming the rest of the world
Simeon's government came to power at an unfortunate time. The world economy since 9:11 has been suffering from popular apprehension at what comes next. The build-up to war is notorious for creating uncertainty and anxiety depressive of consumption and investment and conducive to savings. Bulgaria has not been exempt from these pressures. The government can therefore legitimately blame part of the present troubles on the world going awry.

NATO and the EU seen as very mixed blessings 
The strategy of Simeon's administration, as that of his predecessor, has been starkly, pro-Western, as one might expect. But it is therefore, also dubious in many people's eyes.
The admittance to NATO, which was agreed in its Prague summit in December, is highly welcome as recognition of Bulgaria's newfound status as an aspirant Western country. It is also an acknowledgement of its critical contribution to settling the Kosovo crisis satisfactorily in 1999. Sofia refused Russia access to its air space in the tense moments concluding the pacification of the province, when the Russians were trying to carve out a sector for themselves and actually rushed 200 troops into Pristina with that purpose in mind. Despite the long-acknowledged debt to Russia for its role in liberating them from Turkish rule in 1878 and from Nazism in 1944-45 the Bulgarians chose the West. After all they paid a heavy price for that second particular 'liberation.' 
It is the admission to the EU, which is the bigger issue, due now to be made in 2007. The apprehension on this one is profound.
People are afraid of being swallowed up by Western companies establishing subsidiaries in Bulgaria; but again they are worried that not enough of them are coming in. Bulgaria has attracted little more than three billion dollars' worth of FDI so far, a pittance compared to Hungary or the Czech Republic for instance, both with similar-sized populations.
Then there is the vexed question of shutdown plans for four outdated nuclear reactors at the Kozloduy Power plant, which involve the combined loss of 1,260 megawatts in output. Such a deficit would lead to a doubling of the cost of electricity and endless power shortages. The Bulgarians feel they are being expected to pay the price for the Western Europeans' political correctness in such matters, given the enormous caution with which nuclear safety is now conducted in Bulgaria as elsewhere post-Chernobyl; the chances of an accident are indeed remote. But the concerns of Bulgaria's EU neighbours or near-neighbours are understandable.

Corruption and organised crime abound
The new government is apparently as helpless at coping with corruption and crime as its predecessor or as other post-communist governments. Foreign investors are hanging back for this reason above all.
The US ambassador to Sofia, James Pardew, described the situation on crime as "very visible and very well organised." He warned that corruption and crime had an impact on state institutions and that foreign investors were aware of the fact.
Poor Simeon is obviously totally out of his depth in facing this problem. Half a century as an exiled monarch, in Madrid is not a good preparation for dealing with the toughest gangsters in history, the outcome of a society that outlawed all private enterprises. They are privateers such as the world has rarely seen, the product of the most curious experiment in Social Darwinism ever, persecuting natures capitalists and only the fittest are likely to survive and prosper. 

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AGRICULTURE

Tobacco industry turns into lavender growing

Tobacco farmers in the republic of Bulgaria are currently being encouraged by the Ministry of Agriculture to grow alternative crops instead. According to recently published local reports, an increasing number of farm cooperatives and private farmers in Eastern Bulgaria have been taking up lavender growing in recent years, in place of tobacco. Most importantly, the reports noted that the revenue this crop brings in is several times higher than for grain crops.
"No other crop is more profitable than lavender," chief of Kapta farm cooperative of the village of Troitsa in Veliko Turnovo region, Stoyan Chakulov, commented, reports the Sofia Echo daily. "The profit is between 3,000 and 3,500 levs a hectare and the manual work and harvesting costs only 500 levs," Chakulov added.
Lavender nurseries have been set up in the districts of Shumen, Varna and Dobrich in north-eastern Bulgaria. "Other farms have also been created in the region of Bourgas south of the city and they produce quality planting material," Shoumen-based company Eterika spokesman, Lozan Lozanov, said, adding that new lavender plantations were cropping up in other parts of the country as well.
According to Chakulov, lavender growing provides temporary job opportunities to the unemployed in rural areas. "The access to the European Union markets for Bulgarian goods is improving," Agriculture Minister, Mehmed Dikme, said. Dikme gave the example of the EU grain crops quota for Bulgaria which, from 2,000 tonnes this year, is expected to be increased to 250,000 tonnes in 2003. "Bulgaria has also asked for the removal of the restrictions on export of farm produce from 2004," Dikme recently stated to the press.
He revealed how much wheat Bulgaria has exported in the past three months. "Over 1.2m tonnes of wheat of the new harvest has been exported, which has not happened in the past 15 to 16 years," Dikme said.
In contrast to the current trend of switching the farming interest from tobacco to lavender investment in the former field are to keep going in Bulgaria.
In particular, the Bulgarian-US joint venture, Dimon Bulgaria, will build a factory in Haskovo to handle and cure 10,000 tonnes of tobacco a year. The investment amounts to millions of dollars, said Production Director, Kiril Vulkov.
The future factory will employ up to 600 workers. Transverse design work is underway on the site for the future facility, which covers an area of 6.2 hectares.

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DEFENCE & ARMAMENTS

Bulgarian army needs US$85m for reforms, army chief says

There is a shortage of some 160m leva [US$85.6m] to ensure that the commitments given to NATO last year, based on various programmes and agreements, are met within the deadline, and that the reforms continue at the same pace, envisaged in the 2004 plan on the reform in the army, and that the needed modernization is implemented, BTA web site has reported. Gen Nikola Kolev, chief of the General Staff of the Bulgarian Army, said on 9th January after a meeting of the Consultative Council on National Security. 
Gen Kolev noted that there is inadequate financial provision of the reform in the army. 
"I am not talking about lack but about inadequacy," Kolev specified. He noted that the funds extended to the army are designed for ensuring its main activities - current support, combat readiness, reform, implementation of the partnership goals and the activities which Bulgaria is to perform under the individual partnership programme, the annual programme and the action plan as well as for upgrading of the armament, equipment and structure. 
It is a matter of political decision to arrange the priorities but the funds are insufficient for all activities taken together based on the plans approved and commitments undertaken, Gen Kolev noted.

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FOREIGN INVESTMENT

Bulgaria establishes high investment targets for 2003

Foreign investments reaching between US$400-500m for 2003 have been targeted by the Foreign Investments Agency, its newly appointed chief Pavel Ezekiev said at his first news conference. 
Ezekiev noted that Bulgaria had to concentrate on greenfield investments as the bulk of the big privatisation deals were already complete. He pointed out that the agency would go for direct marketing seeking a string of meetings and the boosting of contacts with prospective foreign investors. Ezekieve said that Bulgaria needed more of the so-called offset policy in which the government used big state commissions to lure the assignees into investing in the country. "I want Bulgaria to follow the example of the Czech Republic and Poland which successfully implement this policy," Ezekiev stressed. According to the agency head, the most attractive sectors in Bulgaria are real estates, tourism, light industry, finance, energy and information technology. 

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FOREIGN LOANS

World Bank credit for SIEP

The World Bank recently approved a US$50m loan for a Social Investment and Employment Promotion Project (SIEP) in Bulgaria. The project aims to improve the living standard of people in poor Bulgarian regions, among long-term unemployed and ethnic minorities. The loan has a 17-year maturity, with a four-year grace period. Through closer contact with municipalities and local communities, the project will support the creation of more than 700,000 employee days of labour generated by small community infrastructure projects and other active labour market interventions. SIEP will ensure direct financing to small infrastructure projects (up to US$80,000 each) for poor communities and will increase productivity and reduce poverty by assisting the unemployed in response to changing economic and labour market conditions.

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NUCLEAR ENERGY

Bulgarian n-plant signs contract with consortium on units' decommissioning

The Kozloduy Nuclear Power Plant and a consortium of Britain's BNFL and France's EDF on 13th January signed a consulting contract for the management of a project to decommission the n-plant's 440 MW Units 1 and 2. 
The contract is to be implemented over 38 months and is worth over 7m Euros, Kozloduy n-plant's Yordan Kostadinov, who signed the document, told BTA News Agency. 
The priority of the contract will be construction of a dry storage for spent nuclear fuel from Units 1 and 2. In this connection, the companies which have expressed interest in entering a competitive bidding procedure for building of the storage will meet at the n-plant on 16th January. 
Units 1 and 2, the oldest generating units of Kozloduy, were disconnected from Bulgaria's power grid on 31st December 2002. The decision on their final closure was adopted by the Council of Ministers on 19th December 2002. Under that document, Bulgaria undertook to start the decommissioning process for the two reactors by 31st December 2002.

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TRANSPORT

Bulgaria to complete stretch of trans-European route after talks with Turkey

The Bulgarian section of the trans-European north-south motorway between Kalotina (on the border with Yugoslavia) and Kapitan Andreevo (on the border with Turkey) will be completed after negotiations with Turkey, the Council of Ministers' Information and Public Relations Directorate told BTA News Agency on 28th December. 
The Council of Ministers approved the formulation of a government position on an agreement and protocol on cooperation between Bulgaria and Turkey in energy and infrastructure, signed on 4 November 1998, the press release says. Under the 1998 intergovernmental agreement, Turkish companies were to share in the construction of the Gorna Arda hydropower project and the Maritsa transit road between Orizovo and Kapitan Andreevo in exchange for supply of electricity to Turkey. 
The government decision mandates the Minister of Regional Development and Public Works to hold negotiations on updating of the agreement. "Since construction of the Orizovo-Kapitan Andreevo section of the Maritsa transit road has not yet started, under the terms provided for in the protocol on cooperation, the Bulgarian government's position is that this infrastructure project should be excluded from the agreement and protocol on cooperation so that the Bulgarian section of the north-south motorway could be completed and go into operation," the press release said. 
An international competitive bidding procedure for completion and operation of the Bulgarian section of the trans-European north-south motorway in the Kalotina-Kapitan Andreevo direction was held in 1991-1992. The Italian company Salini was then awarded a concession for the construction of the motorway between Kalotina and Kapitan Andreevo, of which the Maritsa transit road forms a part. 
If the negotiations produce positive results, the Minister of Regional Development and Public Works will commission the preparation of a technological, legal, financial, economic, social and environmental analysis of the concession, according to which the specific parameters for implementation of the project will be determined, the Government Press Office said.

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TOURISM

Veliko Turnovo to attract US tourists

Over 7,000 tourists from the US are expected to visit alternative tourism sites in the region of Veliko Turnovo this year, Tsarevgard-Turnov tourist company manager, Diiter Panov was quoted as saying by BTA News Agency. 
The American tourists will stay in old village houses which meet international tourist requirements, said Panov. Currently, there are about 20 such houses operating in Veliko Turnovo and Arabanasi. In the region of Elena, however, their number is higher. Residents of Sofia, Rousse and Varna are rushing to buy deserted houses in the villages near Elena and Zlataritsa. With comparatively little money and lot of hard work the new owners transform the houses in family hotels bringing them a fair income, Dimiter Dimitrov, owner of the Donkovski Han, was quoted as saying. 

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