Books on Bulgaria
% of GDP
Update No: 093 - (28/01/05)
2004 in Review-Politics-The President's Year
Last year was the annum in which Bulgaria became one of the rare countries on
the planet in which the head of state, Georgi Purvanov, on occasion acted rather
more like a Westminster-style leader of the opposition than otherwise. That may
be no surprise, given that Purvanov springs from a party currently not
represented in government, given that the vacuums left by the conduct of
government and opposition, and given the leeway in the constitutional job
description of Bulgaria's head of state.
On more than one occasion, Purvanov made critical statements with regard to the
health care system and in particular the troubled National Health Insurance
Fund, and he described the country's education system as getting further from
As head of state and as nominal Commander-in-Chief of the Bulgarian armed
forces, he commented on several occasions on the country's continuing deployment
of troops in Iraq, and spoke out to oppose proposals to reduce the strength of
the military from 45 000 to 39 000, especially in the context of plans to expand
the military bureaucracy. Perhaps, indeed, the event that gained him the most
credibility in 2004 was when he donned uniform to visit Bulgaria's military
personnel in Iraq.
In one respect, he issued a message that would have been welcomed by the
Government, that he opposed the holding of parliamentary elections any earlier
than as scheduled in the summer of 2005, the expiry of the term of office of the
He also spoke out against proposals from various political quarters that a Grand
National Assembly be convened to deal with proposed changes to the constitution.
These, he said, should be handled by the currently serving ordinary National
Assembly. To set up the wider body would lead to "clogging" of the
processes within Bulgaria as it sought to deal with key issues ahead of
accession to the European Union, Purvanov said.
For all these concerns expressed at domestic level, Purvanov had an active year
in his role as ambassador-at-large, including leading a number of delegations on
foreign trips with a business and investment recruitment focus.
He took his role as representing Bulgaria to the hilt when, at the Olympics in
Athens, he was a strong proponent of the appeal against the decision to award
gymnast Yordan Yovchev only second place in an event for which most Bulgarians
believed Yovchev deserved gold.
Purvanov's move early in the year to propose that Bulgaria hold a referendum on
accession to the EU was less well-received initially, but later gained currency.
He also faced some trouble in the first half of the year when his name, among
others, was linked by the media to alleged donations of oil by Saddam Hussein's
regime to the Bulgarian Socialist Party at a time when Purvanov was its leader.
Purvanov denied any knowledge of or involvement in the controversy, which was
dubbed "Barrelgate". After initial discussions on whether he would
appear before a parliamentary committee specially set up to investigate the
allegations, it was decided he would not.
As head of state and constitutionally not a member of Parliament, Purvanov
seldom sets foot within its portals. However, he had a series of engagements
with MPs, as he continued in 2004 to use his veto on a number of occasions,
including to send back the Family Allowances Act for revision. MPs amended the
legislation to tailor it to Purvanov's objections, which he had based on the
original version being prejudicial to encouraging Bulgarians to have children
While individually popular, with most polls giving his personal popularity
generally as running second only to the ever-popular Interior Ministry chief
secretary Boiko Borissov, detractors of Purvanov interpreted some of his moves
as populist. However, with no real scandal attached to his name, he emerged at
the end of the year as generally enjoying credibility and some acknowledgement
that he was in general fulfilling the role set out for him by the constitution,
to be a "president for all Bulgarians."
The former communists hold the lead
About half a year before the elections for parliament later in 2005, the
Bulgarian Socialist Party (BSP), the successor to the communists, continues to
hold the lead in the public opinion polls, in spite of rather tumultuous events
According to a poll in December 2004 by the MBMD polling agency, had the
elections been held in the beginning of that month, the BSP would have got 23%
of the votes.
New Year bombshell
Major controversy erupted around the BSP in January, 2004 after a report in the
Iraqi daily Al-Mada, according to which the BSP had in 1998 received 12 million
barrels of petrol as a "gift" from the regime of Saddam Hussein.
According to the report, about 200 individuals, companies, political
organisations and religious organisations in 50 countries that year received
from Hussein various quantities of petrol as a gift under the UN food-for-oil
Opposite the name of Bulgaria appeared the BSP and a Bulgarian-Iraqi company,
IraqBul, which allegedly received two million barrels of petrol.
Purvanov in repudiation
President Purvanov, who was BSP leader at the time when this allegedly
happened, described the Al-Mada report as "ill advised black humour",
ordered the National Security Service (NSS) and the National Intelligence
Service (NIS) to hold an inquiry, and rejected all allegations.
Current BSP leader Sergei Stanishev also rejected the allegations. Several days
after the first report, it turned out that businessmen close to the BSP had
indeed dealt with Iraqi petrol under the UN oil-for-food programme.
In an interview with the bTV national channel, Zahari Zahariev, a member of the
BSP Supreme Council (SC), admitted that he was an intermediary in a deal under
the UN oil-for-food programme between Iraq and a Bulgarian company,
Machinoexport, controlled by Dimitar Mandjukov, widely seen as close to the BSP.
Mandjukov is the publisher of the party newspaper, Duma. He is also a weapons
dealer, owns the BBT cable television channel, has interests in the
telecommunications sector and has been awarded by President Purvanov the Stara
Planina order for his contributions to journalism in Bulgaria.
But Mandjukov said that he had made only a little profit from the sale of the
one million barrels of petrol and had not used it to sponsor the BSP.
Mandjukov said he would sue anyone who tried to say anything negative about his
Both Mandjukov and Zahariev denied having involved the name of the BSP in the
deal or having negotiated with Iraq outside the UN programme.
The controversy led to the setting up of a parliamentary committee in February,
which started its own inquiry into the Al-Mada allegations. On several occasions
the committee, whose original two-month term has been extended on more than one
occasion and it is still in existence, has tried to summon Purvanov. So far it
has not succeeded.
In the heat of the Iraqi oil controversy, the BSP tried to shift negative public
attention from itself by pushing for early elections and solemn vows to rid
itself of members "who stick their fingers in the honey" but at the
same time, party leader Stanishev refused to dismiss SC member Zahariev from his
In the beginning of March, the BSP tabled in Parliament a vote of no confidence
on the basis of the Government's "social irresponsibility".
Deputy leader Rumen Ovcharov identified as evidence of the
'irresponsibility" of the Government its income policies, problems within
the education system and with health care, the sale of the Bulgarian
LUKoil buys Petrol shares
Russian giant LUKoil has agreed to purchase an 18.3% stake in Bulgaria's largest
fuel retailer, Petrol, for 80m levs (US$55m), local media reported recently,
cited by Deutsche Presse-Agentur (dpa).
At the same time, LUKoil and Bulgaria will start talks on the sale of the
remaining Petrol capital, expected to total 437m levs. The Russian firm already
owns the largest oil refinery in Bulgaria and a network of petrol stations. In
September 2003 it bought Beopetrol, the second largest fuel retailer in the
neighbouring Serbia for US$240m.
Bulgaria extends energy export
National Electricity Transmission Company (NETC) plans to export some 500m kwh
on a yearly basis reaching about 6bn kwh in export in 2004, the company's CEO
Vassil Atanassov told Sofia news agency on December 16th.
Atanassov said Bulgaria is a leader on the regional energy market exporting to
all Balkan countries and largely covering their energy deficits. He hopes that
this trend would continue in the next couple of years. According to him, the
upcoming EU entry of Bulgaria would contribute to a better performance of the
country on Europe's energy stock exchanges. Atanassov highlighted the fact that
exports are growing due to domestic consumption, which has dropped by some
2-2.5% compared to 2003, mainly due to 2003's warmer winter days.
Bulgaria, Macedonia, Albania give go-ahead for oil pipeline
The prime ministers of Bulgaria, Macedonia and Albania on 28th December signed a
joint political declaration in support of the Burgas-Vlore oil pipeline
construction. The project is valued at US$1.2bn, it was reported from the
Council of Ministers.
In addition to the political declaration signed by Prime Minister, Simeon
Saxe-Coburg-Gotha, Albanian Prime Minister, Fatos Nano, and Macedonian Prime
Minister, Vlado Buckovski, support for the project was confirmed by an
additional document - a special memorandum of the three countries' ministers in
charge of regional development, industry, and economy, Khorizont Radio reported.
After signing the declaration, Saxe-Coburg-Gotha pointed out that the documents
are proof of the willingness of the three governments to work together for the
development of the region.
The US AMBO Corporation will implement the project. President Edward Ferguson of
AMBO pointed out that the project will cost almost US$1.2bn and construction
will take three-four years. The construction is expected to begin within one
The Burgas-Vlore oil pipeline will be 912 km-long, some 480km of which will be
in Bulgarian territory. The idea to construct this pipeline was launched in 1994
as a part of Corridor No 8. The pipeline's planned capacity is 950,000 barrels a
day, or in other words - about 35m tonnes of oil per year.
FOREIGN ECONOMIC COOPERATION
Bulgarian, Chilean foreign ministers discuss relations, cooperation
Bulgarian Foreign Minister, Solomon Pasi, met with his Chilean counterpart,
Ignacio Walker, in Santiago recently, the Foreign Ministry said, BTA web site
The two expressed satisfaction with the progress in bilateral relations and
optimism about the future of these relations. "Bulgaria, as a future EU
member from 2007, and Chile, as an EU associated country, have excellent
prospects," Pasi said, quoted by his ministry. "Located as far apart
as any two nations of Europe and Latin America can be, our countries can throw a
bridge between the two regions."
Pasi and Walker noted that bilateral economic contacts are becoming more
dynamic, which is evidenced by the fact that two-way trade has increased
threefold over the last three years. In terms of annual trade volume, Chile was
Bulgaria's second most important partner in Latin America in 2004, after Brazil,
and in 2003 Bulgaria was Chile's number one trading partner in Central and
Eastern Europe, Russia included.
Pasi presented a draft agreement on avoidance of double taxation, which is
expected to facilitate two-way investment and trade. He said the expected
appointment of a Chilean honorary consul in Bulgaria will add further impetus to
bilateral relations. He expressed the hope that a Chilean embassy will soon be
set up in Sofia.
The two foreign ministers signed an Agreement on Antarctic Cooperation between
Bulgaria and Chile, which envisages joint scientific projects and logistic
support for Antarctic expeditions. In the presence of his Chilean counterpart,
the Bulgarian foreign minister also signed an Agreement on Cooperation between
the Ministry of Youth and Sport of Bulgaria and the National Youth Institute of
Chile, and a Memorandum of Cooperation between the Diplomatic Institute with the
Ministry of Foreign Affairs of Bulgaria and the Andres Bello Diplomatic Academy
Bulgarian minister hopes nuclear plant will be operational by 2011
Bulgaria's Energy and Energy Resources Minister, Milko Kovachev, expected the
country's second nuclear power, at Belene, to be commissioned in 2011, he said
on bTV, BTA web site reported
The government can make a decision in principle on construction of the Belene
nuclear plant as soon as the public debate is over, Kovachev said in the BTA
interview. Once such a decision is made, the financial and technical design can
be ready in June, and a contractor can be selected and contracted, said Kovachev.
Euratom, Citibank and export credit agencies have been approached about possible
financing of the project, but the energy minister said it is too early to say
what financial commitment they are ready to assume.
The Belene nuclear plant went under construction in 1982 but was mothballed in
May 1990. As Bulgaria started to prepare the decommissioning of the two oldest
Kozloduy reactors (Units 1 and 2), the government decided to revive the project
in December 2002. The Environment Ministry panel approved an environmental
impact assessment report in October 2004, determining that the project could go
ahead. In late 2004, Deloitte & Touche were selected as financial consultant
and Parsons Europe Ltd as engineering consultant in the project.
Units 3 and 4 of the Kozloduy nuclear plant have to be shut down conclusively
not later than 31 December 2006, as agreed with the European Union, no matter
which government is then in power, the Energy Minister said recently.
The reserves of the Bulgarian power industry may reach a critical low in
2007-2011, and then the country will reduce its electricity export, Kovachev
said, replying to a question. He noted that the government is pursuing an active
policy in respect of the future of the energy sector.
Telco acquires 49% in Mobikom
The Commission for Financial Supervision approved the Bulgarian telecom's
acquisition of a 49% stake of Britain's Cable & Wireless in local analogue
mobile carrier Mobikom, New Europe reported recently. The formerly state-owned
Bulgarian Telecommunications Company (BTC), 65% of which was bought earlier in
2004 by Viva Ventures, currently holds 39% of the group. BTC will develop a GSM
technology, using Mobikom infrastructure. The sum of the deal is €20m. In
order to be finalised, it needs the seal of approval of the Commission for
Protection of the Competition.
Bulgarian-Portuguese JV secures Trakiya highway deal
Trakiya highway, the second largest in Bulgaria, was recently granted on
concession to a Bulgarian-Portuguese joint venture. The cost of the project is
estimated at €720m, with €590m planned investment by end 2007 and another
€125m by end 2009, Regional Development Minister, Valentin Tserovski, told
Bulgarian News Agency.
The cabinet also decided that the owners of real estate alongside the highway
would be reimbursed with a total of 1.5m levs for the nationalisation of their
At its regular meeting the government decided on December 16th to award the
35-year concession of the south highway to the Trakiya Highway AD, which is to
complete the construction and rehabilitate the main traffic road. The concession
is awarded without competition or tender for republican road Kalotina (on the
Serbian border) - Sofia ring road (northern arch) - Orizovo - Stara Zagora -
Nova Zagora - Yambol - Karnobat - Bourgas (on the Black Sea).
The government will have to reconstruct, operate and maintain with its own funds
the sections of the highway built by the state. The concessionaire would be
entitled to collect road tolls in compliance with the Roads Act. The total
length of the highway, including the Kalotina - Sofia section, is 443km, 182km
of which have been completed while the remaining 261km would have to be
constructed by the concessionaire. Shareholders in Trakiya highway include
Avtomagistrali EAD, Technoexportstroy EAD, MSF-Moniz da Maia, Serra&Fortunato-Empreiteiros,
SA, Lisbon, Portugal, as well as Lena Engenharia e Contrucoes, SA, Fatima,
Portugal and Somague Concessoers e Servicos, SA, Sintra, Portugal.
The three Portuguese companies own 51% of the company capital. The council of
ministers also permitted the design and construction of sites for state needs on
agricultural land, including highway Trakiya sections in the region of Nova
Zagora - Yambol, the Nova Zagora road unit and Yambol - Karnobat with a total
area of 445 hectare.
The government also sanctioned the design and construction of technical
infrastructure sites of transeuropean Corridor IV on the territory of Vidin
municipality, including a combined road-railway bridge over the Danube between
Vidin, Bulgaria, and Calafat, Romania.