Books on Bulgaria
% of GDP
Update No: 112 - (26/09/06)
Looming elections for the presidency
Bulgaria is due to enter the EU in January, although there are still four of the
25 existing members who have yet to ratify its accession (and Romania's),
including Germany. Assuming it happens, who is president at the time is going to
be of more than symbolic significance. Presidential elections are looming this
Bulgaria's Cabinet approved expenditure for the preparation and carrying out of
the first stage of the presidential elections on October 22nd. The funds needed
would remain below 22 million leva, State Administration Minister Nikolai
Vassilev said. The sum could be optimised and reduced further, Vassilev said.
For the first time voters would use one integral ballot. The ballot boxes would
be transparent and manufactured for the first time in Bulgaria. Voters would be
able to cast a ballot in 12 000 polling stations throughout the country.
Tariffs and fees for the broadcast of electoral materials were also determined.
Each candidate would have to pay for the television and radio commercials to be
presented during the campaign period.
An army general, a politician, a former constitutional judge, a director and a
new-born leader of a nationalist party are the five presidential candidates
known so far besides incumbent President Georgi Purvanov, the front-runner, and
Nedelcho Beronov, leading the opposition candidates.
Petrov pitches in
But there is a newcomer to the scene who could upset the generally-held
expectations. Army general Lyuben Petrov is probably the most arresting of the
candidates who, with his three years as chief of staff of the Bulgarian army
(1991-94), really fulfils the ideal of the strong man in uniform. Two big
moments in Petrov's public life have given him a definite profile. After long
years spent as a devoted member of the Bulgarian Socialist Party (BSP), the
successor to the Bulgarian Communist Party, Petrov suddenly decided to form his
own political movement and on August 7th 2006, officially announced the creation
of the People's Patriotic Alliance (PPA).
Petrov then said his aim was to fight for "a more human and just system of
human existence," and that the PPA was going to lead a more left-wing
policy in the political spectrum occupied by the BSP.
What the PPA really looks like can be seen by the people behind it. The list
contains 11 citizens and political organisations from the left and ultra-left
wings. Among these organisations is Nova Zora, which is part of the circle
closest to Volen Siderov's ultra-nationalist Ataka party. Former BSP and Ataka
MPs and the Movement for Protection the Rights of Pensioners and the Socially
Disadvantaged also put their signatures in support of the PPA.
A movement led by Ivan Slavkov, son-in-law of communist dictator Todor Zhivkov,
added its name to the list of PPA founders. Slavkov is the former head of the
Bulgarian Olympic Committee, who last year was captured on tape discussing
It was not a surprise that the PPA's messages recalled Ataka's from last year,
when Ataka won a surprising fourth position in Parliament. "We will fight
against poverty and corruption in Bulgaria," Petrov said.
The PPA was quickly described by the media as a formation that would try to
steal the nationalistic vote from Siderov and Ataka. Conspiracy theories even
suggested that the BSP was behind the PPA in an attempt to disorganise Ataka
supporters and secure a clear victory for Purvanov in the elections. Apparently
to prove these theories right, on August 23rd Petrov officially announced his
candidacy for president, marking the second important moment of his political
The general listed three priorities. He promised that once elected, he would
initiate a referendum against the closure of Kozluduy nuclear power plant, ask
Parliament to discuss a ban on the joint Bulgaria-US army bases in Bulgaria, and
encourage the immediate withdrawal of Bulgarian troops from Iraq.
The PPA released a declaration that said the party was for "regulative
functions of the state against the current market chaos in the economy" and
"revision of the shady privatisation deals," and against "selling
land to citizens from non-EU countries." To add some more colour to the
situation, Petrov said his candidate for vice president would be actress Neli
Topalova, mainly known in Bulgaria from the many TV series dubbed with her
Facing the real threat of losing his supporters, Ataka's Volen Siderov hinted
that he would try to win the presidency. Ataka won 21 seats out of the 240-seat
Parliament in July 2005 and proved a powerful force that forced the established
political parties to reconsider their supporters seriously. However, the lack of
experienced Ataka MPs, the several splits within the party that ended with ugly
scandals, the expulsions of several MPs, and, most of all, the spring incident
with Siderov on the Trakia highway when he allegedly waved a pistol in the face
of a young man and his ill grandfather banished much of Ataka's charm.
This resulted in a vacuum that now may be filled by Petrov's PPA. Three days
after Petrov announced his candidacy, Ataka answered by naming Siderov for its
Who will attract more votes from the Bulgarians with nationalist feelings only
the elections will show, but Siderov has found his rival. Especially since all
the other political parties avoid even mentioning the word nationalism, fearing
that this would contradict the values of the European Union they all vow to
The more moderate Markov
A more moderate rival of Siderov, or at least in terms of aiming at the
disappointed people from the established parties, would be a description of
Georgi Markov, leader of the party Order, Law and Justice (OLJ). Markov, former
judge in the Constitutional Court, is a prominent political figure in Bulgaria.
He was among the most passionate supporters of democracy, an anticommunist and
one of the founders of the Union of Democratic Forces. He was even rumoured to
be the joint right-wing candidate for the elections.
Since this role has been more or less taken by Beronov, Markov decided to go out
on his own and on August 27th, OLJ said that Markov would run for president
together with the unknown Maria Ivanova, "mother of four and owner of an
Markov's candidacy is not a surprise, since only three of the eight right-wing
parties represented in Parliament support Beronov. However, with Markov's
candidacy, the right-wing risks fractioning the right-wing vote into pieces,
which might result in neither Beronov nor Markov reaching the second stage of
the elections, where undoubtedly Purvanov will await a rival.
A regional contender. Kostov
The director Kamen Kostov from the central city of Stara Zagora is somewhat
of a regular bidder. His nomination was announced on August 23rd.
Kostov has worked as a director at Bulgarian National Television. Kostov tried
to run for president in previous elections, but his initiative committee failed
to present the required number of signatures. As did Petrov, Kostov listed three
priorities: to win, to follow the real agenda of Bulgarian society and to change
political thinking. "I will work for the Bulgarian national cause, more
powers for the president and for a presidential republic," Kostov said.
The irredentist champion for United Bulgaria
Nationalist Bulgarians do not accept the independence of Macedonia, a part
of which was part of the Greater Bulgaria of yore before the First World War.
They lost it in the Balkan wars of 1912-13 when the Ottomans were finally
On August 29th a fifth candidate entered the race for nationalistic voters.
Grigor Velev, leader of the recently established United Bulgaria party said he
would run, and listed three priorities: to return territories from Serbia to
Bulgaria, to grant Bulgarian citizenship to all Macedonian citizens who wanted
it, and to bring one million Bulgarians back from Ukraine.
So far everyone except for Purvanov and Beronov are betting on the nationalistic
card, which might turn this election into the battle for the nationalistic vote.
A vote that is very unlikely to secure a win in the first stage, but very likely
to contribute to the second-stage results of Purvanov or Beronov.
The outcome will be most revealing of the true sentiments of the Bulgarian
Bulgarian route for Russian pipeline to Greece
By the end of the year Bulgaria, Russia and Greece would sign the first
agreement for the construction of the Bourgas-Alexandroupolis oil pipeline
project. The decision was taken during a meeting in Athens on September 4th.
Bulgarian President, Georgi Purvanov, his Russian counterpart, Vladimir Putin,
and Greek prime minister, Konstantinos Karamanlis, took part in the summit,
Darik Radio reported.
A joint declaration on co-operation in the sphere of energy was presented after
the meeting. Russia, Bulgaria and Greece expressed their interest in the
speeding of the Bourgas-Alexandroupolis project execution and in the creation of
new natural gas networks.
Purvanov said that another delay in the project was going to be fatal due to the
start of various other energy projects. A specific term for the execution of the
project was agreed upon and needed to be followed, Purvanov said.
Putin said that Bulgaria and Greece realised the strategic importance of the
project as a mechanism for controlling European energy policies.
Specific details were not presented after the summit. The leaders said the
political parameters of the deal were negotiated and the technical issues would
be left to experts in the energy field. The three countries' energy ministers
are to meet before the end of the year.
The following gives a recent German perspective on Bulgaria's EU entry. There
are those with misgivings in Germany about admitting Bulgaria and Romania, given
their notoriously poor record on crime and corruption and the possibility of
them spreading within the EU by uncontrolled immigration.
Germany is still almost certain to ratify their entry. It is too late to issue a
ban or delay now:-
Bulgaria "to continue fight against crime after EU membership"
Deutsche Presse Agentur
Bulgarian Foreign Minister, Ivailo Kalfin, expressed confidence recently that
his country will join Romania in becoming the 26th and 27th members of the
European Union in January next year, ruling out any special conditions on them
joining the Brussels-based bloc. "In the European Union there are not
different types of membership," Kalfin told Deutsche Presse-Agentur dpa in
Berlin. Bulgaria was going to be "a fully-fledged member," he said.
Kalfin was visiting Berlin as part of a trip to Germany in the build-up to the
release of the European Commission's final report on Bulgaria's EU candidacy,
which has been hit by concerns about the country's fight against crime and
corruption. "It is a fight that will continue after (EU) membership,"
Germany is one of only a handful of the EU's members that have still not
ratified Bulgaria's ascension treaty, which is a key part of the nation's move
towards joining the Brussels-based bloc. Already 21 of the EU's 25 member states
have signed the treaty with Bulgarian Prime Minister Sergey Stanishev, who
earlier this week was also in Brussels to lobby for the nation's membership
application to receive the final green light.
But Kalfin acknowledged that crime and corruption in Bulgaria remained a key
concern of the EU, which has set safeguards to ensure that the nation meets
standards in the fight against crime. "We have reformed the judicial
system," he said, adding that the nation was now seeing the beginning of
the results of the reforms to fight organised crime with high-ranking officials
being prosecuted and investigations underway.
"I am optimistic," he said about Bulgaria avoiding a delay in joining
the EU in January as planned with the foreign minister insisting that any
further issues could be resolved together with the other EU members once Sofia
has been formally admitted as a member. Kalfin said that a delay by one year to
January 2008 would undercut the momentum that has been built up in the country
behind membership would be very discouraging for the Bulgarian public, where
support for joining the EU is running at about 70 per cent. As a result, he
said, there is considerable pressure on the government to ensure that Bulgaria
joins the EU on time in January. "It is very important to keep up this
momentum," he said.
Parts of Western Europe have moved as part of the last EU enlargement in May
2004 to protect their labour markets from cheap workers flooding in from the new
EU member states in Central Europe. But Kalfin said that he did not see any
threat of Bulgarian workers following the example of other EU newcomers and
seeking to move to other parts of the EU.
He said that it was in the interests of Bulgaria to keep the well trained
members of the country rather than letting them emigrate.
OTP Bank bids for DZI Bank
Hungary's OTP Bank is up against Belgium's KVC, Italy's Banca Intesa, Greece's
Alpha Bank and Eurobank and Austria's Raiffeisenbank and Volksbanken in a bid
for Bulgaria's DZI Bank, Sofia News Agency reported.
DZI Bank, Bulgaria's 11th biggest bank in terms of assets, reported a net profit
of 416,000 Euro in the first half of 2006. The bank, which operates a
country-wide network of 21 branches, manages assets worth 562 million levs. OTP
deputy CEO, Laszlo Wolf, said in August that the bank was interested in buying
DZI in order to strengthen its position in Bulgaria. OTP already owns Bulgaria's
biggest retail bank, DSK, which it bought in a privatisation deal in 2003 for
311.1m Euro. Other sources put the exchange-listed bank's market capitalisation
at 178m Euro. The bank's share price has risen 63 per cent since the start of
the year because of speculation of a buyout offer. Up for sale is 70 per cent of
the bank's shares held by Vesela Kyulev, the widow of Emil Kyulev, who acquired
the shares in 2002 when he bought the DZI financial group in a privatisation
S&P ranks Globul as country's top company
Credit rating provider Standard and Poor's (S&P) announced that Globul,
Bulgaria's second mobile operator, was the country's most successful company,
New Europe reported.
S&P provides rankings for the top 50 Bulgarian companies twice a year.
Globul is part of the Greek mobile group Cosmote. It competes against market
leader Mobiltel, backed by Telekom Austria. Last year Globul made a net profit
of 51.4m levs, while operating profit was up by 54 per cent year-on-year to 536m
levs. Since its inception, the company has invested a total of 1.1bn levs. At
end-March 2005, Globul had 2.5m customers.
Moody's assigns Investbank rating
Moody's Investors Service assigned B3/not-prime long and short-term foreign
currency deposit ratings to Bulgaria's Commercial Bank Investbank (iBank), New
Europe reported recently.
The B3/not-prime deposit ratings reflect the bank's stand-alone creditworthiness
based on its intrinsic franchise strength. Although the strategic shareholders
are ready to provide capital support for the bank's growth, Moody's has not
imputed external support in the deposit ratings. All ratings carry stable
outlooks. Moody also placed E+ financial strength rating which reflects the
bank's small business franchise on Bulgaria's competitive banking market, its
high credit concentration levels and its vulnerability to development risks in
the evolving Bulgarian banking market. The rating also captures the bank's good
credit quality and good liquidity levels. Simultaneously, the rating is
constrained by iBnak's weak earning power reflecting its low interest rate
margins in the Bulgarian context and the relatively expensive operating
structure. Moody relates that at a lower base, the bank witnessed strong
business and balance sheet growth and a step forward. iBank intention to change
its strategic focus away from corporate banking and into retail banking sector
give rise to challenges with regards to managing growth which may become a
concern, said Moody's.
According to Moody's, the management of iBank will face the challenge to expand
the funding base and grow the stable deposit base in order to support the bank's
The rating agency also cites possible challenges in ensuring that the bank's
internal systems, procedures and controls are adequate and are commensurate with
every stage in its development.
In this context, the bank does not enjoy the support of any foreign shareholder
bank, that other competitions enjoy, so the bank has to develop its internal
systems based on its own resources.
The planned 10 million levs capital increase will support the bank's ratings
while failure to successfully increase capital levels promptly will limit the
bank's capacity to grow. Any further deterioration of regulatory capitalisation
will be viewed as a negative rating driver, said Moody's.
Russian govt to back local bidder for Belene NPP
Russia's government recently announced that it would provide financial support
to local company, Atomstroyexport, if it wins the bid for construction of
Bulgaria's second nuclear power plant (NPP) in Belene on the Danube, Sofia News
President of JSC Atomstroyexport, Serguey Shmatko, said in Sofia that the
Russian government was preparing a decree of financial support for the Belene
Atomstroyexport is ready to buy the redundant equipment delivered to the site of
the plant before the project was put on hold in the early 1990s, Shmatko said.
Russia and Bulgaria agreed to set a commission to review the issues related to
the reuse of the mothballed equipment, he was cited by the press as saying.
Shmatko remained silent on what would be the impact of the buyout on the cost at
which the company is proposing to complete the Belene project.
Atomstroyexport is planning to use the Belene equipment in the building of the
fourth unit of the Kalinin NPP in Russia. Shmatko said that the Belene project
is considered successful by the banks approached by the company, and that this
reflects a sound financial aid for Belene. Atomstroyexport's head explained that
Russia's Federal Atomic Energy Agency (RFAEA) is the company's main
shareholders, as it replaced Gazprombank in May of 2006.
The Bulgarian side recently said it was not happy with the financial package of
the Atomstroyexport offer and that of the competing Czech outfit Skoda Alliance,
noting that the proposed cost target is very close to that for building a new
NPP from scratch.
However, later, Atomstroyexport sweetened some parameters of is bid to build the
Belene NPP following its rival Skoda's update documentation. The revisions in
the construction price were prompted by murmurs from Sofia that the Energy
Minister, Rumen Ovcharov was disappointed by Atomstroyexport's and Skoda's
Responding to the request of the advisory commission for a revision of the cost
and time estimates, the Russian company offered to finish the first of the two
reactors in 4.6 years and to hand over the second in 5.6 years. If the NPP is
built from scratch, the first reactor could be completed in seven years,
Atomstroyexport said. Skoda Alliance has cut from 10 to six years the hand-over
time-frame for the second reactor, saying there was no room for further cuts.
The Russian offer is tied to the delivery of fresh nuclear fuel for the lifespan
of the Belene NPP, said Vitalii Antipov from the Russian nuclear fuel
manufacturer Tvel. The same company could feature as the fuel supplier in the
Skoda proposal. Atomstroyexport has announced that Carsib, a consortium of
France's Areva Group and Siemens Power Generation Group, will be subcontracted
to deliver the electrical systems and the industrial accident management
Belene, which is expected to commission its first nuclear unit in 2013-2015,
will be Bulgaria's main nuclear power producer, after most of the reactors at
the Kozloduy plant will be closed under EU pressure. Experts stated that two
billion Euro would be required to build the new nuclear facility. The project
has been continually delayed after its launch in 1986 because of financial
problems and pressure from environmentalists.
FOOD & DRINK
Coca Cola's success prompts restructuring
Following healthy half-year profits, Coca Cola Hellenic Bottling Company will
restructure its operations in Bulgaria by the beginning of 2007, Sofia News
Having announced profits up 19 per cent on the same period the previous year,
the company's Bulgarian unit will phase out production at its bottling plant in
Plovdiv, transferring operations to its Konstinbrod factory, which is in the
wider Sofia area and closer to the capital.
"The restructure was part of an ongoing spate of initiatives that have also
been seen in Nigeria, Greece and Ireland, Gregg Quine of Coca Cola HBC said.
According to the company's financial report, the changes have already seen 37m
Euro of restructuring costs being partially offset by the sale of one of its
plants in Dublin for around 15m Euro. This has helped profits for the year so
far to reach 276m Euro, an 11 per cent rise over 2005.
"We have managed to largely offset the raw material cost pressures and
increased investment in our sales force and market initiatives, mainly through
revenue growth management execution and our supply chain cost efficiencies,
resulting in only a slight decline of our margins," Managing Director of
Coca Cola HBC, Doris Constantinou, said in the financial report.
The group's full year finances are expected to improve over last year's results,
with overall volume growth expected to increase from eight to nine per cent.
"We remain confident our strategic and operational focus will enable us to
achieve our full year guidance," Constantinou added in response to the
The administrative units in the city that deal with distribution, marketing and
finance will remain where they are, the report added. Coca Cola HBC currently
has four factories in Bulgaria in Sofia, Kostinbrod, Targovishte and Plovdiv, as
well as 11 distribution centres. Coca Cola HBC has invested over 170m Euro
together with Coca Cola Company.
MINERALS & METALS
Steel plant to help protect environment
The massive Kremikovtsi steel complex plans to invest US$71m in environment
protection facilities and cleaning filters in the next five years, Steel Mill
CEO, Vilas V Jamnis said at a conference, Sofia News Agency reported.
Under the complex licence issued to the company, over 321m Bulgarian levs will
be invested in the company by 2011 to comply with the European Union
environmental legislation and norms. The investments envisaged for 2006 stand at
32.248m levs, for 2007 at 56.96 levs, for 2008 at 43.04m levs, for 2009 at
44.45m levs, for 2010 at 65.15m levs and for 2011 at 68.430m levs. Kremikovtsi's
total sum to be invested into the plant until 2012 is US$350m. Kremikovtsi CEO,
Vilas Jamnis will surely match up to international environmental standards,
having in mind the approaching accession of Bulgaria into the European Union.
The funds will be invested in steel mill technological upgrade, its compliance
with requirements and production capacities stabilisation, the company added.
The Regional Environment and Waters Inspectorate of Sofia on August 21st said
the technical and technological status of Kremikovtsi's gas cleaning systems is
inefficient and the system's performance is getting worse. This leads to poor
quality of exhaust gas emissions and the air being polluted above the norm,
environment experts said.
Martern discovers gold deposit in Southwestern region
Major gold deposits were located close to the town of Trun in Southwestern
Martern, in Bulgaria, Mining company Martern, the Bulgarian arm of Canada's
Euromax Resources Limited, said, New Europe reported.
Martern Chief Executive, John Menzies, said that drilling has revealed a
concentration of 440g/tonne, but it will be years before the amount of gold that
could be extracted is determined accurately, Sofia News Agency reported. A total
of 700,000 samples taken from the area have shown large amounts of the precious
metal in the surface layer.
The sample tests were conducted on cutting-edge prospecting technology,
involving the study of 65 segments in every sample. Nadezhda is the name of the
gold field, which measures 1,500 metres by 70 metres. The metal is relatively
pure, alternating with quartz, with very low sulphur content (below 0.5 per
cent), Mezies said. Martern has been carrying out research in the region for
some time. In case the initial analysis was confirmed, the gold deposit in the
Trun region is among the most significant discovered over the last 100 years.
The project's chief geologist, Georgi Vakarelski, was amazed by the finding.
"After 30 years as a geologist at numerous Balkan sites, this is my first
time seeing such amounts of visible gold," Vakarelski said.
The expert was stunned by the fact that neither the Romans nor the Thracian gold
diggers had uncovered the deposit. The finding was announced only a day after
Emil Minev, a representative of the Bulgarian Academy of Sciences, said that
significant gold deposits were located in the Pernik region. A new geological
exploration made was used to analyse the presence of the precious metal in the
Trun region. If the development of the deposit is economically feasible, then
Martern intends to apply for an exploration permit.
Additional testing is needed to confirm the initial result before any
exploration starts. The company plans to offer the Bulgarian government a
concession royalty equal to two to three per cent of the gross value of the gold
metal content in the extracted ore. If the concession permit is granted, the
deposit will be explored by Teck Cominco, which has a joint venture for the Trun
licence with Euromax. Martern works in five Bulgarian regions: Ogosta, Breznik,
Rakitovo, Trun and Popintsi.
The Popintsi exploration had to be abandoned after the project met with strong
resistance from the local population and environmental organisations. The
company is ready to invest 400-500 million Euro if it starts mining the deposits
it is currently exploring.
Tourism set to develop at a higher pace
Bulgarian tourism will develop at a high pace but will lose tourists from the
main market, the latest report by the independent Centre for Economic
Development (CED) said, Sofia News Agency reported.
For instance tourists from Germany and UK will continue to decrease.
The information on the downsizing in the holidaymaker's figures from the two
markets was confirmed by the largest German tour operators, which saw a serious
drop in the number of bookings, 15 per cent as compared to last year. Even the
World Tourism Organisation predicted that Bulgarian tourism would not have good
results. The country's tourism will tend to be oriented towards groups of
low-income European holiday makers.
Bulgaria is expected to double the number of its foreign holidaymakers. The
period under review in the CED report has seen the introduction of some good
practices in expanding the variety of tourist products, as well as in offering
new forms of tourism - dental, wine, creation of specialised spa centres for
sea-water and seaweed treatment and others. CED experts believe that the
development of such forms is a good alternative to the mass and inexpensive
summer and winter tourism in Bulgaria.
The National Statistical Institute (NSI) reported that more than 2.7 million
foreigners visited Bulgaria in the first six months of 2006. NSI confirmed an
increase in the number of German and UK tourists. About 100,000 Germans visited
Bulgaria in the first half of 2005, while their number in the corresponding
period of 2006 was more than 192,000 of which more than 146,000 were tourists.
The NSI data show that Bulgaria is a leading tourist destination among the
More than 257,000 Greek tourists came to Bulgaria from January through June this
year while 209,000 people from Macedonia came to Bulgaria as holiday makers in
the first half of the year. Among the neighbouring Balkan countries, Bulgaria
attracted the least number of tourists from Turkey. Only about 15,000 Turks have
declared since early 2006 coming here for a holiday. Most of the total of almost
224,000 Turkish citizens that crossed Bulgaria's border in the first half of
2006 were only transit passengers.