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BULGARIA


  
  

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 19,859 15,608 13,600 69
         
GNI per capita
 US $ 2,130 1,790 1,650 106
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 166 - (26/01/12)

Bulgaria has seen in the New Year with a new president and a new set of challenges. The country, which has suffered systemically from problems related to corruption, cronyism and general economic fragility, is facing the shockwaves of the eurozone crisis. Evidence of an increasingly restive populace has come in the form of protests which have flared across the country in recent months, related not only to living standards, but also the nascent shale fracking sector. The ruling party centre-right party Gerb, along with its flamboyant Prime Minister Boiko Borissov have steered the country through a tumultuous few months.

On January 19, 2012, victorious presidential candidate for the ruling GERB party, Rossen Plevneliev, was sworn into office as the new president of Bulgaria, replacing Georgi Purvanov of the Socialist party. The elections, which took place on October 23, culminated in the Socialist candidate, Ivailo Kalfin, conceding to Plevneliev, who served as Regional Development Minister in the Borisov Cabinet from 2009 till 2011. Margarita Popova, also of the centre-right GERB party, was elected Vice President. Whilst the role of President is largely ceremonial, Plevneliev has been praised for pushing through major projects related to infrastructure and in particular the development of Bulgaria's highways, which were in state of disrepair for decades. In his inaugural speech, the former entrepreneur vowed that as President he would do his best to ensure greater financial growth as well as investment flow into the economy.

In terms of the electoral process, reports from international observers were cautiously positive. Observers from the Parliamentary Assembly of the Council of Europe (PACE) were apparently "heartened by the overall orderly and peaceful conduct of the vote." Nonetheless the delegation did note a number of problems - namely the access of candidates to the media, which they say needs 'drastic improvement'. Candidates were apparently obliged to purchase advertising space for their campaigns, limiting their access to public platforms. The PACE monitors also advised that the Central Electoral Commission should be more transparent in its methods and suggested that the authorities might want to consider creating a dedicated voters’ register, as opposed to a register formed from the population lists compiled by local authorities. Meanwhile, the Organization for Security and Cooperation in Europe (OSCE) delegation observed a more worrying trend: widespread allegations of vote buying. Apparently the great majority of candidates told monitors that the electoral process was rife with this practice. Opposition members have accused the ruling GERB party in particular of seeking to undermine the democratic process and of offering citizens a 'pseudodemocracy' . One commentator found evidence of this in the fact Bulgaria’s Central Electoral Commission revealed the final results of the presidential race a day and a half after the legally mandated 48 hour deadline.

Another worrying development has been noted in Bulgaria relating to media freedom in the run up to the elections. It was reported that an intimidation campaign was launched against two journalists. Sasho Dikov, the director of private television channel Kanal 3, narrowly avoided death when a bomb destroyed his car outside of his home in Sofia. Mirolyuba Benatova who works for privately-owned BTV attracted a flurry of abuse and threats over her coverage of clashes between Roma and ethnic Bulgarians in the village of Katunitsa on September 24. The events in Katunitsa, where a 19-year old ethnic Bulgarian was killed allegedly on the order of a Roma leader sparked an alarming wave of anti-Roma demonstrations. A crowd of 2,000 people besieged the village and set fire to buildings owned by the Roma leader. This was followed by protests against "government inactivity" throughout the week, with some 5,000 football fans and students gathering in the central square of Plovdiv, the nearest major town to Katunitsa. In Sofia, 2,000 people gathered in anti-Roma protests, where they denounced them as "parasite communities". Far-right Ataka party leader Volen Siderov readily attempted to capitalize on these tensions with calls for the reinstatement of the death penalty and for Roma "ghettos" to be dismantled. Integration, or lack thereof, of the Roma minority has been an issue of some concern for international observers for a number of years.

The past five months have generally been characterized by an increasing swell of popular unrest. A number of strikes have occurred, spelling disruption to business. On November 30, unions held a national day of protest against government plans to reform the pension scheme, which would see the retirement age go up by one year in 2012. The government is now considering downgrading this to four months, though remaining committed to the notion of reform as a whole. Also in December, workers from the indebted railway operator BDZ took prolonged industrial action over planned job cuts. The tide of discontent is not limited to the industrial sector. The same month, Bulgarian farmers protested over subsidy cuts, which will be instituted next year, with a protest in Sofia attended by hundreds and with the blocking of major roads and two important border crossings to fellow European Union member Romania, and Turkey. Calls abounded for the finance and agriculture ministers to resign. The New Year has not tempered anger among workers. On January 15, 2,300 miners from state-owned Mini Maritsa Iztok went on strike demanding improved working conditions and equipment, as well as a bonus for helping the company to reach record coal output in 2011. The first three days of the strike apparently cost the company €2 million. If industrial action continues for more than a week, it could result in a hike of at least 10% in electricity prices.

Much like in neighbouring Romania, the government has introduced a number of cuts to reduce spending as it braces itself for possible infection from the eurozone crisis, which analysts believe may hit and central and eastern European states over the course of 2012. Bulgaria is among the five countries expected to be worst hit by the debt crisis. The European Bank for Reconstruction and Development has cut its 2012 economic growth guidance for Bulgaria to 2.3% from 3.7% projected in July and also lowered its forecast for 2011 to 1.6% from 3% forecast 3 months ago. Reducing the nation's fiscal deficit is a sine qua non of establishing financial security, but it will continue to take its toll on citizens in their everyday lives.

One issue related to living standards and the economy which has brought people onto the streets in droves is that of shale gas exploration. On January 14, several thousand people gathered in Bulgaria's main cities to protest against the extraction of the unconventional gas by the controversial hydraulic fracturing method. The fracking process is believed to have a number of deleterious effects upon the environment, about which Bulgaria is not the only country concerned: France has already banned fracking. Initially the GERB party was open to exploiting the country's reserves, as a potentially lucrative industry and as a means of reducing dependence on imports from Russian energy giant Gazprom. The government accordingly awarded an exploration permit to US major Chevron for the Novi Pazar area in June 2010, but without specifying at that point what technology the company could use. Following the wave of protests, on January 17, the Borissov cabinet decided to amend Chevron's licence, limiting the company to drilling conventional wells only. There is also a six -month moratorium on the exploration as environmental protection laws are improved.

The opposition party has criticized the moratorium as being too short and too lax. Interestingly the matter crosses traditional party lines. The Socialists put forward a bill banning shale gas exploration and extraction in its entirety while ultra-nationalists Ataka have also demanded more stringent rules, in the form of a 20-year moratorium. The matter is far from transparent, since whilst offering economic advantages, it remains an unknown quantity in terms of how it will affect the nation's ecological landscape. According to a recent poll, 75% of Bulgarians are in favour of exploration for shale gas provided that environmental safety guarantees are secure. Decision-making on shale gas is in its infancy across the globe, mainly due to its novelty as an exploitable energy source. The EU, for example, remains undecided on a general protocol for shale gas exploration. Doubtless the issue will continue to provoke controversy. Another development in Bulgaria's energy sector is the country's decision to back out of the Russia led trans-Balkan oil pipeline project aimed at taking Russian crude through its territory to Greece. The decision was taken because the pipeline apparently 'did not serve the national interest'. Whilst likely to irk Russia, Bulgaria has also approved Russia's South Stream pipeline project meaning relations remain amicable.

Bulgaria has had a turbulent few months. Citizens are feeling the pinch of a beleaguered economy and becoming increasingly active in expressing their discontent. Combined with the lurking financial crisis, there remain inherent problems in Bulgaria's business environment. According to the Wall Street Journal/Heritage Foundation economic freedom index for 2012, its economic freedom has declined, a telling indictment of an often-criticized business environment. Foreign direct investment fell in 2011, signalling suspicions about the viability of investing this state. The point that the anti-fracking protestors made clear however, is that some investments come with a very high price.


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