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BULGARIA COUNTRY COMMERCIAL GUIDE FY2001 |
POLITICAL ENVIRONMENT |
Factbook.net
A. Nature
of Political Relationship with the United States
U. S.- Bulgarian bilateral relations are steadily improving and have
intensified over the last three years reflecting a wide range of shared
interests. The U.S. Government strongly supports political stability,
the growth of democracy, and the development of a market economy and
economic prosperity in Bulgaria. U.S.-Bulgarian high-level contacts
are increasing, with President Stoyanov having visited Washington
in February 1998, First Lady Hillary Clinton paying a visit to Sofia
in October 1998, and President Clinton coming to Bulgaria for a highly
successful visit in November, 1999.
In February 1994, Bulgaria joined NATO's Partnership for Peace. U.S.-Bulgarian
defense relations are active and include regular naval ship visits
to Bulgaria's Black Sea ports. Defense Secretary Cohen visited Sofia
in July and in October 1997, to discuss requirements and preparations
for Bulgaria's eventual application for full NATO membership. The
Department of Defense has a number of military liaison programs with
the Bulgarian military to help modernize Bulgarian armed forces, purchase
appropriate equipment, and prepare for interoperability with NATO
forces. Bulgaria is a leader in the multilateral peacekeeping force
for Southeastern Europe whose first headquarters are in Plovdiv.
Since the fall of Communism at the end of 1989, numerous bilateral
agreements have been signed between Bulgaria and the United States.
In the areas of aviation and defense these include the Civil Aviation
Security Agreement of 1991, an agreement by the United States International
Military Education and Training (IMET) Program (1992), and a Memorandum
of Cooperation on Defense and Military Relations (1994).
Agreements on postal matters include a Memorandum of Understanding
on the INTELPOST service (1990) and the International Express Mail
Agreement (1991). Other trade-related agreements include a 1993 agreement
on trade in textiles and textile products, the Investment Incentive
Agreement (1991).
On February 1, 1999, a bilateral Memorandum of Understanding came
into force providing for tax free treatment of U. S. Government assistance.
B. Major Political Issues Affecting Business Climate
The ruling Union of Democratic Forces (UDF) has enjoyed a stable parliamentary
majority and has followed a mandate of leading Bulgaria out of the
1996-97 economic crisis; however, reforms have not been implemented
as fast as some had hoped. And although the Currency Board has been
highly successful in stabilizing the economy, sustained growth has
yet to be achieved.
Organized crime and corruption are a concern of both the government
and the ordinary citizen. Prime Minister Kostov has declared this
a priority issue. The National Assembly has passed laws to amend the
Penal Code and the Criminal Procedures Code. Violent crime against
persons is extremely low and property crime—car theft, pick-pocketing
and burglaries—though still widespread, is on the decrease.
Among some state-owned companies assets have been siphoned off by
unscrupulous managers in league with private business people—a
practice which the current government has attempted to curb.
The government actively pursues membership in Western institutions
including NATO and the European Union (EU). The UDF maintains close
contacts and an active dialogue with NATO and the EU on all relevant
political, financial, military and other issues related to future
full membership. In many ways the Bulgarian Government has attempted
to cooperate as though it were already a full NATO member, as witnessed
during the Kosovo Crisis. The government hopes that active engagement
to fulfill the membership criteria will encourage foreign investment
and promote greater confidence in Bulgaria's political and economic
institutions.
C. Brief Synopsis of Political System, Schedule for Elections, and
Orientation of Major Political Parties
Following the removal of long time communist leader Todor Zhivkov
in 1989, Bulgaria has been a parliamentary republic ruled by a democratically
elected government. A new constitution was enacted in 1991 which lays
out the basic rights and obligations of citizens and is the basis
for Bulgaria's legal system. The constitution allows for the freedom
of association and the formation of political parties.
The constitution provides for the separation of powers amongst the
executive, judicial and legislative branches and a system of checks
and balances. The president is the head of state. The presidency is
empowered to conclude international treaties and to schedule parliamentary
(or National Assembly) elections. The president is also the commander-in-chief
of the armed forces. The National Assembly is a unicameral legislative
body that consists of 240 members who are elected for a term of four
years.
Petur Stoyanov of the Union of Democratic Forces (UDF) won a decisive
victory in the November 1996 presidential election. He assumed the
presidency in January 1997 for a five-year term.
Failure to follow through on reform measures through most of the 1990's
led to the rapid downward spin of the economy which in turn seriously
affected the living standards of all Bulgarians. Between 1989 and
1997 there were eight governments in Bulgaria. By giving local groups
without management ability priority in the privatization process and
access to questionable loans, this cronyism spread weakness throughout
the economy causing the banking system to nearly collapse in May 1996.
The Bulgarian Socialist Party's slow progress in implementing reforms
and mishandling of the economy led to a host of financial, social,
and economic problems which reached crisis level in late 1996- early
1997. Meanwhile, the UDF developed a new sense of unity and purpose
by promoting a consensus, pro-reform- pro-West agenda as recommended
by international financial institutions.
In February 1997, after several weeks of escalating public protests
televised worldwide over the government's handling of the economy,
the ruling Bulgarian Socialist Party (BSP) agreed to step down. Later
that month President Stoyanov dissolved the national Assembly (Parliament)
and appointed a UDF-led caretaker government to replace the unpopular
socialist government.
The caretaker cabinet moved quickly to stabilize the economy in March
1997 by concluding a $510 million standby arrangement with the IMF
to help pull the country out of crisis.
In April 1997, a reform-minded coalition headed by the center-right
United Democratic forces --which includes the UDF, the People's Union
and a number of smaller parties—won an absolute majority in
the pre-term general parliamentary elections. UDF Chairman Ivan Kostov
was appointed Prime Minister by the National Assembly.
The key priorities of the UDF-led coalition government have been economic
stabilization, crime control and Euro-Atlantic integration. The next
parliamentary elections will be held in the year 2001.
Local elections were held in October, 1999. Neither party achieved
a breakthrough with the UDF failing to expand its 1997 mandate, while
the BSP lost several mayoralties and the accompanying government apparati
which they had controlled. Key features of the election were voter
apathy, the inclination to cast a protest vote for small parties and
the dispersion of municipal council seats amongst parties not represented
in parliament
The prospect for national elections is for a further whittling away
of the UDF's current majority, while the BSP which has attempted to
implement numerous reforms and moved to a more flexible policy on
NATO, will try to regain its previously dominant position. Some believe
a coalition government is probable and that the largely ethnic Turkish
Movement for Rights and Freedoms will play a significant role in forming
a new government.
Demographics & Economic Situation
Source: Factbook.net
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