A Concise History of Bulgaria

by R. J. Crampton

  The impact of the economic reforms was most painful for those on fixed incomes, notably pensioners and single parents. But the most widespread problem was a rise in unemployment which by February 2000 had reached 18.4 per cent; in some depressed areas, especially those populated mainly by Roma, it could be as high as 80 per cent. A further worrisome aspect of the problem was unemployment amongst the young, and not least among the most educated of the young. One young unemployed man took the extraordinary step of hacking into the presidential website; he did not destroy anything but left a message complaining of the difficulties of finding work. President Stoyanov promptly offered him a job but for the vast majority of able and enterprising young Bulgarians there was no such escape and they joined the depressingly large number of talented young people who were lost to the country by emigration.

  An even more disturbing fact was that many of the hard-hit suspected that the newly acquired riches of the few had not been legitimately acquired. Crime was rampant and seemingly unchecked. Early in 2001 there were six murders in Sofia within ten days and although the minister of the interior denied there was a crime wave he did have to admit that the crime rate had risen with an average of 380 offences being committed per day. Even the former king had been a victim, thieves depriving him of a cellular phone and some jewellery belonging to his daughter when he visited Sofia in 1999. The rise in crime, and the proliferation of firearms caused widespread fear and resentment amongst the population.

  Even greater resentment was felt over corruption at high levels and this resentment was to be the major cause for the decline and fall of the Kostov government. Corruption and economic crime were hard to disentangle. In May 2000 it was estimated that the black economy accounted for over a third of the country’s GDP and that in 1998 illegal trade across the borders had been worth $850 million, a sum equal to the entire defence budget. It was suspected that the smugglers were using channels once operated by the communist-era secret services and that many of the smugglers themselves were former secret service officers who had become businessmen by privatising their former secret police networks. When he came into office Kostov had made it clear that there would be no tolerance or indulgence of ministers who used their new office to become corrupt; not only was this morally unacceptable and socially destructive but the EU and other international agencies insisted that the elimination of the evil of corruption was essential. But the evil would not go away and with the dawning of the new millennium it became the dominant feature of Bulgarian politics.

  In the summer of 2000 a number of Russian businessmen accused of illegal activities were expelled and in March 2001 three Russian diplomats were ejected for spying. This was the first time Bulgaria had ever expelled Russian diplomats and was reminiscent of the action taken against the Russian generals in the 1880s. Kostov’s administration was not unduly concerned at a decline in relations with Moscow and when the Russians asked for intelligence material on the businessmen expelled they were reminded by the Bulgarian minister for foreign affairs, Nadezhda Mihailova, that the Warsaw pact no longer existed and that Bulgaria was now a fully sovereign, independent state. But if state sovereignty could be emphasised over the expulsion of the Russian diplomats, the last word had not yet been said on the question of the businessmen.

  The expulsion of corrupt foreigners brought the Sofia administration some credit but not enough to outbalance the deficit caused by corruption at home. In April 2000 government spokesman Mihail Mihailov was forced to resign after being accused of accepting a $10,000 bribe from a businessman, a charge which Mihailov denied. In June came an even more embarrassing case when the government’s chief negotiator with the EU, Aleksandûr Bozhkov, was also forced to resign after the prosecutor-general’s office had sent a report on his activities to Kostov; Bozhkov had previously been minister with responsibility for privatisation where he earned himself the nickname ‘Mr 10 per cent’. The most damaging blow, however, came in September when the opposition daily Trud revealed that the Russian mafia had given $80,000 to a charitable foundation run by the prime minister’s wife, Yelena Kostova. She made no attempt to deny the allegation, even arguing that there was nothing wrong in putting bad money to good use. But the scandal intensified when the Russian businessman who had transferred the money to Kostova’s foundation told Trud that he had been giving nearly half a million US dollars a month to the UtDF. It was in the wake of these allegations that the Russian businessmen were expelled from Bulgaria.

  Kostov admitted in April that he had been at fault in not pursuing corruption with greater vigour and he pushed through legislation requiring government officials to declare their wealth at the beginning and the end of their period in office. But the damage had been done, the government’s reputation was sullied and few people believed that in this respect the administration was any better than its predecessors.

  The UtDF therefore entered the election year of 2001 beset by possible economic restagnation, static or declining standards of living for many people, rising crime, and all-pervading corruption by which a few became hugely rich at the expense of the many. The party was further weakened by defections from and dissent within its ranks. As the political world began to prepare for the coming electoral battle the UtDF was scarcely more popular than its main rival, the BSP which had now joined with a motley group of parties to form the Coalition for Bulgaria, an alliance between the BSP and the MRF being impossible after the recent revelations of Atanasov’s responsibility for the regenerative process.

  All seemed set for a close struggle at the forthcoming polls. But then the situation was drastically changed. Early in 2001 there had been rumours that the former king, Simeon II, might return from exile to contest the presidential elections due later in the year. This was impossible because of the constitutional requirement that a presidential candidate be resident in the country for five years preceding an election. But Simeon did return in April, announcing that he would form a new organisation, the National Movement Simeon II (NMSS), to contest the parliamentary elections.

  The NMSS’s programme was unashamedly populist. It set itself three essential objectives. One was to end political partisanship, another was to eliminate corruption, but the most striking was the promise of immediate and qualitative reform which would produce a real market economy in line with EU criteria; ‘I am ready’, the former king told the voters, ‘to propose a system of economic measures and partnerships which, within eight hundred days and based on the well-known Bulgarian work ethic and entrepreneurial skills, will change your life.’ He asked the public for its trust in restructuring the ethical as well as the material bases of the state and society. The new movement appealed particularly to the young and to women. Simeon promised to include more of both groups in the party’s list of candidates, and his entourage included many young men and women with varying types of expertise including some television presenters and one pop star, but the most prominent were the successful financiers and economists with western experience who prepared the movement’s economic programme. This, though still imprecise, promised to foster small business and to stimulate general economic growth by providing incentives for reinvesting profits and promoting the development of capital and stock markets. The NMSS also promised immediate increases in pensions, child benefit payments, and teachers’ salaries. The NMSS’s populism was inclusive rather than exclusive. It was not racist and appealed to all ethnic groups and to all sections of society. It had no bogeymen apart from the racketeers who had corrupted society and the political process whilst enriching themselves.

  The movement’s programme was vague, simple and stunningly successful. The NMSS rapidly established a commanding lead in the polls and this was confirmed in the elections of 17 June. It took 42.47 per cent of the vote and emerged with 120 seats in parliament, precisely half the total number. The UtDF had 51, the Coalition for Bulgaria 48, and the MRF 21. The 2001 elections returned the highest number of women deputies ever in Bulgarian history; they now formed o
ver a quarter of the total, as opposed to a maximum of 10 per cent in previous years, and most of them sat for the NMSS, 40 per cent of whose deputies were women. The movement had won support in all sections of the electorate, urban as well rural, intelligentsia and professional as well as working class, old as well as young. It also galvanised the votes of the Bulgarian Turks, both in Bulgaria itself and amongst those who had emigrated to Turkey. In 1994 only 2,000 of the latter had chosen to vote; in 2001 55,000 did so, many of them voting for the NMSS in line with the traditional support Bulgarian Muslims gave to the throne.

  Plate 9.5 A first for Bulgaria, for Europe, and the world. A former king casts his ballot in the elections which will make him prime minister of the country he was once forced to flee. The party of Simeon Coburggotski, or ‘the King’ as he is usually called, won the largest number of seats.

  The NMSS had been helped by the weakness of its opponents, particularly the UtDF which was discredited by its four years in office and further impaired by the negative campaign it conducted, choosing to concentrate on the shortcomings of its main opponent’s programme rather than the presumed superiority of its own. But despite this the success of the NMSS was largely due to its own strengths and popularity. Also there was no doubt that the former king was a hugely powerful electoral magnet. He had personal charm, proven ability and connections with the outside world which many hoped might help Bulgaria. More importantly, unlike all previous political leaders in post-totalitarian Bulgaria, he had never been part of the pre-1989 system, and had no associations with either of the two main groups which had dominated political affairs since the fall of Zhivkov. But his greatest electoral asset was that he was absolutely free from any suspicion of personal corruption.

  The government of ‘the king’; the road to the EU and NATO

  It was a remarkable turn of events for a former king to return to his native ex-communist country as a head of government. It was even more remarkable that that government, despite considerable difficulties on the domestic front, was able to bring Bulgaria into NATO and to the threshold of membership of the EU.

  After his return to Bulgaria Simeon adopted the official surname Saxecoburggotski, though he continued to be known universally as ‘tsarya’, the king. There were still some who suspected that his aim was a restoration of the monarchy but Simeon was far too astute a reader of the political runes to harbour any hopes of an early restoration. His preoccupations were, he insisted, not with long-term constitutional designs but with the immediate task of bringing about economic regeneration and social renewal. His cabinet contained not only members of the NMSS but also two members of the MRF and two others who were from the BSP. His minister for foreign affairs, Solomon Pasi, was from the small Jewish community in Bulgaria and had long been an active proponent of Bulgaria’s joining NATO, but the most prominent figures were the two young financial technocrats fresh from success in the west, the 31-year-old Nikolai Vasilev who became minister for the economy and a deputy prime minister, and Milen Velchev, aged 35, who became finance minister.

  The fundamental policy objectives espoused by the new administration were little different from those of the Kostov government: progress towards admission to the EU; membership of NATO; accelerated economic reform; an increase in living standards; a decrease in crime; and the elimination of corruption.

  The first task, however, was to begin the economic reform programme, the prime minister having insisted that the 800 days would begin as soon as his government had been formed. On 2 August Vasilev promised that the energy market would be liberalised and that privatisation of major assets such as power stations would be accelerated. On 19 August the prime minister announced a series of technical fiscal reforms to encourage investment and in October a 20 million leva fund was created to provide micro-credits to small businesses. Saxecoburggotski also promised to reform the customs service whose officers were to work ‘for the state and not for themselves’ and there were to be measures to eliminate corruption from the privatisation process. On the social front a minimum monthly salary of 100 leva, approximately $50, was announced for 1 October when wages in the public sector in general were to rise by 17 per cent, and as from 1 January 2002 child benefit payments were to be doubled. Less welcome was the announcement that electricity and central heating costs would have to rise by 10 per cent on 1 October 2001.

  The liberalisation of the energy market and the efforts to eliminate corruption were part of the government’s campaign to secure accession to the EU. This was to be a complex and at times frustrating process with Brussels blowing hot and cold and domestic factors at times complicating the process. A cold douche from Brussels came in October 2001 when it was decided that although Bulgaria had concluded twelve of the thirty-one chapters of the acquis communautaire the country did not yet have that sine qua non for EU admission, ‘a functioning market economy’. In the following month Brussels widened its criticism, insisting that more had to be done to eliminate corruption, that the judicial system must be restructured, and that discrimination against the Roma must be diminished. That the Laeken meeting of the EU in December 2001 excluded Bulgaria from the states to be included in the first round of enlargement therefore came as no surprise. The Bulgarian government had little choice but to intensify its efforts to meet Brussels’ requirements and later in December parliament approved a series of measures designed to move the country more rapidly in the required direction.

  The Saxecoburggotski regime faced increasing resistance in its efforts to tailor Bulgaria to Brussels’ cloth. In November 2001 the presidential elections produced a surprising result with the victory of Georgi Pûrvanov, the leader of the BSP. Pûrvanov’s victory was mainly due to the fact that the incumbent president, Stoyanov, was deserted by his own UDF supporters. Pûrvanov made it clear that he would defend those who were hard hit by the economic reform programme and that he wanted to improve relations with Russia. This was unwelcome news to the government, as was the fact that Pûrvanov’s assertiveness could reopen the constitutional struggle between president and prime minister.

  The latter also faced difficulties with his own party. From the outset the NMSS had been a heterogeneous body which was one reason why, from the beginning, the former king had established a firm control, insisting personally, for example, on deciding on the suitability of each candidate on the movement’s electoral list. The responsibilities of government meant that the leader could not always exercise so tight a control and rifts began to appear in the movement. There were also signs of indecision on the part of the prime minister, one such occasion being over whether the NMSS should transform itself into a political party. This it did in April 2002 but the divisions remained and in the early months of 2004 a series of defections from the party deprived it of its sûbranie majority, though the defectors declared that they would continue to support the king’s government.

  A further obstacle on the path towards EU accession was the toughness of the terms insisted upon by Brussels. This was most apparent over the question of Kozlodui. The Saxecoburggotski cabinet came under increasing pressure from the BSP, the president, and a considerable proportion of public opinion to demand a renegotiation of the terms of this part of the acquis. And in March 2003 the Supreme Administrative Court ruled that the closure of reactors three and four was unconstitutional.

  This was only one of a number of issues at dispute between the government and the judiciary. At the end of 2002 major privatisation agreements were concluded for the sale of Bulgartabak and BTK, the state telecommunications monopoly. The courts declared both privatisations irregular and invalid. The government’s response was to limit the power of the courts in this area, but this only provoked a trench war between the executive and the judiciary which in effect froze the two privatisations for a year. Brussels made it clear that this validated its own concerns over the state of the judiciary and in response the government pushed through reforms which limited the power of the judiciary, the necessary amendments bei
ng enacted in September 2003.

  Of the other concerns voiced by Brussels in the autumn of 2001 the question of the Roma had been addressed and a number of concessions had been made. Action was taken to speed up the implementation of a framework programme for the integration of Roma into Bulgarian society, adopted by the Kostov government in 1999, the action including in 2003 a government scheme to help illiterate Roma aged over sixteen, special courses in the universities of Tûrnovo and Stara Zagora to train those who would teach Roma children, and a general anti-discrimination law enacted in September. The latter won the approval of the Budapest-based European Roma Rights Center.

  To these advances could be added significant progress on the macro-economic level. Real GDP growth of over 4 per cent was recorded in the five consecutive years up to 2002. In that year Bulgaria’s credit rating was upgraded five times and Milen Velchev was given the Euromoney Finance Minister of the Year award; state revenues were $157 million greater than forecast, and customs revenues were 92 per cent above expectations thanks to the reforms implemented since 2001. Even unemployment rates, though still high, showed signs of sinking, the level for April 2003 being 14.9 per cent compared with 17.85 per cent twelve months before. Inflation, too, declined. In November 2003 the yearly rate was down to 2.5 per cent and Velchev even spoke of its reaching zero by the summer of 2003, though this did not happen. In the vital area of privatisation the embarrassments over Bulgartabak and BTK were to some extent offset in August 2003 by the privatisation of the last remaining state bank, the State Savings Bank, the second largest in the country. By then 82.3 per cent of the state assets earmarked for privatisation had in fact been privatised.