U.S. Department of State
Background Notes: Bulgaria, October 1999
Released by the Bureau of European Affairs
U.S. Department of State
Official Name: Republic of Bulgaria
Area: 110,994 sq. km; slightly larger than Tennessee.
Cities: Capital -- Sofia. Other cities -- Plovdiv, Varna, Burgas, Ruse,
Terrain: Mostly mountainous with large fertile valleys and plains; lowlands in
the north and southeast; Black Sea coast on the east.
Nationality: Noun and adjective -- Bulgarian(s).
Population (1998): 8.2 million.
Population growth rate (1998 est.): -0.6%.
Ethnic groups: Bulgarian 85.6%; Turks 9.5%; Roma 4%; others 1%.
Religions: Bulgarian Orthodox 83.5%; Islam 13%; Roman Catholic 1.5%; others
Languages: Bulgarian (official); Turkish; Roma.
Education: Literacy -- 98%.
Health: Infant mortality rate (1998) -- 14.4/1,000. Life expectancy -- males 67
yrs., female 74 years.
Type: Parliamentary democracy.
Constitution: July 12, 1991.
Independence: March 3, 1887 (from the Ottoman Empire).
Subdivisions: 9 provinces (oblasti) -- Sofia, Sofia City, Burgas, Haskovo,
Lovech, Montana, Plovdiv, Ruse, Varna.
Political parties: Union of Democratic Forces (UDF); People's Union (comprised
of the Bulgarian Agrarian National Union, People's Union and the Democratic
Party); Bulgarian Socialist Party (BSP); Alliance for National Salvation,
comprised of the mainly ethnic Turkish Movement for Rights and Freedoms (MRF)
and smaller partners; Bulgarian Business Bloc (BBB); and the Euroleft.
Suffrage: Universal at 18.
GDP (1998 est): $12.3 billion. About 63.7% of GDP is contributed by the private
GDP growth rate (1998): 3.5%.
Per capita income: $1,484.
Inflation rate (1998): 1%.
National resources: Copper, lead, zinc, lignite, iron, manganese, limestone and
Agriculture (1998): 21% of GDP. Products -- grain crops (more than one-third of
the arable land), oilseeds, vegetables, fruits, tobacco (world's fourth-largest
Industry (1998): 28% of GDP. Types -- machinery and metal products, food
processing, textiles, chemicals, building materials, electronics.
Services (1998): 50% of GDP.
Trade: Imports -- $4,609 million. Exports -- $4,293 million.
Long a crossroads of civilizations (archaeological finds date back to 4600
B.C.), Bulgaria was first recognized as an independent state in AD 681.
Bulgarian Orthodox Christianity, which became a hallmark of national identity,
was established in the 9th century. Bulgaria was ruled by the Byzantine Empire
from 1018 to 1185 and the Ottoman Empire from 1396 to 1878. In 1879, Bulgaria
adopted a democratic constitution and invited a German nobleman, Alexander of
Battenburg, to be prince. When Alexander abdicated in 1885, Prince Ferdinand of
Saxe-Coburg-Gotha became prince. In 1908 he proclaimed himself King.
In the early part of the 20th century, in an effort to gain Macedonian and other
territories, Bulgaria engaged in two Balkan wars and become allied with Germany
during World War I. It suffered disastrous losses as a result. The interwar
period was dominated by economic and political instability and by terrorism as
political factions, including monarchists and communists, struggled for
influence. In World War II, Bulgaria ultimately allied again with Germany but
protected its Jewish population of some 50,000 from the Holocaust. When King
Boris III died in 1943, political uncertainty heightened. The Fatherland Front,
an umbrella coalition led by the Communist Party, was established. This
coalition backed neutrality and withdrawal from occupied territories. Bulgaria
tried to avoid open conflict with the Soviet Union during the war, but the
U.S.S.R. invaded in 1944 and placed the Fatherland Front in control of
After Bulgaria's surrender to the Allies, the Communist Party purged opposition
figures in the Fatherland Front, exiled young King Simeon II, and rigged
elections to consolidate power. In 1946, a referendum was passed overwhelmingly,
ending the monarchy and declaring Bulgaria a people's republic. In a
questionable election the next year, the Fatherland Front won 70% of the vote
and Communist Party leader Georgi Dimitrov became Prime Minister. In 1947, the
Allied military left Bulgaria, and the government declared the country a
communist state. Forty-two years of heavy-handed totalitarian rule followed. All
democratic opposition was crushed, agriculture and industry were nationalized,
and Bulgaria became the closest of the Soviet Union's allies. Unlike other
countries of the Warsaw Pact, however, Bulgaria did not have Soviet troops
stationed on its territory.
Dimitrov died in 1949. Todor Zhivkov became Communist Party chief in 1956 and
prime minister in 1962. Zhivkov held power until November 1989, when he was
deposed by members of his own party, soon renamed the Bulgarian Socialist Party
Bulgaria has been a parliamentary democracy since 1990. Four parliamentary and
two presidential elections have been held since the fall of the communist
dictatorship in November 1989, each followed by peaceful and orderly change.
GOVERNMENT AND POLITICAL CONDITIONS
The president, elected for a 5-year term, is head of state and commander in
chief of the armed forces. The president's main duties are to schedule elections
and referenda, represent Bulgaria abroad, conclude international treaties, and
head the Consultative Council for National Security. The president may return
legislation to Parliament for further debate -- a kind of veto -- but the
legislation can be passed again by a simple majority vote. Petar Stoyanov, the
candidate of a united opposition coalition led by the Union of Democratic Forces
(UDF), was nominated to run for president in the country's first primary
election in June 1996. Stoyanov was elected in November and inaugurated in
The legislative body is the unicameral National Assembly of 240 members elected
to 4-year terms. Political parties must garner a minimum of 4% of the national
vote in order to enter Parliament. Parliament is responsible for enactment of
laws, approval of the budget, scheduling of presidential elections, selection
and dismissal of the prime minister and other ministers, declaration of war and
deployment of troops outside of Bulgaria, and ratification of international
treaties and agreements.
The BSP won the first post-communist parliamentary elections in 1990 with a
small majority. The BSP government formed at that time was brought down by a
general strike in late 1990 and replaced by a transitional coalition government.
Meanwhile, Zhelyu Zhelev, a communist-era dissident, was elected president by
the Parliament in 1990 and later won Bulgaria's first direct presidential
elections, in 1992. Zhelev served until early 1997. The country's first fully
democratic parliamentary elections, in November 1991, ushered in another
coalition government, which was led by the pro-reform UDF in partnership with
the Movement for Rights and Freedoms (MRF). This coalition collapsed in late
1992, however, and was succeeded by a technocratic team, put forward by the MRF,
which governed at the sufferance of the BSP for 2 years. The BSP won pre-term
elections in December 1994 and remained in office until February 1997, when a
populace alienated by the BSP's failed, corrupt government demanded its
resignation and called for new elections. A caretaker cabinet appointed by the
President served until pre-term parliamentary elections in April 1997, which
yielded a landslide victory for pro-reform forces led by the UDF in the United
Democratic Forces coalition. Along with the UDF, there are five other parties
represented in Parliament.
The Council of Ministers is the principal organ of the executive branch. It is
usually formed by the majority party in Parliament, if one exists, or by the
largest party in Parliament along with coalition partners. Chaired by the prime
minister, it is responsible for carrying out state policy, managing the state
budget, and maintaining law and order. The Council must resign if the National
Assembly passes a vote of no confidence in the Council or the prime minister.
Bulgaria's judicial system is independent and is managed by the Supreme Judicial
Council. Its principal elements are the Supreme Court of Administration and the
Supreme Court of Cassation, which oversee application of all laws by the lower
courts and judge the legality of government acts. There is a separate
Constitutional Court, which interprets the Constitution and rules on the
constitutionality of laws and treaties.
Six out of the 34 political parties and coalitions that fielded candidates in
the last election are represented in Parliament. The UDF recaptured Parliament
in April 1997 with 123 seats out of 240. Its electoral coalition partner, the
People's Union, carried 14 seats. Also in that election, the BSP dropped from
its 1994 majority of 125 seats to 58. The MRF formed the Alliance for National
Salvation with several smaller parties, taking 19 seats. The other party on the
left is the Euroleft (comprised largely of defectors from the BSP with a social-
democratic orientation), which holds 14 seats. The next parliamentary elections
must take place no later than April 2001.
Principal Government Officials
President -- Petar Stoyanov
Vice President -- Todor Kavaldjiev
Prime Minister -- Ivan Kostov
Ambassador to the United States -- Filip Dimitrov
Ambassador to the United Nations -- Vladimir Soitirov (acting)
The Embassy of the Republic of Bulgaria in the United States is located at 1621
22nd Street, NW, Washington, DC 20008; tel. 202-387-7969; fax. 202-123-7973.
Bulgaria's economy contracted dramatically after 1989 with the collapse of the
COMECON system and the loss of the Soviet market, to which the Bulgarian economy
had been closely tied. The standard of living fell by about 40%. In addition, UN
sanctions against Serbia (1992-95) and Iraq took a heavy toll on the Bulgarian
economy. First signs of recovery emerged when GDP grew 1.4% in 1994 for the
first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to
122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to
the BSP's go-slow, mismanaged economic reforms, its disastrous agricultural
policy, and an unstable and decapitalized banking system, which led to inflation
of 311% and the collapse of the lev. When pro-reform forces come into power in
spring 1997, an ambitious economic reform package, including introduction of a
currency board regime, was agreed with the International Monetary Fund (IMF) and
the World Bank, and the economy began to stabilize.
The Government of Prime Minister Kostov, elected in April 1997, has made a clean
break with the failed policies of the early and mid-1990s. In this, the
Bulgarian Government received the backing of international financial
institutions and committed itself to sound financial and structural policies as
the only way out of crisis.
Since July 1997 the Bulgarian Government has been operating under a currency
board as required by the International Monetary Fund's $510 million standby
arrangement of March 1997. From July 1, 1997 to December 31, 1998 the Bulgarian
lev (BGL) was tied to the German deutschmark (DM) at a rate of BGL 1000 to one
deutschmark. Since January 1, 1999, the lev is tied to the euro at an exchange
rate of 1,955.83 leva to one euro. Since July 5, 1999, BGL 1,000 was
redenominated by the issuance of new currency and coins to be one lev (BGN).
Thus BGN 1.00 equals DM 1.00.
The Currency Board rules provide that the Bulgarian National Bank (BNB) must
hold sufficient foreign currency reserves to cover all the leva in circulation
including the lev reserves of the banking system; the BNB can only refinance
commercial banks in the event of systemic risk to the baking system; and the
government is limited in taking on new financial liabilities or providing
Under other IMF conditions for strict financial discipline, the Bulgarian
government is pledged to close loss-making enterprises and to speed
privatization, bank reform, and restructuring. The government established an
isolation list of 70 state enterprises, accounting for half of the public sector
losses, that do not have access to commercial credit unless they are privatized.
The government succeeded in privatizing or beginning liquidation of all but one
of the isolation list's commercial companies (Group B) by June 30, 1999.
The results have been very impressive. Inflation was reined in relatively
quickly. Official reserves rebounded from $400 million in January 1997 to
$2,964 million at the end of 1998. Moody's Investors Service upgraded
Bulgaria's credit rating to B2. Foreign investment, including participation by
American investors, has also revived as macroeconomic stabilization and a
friendlier business climate have taken hold. The closure of 18 troubled banks
has also helped to increase confidence in the banking system. Following
declines in GDP in both 1996 and 1997, GDP increased from $10,200 million in
1997 to $12,257 million in 1998. In fact, some experts believe that official
statistics underreport economic activity, and the active unofficial market
statistics could represent an additional 20% to 40% of the official GDP. This
means that there is more money flowing through the economy and higher actual
disposable consumer income than is officially accounted for.
The private sector contributed between 25%-30% of GDP in 1995, 35%-40% in 1996,
approximately 65% in 1997 and 1998, 62% in 1999; it should increase further with
continuing privatization. Since the currency board constrains borrowing, the
government needs to keep wage growth modest and focus on improving productivity
to generate revenues.
The main threats to the Bulgarian economy's medium-term prospects are the
effects of the Kosovo conflict and the threats of wider regional instability and
turmoil in global financial markets affecting investments in emerging markets.
This may adversely affect revenues to the government from privatizing large
enterprises. Due to Bulgaria's geography, the Kosovo situation has interrupted
Bulgaria's main highway and Danube River trade routes with western Europe
through Serbia in Yugoslavia, which have increased transport costs and may
reduce future economic growth and market potential over the short term.
However, the Governments of the United States, European Union countries, and
southeast European countries have committed to a Stability Pact aimed at
developing prosperity and stability throughout the southeast Europe region.
Washington is currently developing a major comprehensive plan for economic
development in the region to be implemented in the aftermath of the Kosovo
crisis. This should lead to new and expanded trade and investment opportunities
in Bulgaria over the long term.
A second potential impediment to Bulgaria's economic transformation is the slow
and less than fully transparent privatization process itself. The Bulgarian
Government has relied heavily on controversial management-employee buyouts for
smaller enterprises, and on use of foreign consultants to privatize pools of
medium and large companies. The privatization framework has also included
complex criteria for selecting buyers that has generated concerns about
transparency and corruption. As a result, ownership transfer has been delayed
and, in some cases, has provoked litigation.
However, the government completed a number of large privatization deals in mid-
1999, meeting its commitment to sell or commence liquidation of a group of loss-
making enterprises by June 30, 1999. These deals included sales of the
Kremikovtsi Steelworks, Balkan Bulgarian Airlines and DZU compact disk factory.
As a relatively small market in the Balkans, Bulgaria will have to make extra
efforts to attract investors--by improving transparency, for example--as well as
by more fully marketing its many advantages, including a highly skilled, low
cost labor force and proximity to both European and Near Eastern markets.
Bulgaria has good relations with its neighbors and has proved to be a
constructive force in the region under socialist and democratic governments
alike. Promoting regional stability, Bulgaria hosted a Southeast European
Foreign Ministers meeting in July 1996 and a Southeast European Defense
Ministers conference in October 1997. Bulgaria also participated in the 1996
South Balkan Defense Ministerial in Albania and is active in the Southeast
European Cooperative Initiative. In 1998, Bulgaria and FYROM solved their so-
called language dispute and have developed closer bilateral relations.
With their close historical, cultural, and economic ties, Bulgaria seeks a
mutually beneficial relationship with Russia, on which it is largely dependent
for energy supplies. Negotiations are underway among Greece, Bulgaria, and
Russia for construction of a gas pipeline from Burgas on the Black Sea to
Alexandropolis to transport Caspian Sea oil.
Bulgaria's EU Association Agreement came into effect in 1994, and Bulgaria
formally applied for full EU membership in December 1995. In 1996, Bulgaria
acceded to the Wassenaar Arrangement controlling exports of weapons and
sensitive technology to countries of concern and also was admitted to the World
Trade Organization. Bulgaria is a member of the Zangger Committee and the
Nuclear Suppliers Group. After a period of equivocation under a socialist
government, in March 1997 a UDF-led caretaker cabinet applied for full NATO
membership, which the current government is pursuing as a priority.
Bulgaria joined NATO's Partnership for Peace in 1994 and applied for NATO
membership in 1997. It is working toward NATO compatibility in communications
and training, and has established a Peacekeeping Training Center. In 1999,
Bulgaria inaugurated the headquarters of the Multinational Peacekeeping Force
U.S.-Bulgarian bilateral relations improved dramatically with the fall of
communism in 1989. The United States moved quickly to encourage development of a
multi-party democracy and a market economy. Initial progress was rapid, leading
to full normalization of bilateral political and trade ties. A trade agreement
was signed in 1991 and a bilateral investment treaty in 1992. The U.S. accorded
Bulgaria unconditional most-favored-nation trade status in 1996. In 1998, the
U.S. was Bulgaria's third-largest investor, with investments of $148 million.
There is active bilateral military cooperation, including a linkage between the
Bulgarian military and the Tennessee National Guard. Bulgaria hosts the only
fully American university in the region, the American University of Bulgaria in
Blagoevgrad, established in 1991 and drawing students from throughout southeast
Europe and beyond. The American College of Sofia, a high school founded in the
1860s and closed under communism, reopened in 1992.
In 1989, the U.S. Congress passed the Support for East European Democracies Act
(SEED), authorizing financial support to facilitate the development of
democratic institutions, political pluralism, and free market economies in the
region. The U.S. Agency for International Development (USAID) administers the
SEED programs in Bulgaria under the guidance of the U.S. ambassador. Bulgaria
has received more than $290 million in SEED assistance as of 1999, along with an
additional $60 million in food programs and a $15-million endowment for the
American University in Bulgaria. Much of USAID's assistance focuses on
strengthening non-governmental organizations and other grassroots initiatives,
promoting the private sector, and enhancing local government effectiveness and
accountability. An additional $25 million has been pledged for budget support
due to losses incurred during the Kosovo crisis.
In addition, the Peace Corps, with 106 volunteers in Bulgaria as of 1999, offers
assistance in English-language instruction, small business centers, and
environmental protection programs. The Department of Defense provides monetary
and professional assistance through several programs, including the Joint
Contact Team Program, Partnership for Peace, International Military Education
and Training, Excess Defense Articles, Foreign Military Financing, and
humanitarian assistance. Bulgaria serves as coordinator for the South Balkan
Development Initiative, which is funded through the U.S. Trade and Development
Agency to promote infrastructure development in Bulgaria, Albania, and The
Former Yugoslav Republic of Macedonia.
Principal U.S. Embassy Officials
Ambassador -- Richard M. Miles
Deputy Chief of Mission -- Christopher Dell
Political and Economic Counselor -- Steven L. Blake
USAID Country Director -- John Grant
Agricultural Officer -- Holly Higgins
Public Affairs Officer -- James W. Hutcheson
Defense Attache -- Col. Barry Shade
Commercial Officer -- Richard Kanter
Administrative Officer -- William Loskott
Consular Officer -- Laurence Tobey
Regional Security Officer -- David T. Schnorbus
Peace Corps Director -- Perdita Huston
TRAVEL AND BUSINESS INFORMATION
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fax-on-demand system: 202-647-3000. Consular Information Sheets and Travel
Warnings also are available on the Consular Affairs Internet home page:
http://travel.state.gov. Consular Affairs Tips for Travelers publication series,
which contain information on obtaining passports and planning a safe trip abroad
are on the internet and hard copies can be purchased from the Superintendent of
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Emergency information concerning Americans traveling abroad may be obtained from
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Passport information can be obtained by calling the National Passport
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Travelers can check the latest health information with the U.S. Centers for
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(877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the
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advice on food and drinking water safety for regions and countries. A booklet
entitled Health Information for International Travel (HHS publication number
CDC-95-8280) is available from the U.S. Government Printing Office, Washington,
DC 20402, tel. (202) 512-1800.
Information on travel conditions, visa requirements, currency and customs
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