issue 84 november 2007

Economy: State Budget 2008; Foreign Investments; Energy Sector

Amcham news: The start of meet-the- new-members Event Series

Analysis: Turkey and the Kurds; Foreign Investment: New Capitals Flow

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area, Building 2, Floor 6, 1766 Sofia Tel.: (359 2) 9742 743 Fax: (359 2) 9742 741 homepage: www.amcham.bg e-mail: [email protected]

editorial

Dear Reader,

You will probably notice that in this issue of AmCham Bulgaria Magazine we are not offering you an article on the 2007 mayoral elections, as we had promised last month when we introduced the main candidates.

I am almost certain that you would not have noticed this absence, had I not mentioned it, and the reason is that the elections went by in a completely predictable fashion. Boyko Borisov, the leader of the newly formed GERB party, won in Sofia, and his associates took Plovdiv, Bourgas, Vidin, Dobrich, Stara Zagora, Yambol and Sliven. The ruling BSP got only Blagoevgrad, Varna, Lovech, Pernik and Smolian. The "democratic forces" - or what remains of them - got a mayor in Pleven only.

In other words, a little over one-third of Bulgarian voters went to the polls and gave almost the entire local power to the former secretary of the Ministry of the Interior. Boyko Borisov himself - or "the General" as he is known for some reason - immediately declared that this is a harbinger of early parliamentary elections. We at AmCham Bulgaria Magazine think that the former policeman should be left to rule in Sofia, the former soccer star Yordan Lechkov, and all their GERB colleagues - where voters put them. As for the elections, we shall see.

It is very unlikely that the triple coalition of Sergey Stanishev, Ahmed Dogan and Simeon II will abandon power early. Even though the current government has a nominally leftist label, its policies are rightist. The country keeps its pledges to EU and NATO partners, and the teachers' strike is already over.

At the same time, the contender for Prime Minister's position Boyko Borisov has a lot to accomplish before his GERB party is in good enough shape to win parliamentary elections. In many instances, GERB supported popular candidates who were not necessarily party loy- alists, thus winning even in areas with less-than-strong support for Borisov & Co.

Let us not forget that during parliamentary elections, BSP can mobilize a lot more of its vot- ers, who were now probably discouraged by weak mayoral candidates. Not the least, to win

the next elections (extraordinary or regular ones, in 2009), GERB will most likely have to AmCham Bulgaria Magazine November 2007 form a coalition. The party, however, has no clear partners right now.

If anything threatens the current government, it is only the slower-than-expected growth of Bulgarians' incomes compared with the fast adoption of European prices and standards.

I hope the cabinet has a plan for that. On my part, I upped the pay for the magazine's staff writers as soon as I heard "Ode to Joy" at the beginning of this year.

page Yours truly, 1

Milen Marchev Editor-in-Chief contents

issue 84 november 2007

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business oppor- tunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American Chamber of Commerce in Bulgaria.

Publisher Writers: American Chamber of Commerce in Bulgaria Boyko Vassilev, Marina Tzvetkova, Business Park Sofia, Mladost 4 Area Mina Georgieva, Panayot Angarev, Building 2, Floor 6, Sofia 1766, Bulgaria Yuliana Boncheva Tel.: +359 (2) 9742 743 Fax: +359 (2) 9742 741 Advertising e-mail: [email protected] AmCham Bulgaria: www.amcham.bg Nadejda Vakareeva, [email protected] AmCham Bulgaria Magazine: Editor-in-Chief Milen Marchev, [email protected] Milen Marchev

Deputy Editor-in-Chief: The AmCham Bulgaria Magazine reaches a broad audience Christopher Karadjov of AmCham members, leading US, Bulgarian and internation- al companies, US and Bulgarian decision-makers, all Senior Editor: AmChams around the world. Irina Bacheva Subscription is free of charge. If you would like to subscribe to AmCham Bulgaria publications, please contact the ISSN 1312-935X AmCham Bulgaria office.

2 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria amcham bulgaria

Board of Directors of the American Chamber of Commerce in Bulgaria President Mr. Borislav Boyanov Borislav Boyanov & Co. First Vice President Mr. Anthony Hassiotis Bulgarian PostBank Contents Second Vice President Mr. George Randelov IBM Bulgaria Treasurer Tanya Kosseva-Boshova Landmark Property Bulgaria cover story USAID in Bulgaria Celebrates End of Members Ms. Olga Borissova Ellief Center, AUBG 17 Years of Assistance ...... 4 Mr. Thomas Higgins Balkan Accession Fund By Jennifer Croft Mr. Andon Ichev General Electric Mr. Stefan Ivanov Citibank N.A. economy Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory Budget 2008: Ms. Evgenia Stoichkova Coca-Cola Bulgaria A Wonderful Time for Fiscal Promises ...... 10 Mr. Chris Thompson Bearing Point, CLRP By Marina GEORGIEVA Ms. Elitsa Tsaneva Ideal Standard Bulgaria

Foreign Investment: New Capitals Flow in 2008 . . . 14 Ex-Officio Member Mr. James Rigassio US Senior Commercial Attache By Marina Tsvetkova Executive Director Valentin Georgiev secret services 3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . Abbott Laboratories S.A. . AbCRO - Bulgaria Government Starts Intelligence Shuffle ...... 18 . Accor Services Bulgaria . ACO Building Elements Ltd. . ACSIOR . ADIS Ltd. . Advance By Panayot Angarev International Transport (Balkan) EAD . AES Corporation . AFA OOD . AIG Bulgaria Insurance & Reinsurance Company EAD . AIG Life Bulgaria . AIMS Human Capital . Alcoa Packaging Bulgaria . Alexander Hughes Bulgaria OOD . ALEXANDROV GROUP CORPORATION . Alfred C.Toepfer International analysis . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . Alter Ego Company OOD . American Allies in Chains ...... 20 College of Sofia . American English Academy . American Resarch Center in Sofia . American University in Bulgaria (AUBG) . Anglo-American School of Sofia . Anton Preslavski, Liebert Hiross . APIS - BUL- By Boyko Vassilev GARIA Ltd. . APOLO Ltd. . Argento Human Resource Solutions . Aries Commerce . Association Integra-BDS . Association of Bulgarian Broadcasters - ABBRO . Astral Holidays AD . Astra Zeneca Energy Sector Faces New Threats UK Ltd. . AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . Avendi Ltd. . AVON over EU Emission Allowances ...... 22 Cosmetics Bulgaria Ltd. . BAE Systems International Ltd. . Balkan Accession Fund . Balkan News Corporation Plc. . Balkan Star Automotive EOOD . Baxter AG . Bayer Bulgaria EOOD . BC Serdon . BearingPoint, Inc. . Berlitz Schools of Languages . BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. procurement . Borislav Boyanov & Co. . Braykov's Legal Office . Brown Forman Beverages Worldwide Sofia Branch Some $50 Million Will Be Spent in Bulgaria for LLC . British American Tobacco . Bulgaria Platinum Group . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Land Development EAD . Bulgarian PostBank . Contracting in 2008 ...... 24 Bulgarian Telecommunications Company EAD . Business Media Group . Business Park Sofia EOOD . By Irina Bacheva CallCenterBulgaria . Candole Partners EOOD . Car Rental Bulgaria Ltd. . Carlsberg Bulgaria AD . Cefin Bulgaria EOOD (IVECO dealer) . Center for the Study of Democracy . Central Hali AD . CEN- TURY 21 Bulgaria . Chelopech Mining EAD . Cisco Systems Bulgaria . Citibank N.A.- Sofia Branch . Mark Lumer, contracting officer, City University . Clockwork Ltd. . CMS Cameron McKenna EOOD . Coca-Cola Bulgaria EOOD . U.S. Space & Missile Defense Command: Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . Colgate-Palmolive Adria . COLLIERS International . ConsulTeam Recruitment and Selection Ltd. . Cook Communications Bulgarian Companies Have an Edge in Servicing . Corstjens Worlwide Movers Group . CPM Consultancy Sllc . Curtis / Balkan Ltd. . Data and U.S. Bases in Europe ...... 26 Information Consult . DeConi International . Deloitte Bulgaria EOOD . DENIMAR Ltd. . DHL Express Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Monika Schoeller, supervisory contract officer, Kyutchukov, & Velichkov . DLA Piper Weiss-Tessbach Branch Sofia . Dobrev, Kinkin & Lyutskanov Law Firm . Domaine Boyar AD . Dr. Emil Benatov & Partners . Dr. I.S. Greenberg Medical Center, Ellen Ruth Defense Logistics Agency: U.S. agency looks for Greenberg, Ph.D. . DuPont de Nemours International S.A. . DynCorp International LLC . Economedia AD . Effekten Und Finanz - Sofia AD . Ekotoi - Service Ltd. . Electron Progress AD . Eli Lilly and Bulgarian suppliers ...... 28 Company . Elido (Lamel Ltd.) . Elmec Sport Bulgaria Ltd. . Elta consult AD associated partner of CB Richard Ellis for Bulgaria . Emerson Process Management AG . Encouragement Bank AD . Enel Maritza amcham events East 3 AD . Enemona SA . Engineeringservice Sofia Ltd. . Environmental Quality Management, Inc. . AmCham Launches Meet-the-new-members Epsilon Interactive International . Equest EAD . ERATO HOLDING PLC . Ernst & Young Bulgaria . European Bank for Reconstruction and Development (EBRD) . Flying Cargo Bulgaria Ltd. - Licensee of FedEx Event Series ...... 30 . Force Delta Ltd. . Forem Consulting Bulgaria . Forton International JSCo . Foster Wheeler Energia Polska Sp. z o.o. (FWEP) . G4S Security Services Bulgaria JSC . General Electric International . Adding Bulgarian Taste to Brussels' Cooking . . . . 32 General Security ltd. . Genmark Automation Bulgaria Plc. . GiTy Bulgaria ltd. . GlaxoSmithKline . Global Benefits Group GBGI CEE LLC Representrative Office . Goodyear Dunlop Tires Romania . Grand news Hotel Sofia . Grenville Bulgaria . Grey Worldwide Bulgaria EOOD . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia . Holiday Inn Sofia . Honeywell EOOD . Hotel Yastrebets Wellness & SPA . IBM Bulgaria Banking on Food ...... 34 . IBS Bulgaria Ltd. . Ideal Standard Bulgaria . Immo Industry Group . In Time Ltd. . Industrial Marina Brakalova, FORA Foundation Holding Bulgaria . ING Bank Sofia Branch . Interbrands Marketing & Distribution Inc. OOD . Interdean . International University . Investbank Plc. . IP Consulting Ltd. . ISI Emerging Markets (Internet Chris Rebstock, Global FoodBanking Network Securities, Inc.) . Johnson & Johnson Doo. . Johnson Controls Electronics Bulgaria . Junior Achievement Bulgaria . Kaliakra AD . Kamenitza AD . Kamor Auto EOOD . Katilin Popov Enforcement Officers us news . Kempinski Hotel Grand Arena Bansko . Kolbis International Transfer Corporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK Property Bulgaria . Lexim Sofia Ltd. . LIC Penkov, Markov & Partners AmCham Bulgaria Magazine November 2007 U.S. Department of Commerce Environmental OOD . Lindner Bulgaria EOOD . Lirex BG Ltd. . Lowe Swing Communications . M & M Air Cargo Trade Mission Visits Bulgaria ...... 36 Service BG OOD . M3 Communications Group, Inc. A Hil & Knowlton Associate . Maersk Bulgaria Ltd. . Magnetic Head Technologies . Maria Vranovska, MO, MBA . Marsh EOOD . MARTERN EOOD . Mathnasium Rossimat . McDonald's Bulgaria Ltd. . Mellon Bulgaria EAD . Merck Sharp & Dohme IDEA member news Inc. . Mercurius-Sofia . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, Public Affairs & Public Kabile Attracts hi-tech Archaeologists ...... 38 Relations Consultants . Mobiltel EAD . Monbat Plc. . Moody International Ltd. . Moten Sport . Moto-Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO Defense College Anciens' Association . NDT Equipment Supplies LTD . Neochimiki Bulgaria S.A. . Net Is Ltd. . Neterra By Shawn Ross & Adela Sobotkova Communications . Neumann International AG . New Europe Corporate Advisory . New Europe Directories Bulgaria . Nexcom Bulgaria EAD . Nu Image Bulgaria . Opet Aygaz Bulgaria EAD . Oracle East SE Europeans Accumulate Wealth, Central Europe Limited - Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSG Records Management . Choose to Invest ...... 39 Outsource Partners International . Ozone Laboratories Bulgaria . PANDA - IP Ltd. . Parsons E&C Bulgaria . Penev & Partners Law Offices . Pfizer Luxembourg SARL, Representation Office Bulgaria . Philip Morris page Bulgaria EOOD . Piraeus Bank Bulgaria AD . Pioneer Semena Bulgaria EOOD . Plesio Computers Jsc 3 Garnev, Karakitis Join Ernst&Young . Popov Legal Office . PostPath . Praktiker EOOD . Pratt & Whitney . PricewaterhouseCoopers . in Bulgaria ...... 40 Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. . Radisson SAS Grand Hotel . Reader's Digest EOOD . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Rising Force Co., Ltd. . Rockwell/Intelpack . S&T Bulgaria . Schenker EOOD . Schering - Plough Central East - Bulgaria Kempinski Hotel Grand Arena Bansko Awarded as . Scandinavia Motors Ltd. . SEAF Management Bulgaria EOOD . Sheraton Sofia Hotel Balkan . Sherita Leading SPA Resort ...... 41 M Ltd. . Siemens AG . Sienit Ltd. . SigmaBleyzer Investment Group LLC - Representative Office . Soravia Bulgaria Ltd. . Stanton Chase International Bulgaria . Stefan Dimitrov, Norman Realestate Co. Ltd. Motorola Plants Trees in Mladost ...... 41 . Stoeva, Kuyumdjieva & Vitliemov Law Firm . Symix Bulgaria OOD . TechnoLogica EOOD . TeleLink AD . The Atlantic Club of Bulgaria . Tishman Management Company Ltd. . Tissue Bank Osteocenter Bulgaria EAD . TMF . Totema Engineering . Trans Company Ltd. . TravelStoreMaker.com . new members ...... 42 Tumbleweed Communications EOOD . UniCredit Bulbank . Unimasters Logistics Plc . Unique Estates Renault Nissan Bulgaria . Unisys Bulgaria Branch . United Consulting Ltd. . United Healthcare Bulgaria Group of Companies . United Medical Communications . Urban 2000 Ltd. . Vaptsarov Joint Stock Company . Vector music Management Bulgaria EOOD . Videolux Holding / Technopolis . VIP Security Ltd. . VISA International Service Association . VSK Kentavar Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Punk at 30: A Retrospective on the Filth, Branch . World Courier Bulgaria . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Yavlena Ltd. . the Fury and Fender ...... 43 Zlati Dinev Studio in partnership with Outerbridge/Morgan . cover story USAID in Bulgaria Celebrates End of 17 Years of Assistance By Jennifer Croft

U.S. Ambassador to Bulgaria John Beyrle, USAID Bulgaria Mission Director Michael T. Fritz and the Bulgarian Minister of State Administration Nikolay Vassilev provided their personal and professional perspectives on key aspects of the U.S.-Bulgaria partnership during the meeting in Kempinski

Who are the people who tell the story of Bulgarian American Credit Bank. tance and an investment of more than United States Government development $600 million can be seen in many assistance to Bulgaria? They are the children in communities aspects of Bulgarian society. U.S. such as Stara Zagora and Chelapare assistance has played a key role in They are the court clerks in courts where community funds have success- Bulgaria's transformation since 1990 around the country who are able to work fully forged partnerships with business into a well-functioning democracy and more transparently and effectively to renovate playgrounds and soccer stable market economy. thanks to case management software. fields. Working closely with Bulgarian partner They are the ordinary citizens who save They are Muslim and Christian children organizations, the Bulgarian govern- 4 time and nerves by receiving all munici- who participate in after-school lessons ment, and other international donors, pal services in a convenient one-stop to learn about world religions and have USAID addressed priorities such as shop rather than visiting different offices. fun celebrating each other's holidays. local governance, rule of law, financial sector reform, agricultural and private They are the entrepreneurs who took They are the young graduates of the enterprise development, humanitarian loans to build and expand their busi- American University in Bulgaria who are assistance, energy restructuring, ethnic nesses and hire more workers. pursuing successful careers in the pub- cooperation, civil society development, lic and private sector. and anti-corruption. Following are the

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria They are the new homeowners who major areas and achievements of U.S. received mortgage loans from the The impact of seventeen years of assis- development assistance to Bulgaria. cover story

Key legacies of usaid in Bulgaria Organizations for democratic reform Bank and development ● Nachala and Ustoi micro-credit organizations ● The American University in Bulgaria ● The Institute for Market Economics ● The National Institute of Justice ● The Center for Energy Efficiency ● The National Association of (EnEffect) Municipalities in the Republic of ● A network of Career Development Bulgaria Centers (36 in 2007) ● The Foundation for Local ● A network of support organizations Government Reform including the Center for ● Nine Regional Associations of Entrepreneurship and Executive Municipalities Development, the Bulgarian ● The Broadcast Training Center Center for Training and ● An active network of civic advo- Development, Voca Consult, e- cates, including the Bulgarian FLAG, FLAG APEX, and the Center for Not-for-Profit Law, the Agency for Small and Medium USAID Acting Administrator Henrietta H. Fore Bulgarian Institute for Legal addresses the audience at the closing ceremony of the Enterprises USAID Mission to Bulgaria on October 10, 2007, Initiatives, legal clinics, and the at Sofia's Kempinski Hotel. Attorneys' Training Center Environmental legacy

● A managed system of protected Democracy and Organizations for economic reform areas, including two major national Governance and development parks and the Rila Monastery Early USAID support focused on devel- ● The Bulgarian American Credit Nature Park. oping a pluralistic political party system, strong civil society, and independent with easy access to information and ● Private enforcement agents collected media. One of the most important and services. These centers serve two- more than $60 million in enforceable successful components of USAID thirds of the Bulgarian population; claims during the first year of the new democracy promotion work in Bulgaria ● The increase by more than $100 mil- profession. was support for local governance lion of municipal revenues between reform. In the later stages of its pro- 2000 and 2006; Economic Growth and gram, USAID turned its attention to rule ● An Association of Community Funds Restructuring of law issues, anti-corruption, and judi- was established which has raised cial reform. Concrete results of these $800,000 for grassroots community More than half of USAID funding in activities include: projects such as hospital and school Bulgaria was aimed at helping the coun- renovations; try develop its free-market economy. ● The establishment of a parliamentary ● Thirty-two courts achieved the status Initial assistance focused on privatiza- internship program; of "model courts," implementing high tion and reform of economic policies. ● The creation of 140 "one-stop shops" standards of transparency and effi- Later, support shifted to stimulating pri- in municipalities to provide citizens ciency; vate entrepreneurship with technical and AmCham Bulgaria Magazine November 2007

page 5 cover story

directly created as a result of USAID projects; ● Flood assistance in 2005 supported more than 10,000 victims; ● A network of 36 career centers in uni- versities provides career consulting services to more than 170,000 stu- dents; ● The Bulgarian Government received assistance in managing protected areas and developing the national parks system. Training and Education

Training was an essential part of the USAID approach in Bulgaria, leaving a Microcredit from USAID has helped entrepreneurs such as Rositsa Atanasova (above) and Radka Zdravkova legacy of knowledgeable and skilled (below) expand their businesses. Both women are clients of the USAID-supported Nachala Cooperative in professionals who participated in semi- Stara Zagora. nars, courses and study tours. Almost $60 million in U.S. funding supported the establishment and growth of the American University in Bulgaria, a four- year liberal arts undergraduate institu- tion with the mission of educating future leaders. The curriculum, based on the U.S. liberal arts model, is taught in English. Planting Seeds for Future Progress

USAID is establishing two funding mech- anisms to continue reform work in key areas. The main mechanism will be the American for Bulgaria Foundation, established with the liquidated assets of the Bulgarian American Enterprise Fund (BAEF). The Foundation is expected to become operational in 2008. Another mechanism, the Bulgaria Fund, was financial assistance. After the banking ● More than 53,000 loans worth $68 established with the German Marshall crisis in 1996, USAID stepped in to help million were made to micro-enterpris- Fund and will give targeted grants to strengthen financial institutions. USAID es that supported more than 78,000 NGOs. was also involved in reform of Bulgaria's jobs; pension system, and in restructuring of ● Banking system assets have grown by Closing Ceremony Marks a the outmoded energy sector. Starting in more than 500 percent since 1997; New Stage in the U.S.- 2003, USAID focused on improving pri- ● Energy efficiency projects in hospitals Bulgaria Relationship vate sector competitiveness in agricul- resulted in average savings of 20 per- ture and other sectors. Concrete results cent. On October 10 in Sofia, Acting USAID of these activities include: Administrator and Director of Foreign Quality of Life Assistance Henrietta Fore joined more 6 ● More than 1,000 medium-sized state than 400 guests in paying tribute to owned firms were privatized by 1997. USAID also supported various projects Bulgaria's graduation from Support for ● Modern laws on investment and taxa- to ease the social cost of Bulgaria's East European Democracy (SEED) tion were passed, and the government transition. These included programs to development assistance, the closing of established key strategies to promote reduce the impact of mass layoffs and the USAID Mission in Bulgaria, and the investment and SME development; unemployment, humanitarian crises, and continuing U.S.-Bulgarian partnership. ● The Bulgarian American Credit Bank environmental degradation. Examples of The closing ceremony was attended by was a pioneer in mortgage lending, the results of these initiatives include: prominent representatives of Bulgarian

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria providing mortgages for more than civil society, media, business, govern- 5,000 apartments; ● Approximately 130,000 jobs were ment, the judiciary, and academia.

cover story

Ambassador John Beyrle and Minister of State Administration Nikolay Vassilev emphasized the progress Bulgaria has made, especially in the last ten years, and the substantial impact of the U.S. Government on reforms in the economy, judicial system, local governance, and other areas.

"Starting sometimes from just the spark of an idea, we have built something of immense value that neither Americans nor Bulgarians could have accomplished without the other's help and support," Ambassador Beyrle remarked in his speech.

Three additional Bulgarian speakers, Rayna Gavrilova, Executive Director of the Trust for Civil Society in Central and Eastern Europe, Stefan Ivanov, Country Officer for Citigroup in Bulgaria, and A court clerk in Veliko Turnovo is able to perform her duties more efficiently thanks to equipment and soft- ware provided by USAID as part of its program to strengthen the Bulgarian judiciary. Hristo Ivanov, attorney at the Bulgarian Institute for Legal Initiatives, provided ly 500 trees in November. October 10 ceremony entitled USAID in their personal and professional perspec- Bulgaria: 1990-2007, A Story of tives on key aspects of the U.S.-Bulgaria Spreading the Message Partnership and Progress. The 40-page partnership. The speakers focused on about USAID in Bulgaria full-color publication, available in English the future potential of Bulgaria to be a and Bulgarian, examines the key areas role model for its neighbors in the west- In mid-September USAID launched a of USAID involvement and concrete ern Balkans, and the need to continue public awareness campaign consisting results of USAID assistance. It includes the fight against corruption, organized of TV, radio, print and internet ads. The success stories, first-person testimoni- crime and trafficking as well as to pro- goal of the campaign is to raise aware- als, and photographs illustrating the tect Bulgaria's unique natural beauty. ness among the Bulgarian public about work of USAID. ■ the accomplishments of the U.S.- As a symbol of the continued growth of Bulgaria partnership. Broadcasting of For more information about USAID in the U.S.-Bulgaria partnership and its the TV and radio spots was conducted Bulgaria, please visit http://bulgaria. achievements, each participant in the by the Association of Bulgarian usaid.gov. Copies of the publication closing ceremony received a certificate Broadcasters (ABBRO), an advocacy USAID in Bulgaria: 1990-2007, A Story that a tree will be planted in their name organization for independent media that of Partnership and Progress can be in Sofia's South Park. The USAID received early assistance from USAID. obtained by contacting Ms. Vessi Mission and Sofia Municipality will orga- Goleminova at the USAID Mission, +359- nize the official planting of approximate- A new publication was distributed at the 2-939-5702, [email protected].

8 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria

economy

Budget 2008: A Wonderful Time for Fiscal Promises By Marina GEORGIEVA Photo by Pressphoto BTA Photo by Pressphoto

Bulgarian Prime Minister Sergey Stanishev talks with Simeon Saxe-Coburg Gotha and Ahmed Dogan over some final adjustments in the Budget 2008. The three political leaders in the ruling coalition faced problems such as the National teachers strike and lack of money for some of the public sectors turned out to be the main issues of the budget. The leaders of the ruling coalition - Sergei Stanishev of the ately after the 2008 budget bill was deposited with the National Bulgarian Socialist Party (BSP), Simeon Saxe Coburg-Gotha of Assembly. the National Movement Simeon II (NMS) and Ahmed Dogan of the Movement for Rights and Freedoms (MRF) approved the According to Oresharski, the budget aims at macro-economic draft budget for next year. The draft bill will have to be stability and sustainable development. Due to the expected approved by the National Assembly, after passing the amend- high current account deficit of 21.9 percent by the end of next 10 ments to the relevant tax laws. According to the Cabinet, the year, a budget surplus of 3 percent of the GDP has been tar- 2008 budget geted for next year. This, according to Oresharski, will guar- antee the actual coverage of the Bulgarian lev and the stabil- will raise the wellbeing of the people ity of the exchange rate.

and will make the economy more competitive. The Finance Minister stressed also that the flat 10 percent tax, which will be levied as of next year, is the lowest in Europe The 2008 state budget will be strained to implement, as it stip- and will help attracting foreign investments. The 2008 budget

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria ulates a 25 percent increase in revenue compared to this year, bill stipulates a record high level of state investments - BGN Finance Minister Plamen Oresharski told journalists immedi- 4.25 billion, up from 2.8 billion in 2007. The bulk of these economy

investments are dedicated to infrastructure projects. account deficit is expected to continue to grow next year and rise to about 22 percent of the GDP, which is the highest level Education, healthcare, and the social among all EU member states. As an EU member, Bulgaria will sphere also have to pay its annual contribution. Still, a number of spheres need a more substantial financing, but it depends on will be the financing priorities for the next year. the budget potential. Its successful implementation depends on the high rate of reforms, designed to curb expenses and raise For instance, education will get an increase of BGN 470 mil- treasury revenue. The targeted budget expense for 2008 is set lion compared to the current fiscal year. More funds have been at BGN 25 billion, or 40 percent of Bulgaria's GDP. It is stipu- allocated to science and research, in order to allow Bulgaria lated that the revenues to the 2008 budget should exceed to redirect its economy towards higher added-value products expense by 3 percent of the GDP. Education and healthcare and thus raise the competitiveness of Bulgaria's production. will get 4.2 percent of the GDP each, and the social sphere Substantial amounts have been allocated to infrastructure pro- will get a total of 12.2 percent. Defense will get 2.1 percent, jects as well, for instance co-financing scheme aimed at and town planning 2.4 percent of the GDP. absorbing the funds released by "Transport" and "Regional development" European structural programs. One of the declared objectives of the 2008 budget is to raise the living standard of people. Hence, a 10-percent increase of 2008 is emerging as a difficult fiscal year, Plamen Oresharski budget salaries is planned for July 1, with options for a further admitted recently. His remark was perhaps motivated by the increase, provided the individual institutions streamline their fact that this country will have to allocate co-financing funds expenses. That is why the ruling coalition plans quick reforms in order to successfully absorb the substantial funds released in the public sector and the decrease by 12 percent of the for Bulgaria from the EU structural funds. Besides, the current number of public employees, which in turn will allow the rest Insured top income will be drastically increased

The maximum incurred income ceiling will be raised by 40 insurance. The Social Affairs Ministry has allocated BGN 190 percent as of next year, which constitutes the most signifi- million out of its budget for subsidized employment and qual- cant change in the social budget. The logic of the social ification programs. budget however follows this year's guidelines. Employers reacted unanimously: the steep increase from BGN 1400 to A total of BGN 5.3 billion is allocated for pensions in 2008, BGN 2000 was interpreted as unfoundedly large, not moti- which is by BGN 900 more than this year. This increase is vated and contradicting to previous agreements between the attributed to a two-step increase of pensions this year by a social partners, the Confederation of Employers and total percentage above the budget target. The 2008 budget Industrialists in Bulgaria (CEIB) wrote in a position paper. bill again stipulates that the government will apply the so Besides, the minimum insured income threshold was called Swiss rule to pension adjustments - which means that increased by less than 10 percent - from BGN 220 to BGN the increase will be determined by equal weight by inflation 240. and by the increase of the average insured income level. This rule however was not applied both in 2006 and 2007. Maximum pension is set by law at 35 percent of the maxi- According to this rule, pensions must be increased by 9.1 mum insured income ceiling, which means that the maximum percent as of July 1, 2008. pension must rise to BGN 700 in 2000. The maximum pen- AmCham Bulgaria Magazine November 2007 sion for next year however remains at its 2007 level - BGN The unemployment benefits threshold remains unchanged 490, as the maximum insured income ceiling in the 2007 from 2007 - BGN 90, while the ceiling is raised by BGN 10 budget remained unchanged. to BGN 190. The same amount will be paid to mothers car- ing for their children until the age of 2. A total of BGN 7.6 billion have been allocated for social insurance, social support and social care, which is by 13.4 The budget bill does not stipulate further steps to alleviate percent (BGN 900 million) more than 2007. This amounts to the social insurance burden, after the last 3-perceny page 31.7 percent of the total expenses, which makes these allo- decrease in effect as of October 1. Employers' organizations 11 cations the largest for next year. propose a record 13 percent decrease in the middle of 2008. Thus, pension insurance payments would fall to the level of A new rule will be applied as of January 1, 2008, which stip- the income tax, 10 percent. CEIB claims that this measure ulates that people with a full working ability shall not be enti- would bring out in the open major portion of the income, tled to unemployment benefits for more than 18 months. If which is currently not covered by insurance installments. The they fail to find employment by themselves, they will be ratio between the installments made by the employers and enrolled into literacy and professional qualification programs, the employees becomes 60:40, compared to 65:35 for 2006 while the state will play them a minimal wage and social and 2007. economy Photo by Pressphoto BTA Photo by Pressphoto

Bulgarian Minister of Finance Plamen Oresharski handles the State Budget 2008 to the Chairman of the National Assembly Georgi Pirinski.

to get higher salaries. Pensions will be increased by 9.5 per- on coffee and coffee extracts will be reduced as well. cent as of July 1 as well. A flat tax rate of 10 percent will be introduced as of 2008 for natural persons' income, but the tax- Tax payers should be concerned by the free minimum will be eliminated. This measure will leave more fact, money in the hands of people and will offset to a certain extend the appreciation of a number of goods and services. that the bulk of the budget funds next year will be allocated Appreciation is expected to continue next year as well, mainly to unreformed sectors like healthcare and education, econo- due to the increase excise duties on energy. mist Georgi Ganev said.

Business will also keep more funds in It is normal to talk about GDP at the end of the fiscal year - 2008. this is the time to evaluate developments, "but when the expenses of the state are planned, it is a highly corrupt It is a well-known fact that Bulgaria has the lowest profit tax approach to ask so much money for the systems", Ganev in the whole of Europe - 10 percent, which is one of the pre- said. conditions for attracting more foreign investments to this coun- try. Value-added tax will remain at 20 percent next year. In line "The state budget idea is not just spending money, but receiv- with its EU membership, Bulgaria is obliged to raise the excise ing something in return. Which means that we, as taxpayers, duties on fuels to the EU level. Excise duties on unleaded spend some money, but at the same time we expect to receive gasoline, fuel oil, coal, and of electricity for commercial pur- a product, the so called public welfare - protected health, poses will be increased next year. This will increase budget national or personal security, justice and a feeling of getting a 12 revenue, but at the same time will boost prices of many prod- square public deal. Money can be spent for such objectives, ucts and services. but to pour funds without getting anything in return while sec- ondary education in Bulgaria continues to drown - this is not In order to attain the minimal required EU levels, the excise acceptable", Ganev added. duties on cigarettes will be raised by 33 percent in 2008, with another two steps at the same rate are planned for 2009 and Critics if the Cabinet's fiscal policy 2010. It is planned to reduce the excise on mixtures using bio- fuels (for gasoline and bio-ethanol to BGN 671.3 per tonne, claim that, judging by the figures in Budget 2008 and by the poli-

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria and for fuel oil and bio-diesel to BGN 588 per tonne. The cies emerging behind these figures, the public sector will remain required bio-fuel content is set at 2 to 5 percent. Excise duties without reforms. The proportions relevant to the funds allocated economy

to education, healthcare and the social sphere follow the 2007 next year. This money will be made available after the chil- budget targets, while the increased financing will come out of dren become of age and will be used for enrolling with a uni- economic growth and not as a result of new policies. versity or for choosing a professional school.

Financial experts from the non-government sector claim that Hospitals remain underfinanced. Healthcare will receive a lit- education has been highlighted as a priority in words alone. The tle more next year. Healthcare allocations are increased from arguments of the finance ministry that education will receive BGN 2.2 billion to BGN 2.6 billion in 2008, which is equiva- more funds next year, expressed as a portion of the gross nation- lent to 4.2 percent of the next year's GDP target. This al product, are not sufficient for the time being to convince nei- amounts to a 16-percent increase, which however will be ther the teachers, nor the science community that this sector has consumed in advance by inflation, which is expected to become a genuine priority for the government. These estimates emerge above the double-digit level before the end of this are supported by claims that the 4.2 percent of the GDP for year. 2008 is the same as in 2007, while the difference equals the GDP targets reassessment made in the middle of the fiscal year, The budget of the National Health Insurance Fund (NHIF) is which means that the allocations for all sectors are actually lower increased by BGN 150 million - BGN 1.61 billion. The expect- if expressed as a share of the GDP. Besides, the "value" of this ed budget performance of the NHIF for 2007 however is set sector remains below the 4.7 percent asked by teachers and the at BGN 1.55 billion, which indicates that the increase for next 5 percent asked by young scientists. year is minimal. The most sensitive section - the hospitals - will receive BGN 785 million. The expenses of the hospitals In nominal terms, the money for education will be by BGN 470 for 2007 are estimated at BGN 865 million, which required million more next year, which raises the total to BGN 2.6 billion. an amendment of the NHIF by an increase of BGN 86 mil- According to the cabinet assessments, the funding per student lion. Figures indicate that the financing deficit of the hospi- will be increased from BGN 933 to BGN 1151 in 2008, which tals, as admitted by the Health Minister Radoslav Gaidarski, will allow for an increase of average salaries in the sector to will persist through 2008 as well. BGN 650. However, the cabinet has stressed that the spending of the money must be optimized. Expenses optimization is shift- The funds for specialized medical pre-hospital care will be ed to school headmasters - as of 2008, the principle of dele- increased by BGN 10 million, and dental services will get gated budgets will be introduced in full, which is a year ahead some BGN 6 million more. No additional funds are planned compared to the program for reforms in secondary education for the general practitioners although the National Assembly as approved by the National Assembly last year. has already approved on first reading the BSP proposal to spare the pensioners the medical check-up fee. Enforcement by financial tools remains the single incentive for the restructuring of the sector, based on the funding-per-stu- The allocations for pharmaceuticals for home treatment are dent principle. The schools, which manage to enlist more stu- increased by BGN 13 million and will be partially or in full dents in their classes, would be able to allow higher salaries paid for by the NHIF. These figures indicate that without for their teachers. The survival scheme-school should be structural reforms doctors will continue to work under the closed down if the number of students is low - will perhaps same conditions and patients will receive the same medical not be applied in full scope. services as before. NHIF and Union of the Bulgarian Doctors experts have improvement of health services, which requires An additional BGN 240 million is allocated in Budget 2008 for a BGN 1 billion more than the current NHIF budget. That is various programs for school network optimization, for repairs, why the doctors' professional union has deposited its own improved conditions for sports, and others. It is this item of the budget proposal, which will have to be discussed by the par- budget that was left with some BGN 20 million unspent this liament. year, as the municipalities were unable to utilize. According to the 2008 Budget bill, AmCham Bulgaria Magazine November 2007 Science is allocated 0.4 percent of the GDP, which amounts to close to BGN 269 million. Compared to 2007, the 2008 budget the Ministry of Healthcare will receive provides for a BGN 43 million increase of the allocations for BGN 560 million, research. Thus, "research" money will become BGN 60 million, and will be subject to the competition among research projects. which is 20 percent more than this year. The ministry is pay- The state subsidy for the Bulgaria Academy of Sciences will rise ing for emergency treatment, for treatment at psychiatric hos- by 13 percent in 2008 to a total of BGN 77 million. pitals and cancer dispensaries, chemo-dialysis and health page prophylactics programs. Some BGN 140 million will be used 13 The subsidies for universities next year will be increased by to finance emergency hospitals and the treatment of seri- BGN 33 million to BGN 219 million. The base amount of fund- ously ill patients. Another BGN 160 million has been allocat- ing for a single university student will be increased by 10 per- ed for expensive drugs for cancer patients and for other seri- cent to BGN 816. ous illnesses, whose treatment is not paid for by the NHIF. The funds for repairs of hospitals, outside those repairs that The "Intellect" fund, for which the state will be carried out by state investment loans, will be allocated BGN 20 per month increased by BGN 5 million to BGN 36 million. These funds will be dedicated mainly to state-owned medical establish- for all children born after January 1, 2008, will be launched ments. ■ economy Foreign Investment: New Capitals Flow in 2008 By Marina Tsvetkova Bulgaria's trade and current-account deficit already exceeds 6 2008 - will be yet another strong year for billion Euro, i.e. more than 20 percent of the country's GDP. That Bulgaria is the reason why most economists share the opinion that the whole economy depends on foreign investment. The inflow of for- as concerns the inflow of foreign direct investment, government eign capital in turn is encouraged by the stability of the Lev. analysts and international experts and observers are unanimous. External capital is vital for Bulgaria. Since the gap in the coun- Forecasts show that the foreign capital in Bulgaria will amount to try's balance of payments continues widening, foreign investment 4.7 billion Euro. Such level of estimated investment confirms that is one of the main ways of stabilizing the economy and the local Bulgaria is an attractive place for foreign capital, Minister of currency, macroeconomists say. Foreign Affairs Ivaylo Kalfin said.

The vocabulary of the Bulgarian incumbents in recent years has For the past three years, including the capital inflow expected been interspersed with investment superlatives. In their words, until this year's end, the investment in Bulgaria has reached 11.5 Bulgaria is something like "a pot of gold" in the Balkans: a def- billion Euro, compared with 15 to 18 billion Euro for the past 20 inition that was used for the first time in relation to Ireland by the years. Moreover, in the next seven years Bulgaria will have the U.S. economist Benjamin Powell. The statistical figures encour- chance to absorb 7 billion Euro from the European Union funds. age the optimistic assessments of the state's achievements in In addition, 10 billion Euro will be injected in the energy sector attracting foreign capital. The data show that foreign investment alone. The Belene nuclear power plant for instance will cost 3.9 in Bulgaria soared from $200 million in 1996 to some 3.5 billion billion Euro. In the next few years, two new units will be built at Euro 10 years later, in 2006. the Maritsa Iztok thermal power plant, where the investment will

14 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria economy

amount to 1 billion Euro. Another 12 or 13 billion Euro is expect- ed from the EU funds and other sources for large infrastructur- al projects. The problem is that currently Macro-pessimism only 25 percent of the investment goes to East Europe is the most vulnerable region in the world in production, the event of a large-scale outflow of foreign capital if the mortgage crisis in the world aggravates, the International while real estate attracts 35 percent of the foreign capital. Monetary Fund (IMF) said. The fund's World Economic Bulgaria continues enticing foreign investors: the most preferred Outlook report points out that a number of market areas for investment in 2007 are real estate operations, rental economies in Europe and the former Soviet Union have activities, business services, and financial intermediation. large current account deficits and a substantial increase in government spending. The vulnerability of these coun- A survey conducted by the United Nations Development Program tries will become evident if the current crisis deepens and shows that Bulgaria is now one of the nine most attractive invest- triggers repatriation of capital, the fund's analysts point ment destinations in the world. According to data of the out. InvestBulgaria Agency, the foreign direct investment in Bulgaria between 1992 and 2005 amounted to $12.9 billion. The IMF focuses on the credit boom in the Baltic states, Romania and Bulgaria. The loans are denominated in for- The investment in real estate last year reached an all-time high eign currency and are concentrated mainly in the real of 409 million Euro. The direct investment through financial estate sector, which creates concerns for the macroeco- intermediation totaled 614 million Euro. The investment in trade, nomic stability, the report reads. Inflation remains under repair of motor vehicles and personal and household goods control due to the strong competition among countries in amounted to 36.8 million dollars, data of the National Statistical determining wages but the increasing domestic demand Institute show. Two fields of business that attracted 18.8 million already starts exerting pressure on the economic dollars each were the manufacture of machinery and equipment resources, the IMF underscores. Growth in the region will (excluding electrical and optical equipment) and the manufacture probably slow down to 5.8 percent on the average in 2007 of chemicals, products and man-made fibers. The investment in and to 5.2 percent in 2008 due to the tightening of the the construction sector also registered a substantial increase and monetary and budget policies, as well as to the drop in in the third quarter of the year the figure doubled to $15.8 mil- exports as a result of the growth decline in West Europe. lion. The activity slow-down is expected to be most conspicu- The most attractive sector for ous in the Baltic states, where the lower rates of increase in demand will be of use, the fund's experts forecast. foreign investment in Bulgaria is tourism, Meeting the inflation criterion is expected to be the most difficult requirement for the candidates for the Eurozone. which accounts for 10 percent of the country's GDP. The num- The IMF recommends budgeting prudence. As a whole, ber of tourist arrivals in 2007 stands at 5.5 million, which shows however, the emerging economies in East Europe have so the sector's great potential. More and more Britons are choosing far managed to resist the crisis in the US mortgage mar- the Bulgarian Black-Sea coast for buying a second home, a sim- ket, the economists of the fund point out. ilar trend is observed among German and Russian citizens. That has also triggered growth in the tourism sector in recent years. Foreign direct investment in budget 2007 Foreign home buyers in Bulgaria are attracted by the good cli- in million euro: 2,708.6 mate and affordable prices, because foreign currency has a big as percent of GDP: 10.4 purchasing power in this country. Bulgaria's direct rivals in the property sector are Croatia, AmCham Bulgaria Magazine November 2007 Great Britain already tops the ranking in investment volume. Montenegro, Cyprus, Turkey, and Greece. Companies and natural persons from the British Isles have invested 1.1 billion Euro in the Bulgarian economy this year. Another undoubted magnet for foreign investors is the market Some 90 percent of the amount has been used for purchase of of agricultural land, where deals have been closed for 100,000 real estate. hectares and at high price levels at that: some 2,000 Leva per ha. Year on year, the number of deals has doubled and the Economists forecast that 2008 will see market price has jumped by 30 percent. There are a total of page 24 special purpose vehicles registered in Bulgaria and only five 15 a 40-percent increase in foreign investment of them invest in agricultural land. The capital of these five in property. companies is 178 million Leva, part of it has been raised on the stock exchange. Some 40 percent of the capital has been According to experts of BG Estates Worldwide, an international invested in arable land. In 2006 the special purpose vehicles real estate consultant, foreign capital will be directed mainly to bought 35,000 ha of land, i.e. some 1.5 percent of the arable Bulgaria's seaside resorts, as well as to the balneological cen- land in Bulgaria. Note that there is 530,000 ha of agricultural ters for recreation and rehabilitation. Investors are interested land in Bulgaria, including land that is not fit for cultivation. mainly in houses and villas and less in apartments. There is also Interestingly, more than 70 percent of the buyers are foreign interest in the purchase of office buildings and logistic centers. institutional investors. economy

Investment in industrial enterprises A-class investors with projects exceeding 100 million Leva, how- ever, will be able to extend their certificates by another year. has risen by some 11 percent, according to a business poll of The privilege can be used when the project has been delayed the National Statistical Institute. The private sector accounts for because of slow administrative servicing. As a rule, an A-class about 79 percent of the estimated expenses on acquisition of certificate is granted for projects exceeding 70 million Leva but fixed tangible and intangible assets and managers forecast a the new conditions raise the threshold to 80 million Leva. year-on-year increase by 13.4 percent. Besides, the very certificates will be issued by the Ministry of Economy and Energy, not by the Invest Bulgaria Agency. The investment made by public enterprises is much smaller: the However, that could be a problem, because the ministry does year-on-year rise is just 3.2 percent. The bulk of investment was not have a trained team to do that. The agency itself will only used for boosting the production capacity of enterprises: 33.7 be acquainted with the projects after the investors have been percent of the total volume of expected investment in industry. certified. Another 28.0 percent was injected in mechanization and automa- tion and in implementation of new technologies; the capital used The business sector on the investment out- for replacement of outdated equipment made up 27.9 percent of look investment. The remaining 10.3 percent of investment was spent on environmental protection, security measures etc. To keep the interest of foreign investors, Bulgaria has to embark on the promised reforms in the public sector, the way the private The energy and water-related sectors accounted for 37.7 percent sector is doing it, the Confederation of Employers and of the investment in 2006. They were followed by the sectors Industrialists in Bulgaria says. Urgent measures have to be taken manufacturing intermediate goods (36.4 percent) and the sec- to optimize education and carry out the necessary downsizing in tors manufacturing foods and drinks (11.2 percent). the state administration. The low taxes and the stable fiscal pol- icy are some of the advantages of the economy; therefore In 2007, industrial enterprises expect to increase investment by employers will suggest that social security contributions should 16.4 percent. The public sector accounts for 23.7 percent of the be cut by another 3 percent from 2008. estimated investment, i.e. a 28.3 percent rise year on year. At the same time the private sector projects an increase in the volume The capital inflow is essential but businesses should work more of investment by 13.2 percent. actively on investing in neighboring countries, too. A network of bilateral agreements on avoiding double taxation will provide for The investment priorities in Bulgaria's first year as a EU member zero taxation of dividend, interest and capital gains from other are increasing the production capacity, and mechanization, countries to Bulgaria. Such agreements may be closed with automation and implementation of new technologies: 36.2 per- Ukraine and Russia first and then with other countries. Currently cent and 26.8 percent of the total volume of expected investment there are some ten national champions with offshore operations respectively. but their number may increase, business representatives say.

Bulgaria has been noticed already by for- The World Investment Report of the United Nations Conference on eign investors, Trade and Development (UNCTAD) points out that Bulgaria is sev- enth in the world in attracted foreign investment in 2007. The doc- the government is adamant at repeating. The Investment ument reviews the size of foreign investment in a total of 141 Encouragement Act was amended earlier this year to ensure economies. Better performing than Bulgaria are Luxembourg, European rules for the inflow of foreign capital. But many China, Suriname, Iceland, Singapore and Malta. The reason for the observers found the changes to be creating difficulties, rather investment boom is Bulgaria's EU membership, as well as the than enhancing the investment climate. Under the amendments, reforms in the private sector. Bulgaria is also preferred by foreign to provide infrastructural aid to A- and B-class certified investors, investors for its low prices and strategic location in the region. the state has to ask the European Commission (EC) for approval. Even if the approval is granted, the minister of economy and Together with Romania and some CIS countries like Russia, energy is not obliged to submit a proposal to the cabinet for allo- Kazakhstan and Ukraine, Bulgaria is among the leaders in cation of resources. Thus the new procedure considerably attracting foreign investment in Southeast and Central Europe. extends the term when investors can receive support. Even These states account for 85 percent of the investment in 2007. before Brussels' approval was required, the procedure took sev- Foreign investment in Bulgaria amounted to 3.4 billion by August; eral months. The facts speak for themselves: despite investors' 35 percent of the amount was invested in real estate and 25 per- strong interest in receiving infrastructural support, the state has cent, in production. To keep investors' interest, Bulgaria should 16 so far provided financing for only three projects. These are the reduce the state administration and continue cutting the tax and Sofia Business Park, the project of France's Montupet in Rousse, social security rates, the Confederation of Employers and and the hospital of the Japanese Tokuda. Industrialists in Bulgaria said. The organization will propose a revision in social security contributions by 3 percent if the bud- Also, companies that have been certified as A-class investors get revenue performance in 2008 remains as strong as in 2007. already will keep their privileges only if they submit a new appli- According to data of the Bulgarian National Bank, foreign invest- cation to the Ministry of Economy. That has to be done within ment in 2006 amounted to 4.4 billion Euro, but the figure may three months of entry into effect of the amendments and con- reach 5.5 billion Euro when the data of the National Statistical

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria cerns only projects that have not been launched yet. The Institute are added, macroeconomists say. They forecast that changes preserve the three-year validity term of the certificates. investment in 2008 will increase by 30 to 40 percent. ■

secret services Photo by Pressphoto BTA Photo by Pressphoto

Members of the Commission for Interior Safety and Public Order and the State Council of Defense had discussed the setup of new National Security agency during a meeting in Sofa last month. Government Starts Intelligence Shuffle Major players object or seem not to care By Panayot Angarev

The cabinet of Prime Minister Sergei Stanishev was the first Stanishev aired his views on the NSA bill for the first time to embark on a major restructuring and modernizing of during the visit of U.S. president George Bush last June in Bulgaria's security services after 17 years of delays by a Bulgaria. According to unofficial information, the provisions 18 number of successive cabinets. of the bill have been coordinated with U.S. professionals and NATO experts. Government experts drafted a bill on the creation of a National Security Agency (NSA), which will merge the "It is our view that the changes in the structure of the intel- National Security Office, the military counterintelligence and ligence services as proposed by the Cabinet are good, as the financial intelligence authorities, removing them, respec- Bulgaria needs the strong potential of intelligence. If the tively, from the ministries of the interior, defense and finance. principles of professionalism and supervision are provided The new agency, expected to start operations as of the for in the bill, then Bulgaria will have a modern security

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria beginning of 2008, will be directly subordinate to the Prime agency, which is a must under current circumstances", U.S. Minister and will have the rank of a ministry. Ambassador John Beyrle said Oct. 15. secret services

The provisions of the bill, approved on first reading by the National Assembly, stipulate that NSA will be in charge of The 2008 budget will have to tackle some serious issues eliminating any challenges to national security related to related to the functioning of the future agency. Being a spying in favor of foreign powers, corruption or organized- first-class budget assets manager, the NSA will need its crime ties of senior officials, use of violence for political pur- own substantial budget, comparable to the budget allocat- poses, as well as to threats against economic, financial and ed to the Ministry of the Interior and of Defense. environmental security. The NSA will also protect classified According to national security experts, an insufficient bud- information. get will restrict the agency's capabilities to engage in intel- ligence and surveillance operations, which will immediate- The bill stipulates that the three authorities merged into the ly make it dependent on the Ministry of the Interior. NSA will be transformed into general directorates with indi- vidual budgets. The agency will be headed by a director, Judging by the current provisions of the 2008 budget, deputy directors and a chief secretary. Currently, debates none of the affected ministries - the finance, the interior among the authors of the bill are focused on whether the and the defense - is planning to part with its departments agency director should be a professional, with experience that nominally should become part of the NSA in a few with the special services, or a political appointee. months' time.

The future agency will have a special unit in charge of wire- agency. He proposed that the departments of the agency tapping and surveillance. Thus, it will be independent of the should be granted functional independence at a later stage. assets within the Ministry of the Interior. The services of the current "Operative and Technical Information" and "Operative The mechanism for coordination between the new agency Surveillance" departments of the Ministry of the Interior will and the Ministry of the Interior remains unclear. According be used only by sanction of the agency director. Any data, to the provisions of the bill, these issues should be speci- indicating the perpetration of a crime, will be submitted to the fied by a supplementary instruction. Opposition MPs prosecution and the investigation authorities. The agency will expressed their reservations that conflicts may emerge not have investigative powers and will deal exclusively with between the NSA and the Ministry of the Interior in the intelligence, counter intelligence and surveillance operations. future regarding cases, on which both authorities operate simultaneously. The agency's operations will be subject to the supervision of a parliamentary committee. Although it will be directly sub- Debates in the parliament highlighted also the issues relat- ordinate to the Council of Ministers, the NSA will provide ed to the parliamentary control over the operations of the identical information to the president, the Prime Minister and new agency. The provisions of the bill simply state that the the speaker of the National Assembly. control shall be executed by a parliamentary committee, without specifying whether this committee shall be special- A number of questions and problematic provisions were ized or its obligations will be taken over by an existing par- highlighted during the debates, as members of the parlia- liamentary committee. Angel Naidenov from BSP said that ment claimed that a number of amendments must be made both options would be acceptable. The opposition insists on to the original bill. A working group has been established, the establishment of a new parliamentary committee, which with Tatyana Doncheva (Bulgarian Socialist Party, BSP), Ilko will be chaired by a member of parliament outside the rul- Dimitrov (National Movement Simeon II, NMS) and Kassim ing coalition. Similar practices have been employed by other Dal (Movement for Rights and Freedoms, MRF) as members, European states. who were charged to draft the necessary changes before the bill is submitted for a second reading. The ruling coalition will have to decide before the second reading whether the final text of the approved act should One of the major issues, which will have to be resolved ban the employment of officers of the former secret ser- AmCham Bulgaria Magazine November 2007 before the bill is approved, is whether the President should vices. The initiative for the inclusion of the provisions was appoint the NSA director. According to the provisions of the launched by the chairman of the Internal Security original bill, the President signs a decree for the appointment Committee of the National Assembly, Nikolay Svinarov of the director, who is nominated by the cabinet. Opposition (NMS). BSP deputies however challenged such amend- deputies, however, said that guaranteeing national security is ments. a prerogative of the executive and not of the head of state. "It is more important to focus on the provisions, related to page Another major issue, identified by members of parliament, is guaranteeing the professionalism of the employees of the 19 related to the proposed merger of the three authorities. new agency, on the texts, which will eliminate political inter- Yordan Bakalov of the United Democratic Forces (UDFs) ference and the notion that the Agency will be nothing but a said that the bill did not stipulate a detailed organizational new political umbrella for corrupted civil servants at senior structure of the future agency. MPs from the ruling coalition executive positions or for criminals involved with senior state saw some structural problems arising out of the transfer of officials," said BSP's Angel Naydenov. military intelligence personnel under the command of civil superiors. Ilko Dimitrov from the NMS also said that the The MRF is seen as having the final say on whether offices mechanical merger of the three authorities might create of the former state security apparatus will be allowed into problems by establishing "feudal fiefs" within the new the new agency. ■ analysis Allies in Chains Turkey, Kurds and the United States in hatred and in love By Boyko Vassilev Photo by Pressphoto BTA Photo by Pressphoto

A Turkish military chopper, moving soldiers to the frontier, lands in a mountainous district of Yuksekova, in the Hakkari province, near the Turkish-Iraqi-Iranian bor- der, southeastern Turkey in the end of October.

If, while reading this, you can see tanks on television, then the United States and the European Union). Turkish army has advanced for the 25th time into North Iraq. If another movie is on screen - the Turkish Prime Minister Coupled with the stick, though, the Kurdish cause got a car- Erdogan and the U.S. President Bush shaking hands - then rot. After having been neglected and dubbed "mountain Turks" Turkey has listened to the advice of the United States - prob- for a hundred years, the Kurds in Turkey found an important ably for the 125th time. But do not be mistaken: in both cases ally: the moderate Islamists of the Justice and Development the problem remains, the problem Turkey has with its minori- (AK) Party. The Islamists opposed the nationalist secularists ties and its past. and the depressed minority saw in that

Turkey has been quite nervous this fall. First, the two internal a promise for more rights. elites - the old secularist and the new Islamist - engaged in their latest, but hardly last, tough election fight (as the Thus Anatolia, the residence of 14 to 18 million Turkish Kurds, AmCham Magazine reported). Second, the U.S. House became the booster rocket of the AK Party. Despite the grum- Committee on Foreign Affairs recognized the Armenian geno- ble of Istanbul's establishment, the mutual liking between cide, which infuriated Ankara. And third, the paramilitary units Kurds and Islamists created the victorious election machine of of the Kurdistan Workers Party (PKK) killed 40 Turkish sol- Prime Minister Recep Tayyip Erdogan that has already twice diers. Besides, they operated from de jure Iraqi but de facto won absolute majority in the Turkish parliament. autonomous Kurdish territory. "Our patience is running out," the new president, Abdullah Gul, warned. One can easily believe But what is the problem then, you may ask. The problem is that him. the Kurdish issue - which has been neglected by history - is the ghost of Asia Minor; if you chase it out of the door, it will Let us start with the PKK. Until recently Turkey thought it had get in through the window. There has almost never been a 20 done with it. In 1999, after a masterly though murky operation, Kurdish state; there are Kurds living in Turkey, Syria, Iran and the leader of the party and Number One enemy to Ankara, Iraq, not to mention the huge European diaspora. The typical Abdullah Ocalan, was captured. He was sentenced to death Kurdish career is that of the Crusaders' rival, the noble 12th- and the sentence has not been carried out yet. In prison, century sultan Saladin - destined to become famous under the leader Apo re-discovered Western values, started reading phi- flag of a foreign nation, dynasty and cause. The fight for a losophy books and declared Nietzsche "a prophet." state has not ceased for the past 100 years. It was destined to win its first victory in Iraq. In 2001 the United States started its war on terror, which pre-

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria sented a handy opportunity for the Turkish state to repeatedly After Operation Desert Storm in 1991, the Kurds and their two attack the PKK (declared a terrorist organization by both the political parties practically controlled part of the mountain analysis

regions of North Iraq. Their fighters, dubbed "peshmerga," they can cope with the problems of the minorities and the helped overthrow the enemy Saddam, the man who used a past. chemical weapon against them. Thus the Kurds (some 4-6 mil- lion) became some of the most faithful friends of the United Once you get into the eye of the storm, small steps will not States in Iraq and the region. The new Iraqi constitution gave help you run away. Premier Erdogan had to show the suspi- them an autonomous regional status: they interpreted it as full cious military that he is no lesser a Turk than them. He got autonomy and did not wave the Iraqi flag but the motley mad at the United States over the Armenian genocide resolu- Kurdish one. The territory is important: oil fields of Kirkuk are tion and concentrated a 100,000 man army at the border close by. One of their political leaders, Jalal Talabani, became against the PKK. president of Iraq and the other, Massoud Barzani, premier of the Kurdish region. Zugzwang

All that makes it easy to explain why the PKK managed to re- is the word chess-players use in similar situations. You must organize in the de facto Kurdish North Iraq. Its 3,000 young make exactly this move and no other. fighters were trained in the rugged mountains and decided to act. They sneaked into Turkey and started killing. Not that they This raises at least two strategic dilemmas. One is for Turkey, had not done it before, forcing the Turkish army 24 times to the other is for the United States. invade North Iraq for punitive operations. But now it is differ- ent. Challenging the Turkish army, an ally and friend of the The first question is how can Turkey make itself European Americans, are the Iraqi Kurds - without becoming disintegrated and losing its national pride? It is clear that a Bulgaria of 8 million will stomach Brussels' con- also U.S. ally and friend. ditions more easily than a Turkey of 75 million. But what hap- pens if Turkey does not want to stomach it? Somewhere in between are the guerillas (or terrorists) from the PKK, but they may be forgotten in all the turmoil. "Our pesh- The United States knows that the Iraqi Kurds love it, because merga fighters will resist any Turkish incursion," said Barzani, they think they have been promised a state (the same belief driving Ankara mad once again. Washington in turn harnessed explains the Americanophilia of the Albanians in Kosovo). its whole diplomatic imagination to stop a possible Turkish Washington, of course, avoids the question of what will hap- offensive. pen with this Americanophilia if Kurdistan and Kosovo do not become independent. And here is the second strategic dilem- This is where yet another link broke. The Democrat-dominated ma: If it duly backs the Kurds in Iraq, the United States will U.S. House of Representatives (as a matter of fact, one of its alarm the other Iraqis (Sunnites and Shiites) and anger an ally committees) decided that now is the time to talk of the geno- that was until recently faithful, Turkey. If it abandons the Kurds, cide against the Armenians in Turkey in 1915. Whether it did the United States will win their hatred. it just as a snub to Bush or because of influential donors from the Armenian diaspora, it does not matter: the Turkish- What a bad luck! American relations were strained to the extent that Ankara recalled its Washington ambassador "for consultation." Americans have very few friends in this region and even these display opposite interests. Allies against allies: you love the one The White House started explaining and apologizing, but all in I hate and I hate the one you love. Relations blocking other vain. It is difficult to explain to the sensitive Turks the pecu- relations: Allies in chains, I apologize to the famous rock band liarities of U.S. foreign policy: they will not understand, for the pun. because they do not want to. Such facts here usually entail fundamental conclusions: "America no longer loves us," some Of course, there is a way out: a delicate, slow and difficult Turks say; "America is angry with us that we did not back it balance that will not lead to a zero-sum game and will create AmCham Bulgaria Magazine November 2007 100 percent in Iraq," others add. "America wants to make a a win-win situation. Now that I think of it, there is no elegant Kurdish state - first in Iraq and then on our territories," yet oth- way to translate the last two phrases in Bulgarian. Or at least ers fear. And then they recapitulate: "Is it not time for us to there is no immediate translation that gives idea of what they look for other allies - Iran, Syria, and why not Russia? Why not are about. I do not speak Turkish, and I speak Kurdish even give America a piece of our mind? Why not abandon the less, but I am certain that there are no such phrases there strategic partnership with Israel?" either. A win-win situation: do people in Anatolia know what it means? page The leaders of the AK Party - premier Erdogan, President Gul 21 and foreign minister Babacan - belong to none of the four Turks have their own lovely proverbs. groups. While they tried to make friends with the Kurds, they also tried - slowly and quietly, step by step - to take up with "You can take a horse to water but you cannot make it drink; Armenia and the Armenians. They showed that they were not and even if you can, you should not," says one of them. It is enthusiastic about the anti-Armenian hysteria in Turkey by useless - both for the PKK to kill any more and for the Turkish leaving it to their opponents, the secularists - judges, the mil- army to chase it in the mountains of Iraq. itary, historians. The very word "genocide" was even spoken by a Turkish mouth - something unthinkable before. The moder- What is needed is a little common sense, some time and a cool ate Islamists wanted to impress Europe and convince it that head. I am sure that this can be translated into Turkish. ■ analysis Energy Sector Faces New Threats over EU Emission Allowances EC cuts Bulgaria's greenhouse emission new emissions caps but also by regulatory pitfalls. Excess allowances by 37.4% in 2007-2012 price regulations on the market of electricity supplies to households, coupled with insufficient liberalisation of imports The electricity sector has overcome the main supply risks in and exports, create unfavourable conditions for power produc- the first half of 2007 stemming from lost production capacities ers and large electricity users. The energy regulator has tried and regulatory failures on the electricity market but is facing to achieve several incompatible targets as of July 1 for main- new challenges after the decision of the European taining low electricity prices for households in response to Commission in late October to cut the carbon dioxide (CO2) political pressure, low power generation prices amid rising input emission allowances for Bulgaria by 37.4%. The Commission costs, and market opening in compliance with EU regulations. reduced the (CO2) allowances in the Bulgarian national plans To maintain low domestic prices, the energy commission and for 2007 and 2008-2012 to 42.3mn tonnes per year from pre- the government have been forced to accommodate indirect viously envisaged 67.64mn tonnes. The country will thus lose forms of limiting export deals. Power producers however com- the opportunity to sell excess emission allowances in the plain that the current regulatory framework does not allow amount of 25.34mn tonnes annually which are valued at about them to use reserve production capacities in periods of high EUR 575mn at the current market price (EUR 3.5bn for the 6- external demand while sales on the local market bring nega- year period). Moreover, the country may not be able to meet tive net income flows. the new CO2 emission cap that would necessitate purchase of allowances from other countries and could block many The coal-fired power plant in Varna, which was acquired by ongoing or planned projects in the coal-fired power generation the Czech Electricity Company (CEZ) last year, claims that it sector or in other sectors relying on conventional energy. The could be forced to stop production in order to minimise loss- verified emissions for Bulgaria are reported at 40.6mn tonnes es and at the same time it would not able to take attractive in 2005 against the new cap of 42.3mn tonnes per year. orders from abroad due to various export limitations defined as However, the closure of two nuclear power units as of Jan 1 "national security" principles. CEZ Group has meanwhile won this year has raised significantly the electricity output in coal- a big deal for electricity supplies to Kosovo and plans to use fired generation facilities and related CO2 emissions. Taking free power generation capacities in Bulgaria to fulfil part of into account the sound industrial growth in 2006-2007, it may these obligations. The price contracted in Kosovo is more than turn out that the country is already above the new allocation two times higher than the corresponding one in Bulgaria but plan. CEZ may face new regulatory barriers despite the formal opening of the export market. At the same time, large elec- Energy supply overcomes supply risks but tricity users complain that the price ceilings in the household administrative barriers persist sector will force power producers to raise the average price of electricity supplies in the industry by about 30% to cover high- The gross value added in the energy sector, as reported in the er costs for primary energy inputs and to capitalise on elec- GDP breakdown by supply components, dropped by real 10.6% tricity supply gaps in the region. y/y in Q1 after a much steeper fall of 27.5% y/y in Q4 last year, but rebounded to a growth rate of 4.1% y/y in Q2. The The ratio of price adjustments for large industrial users will figures are preliminary and cover supplies of electricity, heat, apparently depend on international fluctuations in future that natural gas, and water. The weak performance at the end of will restore the previous model of cross-subsidies in the elec- last year and the first months of this year also reflects weath- tricity sector, as big consumers will pay higher prices than er-driven demand effects, which are quite strong in the field of households in contrast to cost fundamentals and price struc- heating supplies where no export options exist. The monthly tures in other EU members. In these circumstances, big elec- 22 statistics for energy production and sale volumes show further tricity users are urging the energy commission to maintain var- recovery in the second half of the year but the country's power ious forms of export barriers until demand is fully guaranteed balance has been seriously threatened again not only by the by domestic producers.

This article is based on extracts from ISI Emerging Markets IntelliNews publications: Bulgaria This Week and Bulgaria Country Report. For more detailed information please contact ISI Emerging Markets office in Sofia at +359 2 8160404 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria or [email protected] analysis

increase supply risks. On the other hand, the energy produc- tion and sales reports for 2007 indicate that the sector has the potential to raise capacity utilisation rates.

The electricity sector could separately benefit from commis- sioning of small power generators that are not monitored on a regular basis by the system power operator but may have played an important role in the country's energy balance in view of the large number of investments allocated to building small hydropower plants and other small-scale projects. The parliament and the government have passed new regulations in the first half the year in support to private investors in clean energy that could offset part of the supply risks in the tradi- tional energy sector. Investment commitments in the field of hydro, wind and solar energy have risen significantly in 2007 and look like the most promising alternative for offsetting sup- Power supply outlook ply gaps until the project for building a nuclear plant in Belene is completed. In the meanwhile, environment minister The risks of supply gaps will increase next year when some Dzhevdet Chakarov vows to appeal the decision of EC and of the biggest coal-fired power plants will have to pay sanc- believes that local authorities will win the dispute even it is tions set by the line EU regulations or stop operations. brought to court. According to the rehabilitation programme in the sector, the three power plants in the coal basin of Maritsa East have to But the ministry is not in the best position to argue with EU meet EU environment standards by the end of the year but authorities, as the country is facing sanctions on several other only few units are modernised so far. The private investors environmental failures linked to the programme for preservation working on state orders or buy-own-transfer contracts with the of biodiversity and possible violation of emission targets in state power system operator pledge to speed up installation of steel mill Kremikovtsi and several large coal-fired power plants. filters but at least some of the units will have to pay sanctions The ministry of environment is separately attacked by a num- in the beginning of the year when energy demand will be at ber of investors seeing vested interests in the licensing proce- seasonal hikes. In addition, strike warning of coal miners dures for mining and exploration activities. ■ AmCham Bulgaria Magazine November 2007

page 23 procurement Some $50 Million Will Be Spent in Bulgaria for Contracting in 2008 By Irina Bacheva

From Left: US Experts Bruno Wengrowski, DAU and Mark Lumer, contracting executive for the US Army Space and Missile Defense Command (From Left) and Bulgaria's Defense Ministry officials - Brig. Gen. Boyko Rabadjiiski, General Staff of Bulgarian Army (third from right), Venislav Tzanov, Director Procurement and Management Directorate at the Ministry of Defense share business cards. Bulgarian companies won U.S. military procurement contracts in Pepsi-Cola to U.S. military bases in Romania, U.S. experts recent years and proved they can deliver, said Mark Lumer, con- announced during the seminar. At the moment, negotiations are tracting executive for the U.S. Army Space and Missile Defense held with a Bulgarian company to deliver mineral water to the Command. He participated in a contracting training seminar in U.S. soldiers in the Middle East, said Sean Scott, U.S. Army Plovdiv on Oct. 9-11, organized by the Defense Acquisition attache to Bulgaria. University (DAU), the American Chamber of Commerce in 24 Bulgaria and the U.S. Embassy. The seminar was designed to Lumer explained that every year the U.S. government is buying provide detailed information on contracting procedures to firms products and services for more than $400 billion, approximately interested in US-Bulgaria joint training facilities. $250 billion going to the U.S. Army. For the fiscal year 2006, the U.S. government bought products and services for $425 billion. More than 100 Bulgarian companies throughout the country reg- There are 800 U.S. laws on military procurement, but the proce- istered to learn more about U.S. contracting procedures and the dures are clear and every company can go through them, said opportunities to participate in the tenders for the U.S. bases in seminar participants. The training session was focused on cur- Bulgaria. Defense Ministry officials also attended the event. rent and future business opportunities and included discussion of

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria U.S. contracting procedures for tenders, evaluations and award- A Bulgarian company, Agrima, has won a subcontract to supply ing of contracts. procurement

Successful Projects Joint Task Force-East "Lion Strike" Holds Ribbon-Cutting Ceremony at Retirement Home By Master Sgt. Kimberly Williams, Photos by Pfc. Crystal Abbott NOVO SELO, Bulgaria - Joint Task Force-East "Lion Strike" held a ribbon- cutting ceremony Sept. 26 to celebrate the completion of a humanitarian pro- ject at the Public Retirement Home in Sliven, Bulgaria.

"This retirement home was selected as the beneficiary of both our nations' desires to improve the accommodations of those who have served and sacri- ficed and are deserving of the best we can provide in their retirement years," said Lt. Col. Bruce Sones, commanding officer, JTF-E "Lion Strike", who spoke at the ceremony.

Eleven U.S. Navy personnel from the Naval Mobile Construction Battalion 40, Lt. Col. Bruce Sones, commanding officer, JTF-E "Lion Strike", gives his remarks during a ribbon-cutting commonly referred to as SeaBees, over- ceremony Sept. 26 at the Public Retirement Home in Sliven, Bulgaria. SeaBees conducted a humanitar- saw the project to replace metal-framed, ian project at the retirement home to replace broken, single-paned windows with insulated, double-paned single-paned windows in the lobbies on windows. all three floors with insulated, double- such as patching and painting the sur- Slavova. Before leading five of her fel- paned windows, which will prevent the rounding interior walls. low residents in a popular Bulgarian loss of heat. song about never forgetting your home- "The reward here was not just the new land, Milka Bankova also expressed her Because the project required the windows to keep the heat in during the gratitude to the SeaBees, stating that removal of the surrounding walls and winter, said Iliana Slavova, director for the time they spent together was spe- placement of custom-fitted windows, the the retirement home, "but also the cial. SeaBees contracted the installation of friendships developed with the SeaBees the windows to a local construction firm, standing here." "In your faces, we see our sons, and in said Chief Petty Officer William Nesbit, our faces, you probably see your par- assistant officer in charge of the NMCB "I know that words are not enough to ents," she said. "It fills our hearts with 40-Detail Romania. Once the windows express my gratitude, but on behalf of joy, happiness and hope that we have were installed, the SeaBees performed myself, my colleagues and the residents not been forgotten - that there are still AmCham Bulgaria Magazine November 2007 an inspection and did some finish work, here, I would like to thank you," said people who think of us." ■

"We already have awarded about two dozen prime contracts to To participate in a U.S. Army tender, the companies have to Bulgarian companies over the last two years, so Bulgarian obtain the so-called DUNS number (Data Universal Numbering companies are way beyond just being subcontractors," Lumer System), then NATO Cage Code (Commercial Activity and said. He praised the quality offered by the Bulgarian compa- Government Entity), and, finally, CCR (Central Contractor nies. Registration). The procedures are free of charge. For companies in Bulgaria, three types of contracts offered at the tenders are page "Bulgarian companies should have advantages related to lower most suitable: micro contracts for up to $3,000, middle-ranged 25 transportation costs for procurements in Europe, and they may contracts of up to $1,000,000 and large contracts, of $1 million very well have a labor rate advantage over some other countries." or more.

Meanwhile, fifteen companies and organizations from Plovdiv Seminar tutors presented a very detailed picture of the U.S. con- region have started procedures for participation in U.S. Army ten- tracting system, which is very structured and predictable, but the ders. The companies are from the food industry, hotel, cosmet- candidates should be very careful of the deadlines and tender ics, and transport business. Some of them are: Bella, Agri-M, conditions. According to Bruno Wengrowski, DAU, the process is Dimitar Madjarov, Roza Impex, Leipzig Hotel, Sugar factory mechanical, not political, and the federal acquisition system aims Kristal, City Transport Plovdiv, etc. at satisfying the customer in terms of cost, quality, and timeliness procurement

of the delivered product or service. the plan is for approximately $50 million to be spent in Bulgaria for contracting in fiscal year 2008, perhaps even more. Concerning business opportunities in U.S.-Bulgarian training facilities, the tutors mentioned as most needed the hotel ser- He said that over the last four months the following types of con- vices, water and food supply, engineering and construction ser- tracts have been utilized in either Romania or Bulgaria or both: vices, transportation, mobile telecommunications, office consum- Janitorial, Chemical Toilets Refuse Removal, Bulk Potable Water ables, fuel, electricity supply, portable toilets and showers, laun- Delivery and Waste Water Removal, Transportation Motor Pool and dry and dry cleaning, medical services, custom services. In addi- Material Handling Equipment (TMP & MHE), Grounds and Roads tion, the U.S. military will enjoy the recreation and leisure time in Maintenance, Wash Rack Service Support Laundry Services. the surroundings of the facilities, which would lead to extra investments in the local economy. Major Cundy also said that as part of the recent exercise con- ducted at Novo Selo, two humanitarian assistance projects were Major William Cundy, team leader, 409th Contracting Support completed: a senior citizens home in Sliven and kindergarten in Brigade, U.S. Army Contracting Command Europe, indicated that Mokren. ■ Bulgarian Companies Have an Edge in Servicing U.S. Bases in Europe An interview with Mark Lumer, con- tracting officer, U.S. Space & Missile Defense Command - Can you mention some countries that are on top of the U.S. list of buying products?

- Most of the U.S. government trading partners are from Europe, Canada, Australia, South Korea, where we can buy products and services.

- What kind of services does the U.S. government buy?

- We buy everything: medical supplies, police whistles, ammuni- tion, furniture, uniforms, not as the general perception is that we buy mainly airplanes and missiles.

- Is there anything specific for the upcoming tenders for comparing to 18 months ago. We hope that Bulgarian companies establishment of U.S.-Bulgarian bases? will compete and hopefully win contracts for 500 000 million USD. They have a track record for positive performance. I would - The tenders will be open up to everybody, to every company. like to point out that most of the companies do not read the Over the last two years there have been at least two dozen con- entire tender that is the most common mistake in tenders. tracts awarded to Bulgarian companies for the joint military train- ings in Novo Selo and other regions. The critical thing for the - Comparing to the previous years, like 2004 or 2005, are Bulgarian companies is not to think you are limited to do work there more companies competing for the tenders? Is the U.S. for the U.S. Government only in Bulgaria. You can do works in government spending more money to buy products and ser- Germany, in Italy, Iraq, Afghanistan, and to the United States. vices?

- How Bulgarian companies managed to compete for other - The U.S. government contracting projects have almost doubled tenders? for the last 6-7 years. So in 2000 we were looking for $200 bil- lion and now it would be more than $400 billion. We have more - Bulgarian companies, like most European companies, have an missions worldwide and we are hiring more and more contrac- 26 advantage to work in Europe, because they are here and it tors to perform work, obviously the war in Iraq is one such oppor- means that the transportation costs would be substantially lower tunity for the various companies. We are contracting hundreds of than for the Japanese or American companies. firms only in Iraq.

- How do you appreciate the potential of Bulgarian compa- - This is an ongoing trend, right? nies to serve the U.S. bases here? - It has to go on. I guess it would double in six or seven years. - Based upon the fact that we have awarded those dozen con- We have to hire contractors, businesses. In Iraq we have more

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria tracts, and in every case Bulgarian companies have performed contractors than U.S. soldiers. We have 180,000 contractors, very well, now we believe that they will get larger dollar contracts, compared to 160,000 US troops. ■ procurement

Successful Projects Lion Strike Ends Story by Master Sgt. Kimberly Williams, Photos by Pfc. Crystal Abbott NOVO SELO, Bulgaria. As the two-week "Lion Strike" exer- cise came to a close, U.S. and Bulgarian military personnel joined together for two symbolic ceremonies Sept. 27 and 28.

First, Joint Task Force-East celebrated the ribbon-cutting ceremony for a humanitarian project at a kindergarten in Mokren, Bulgaria. Eleven U.S. Navy personnel from Naval Mobile Construction Battalion 40, otherwise known as SeaBees, finished an extensive renovation of the school dur- ing the exercise.

The children from the school, along with parents, teachers, school director, local officials and U.S. and Bulgarian mili- tary personnel, crowded the small courtyard during the cer- emony.

"We say in the United States that the children are our future," said Lt. Col. Bruce Sones, commanding officer for JTF-E "Lion Strike". "We hope through the efforts of those involved in this project that the improved environment creat- ed for teaching the children will contribute to the children's development as they grow and become leaders in your soci- ety."

The school director, Margarita Nicolova, thanked the SeaBees and then presented them with a picture painted by the children, a CD of Bulgarian folk music, a photo of the children and a glass vial filled with Bulgarian soil. Of the soil, she said, "Wherever you go, you know you'll have a piece of Bulgaria with you." Lt. Col. Bruce Sones, commanding officer for the JTF-E "Lion Strike" Exercise, The school children then sang several songs for the audi- holds Asen Ivanov, 5, so he can cut the ribbon during a ceremony Sept. 27 to ence and the ribbon was cut. But, there was another sur- celebrate the completion of work at the kindergarten in Mokren, Bulgaria. prise for the children, a HMMWV full of gifts. All of the During the two-week exercise, SeaBees conducted an extensive renovation pro- Soldiers, sailors and airmen participating in the exercise had ject at the school. (Pfc. Crystal Abbott) contributed money to buy much-needed school supplies and States Military, and to show that while representing a small educational toys for the school. army, the Bulgarian officers, NCOs and soldiers are honor- AmCham Bulgaria Magazine November 2007 able partners and excellent professionals," said Kalinov, who "We will maintain what you have done, and promise to con- spoke first during the ceremony. He was followed by Sones, tinue with improvements," said Emil Enchev, mayor of who echoed Kalinov's feelings. Mokren. "Hopefully we will continue working together in the future." The next day, all JTF-E "Lion Strike" participants, "This closing ceremony does not mark the end of a training both U.S. and Bulgarian, came together again, this time to opportunity or a farewell to relationships fostered," said commemorate the end of the exercise during the closing Sones. "In our minds, it marks the hopeful commencement page ceremony. of future training opportunities to be conducted between our 27 nations." During the ceremony Sones and Col. Biser Kalinov, chief of Training, Bulgarian Land Forces, presented certificates of "We can truly say the professionalism and generosity of the achievement to 14 U.S. soldiers and 16 Bulgarian soldiers Bulgarian Land Forces is unrivaled," he said. "We know the for their efforts during the exercise. strong relationship between the United States and Bulgaria, as demonstrated during this exercise, will continue to grow, "During this training, we had the opportunity to gain military and we look forward to training and serving with you in the experience from the leading force in NATO - the United years to come." ■ procurement

U.S. agency looks for Bulgarian suppliers An interview with ed, because the question is about food Monika Schoeller, super- delivery and products that need to be visory contract officer, delivered in short terms. Right now I am Defense Logistics looking desperately for suppliers of fresh Agency foods and vegetables from Bulgaria. - Have you succeeded in finding those EUCOM - CENTCOM contacts? Troop Support - Not enough of that what I would like. Specialty European Products The market is ready for dairy products, ● Post - Pre-Mix Sodas, C02, and soft drinks. It is very important for the Fountains including Maintenance Bulgarian companies to understand the ● Non-Carbonated Mineral Water, language of the tenders, the English Canned Sodas wording, so they have to read the tenders ● Dairy Products, Eggs, Bakery on the Internet very carefully. Contact Items, Ice Cream, Juices, details of companies have to enter the - What is the Defense Logistics system, because otherwise the business- ● Non-Alcolic Wine, Beer, Agency? es can not compete. If they do not have Champagne, Potable Ice NATO Cage Code, they can not partici- ● Coffee - Juice Products with - I am for the first time in Bulgaria. I am a pate. Ten years ago I just wrote a fax and Dispensers contracting officer and I am buying prod- specified what kind of deliveries I wanted, ● Produce ucts. Except for food and water, our and that was all. I have contracts all over agency is responsible also for finding sup- Europe, with small firms, like bakeries, Off-Shore Acquisition - pliers for anything from medical products, etc., but when you physically go there, it Backup PVN-PVS uniforms, equipment to coffee machines. is always different. Step by step I explain Supporting OEF/OIF/KFOR/SFOR/ My office is responsible for the European them what they have to do, and in a fort- Forces/Military Exercises with vari- region. I have been in this business for 40 night everything is fine and the contract is ety of fresh products years, so I usually go to make personal ready. Navy Vessel Support throughout contacts with the companies - to see and Europe/SWA Ports test the products, to really say they are - Concerning Bulgarian companies and good, that the company is qualified. The tenders here, do you think there would Market Ready Unique Defense Supply Center Philadelphia - be enough time to be in touch with Requirements European Region (DSCPE) Market Ready Bulgarian companies? ● Vitamin A and D added to fresh Business Unit is committed to providing milk products, not authorized best value logistical solutions to the cus- - I can make a contract in 14 days. If the within the EU tomer, ensuring that the Military Services, company is on the Internet, and it has all Defense Commissary Agency, DoD and the necessary registrations, there would ● American size milk cartons, not other civilian agencies maintain readiness be no problem. It is just formal and in my available in Europe and recognize DLA as their "provider of opinion, it is not that difficult to do. I have ● Preparation of all 302 Customs choice." We provide expert technical contracts up to $40 million as well. But Forms, KFOR and SFOR Custom assistance and product knowledge to our this would be a long-term contract, two Forms valued customers throughout EUCOM and optional years, and you have plenty of ● Cyclamate and Saccharin not CENTCOM to ensure that they receive time. In Bulgaria it is not likely to have a authorized for products delivered high quality products at competitive prices $40-million contract for the bases here, to to meet their mission and organizational because it is just about food and water ● Troop Support goals. delivery. We buy fresh fruits and vegeta- ● U.S. Military Veterinarian bles, we buy bread - it is possible to reach Approval for all products offered - How do you appreciate the capabili- $100,000 per month, but that is it. 28 ● Eggs fresh must be delivered in ties of Bulgarian companies to win con- refrigerated trucks tracts for servicing U.S. - Bulgarian joint -Can you predict at what prices would training facilities? be the contracts? Contacts: Contracting Officer: - We find that the quality Bulgarian com- - It depends on the numbers of the mili- Monika Schoeller panies offer is very good. I started to con- tary - how many would come. But the Telephone: 0049 6134 60 4558 tact directly the companies here and I number of U.S. soldiers is been reduced Fax: 0049 6134 60 4667 would say that several contacts would in Germany and the Netherlands, on the

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria develop in partnerships. If I am dealing account of the new bases in the Eastern E-Mail: [email protected] with a broker in Germany, it is complicat- Europe. ■

amcham events AmCham Launches Meet-the-new-members Event Series

promo evening of the AmCham Some 50 other guests at the party the services it offers. Vyara Titorenkova, Bulgaria new series of events, attended the cocktail as an opportunity marketing manager of Mercurius Sofia, Acalled "Meet the New Members," for both networking and relaxing. The said a few words about the various took place on Oct. 30 at Flannagans, floor was given to each of the new office products the company offers. Radisson SAS Grand Hotel. Seven new member companies. Laurent Bernard, executive director of members of the Chamber were given Renault Nissan Bulgaria, expressed his floor to present their activities in front of Managing Director Diana Pazaitova pre- enthusiasm about the new car models the AmCham community. These were sented Candole Partners as a company that will be sold on the Bulgarian mar- 30 the companies Candole Partners defining and managing political and reg- ket. EOOD, Economedia AD, General ulatory risk across Central and South Security Ltd., Hotel Yastrebets Wellness East Europe. Bisser Boev, general man- To please and amuse the guests, the & SPA, Mercurius - Sofia, and Renault ager of Economedia, elaborated on the new member companies offered special Nissan Bulgaria SRL., and Trans new editions and initiatives of one of the raffle prizes, such as subscriptions to Company Ltd. leading business media groups in Economedia publications and its recent Bulgaria. Petya Tsacheva, marketing DVD collections; one week test drive of Borislav Boyanov, AmCham president, manager of Hotel Yastrebets Wellness Renault Scenic Conquest; weekend for

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria and Chris Thompson, AmCham board and SPA, invited the guests to visit the two at Hotel Yastrebets; and a pricey member, welcomed the newcomers. hotel during the weekend, and to enjoy Parker pen. ■ amcham events

Chris Thompson, AmCham Board Member introduces Diana Pazaitova, Petya Tsacheva, Marketing Manager of Hotel Yastrebets delivers a weekend stay Managing Director of Candole Partners. award of the hotel to Natalia Hristoforova, General Manager of Regus Bulgaria Ltd.

At the gates - meeting Bisser Boev, General Manager of Economedia, and Katrin Laurent Bernard, Executive Director of Renault Nissan Bulgaria (on Left) is Ivanova, Marketing Manager, Economedia. delighted to deliver the test drive of Renault Scenic Conquest. AmCham Bulgaria Magazine November 2007 Subscription packages for Economedia editions were given to the most lucky Ms. Vyara Titorenkova, Marketing Manager of Mercurius Sofia. guests from the audience.

page 31

Getting a sophisticated "Parker" pen from Mercurius Sofia. Wine and beer added to the good moods at the party. amcham events Adding Bulgarian Taste to Brussels' Cooking

Bulgaria is a member of the EU by choice, and except for adopting the EU Bridget Czarnota has worked for the standards and regulations, it should European Commission since 1986. She actively influence EU institutions from was in the then DG3, then DG15, now this year on. known as DG Market, dealing with intel- lectual and industrial property rights. In That was the main point that Bridget 1994 she was responsible for the draft- Czarnota made advising Bulgarian com- ing of the White Paper on preparing the panies in her capacity of a person from countries of Central and Eastern Europe the Brussels kitchen. Czarnota is a for- to integrate into the internal EU market mer director of the Technical Assistance - a kind of simplified guide to the entire Information Exchange Office (TAIEX) of Acquis Communautaire. In 1995 she was the European Commission and former given the job of setting up an entirely head of the Bulgaria Unit of the new structure offering technical Enlargement Directorate General. knowhow on all the acquis to the 13 would-be members of the EU countries Czarnota said that Bulgarians have to of which 12 have now acceded (Turkey know what is being cooked in the is still pending). This new assistance kitchen of Brussels. "Do not wait to see structure was called TAIEX - technical the dish in front of you, but go in the assistance information exchange office. kitchen, see what the chef is putting in the dish, and tell him - we Bulgarians do In 2004, following the accession of the 10 new member states, Czarnota was not want the dish this way, we want to given the responsibility to head the negotiations with Bulgaria, a post which she add our flavors." has held until Dec. 31, 2006, year when the country joined the EU. As of Jan. 1, 2007, she has been an advisor within the Secretariat General, in charge of The power is in the hands of Bulgarians, overseeing the continued progress of both Bulgaria and Romania by means of furthermore through the Bulgarian rep- what is known as the Cooperation and Verification Mechanism. resentatives in the EU Parliament, and the businesses have to know them very feeling strongly the competition on the explained. well, and to search for the first hand EU market, but they definitely will expe- information. rience it in 2-3 years, she added. "For example, to build up an effective Czarnota advised Bulgarian companies network for selling yoghurt, you should Czarnota was a moderator of a work- to search constantly for information find at least one consultant in the shop entitled "How to Make Friends and from the EU institutions and to be famil- respective country to advice how to pro- Win EU Contracts," organized Oct. 22 by iar with Bulgarian representatives in the ceed on the market," said Czarnota. three business organizations: Bulgarian EU Parliament. Chamber of Commerce and Industry, On her part Maria Kapon, a Bulgarian Confederation of Industrials and "There is no such thing as free lunch, observer in the EU Parliament, Employers and AmCham Bulgaria. and there is no such thing as free infor- informed that there is an ongoing Among the issues at focus were how the mation. You have a choice - either get debate within the EU whether the wine Bulgarian businesses will protect their information by yourself, or try to find the should contain sugar, or not. This is an interests in Europe and how they will cheapest and most effective way to get important debate that Bulgarian wine compete successfully within the information," she said. producers are interested in and they European market. should know the developments about it, 32 There is no single web address where Kapon said. "There are no guarantees that Bulgarian companies can go and find all of the companies will win the money under the necessary information to participate in a James Wilson, general secretary of ЕU- EU structural funds if they are not capa- tender, or to win a contract, Czarnota Ukraine Business Council, Brussels and ble to defend their business projects," said during the meeting. For businesses EU Croatia Business Council, explained Czarnota pointed out. Approximately is very important to concentrate on that Bulgaria needs an association of one year is needed to get the partial building a sound business base to be businesses with a common understand- financing of the projects after applying able to absorb EU structural funds but ing to lobby before Brussels and to con-

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria for the EU structural funding, she said. not to see this money for a solution of sult the enterprises here. The model So far Bulgarian businesses are not everyone's problems, Czarnota further works very well for Ukraine and Croatia From Left: Maria Kapon, a Bulgarian observer in the EU Parliament, Ms Bridget Czarnota, former head of the Bulgaria Unit of the Enlargement Directorate General, Tsvetan Simeonov, Vice President and CEO of BTPP, Olga Borissova, PhD, Director Centre for European Programmes and Elieff Center, and Irina Yordanova, Director Projects and Public Communications, CEIBG. businesses and it is "a copy-paste one," and International Affairs Committee in which needs several local companies to European Economic and Social Council, take a lead, said Wilson. talked about problems the Slovak busi- ness faced during the first three years The EU-Ukraine Business Council is an of EU membership. Slovak small and independent CEO-level forum for medium-sized companies had to find European and Ukrainian business lead- ways to survive in a competitive ers that is set up as a non-profit orga- European market. nization in order to promote trade and investment between the EU and Ukraine, "There are no preferences once you to assist companies to develop business have become a member of the EU, opportunities, and overcome regulatory moreover that you are not receiving the obstacles both for Ukrainian businesses pre-accession money and the rules for in the EU and EU businesses in Ukraine. the structural funding are completely dif- According to the expert, the model helps ferent," Zoltvany said. He presented an very much in providing legal consultan- institutional view of how to influence the cy, which spares the efforts of compa- decision making process in Brussels. nies to look for consultants and ways of Based on the Slovak experience, he lobbying before the EU institutions. advised Bulgarian companies, which are mostly SME-s, to unite and form bigger Patrick Zoltvany of the Slovak National structures in order to survive European Employers Union, a member of the EU competition. ■ B2B Resources: International Development Consulting The Assortis database (www.assortis.com) was presented to the workshop par- ticipants. Launched in 2001, Assortis has been providing a range of dedicated B2B resources servicing the needs of both private and public sector organiza- tions active within the international development aid sector.

The Assortis Daily Tender Alert service is personalized daily e-mail alert that informs clients of every new business opportunity for tenders, shortlists and awarded contracts the day they are published from a selection of 25 interna- tional and bilateral donor funding agencies targeted to the clients sectors and regions of primary business activity.

The Experts Database is Europe's most comprehensive and up to date database of development aid consultants with 5000 in total.

The Job Posting Board is a dedicated resource used by organizations looking to source new profiles for projects they are currently recruiting for. Banking on Food Marina Brakalova, FORA Foundation Chris Rebstock, Global FoodBanking Network

The idea of a different bank - FOOD products and resources that the industry BANK - was introduced to business orga- is making available to them so they can nizations and companies from the food take care of people who are in need. On industry during Food bank Information the other, they are a business partner to days in Bulgaria the week of Oct. 16. the food industry.

Is the business interested in seeing food How food banks can part- banks functioning in Bulgaria was the ner with the industry? focus of the discussion held at the American Chamber of Commerce in Any company makes mistakes in its pro- Bulgaria. The concept and benefits from duction process. Sometimes the mistake food banking were presented from U.S. leads to the product they are producing "food bankers" who have more than 20 not being consumable. Most of the time years of experience. these mistakes do not really affect the nutritional quality of the food so much as The first food bank was created in the they affect the economic viability of the United States by a retired businessman product. This might be a labeling error. in 1967. Food banks operate in more Companies may decide to change than 20 countries in Europe. branding and withdraw large quantities of product from the market. Products that What is a Food Bank (FB)? are consumable, but fail to be marketed or can not be sold before their expiration FB is a charitable organization by nature. date is the life blood of the food banks. Its goal ultimately is to give resources to Food banks provide business solution to people who are in need, hungry, mal- the industry to take that product saving nourished, and cannot afford to buy the industry the cost of disposal the food. products. It takes this product and turns it to a useful benefit to somebody who Functionally FB is part of the food indus- is hungry and needs it. try. They function as any food distributor, with one major exception that they do Another part of the business solution is not profit and they are not buying the related to the charitable activities of the food that they are giving away. Food companies-companies typically have banks have a dual relationship with the dozens of charities knocking on their food industry. On one hand, they are door every year asking for charitable charitable beneficiary - they are taking donation of the products. Companies are news

not in the business of giving their food industry facilities with the same sanitary away and do not have the staff or the and pest control. budget to spend time identifying who is legitimate and should receive donations. Food banking in Bulgaria? The food bank becomes an extension of companies' philanthropic purposes, American and Bulgarian Red Cross because it works with the organizations worked to introduce and start food serving people directly in their communi- banking efforts in Dobritch, Stara ty. Zagora, Shumen and Pazardjik where more than 200,000 kg of donated food Food banks are a cost-effective model was provided to 30,000 people for three for social assistance. Food banks do years. These food banks are in a initial provide assistance of large scale. U.S. phase compared with scales and food banks provide food worth at least capacities in the United States and $9 for every donated dollar. Food is Europe, but have achieved great suc- also collected through community food cess in mobilizing support form people drives organized in stores, schools, and creating trust. companies, etc. Food banks are man- aged by professional staff, but at least The "Information days" initiative was 70 percent of the time is provided by organized by FORA Community volunteers. Development Foundation in partnership with the Bulgarian Red Cross and the Warehousing, inventory and food safety Community Food bank in Pazardjik and standards: Food banks standards in the with the support of USDA. FORA United States were developed in concept Foundation is established with support of with the industry, such as trade associa- the American Red Cross and works to tions and the Food Marketing Institute, provide assistance for the development as well as with the USDA and FDA. Food of food banking in Bulgaria. For more banks facilities look like any big food information visit: www.fora.bg ■ Chris Rebstock, Global Foodbanking Network AmCham Bulgaria Magazine November 2007

page 35 us news

U.S. Department of Commerce Environmental Trade Mission Visits Bulgaria The U.S. Commercial Service, which serves as the trade promotion unit of the White Plains, NY 10604 International Trade Administration of the U.S. Department of Commerce, organized a Telephone (UK): 44-1256-303810 E-Mail: [email protected] trade mission in Bulgaria for American companies working in the environmental sec- Website: www.itt.com tor. The firms were primarily from the sectors of drinking water, wastewater treatment, and recycling. The mission visited Turkey, Romania and Bulgaria on Oct. 1-5, 2007. MIOX on-site generators for water disin- The U.S. businesses envoys met with representatives of the Ministry of Regional fection provide a safer working environ- Development and Public Works, Ministry of Agriculture and Food Supply, and Ministry ment by eliminating hazardous materials. MIOX, headquarted in New Mexico, offers of Environment and Waters. They were briefed on the water sector in Bulgaria - water both on-site hypochlorite and mixed-oxi- projects in rural areas, water supply and sewerage companies, construction of drink- dant generators. MIOX's technology uti- ing water treatment plants, and packaging waste management in Bulgaria. The U.S. lizes salt, water, and electricity to generate guests had a chance to convene with some 100 Bulgarian organizations and indi- a disinfectant solution, which is collected viduals in matchmaking meetings. in a day tank and injected into the water at a dosage suitable for treatment objec- Bio-Microbics, headquartered in Kansas, advertising, targeted couponing and print tives. manufactures proven, affordable and reli- advertising capabilities. able wastewater and storm water tech- Contacts: nologies that can help make quick, sus- Contacts: Carlos Perea, CEO tainable, and affordable infrastructure Christian Crepet, Vice President of Ioana Engstrom, Director of International improvements. The company has a wide Europe Operations Sales range of products for wastewater and Una Petroske, Vice President of Radi Simeonova, International Project storm water applications in residential, Technology Coordinator municipal and commercial uses. 99 Great Hill Rd 5601 Balloon Fiesta Parkway, NE Naugatuck, CT 06770 Albuquerque, NM Contacts: Telephone: 203-720-4059 Tel: 505-938-1014 Robert Rebori, President E-Mail: [email protected]; E-Mail: [email protected]; [email protected] 8450 Cole Parkway [email protected] Website: www.miox.com Shawnee, KS 66227 Website: www.envipco.com Telephone: 913-422-0707 Severn Trent Services, based in E-Mail: [email protected] Froehling & Robertson is a multi-discipli- Pennsylvania, is a leading supplier of Website: www.biomicrobics.com nary engineering firm with core compe- water and wastewater treatment solutions. tencies in geotechnical, environmental, The company's broad range of products Coler & Colantonio, Inc. is a consulting construction, materials testing, and con- and services is concentrated around disin- firm specializing in providing innovative, struction monitoring. The firm is over 125 fection, instrumentation and filtration tech- technology-based services in the areas of years old, employs over 450, as is head- nologies, contract operating services and water/wastewater, energy, and land devel- quartered in Virginia. Froehling & state-of-the-art residential metering prod- opment. Their clients include governments, Robertson has worked with many of the ucts and services. companies, institutions and utilities. The largest U.S. and international companies. company has developed projects in In 2005, Froehling & Robertson estab- Contacts: Poland, Canada, Peru and Kenya. In lished its international subsidiary company, Catherine Estoup, European Business Poland, the firm has recently completed F & R Worldwide, in Romania. Development Manager an assessment and application of waste- 3000 Advance Lane water treatment technologies in a water- Contacts: Colmar, PA 18915 shed that provides drinking water for the Jeff Hudson, Director of International Telephone (UK): 44-7714-346634 city of Krakow, Poland. Operations E-Mail: 3015 Dumbarton Rd. [email protected] Contacts: Richmond, VA 23228 Website: www.severntrentservices.com Mark Devine, Group Manager Telephone: 804-263-2778 David Kiely, Partner - Jennings E-Mail: [email protected] Zoeller, founded in 1939 and located in O'Donovan (Irish subsidiary) Website: www.fandr.com Kentucky, manufacturers a wide variety of 101 Accord Park Drive non-clogging pumps for the drinking water Norwell, MA 02061 ITT Corporation, Inc. supplies advanced and wastewater pump market. Zoeller also Telephone: 781-982-5400 technology products and services in key offers on-site technology that enables E-Mail: [email protected]; markets including: fluid and water man- water reuse. Zoeller pumps range from [email protected] agement including water treatment; 0.5 to over 100 horse power with models 36 Website: www.col-col.com defense communication, opto-electronics, available for handling potable water, information technology and services; elec- excess water and a large variety of efflu- Environmental Products Corporation tronics; and other specialty products. ents. (Envipco), a 28-year old company head- Headquartered in White Plains, N.Y., the quartered in the State of Connecticut, pro- company generated ~$8 billion in 2006 Contacts: vides innovative Reverse Vending sales. Alan Nachby, Machines (RVMs) for beverage container Director of International Sales recycling. Envipco's machines identify, Contacts: 3649 Cane Run Rd accept, count, sort and compact used Mike Hughes, Director for Water and Louisville, KT 40211 beverage containers in exchange for cash Wastewater Telephone: 502-778-2731 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria vouchers, coupons or loyalty card credits. ITT Corporation E-Mail: [email protected] Additional options include targeted video 4 West Red Oak Lane Website: www.zoeller.com

member news

Kabile Attracts hi-tech Archaeologists By Shawn Ross & Adela Sobotkova

Observing excavations of burial mounds near Yambol. Shawn Ross at the archaeological site of Kabile. While most foreign scholars, like devel- a Research Associate at the American In 2008 the researchers plan to com- opers and real estate agents, see the Research Center in Sofia. mission a geomorphological survey and Black Sea as the most alluring part of conduct an archaeological surface sur- Bulgaria, a team of researchers is find- During the fieldwork a new remote vey with a team of Bulgarian and foreign ing great potential in the often over- sensing methodology was tested. students. While the geomorphological looked region of Yambol. Quickbird satellite image (acquired survey will form a basis for geological through a UNSW grant) was enhanced and palaeo-environmental reconstruc- A new archaeological project has been and used for the identification of tion, the survey will produce a detailed launched to explore the site and envi- archaeological sites in a 100 square account of visible archaeological rons of Kabile, near Yambol. This kilometer area around Kabile. Suspect remains. The goal of this research is to Hellenistic, Thracian, and Roman city features in the image - traces of poten- record evidence of the ancient environ- not only boasts a dramatic history, but is tial archaeological sites - were then vis- ment and past human activity around archaeologically important due to its ited. Some 70 percent of the satellite Kabile before such evidence is excellent state of preservation. While imagery has been investigated, and destroyed by modern development (con- similar ancient cities in the Thracian resulting data recorded in a GIS and struction of the Trakia Highway consti- plain have either been submerged by database. The satellite image serves as tutes the most immediate threat), and to reservoirs (Seuthopolis) or built over by a highly accurate and detailed map, and illuminate the social, economic, environ- modern construction (Philippopolis/ will also inform future archaeological mental and cultural setting of this Plovdiv), Kabile has survived in a mini- work in the area. ancient metropolis. ■ mally-developed rural setting.

The project members include Dr. Shawn Ross (a lecturer in history, University of New South Wales, Sydney, Australia) and Adela Sobotkova (a doctoral stu- dent, University of Michigan, Ann Arbor, Mich.), in collaboration with members of the Department of Archaeology at Sofia 38 University "St. Kliment Ohridski." They were joined for one week by Dr. Samsung Lim (senior lecturer in Surveying and Spatial Analysis, UNSW), a GPS and GIS specialist. The project is realized thanks to the logistic support of the American Research Center in Sofia and with the help of the Yambol

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria Museum of History. During the 2007 The research team and scholars from Sofia University "St. Kliment Ohridski" and the American Research season, Dr. Shawn Ross was appointed Center in Sofia in front of the University Library member news

SE Europeans Accumulate Wealth, Choose to Invest The GDP growth in the South Eastern Europe is well above the increase in incomes and good economic prospects. The personal EU average. It is mostly driven by lively consumption and invest- consumption grows extraordinary in the SEE countries. Regarding ment activity. "The strong consumption is driven by households' the ownership of the consumer goods - around 20 percent of wish to reach the same living standards of their richer Western the SE Europeans have Internet access at home, just under 40 European neighbors," said UniCredit Group CEE Chief percent own a car, around 70 percent do have a mobile phone Economist Debora Revoltella at the Euromoney Conference in in the SEE region. Households are increasingly investing in real Dubrovnik. South Eastern European households - in Bulgaria, estate, so there is a strong demand for housing financed by mort- Romania, Croatia, Bosnia and Herzegovina, and Serbia - are the gages. This will continue the high potential for the mortgage mar- engine of growth, especially for the new EU countries Bulgaria ket in the region. The Economists of the CEE Research and Romania it is forecast. These two countries are still profit- Department of the BA-CA and UniCredit Group forecast a 24-per- ing from the positive EU accession this year. Strong domestic cent growth per year in 2007-2009 in this area. demand and favorable external environment are behind a dynamic performance in both Serbia and Bosnia and "Households in the SEE region are adapting their consumption Herzegovina. In both countries however sustainability of growth habits to new and improved standards of living. At the same time, in the medium term is conditional on advancement of structural they are increasingly investing in their homes. Consumption is reforms. In Bosnia and Herzegovina political forces so far con- marked by fast income growth and improved access to the cred- tinue to fail to find the necessary agreement, while in Serbia it market, which in turn is also supported by a wealth effect aris- forthcoming local and presidential elections are likely to delay ing from fast growth of house prices," Revoltella said. further actions. Wide external unbalances in both countries pose an additional threat. As a result of mass housing privatization for housing during tran- sition, home ownership rates are comparably high, especially in In Bulgaria and more recently in Croatia, the emergence of new Bulgaria, Romania, Croatia and Serbia. People have discovered savings flows is adding to the accumulation of wealth (financial the best way to invest their money. In the South Eastern and real estate). All over the SE European region, the households European countries still persist some underevaluation of prices of are rapidly improving their living standards, on the back of fast houses compared to their theoretical level, except for Croatia. ■ AmCham Bulgaria Magazine November 2007

page 39 member news

Garnev, Karakitis Join Ernst&Young in Bulgaria

Ernst&Young in Bulgaria announced that two new partners are joining the company. Nikolay Garnev is the new partner with the Assurance & Advisory Business Services, and Alexandros Karakitis leads the Tax Advisory and Compliance Practice of Ernst & Young in Bulgaria.

Garnev has 10 years of experience in independent auditing mainly in the field of companies within the finance ser- vices sector (banks, insurance and leasing companies and other non- banking institutions). Since August 2007, Garnev has been based in the Bulgarian office. He will continue to be in charge of audit engagements across other Eastern European countries and Nikolay Garnev Alexandros Karakitis largely for the Ernst & Young projects Ernst & Young (one of the seven He specializes in International Tax and in Romania, where he has been over Global Areas of Ernst & Young, which especially transfer pricing, supply chain the last year. Garnev is a certified pub- comprises France, Spain, South East structuring and cross-border M&A (he lic accountant and member of the Europe, Italy, Portugal, Belgium, also leads the Transfer Pricing and Tax Association of Chartered Certified Luxembourg and the Francophone Effective Supply Chain Management Accountants UK (ACCA) and the Africa). He moved to Bulgaria from the Practice of Greece). His clients portfo- Bulgarian Institute of Certified Public Athens Practice of Ernst & Young last lio consists of some of the most promi- Accountants (IDES). November. His mid-term goal is to nent companies of the Pharmaceutical, achieve market leadership through tax Real Estate, Energy and Retail & Alexandros Karakitis leads the Tax service quality excellence and opera- Consumer Products Industries. Advisory and Compliance Practice of tional effectiveness. Karakitis is an attorney-at-law and Ernst & Young in Bulgaria, being holds a doctorate in international tax responsible of the work of 30 tax pro- Karakitis has extensive experience in law from the University of Tubingen, fessionals and accountants with legal all fields of corporate and international Germany. He has a postgraduate or economic background. Since July tax law, advising major multinational degree in European law from the 2007, he has been a partner of the clients in their operations, expansion European Institute of the University of Continental Western Europe Area of plans and intercompany transactions. Saarland, Germany. ■

40 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria member news

Kempinski Hotel Grand Arena Bansko Awarded as Leading SPA Resort

Kempinski Hotel Grand Arena Bansko beauty and health treatments already becomes the leading spa resort in existing at the Kempinski Hotel Grand Bulgaria for 2007 at the World Travel Arena, the authentic Softouch Awards. The World Travel Awards were Ayurvedic Center will offer not only established in 1993 to acknowledge, body and face treatments but a com- reward and celebrate the enormous pletely different "way of life." The achievements in all sectors of the glob- Kempinski Hotel Grand Arena in Bansko al travel industry. Candidates for nomi- detail was designed to give complete offer a variety of restaurants, bars and nation are based upon the previous relaxation. Unique in its size and variety lounges allows the guests the possibili- year's voting. Voting is cast by travel of services, the Zalez Spa & Wellness ty to choose among diverse cuisines, agents in over 190 countries around the Center in the "Kempinski Hotel Grand including local and international spe- world. Hundred and thousands of votes Arena" is situated on 1,200 square cialties. Guests can enjoy the a-la-carte each year are registered online at the meters. restaurant Come Prima with official World Travel awards website. Mediterranean flavors prepared in a The guests enjoy an indoor and two out- show kitchen right in front of their eyes. Situated in one of the most symbolic door swimming pools, children's pool The Gallery restaurant which is acces- Bulgarian cities, the Alpine style hotel heated throughout the year, and several sible right from the ski slopes; it reveals blends gracefully into the surrounding Jacuzzi. Large windows overlook the a marvelous view to the mountain. Bella area. The ensemble consists of five mountains and open a stunning view, Vista Lounge is the perfect place for an buildings located at the foot of Bansko which inspires admiration of the natural afternoon drink, a relaxing retreat or a ski slopes, offering direct access to the beauty. Guests find completely satisfac- cocktail party on the extensive Bella modern gondola station. On the foot of tion and revitalization in the different Vista Terrace. Seven bars and restau- the beautiful Pirin Mountain The up- types of saunas, steam baths and rants at the hotel are first choice for scale Zalez Spa & Wellness Center rep- unique snow room. guests with a taste for elegant service resents an exclusive space for anybody in the amazing landscape of Pirin who revels in luxury and harmony. Every Besides a comprehensive range of Mountain. ■ Motorola Plants Trees in Mladost Motorola employees have a tradition to dedicate one day in October - Global Day of Service - to activities benefiting the society. These services are performed by Motorola employees in different areas, such as taking care of underprivileged children, repair and maintenance of build- ings, planting trees. AmCham Bulgaria Magazine November 2007

Motorola Global Day of Service on Oct. 10, 2007, was aimed at improving the environ- ment in the city where we all live and work. The first stage of Motorola's project "Mladost Garden and Children Playground" this year was planting trees on the terri- tory of Mladost Municipality, in the area page between blocks 446 and 447 in "Mladost 41 4," some 200 meters away from Business Park Sofia.

In the next couple of months the Motorola team will finalize the building of the chil- dren's playground and invite representa- tives of the local community and busi- nesses to the official opening. ■ new members

The alliance Renault Nissan created Renault and to realize effective marketing strategies for the Nissan Bulgaria with the mission to participate 3 brands. Renault Nissan Bulgaria controls the actively on the fast developing Bulgarian market. entire dealer's network which realizes the sales and Renault Nissan Bulgaria is 100 % property of the after sales services. In October 2007 the deal- Renault S.A.S. and is responsible for the import of er's representatives for Renault are 16, for Dacia - vehicles and spare parts for the brands Renault, 17 and Nissan is offered in the 6 biggest cities. The Nissan and Dacia as well as for their distribution to team is composed of 30 professionalists. the dealer's network which is created in conformity with the standards and requirements of the three Contact information: brands. Renault Nissan Bulgaria SRL Laurent Bernard - General Manager Renault Nissan Bulgaria has started its activity as 47 blvd. Nikola Vaptzarov the official representative and importer of Renault, Sofia 1407 Nissan and Dacia in September 2005. Tel. 02/9335777 Fax. 02/9335788 Its mission is to stimulate the commercial activity [email protected]

42 AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria music Punk at 30: A Retrospective on the Filth, the Fury and Fender Three decades on, punk culture is everywhere. Fender looks back at its young, loud and humble beginnings... When the first blinding flash of first- wave punk detonated in 1976-77, it wasn't immediately apparent that an enduring cultural phenomenon was under way. Clearly, something young, loud, brash and reactionary was going on-especially musically-but fads and movements came and went in the cos- mopolitan cultural centers of London and New York like the weather.

But if punk passed quickly as a musi- cal phenomenon, it succeeded wildly- and enduringly-as a powerful and worldwide cultural one. After all, in its spiritual home and cultural epicenter, London, punk was never conceived of as a strictly musical movement, but rather as a cultural one that also encompassed art, fashion and politics.

Most interestingly, although mid-'70s couple decades by then. By the mid- that were embraced by the old guard punk rock flamed out quickly in '70s, it was a big company and every- were also embraced by the punks, England and never really escaped the body was using its gear, from ama- who were poised in 1976-77 to make a underground in America, punk's viral teurs to professionals; from the pre- bigger, more lasting impact than they attitude and imagery infected the rest vailing blues-rock masses and reigning ever could've imagined. And the same of pop music and pop culture so suc- rock elite to those who made up uncannily versatile design elements of cessfully over the ensuing decades rock's little-known fringes and inhabit- utility and aesthetics that made that it's now simply part of the land- ed its underground. The rock giants of Fender instruments right at home scape. Whereas other popular musical the '70s were still going strong in 1976, onstage at Wembley in front of mil- movements (i.e., rockabilly, swing) when punk made its first big, sordid lions also made them right home in were eventually relegated to niche sta- splash in the U.K.-Led Zeppelin, Pink New York's cramped, grimy CBGB and AmCham Bulgaria Magazine November 2007 tus, punk imagery and attitude are Floyd, Yes, Queen, Genesis and many London's venerable 100 Club in front everywhere, having rained down like others were still at their height of pop- of, well, dozens. fallout to near-omnipresent status. ularity, embarking on massive world Punk culture is on TV, in the movies, tours, all loaded with an impressive After all, Fender instruments were high- on clothing, online, on newsstands, in share of Fender gear. ly regarded by punk rock's parents and art, business and politics. spiritual progenitors, garage rock, glam Interestingly though, Fender instru- and psychedelia. The fact that Fender page For its part, Fender played a signifi- ments were also being put to equally instruments could take a beating and 43 cant role in the history of punk. good use by those who had something somehow stay in tune and look even Fender instruments turned out to be entirely different in mind; contingents cooler dovetailed nicely with punk's perfectly suited for its raucous sound, on both sides of the Atlantic who vig- more abusively theatrical element its powerfully arresting look and its orously-sometimes violently-rejected (nothing new, once again-rock stars iconoclastic DIY attitude and work rock's more lofty, indulgent excesses. had been smashing them and lighting ethic. The very same Stratocaster®, them on fire for years); a use that just Telecaster®, Jaguar® and Jazzmaster® didn't work with all the fancy high-end It was an interesting situation. Fender guitars-and especially Fender's stal- boutique guitars that had cropped up instruments had been around for a wart workhorse, the Precision Bass®- by the mid-'70s, not that punks could music

charmingly contrived guerilla market- angular melodies out of a Jaguar or a ing campaign, many of punk's gui- Jazzmaster. There was the Stranglers' tarists and bassists could play their Jean-Jacques Burnel, using a growling instruments just fine-certainly well Precision to bludgeon his way through enough to make good records. 1977's seminal Rattus Norvegicus and No More Heroes. There was Chris As original Pistols bassist/songwriter Stein, wielding a Stratocaster onstage Glen Matlock (see related story) with Blondie. There was Paul Simonon noted, while attending a summer 2007 of the Clash, about to smash his fashion show at onetime London punk Precision on the stage of New York's landmark the 100 Club, "They was Palladium on Sept. 21, 1979, a moment playing all these records in the back- captured by photographer Pennie ground, you know, and they sand- Smith as the cover of London Calling wiched 'I Wanna Be Me,' which is one and one of the greatest rock photos of our earliest recordings, with some ever taken. Glorious, every bit of it. Bowie track and something else and something else, and, you know, our "The original aesthetic of the '77 punk playing is just as good as on any of was so strong and identifiable that I the records. I just think when we came think it just keeps cycling back around out that people were trying to compare for generation after generation of us to Yes and Genesis, who were kids," said artist Shepard Fairey (of doing, like, 14/8 time or whatever that Obey Giant fame). "I think that's is, but we weren't doing that. We did- somewhat timeless, and it's a formula n't want to do that." that anybody who has that sort of do- it-yourself spirit can latch on to and Fender instruments were particularly use for themselves. So it's a very viral popular with punk bass players, who form of art-making, I think. I mean, it's wielded them like weapons. The ven- what got me going. I think one of the erable Fender Precision became things that holds people back, proba- afford them anyway. And what were almost the de facto punk rock bass bly as musicians-I don't know; I'm not you going to do-plaster your high- right from the start. a musician-but definitely, I know, as priced boutique guitar with stickers or visual artists, is that they feel they paint it lime green? Don't think so. "He liked it because it was heavy," won't be doing something that's good said Arturo Vega, Ramones enough. And the cool thing about punk In short, Fender instruments were per- lighting/graphics director and designer is that it has encouraged people to fect for punk because the more you of the band's famous "presidential participate whether they thought they abused them and the more you per- seal" logo, of the time when Dee Dee were awesome or not. And then, you sonalized them, the better they got, in Ramone was explaining to him why he know, just by participating, you often a way that just didn't work with other preferred a Precision. "He said, 'You become awesome." instruments. It was perfect-punk was, feel it when you play it; you feel it in after all, a DIY phenomenon, and your body. This is a very strong instru- And now just look at the world. Look Fender instruments were originally the ment and you feel it when you play at pop music. Look at pop culture. DIY products of Leo Fender-a guy who and you feel like you're doing some- Punk has infiltrated it all. From the didn't even play guitar or know anything thing.'" Dead Kennedys to Green Day; from about them when he first started mak- the Police to Black Flag; from the ing them. It was a yet another good fit. Across the Atlantic, in London, Matlock Cure to Rancid to Elvis Costello to the concurs. When he landed a post- Offspring to the Circle Jerks to Fall The '70s first-wave punks who played Pistols gig with U.S. punk godfather Out Boy. It's everywhere. Fender amounted to a who's who of Iggy Pop in 1979, Matlock said, "I went the genre (setting aside the many out and bought a Fender '61 Precision "Who would've thought 30 years ago arguments, valid or otherwise, about I saw in a store; played it; loved it, and that punk artists like the Ramones, the who and what really was and really I've never really picked up another Sex Pistols and the Clash would be 44 wasn't punk): the Sex Pistols, the guitar, you know-I've still got it, 30 inducted into the Rock and Roll Hall of Ramones, the Clash, the Damned, the years out. The thing with Fender is Fame?" said Justin Norvell, Fender's Stranglers, the Dictators, the that they just sound like bass should senior marketing manager for electric Buzzcocks, Patti Smith, the sound. When I'm recording, you invari- guitars. "The same music that was vili- Heartbreakers, the Talking Heads, ably just plug it in and you end up just fied and dismissed at the time is now Television, the Dead Boys, the Germs, using the D.I. sound. They got it right, celebrated and honored by the masses. Blondie, the Avengers, Generation X, you know." It highlights the fact that sometimes an the Saints, and many, many others. important cultural movement can hap-

AmCham Bulgaria Magazine November 2007 November Magazine AmCham Bulgaria There was Television's Tom Verlaine pen without anybody knowing it, until it's And contrary to first-wave punk's own onstage at CBGB, choking his jagged, too late to deny anymore." ■