700 People at the Amcham X-Mas Party 2009

issue 105 december 2009

Special Interview: Simeon Djankov: Bulgaria Is Ready to Enter ERMII Energy: Richard Morningstar Praises Bulgaria’s Energy Policy

Events: AmCham Collects 20,000 Leva in Charity for 2009 Prime Minister Receives AmCham Board Members Foreign Minister Meets Chamber Before U.S. Visit Tax Seminar Explains U.S-Bulgarian Treaty

700 People at the AmCham X-mas Party 2009

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]

AES is one of the world’s largest global power companies, with 2008 revenues of $16 billion and we own and manage more than $35 billion in total assets. With operations in 29 countries on ﬁ ve continents, AES generation, production and distribution facilities have the capacity to serve 100 million people worldwide. We take leadership in the business of providing power in a safe and responsible way. We seek to continually improve the environmental performance of our businesses. In Bulgaria, Stara Zagora region the company constructs a 670 MW “AES Galabovo”, 1.2 billion euro Project. editorial

Dear Reader,

2009 was the year of financial and economic crisis that shook not only the “world” but also the lives of practically every one of us. Bulgaria was no exception and certainly we all felt its consequenc- es.

Furthermore, during these difficult times we also had a change of Government in the country. The change of power is a challenging process in any country as the new Government has to assess what it inherits and decide on how to move forward. To its credit the new Bulgarian Government declared an ambitious agenda that rests on the principles of honesty, transparency and open dialog with all stakeholders. This has been one of many encouraging signs that lead us to believe that the worst is behind us.

AmCham Bulgaria has been an active and vocal partner to the new Government. We have had open discussions with the Prime Minister and Cabinet on the AmCham White Paper and Recommendations to the Bulgarian Government. And we are pleased to report that we share a common view on the majority of issues and a mutual understanding on how to address the critical challenges that our economy faces. The Chamber has already provided assistance on a number of measures and reforms that the administration has started to implement.

We are further thankful that alongside the improved communication that has prevailed between the Government and the business community, there is also a very pragmatic approach the Government has taken in solving many of the issues that have confronted member companies for a long time.

Over the past year AmCham was successful in further developing its networking capacities with “Meet the new members” gatherings, the traditional sports and fun events, and the CSR activities that our members have actively engaged in.

Our achievements would not have been possible without the unwaivering support and commitment of all of you, AmCham members, and in particular Ambassador Nancy McEldowney, DCM Alex Karagiannis and Chargè d’Affaires ad interim Susan Sutton and Scott Pozil, the U.S. Commercial Counselor. We sincerely appreciate all you have done.

In the holiday spirit I wish you a Merry Christmas and a very successful and healthy New Year! AmCham Bulgaria Magazine December 2009

Sincerely, Anthony C. Hassiotis

President page American Chamber of Commerce in Bulgaria 1 contents

issue 105 december 2009

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business opportunities. 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 international 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 Magazine Bulgaria December 2009 amcham bulgaria

Board of Directors of the American Chamber of Commerce in Bulgaria President Mr. Anthony Hassiotis Eurobank EFG Bulgaria Vice President Mr. Stefan Ivanov Citibank N.A. Vice President Ms. Tanya Kosseva-Boshova European Trade Center Contents Treasurer Mr. George Georgiev Motorola Bulgaria amcham events Members Mr. David Butts CMS Cameron McKenna Bulgaria Christmas Party Draws 700 ...... 4 Mr. Atanas Garov Colliers International Bulgaria Mr. Thomas Higgins Balkan Accession Fund thanksgiving Mr. Zachary Hampson Grenville Bulgaria Ms. Dana Leff Niedzielska PPD Bulgaria AmCham Collects 20,000 Leva Mr. Peter Lithgow AES Maritza East 1 in Charity for 2009 ...... 8 Mr. Bernard Moscheni Vivacom money Ex-Officio Member Mr. Scott Pozil US Senior Commercial Attache Executive Director Valentin Georgiev Simeon Dyankov: Bulgaria Is Ready to Enter ERMII ...... 12 AMCHAM Members as of December 01, 2009 LIst . . 3M (East) AG . AA KRES EOOD . Abbott Laboratories S.A. . Accor Services Bulgaria . ACO Building Elements Ltd. . ACSIOR Ltd. . Adecco Bulgaria By Milen Marchev ltd. . ADIS Ltd. . Advance International Transport (Balkan) EAD . AECOM Bulgaria Branch . AES Corporation . AFA OOD . AIG Bulgaria Insurance & Reinsurance Company EAD . AIMS Human Capital . AIMS International Bulgaria EOOD . Air France Trade Representative . Alexander Hughes Bulgaria OOD . ALEXANDROV energy GROUP CORPORATION . Alfred C.Toepfer International . ALICO Bulgaria . All Channels Communication . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . Alter Ego Company . America for Bulgaria Morningstar Praises Bulgaria’s Energy Policy . . .14 Foundation . American 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 . AON Bulgaria . APOLO Ltd. . Arco Capital Management LLC . Ashtrom International Ltd. . Association Morningstar: Opera and Gas ...... 16 Integra-BDS . Astra Zeneca UK Ltd. . AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . AVON Cosmetics Bulgaria . Axway Bulgaria EOOD . BAE Systems International Ltd. . Balkan Accession Fund . Balkan News Corporation Plc. . Balkan Star Automotive EOOD . Bayer Bulgaria EOOD . BC Serdon analysis . BCD Travel Bulgaria . Berlitz Schools of Languages . BG Radio . BICA International . BMG Ltd. . BMW Vertiebs GmbH - Branch Bulgaria . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. . Boyden Ltd. . Domestic Economy Set For Recovery Braykov's Legal Office . British American Tobacco Bulgaria . Brown Forman Beverages Worldwide Sofia Branch LLC . Buchanan Associates Europe EAD . Bulgaria Platinum Group EAD . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Development Bank . Bulgarian Institute for Legal After Rapid Adjustment ...... 18 Initiatives . Bulgarian Land Development EAD . Bulgarian Property Developments EOOD . Bulgarian VIP Travel Ltd. . Business Park Sofia EOOD . CallPoint New Europe AD . Candole Partners EOOD . Car Rental The Haiku President and Bulgaria Ltd. . Cefin Bulgaria EOOD (IVECO dealer) . Center for the Study of Democracy . Chelopech Mining EAD . Cheque Dejeuner Bulgaria Ltd. . Chris Thompson, Independent Consultant . Cisco Systems Bulgaria . Citibank N.A. - Sofia Branch . City University of Seattle . Civitas Global, A Ketchum Affiliate . Complexities of Europe ...... 20 Cleves EOOD . CMS Cameron McKenna EOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . COLLIERS International Bulgaria . Construction Management Group . ConsulTeam By Boyko Vassilev Recruitment and Selection Ltd. . Cook Communications . Corstjens Worlwide Movers Group . CPM Consultancy Sllc . Crystal Developments LLC . Curtis / Balkan Ltd. . D&IC (Dun and Bradstreet Representative) . Dalkia Bulgaria EAD . Delchev & Partners Law Firm . Deloitte Bulgaria OOD . DENIMAR Ltd. . denkstatt Bulgaria amcham meetings OOD . Dental Clinic Medical Dent Consult Ltd. . Devin AD . DHL Express Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . Dobrev, Kinkin Prime Minister Receives & Lyutskanov Law Firm . Domaine Boyar International AD . Dr. Emil Benatov & Partners . Dr. I.S. Greenberg Medical Center, Ellen Ruth Greenberg, Ph.D. . DuPont Bulgaria EOOD . Economedia AD . EcoPack Bulgaria AmCham Board Members ...... 24 AD . EKO Bulgaria . Ekotoi - Service Ltd. . Electron Progress EAD . Eli Lilly and Company . Elta Consult AD . Emerson Process Management AG . Emmis International . Emporiki Bank Bulgaria EAD . Enel Maritza East 3 AD . Enemona SA . Energo Service AD . Engineeringservice Sofia Ltd. . Entrea Capital Foreign Minister Meets Chamber . Equest EAD . Equity Share International OOD . ERATO HOLDING Plc . Ericsson Telecommunications Bulgaria EOOD . Ernst & Young Bulgaria . Etap Adress . Euro Energy Consulting OOD (2EC) . Eurobank Before U.S. Visit ...... 24 EFG Bulgaria (under the brandname of Postbank) . EurOmax Resources Ltd. . European Bank for Reconstruction and Development (EBRD) . European Trade Center OOD . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . Fortel Engineering Ltd. . Forton International JSCo . Foster Wheeler Energia Polska, amcham events Branch Office Bulgaria . Foundation for Local Government Reform . G4S Security Services Bulgaria JSC . General Electric International . GlaxoSmithKline . Global Benefits Group GBGI CEE LLC Representrative Office Government Officials Explain HR issues . . . . 26 . Grand Hotel Sofia . Grenville Bulgaria . HelmsBriscoe . Hewlett-Packard Bulgaria Ltd. . HILD Asset Bulgaria Jsc. . Hilton Sofia . Honeywell EOOD . Hotel Yastrebets Wellness & SPA . IBM Bulgaria . IBS Bulgaria Ltd. . Ideal Standard Bulgaria . In Time Ltd. . Industrial Holding Bulgaria . ING Bank N.V. Sofia Branch Change Your Life to Save the Planet . . . . . 28 . Interdean . International University College . Investbank Plc. . IP Consulting Ltd. . ISI Emerging Markets (Internet Securities, Inc.) . JobTiger Ltd. . Johnson & Johnson Doo. . Johnson Controls Electronics Bulgaria . Junior Achievement Bulgaria . Kaliakra AD . Kalin Cargo and Tours LLC . Kamenitza AD . Katilin Popov Tax Seminar Explains U.S-Bulgarian Treaty . . . 30 Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kolbis International Transfer Corporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK Property Bulgaria . Lexim Sofia Ltd. . Lindner Immobilien Management EOOD . Lirex BG Ltd. . M & M Air Cargo Service Bulgaria Ltd. . M3 Communications Group, 2009 December Bulgaria MagazineAmCham Cleveland Mayor Outlines Inc. A Hill & Knowlton Associate . Magnetic Head Technologies . Maria Vranovska, MD, MBA . Mars Incorporated Bulgaria . Marsh EOOD . MB Communications . MBL Ltd. . McDonald's Bulgaria Ltd. . Mellon Business Opportunities ...... 31 Bulgaria EAD . Merck Sharp & Dohme Bulgaria . Mercurius-Sofia . Metropolitan Hotel Sofia . Microsoft Bulgaria . Miltech Ltd. . Mobiltel EAD . Monbat Plc. . Moody International Ltd. . Moten Sport . Moto- Pfohe Ltd. . Motorola Bulgaria EAD . Movex Relocations . Mr. Dider Stoessel . Mr. Marco A. Bosman . Five New Members Presented ...... 32 Ms. Nadezhda Stoyanova . National DISTRIBUTORS . NATO Defense College Anciens' Association . NATO Information Center in Sofia/ The Atlantic Club of Bulgaria . Neochimiki Bulgaria S.A. . Neterra Communications . Neumann International AG . New Europe Corporate Advisory . New Europe Directories Bulgaria . Nexcom member news Bulgaria EAD . N-Vision Energy EOOD . On Bulgaria Ltd. . Oracle East Central Europe Limited - Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSG Records Management . Outsource Partners International . PANDA McDonald's, AstraZeneca Crowned - IP Ltd. . Penev & Partners Law Offices . Penkov, Markov & Partners . Pfizer Luxembourg SARL, Representation Office Bulgaria . Philip Morris Bulgaria EOOD . Pioneer Semena Bulgaria EOOD . Piraeus Best Employers in Bulgaria ...... 34 Bank Bulgaria AD . Plesio Computers Jsc . PMB EOOD . Polis Construction SA . PPD Bulgaria EOOD . Praktiker EOOD . Pratt & Whitney . Premier Tours Ltd. . PricewaterhouseCoopers . Procter & Gamble page Bulgaria . Project Management Ltd. Branch Bulgaria . PSG Payroll Services Ltd. . Radisson Blu Grand Hotel Sasha Bezuhanova Was Awarded with . Reader's Digest EOOD . Reed Personnel Services Bulgaria . Regus Bulgaria Ltd. . Renault Nissan Bulgaria 3 SRL . Rising Force Co., Ltd. . Rizova & Partners Law Firm . Rockwell/Intelpack . RPI Consulting Ltd. . the Order of the Star of the Italian Solidarity . . .35 S&T Bulgaria . Sanofi - Aventis Bulgaria EOOD . Savantelbul Bulgaria . Scandinavia Motors Ltd. . Schenker EOOD . Schering - Plough Central East - Branch Bulgaria . Schneider Electric Bulgaria . SEAF Management Bulgaria EOOD . Sheraton Sofia Hotel Balkan . Sherita M Ltd. . Siemens EOOD . Sienit . SigmaBleyzer Eurobank EFG Wins the Biggest Investment Group LLC - Representative Office . SKE Bulgaria EOOD . Sodexo Pass Bulgaria EOOD . Sofstroy AD . Soravia Bulgaria Ltd. . St. Sofia Golf Club & SPA . Stanton Chase International Bulgaria . Steelcase European Award for Eco-Management . . . . . 36 International . Stefan Dimitrov, Norman Realestate Co. Ltd. . Stroy-Consult EOOD . Sutherland Global Services Bulgaria EOOD . TechnoLogica EOOD . TeleLink EAD . The Coca-Cola Company Bulgaria . Tishman Management Company Ltd. . Tissue Bank Osteocenter Bulgaria EAD . TMF . Totema Engineering . TR new members ...... 36 Baxter AG . Trinity Corporate Services EOOD . UniCredit Bulbank . Unimasters Logistics Plc . Unique Estates . Unisys Bulgaria Branch . United Bulgarian Bank . United Consulting Ltd. . United Healthcare Bulgaria AECOM Group of Companies . United Medical Communications . Vaptsarov Holding AD . Vector Management Bulgaria EOOD . Videolux Holding / Technopolis . VIP Security Ltd. . VISA Europe . VIVACOM . VM Finance PPD Group . VSK Kentavar Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . Winslow Group AD . World Courier Bulgaria . World Transport Overseas Bulgaria Ltd. . WorleyParsons Europe Energy Services Ltd. . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Yavlena EOOD . Zlati Dinev Studio in partnership with Outerbridge/Morgan amcham events Christmas Party Draws 700 Every year AmCham’s Christmas party is gaining in admira- tives, AmCham board members, and many member companies tion among our members and guests, and this time was no were among the guests. different, with more than 700 people coming to Sheraton Sofia Hotel on Dec. 9. Picturesque bells, small gifts for luck The well-known Dirty Purchase band and Georgi Robev Choir from Domaine Boyar, and a spirited “Jingle Bells” from entertained the crowd. Adding to the Christmas moods, guests Georgi Robev Choir provided party surprises at the Royal were welcomed at the entrance with a small gift - a bell to be Hall gates. put on the Christmas tree. AmCham greatly appreciates the kind support of Vivacom, Johnnie Walker, Domaine Boyar and Starting with the welcoming words of the AmCham leadership, Coca-Cola. the chamber’s recognition within a large community of partners and friends could be seen that evening. Except for being a Following the spirited introductions, coworkers and friends season of gift-giving and celebration, December is a time enjoyed their time at the Sheraton, while waiters filled their associated with the abundance of social events where part- glasses with assorted beverages. The fantastic music provided ners and friends meet to wind up the year and eventually by Dirty Purchase drew the crowd to the dance floor, where initiate new projects. Ambassadors, U.S. embassy representa- the entertainment continued into midnight. n

4 AmCham Magazine Bulgaria December 2009 amcham events Christmas Party Draws 700 AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham

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thanksgiving AmCham Collects 20,000 BGN in Charity for 2009 During charity events in 2009 the AmCham Bulgaria collected 20 000 BGN to let a helping hand to graduat- ing orphans in favor of Projects: Transition Home Together in Gurmazovo, Sofia Integra, Samaritans Stara Zagora, as well as for monthly stipends for 12-grade orphan stu- dents. As in 2008, the AmCham Corporate Responsibility Committee suggested to continue supporting the orphans - children without parents or living without parents in home-like institutions.

The chamber is thankful to all gener- ous contributors, bidders and spon- sors who provided their help for the beneficiaries at the annual family Thanksgiving dinner on November 24th held at the Radisson Blu Grand Hotel. The fundraising for charity succeeded in gathering 16 000 BGN More than 130 designated guests of AmCham member companies participated in the charity evening within collected during the open and silent the American Thanksgiving tradition. auctions, as well as from sold raffle tickets and dinner registration fees. More than 130 designated guests par- 3, and Penkov, Markov&Partners who Additionally the AmCham Independence ticipated in the charity event. The cham- kindly supported the party. Live music Day Celebration in July collected ber extends its gratitude to America for performance was provided by well 4000 BGN for charity purposes. Bulgaria Foundation, ENEL Maritza East known jazz singer Vassil Petrov and

In the middle: Patrick Favre and Stefane Delahaye from the French-Bulgarian Cheers with the Beaujolais Nouveau 2009! H.E. Etienne de Poncins, the Chamber of Commerce with many successful bids and presents. Ambassador of France and Tanya Kosseva-Boshova, AmCham Vice President.

Peter Lithgow, AES Corporation, David Hampson, Grenville Bulgaria and Arthur Moore, Tishman International discussing joint strategy for successful Ambassador of South Africa in Bulgaria Sheila Camerer and Anthony Hassiotis, AmCham Magazine Bulgaria December 2009 bidding in charity auction. President of AmCham and CEO of Eurobank EFG Bulgaria. 'WTQRGCP6TCFG%GPVGT The new business district of Sofia!

QHVJGQHſEGUCNTGCF[NGCUGFQWV

02 976 9 976 www.etc-bg.com www.colliers.com thanksgiving

Angel Zaberski’s jazz band and the sur- Cosmetics, Balkan Star Automotive, Brown Blu Grand Hotel, Red Devil & Right prise present of the party was the per- Forman Beverages, Bulgarian Land Rental, Rising Force, Roy Campbell with formance of Kamelia Voche. Development, CenTransit.bg with Premier National Distributors, Tom Higgins with Luxury Mountain Resort & Molerite Balkan Accession Fund, Stefane Delahaye The AmCham members and guests gen- Bansko, Dana and Lukasz Niedzielski, with Euro RSCG, Patrick Favre with erously contributed or bided for various David Butts with CMS Cameron McKenna, Starbat, VIVACOM, Wolf Theiss. Several items of the open and silent auctions. DEVIN, Domaine Boyar, Emmis Bulgaria, companies and individuals kindly provided AmCham is thankful to: H.E. Sheila ENEL Maritza East, Grand Hotel Sofia, additional financial support, among them Camerer, Ambassador of South Africa to Grenville, Hotel Yastrebets Wellness & Bayer Bulgaria, CMS Cameron McKenna, Bulgaria, Accor Services , Albena Petkova SPA, Integra Association, painter Todor Eurobank EFG Bulgaria, Deloitte Bulgaria, with Deloitte, Allied Pickfords, AVON Popov, Paul Tobin with PWC, Radisson ENEL and PPD. n

In the middle: Lukasz Niedzielski, PPD Bulgaria, one of the main contributors to the auction, the happy winner of a box of wine from the special collection of the Ambassador of South Africa H.E. Sheila Camerer’s winery. In big competition for the Harley Davidson auction items.

Frank Bauer with America for Bulgaria Foundation (first right), David Enel Maritsa East-3 company representatives actively participated in the charity Hampson, Grenville Bulgaria and Kelly Adams-Smith (first left) among the auction at the evening. guests at the charity evening.

The Chairman of the Board of Balkan Star Automotive Manfred Multz and the ...however the guitar went to David Butts, Managing Partner of CMS Cameron CEO of 3M Roumen Mihailov in tough competitive bid for the Fender guitar... McKenna who was the biggest contributor in the charity auction.

Susan Sutton, U.S. Charge d’Affaires told the history of the Thanksgiving tradi- AmCham Magazine Bulgaria December 2009 tion and customs in the U.S. Jazz-singers Kamelia Voche and Vassil Petrov.

money Simeon Djankov: Bulgaria Is Ready to Enter ERMII The finance minister promises to refund VAT within a week to companies with excellent tax records By Milen Marchev

- Minister Dyankov, more than a few Maastricht criteria for 2010. This, fer a decline first, then investments dry international experts have said that undoubtedly, will prop us in our efforts up, and then the economic growth Bulgaria has been overcoming the to enter the ERMII and subsequently slows. These will also be the first indi- fallout from the global economic cri- the Eurozone. We are stable in fiscal cators to bounce back. Unemployment sis better than many other countries. terms, and next year, actually, we will actually starts growing fast six to nine For instance, Bulgaria boasts one of be among the few EU members without months after the beginning of the cri- the lowest inflation rates in the EU. a super-deficit. From that foundation, sis, which explains why we are feeling Will the government succeed in main- we will have to accomplish only a few its effects so strongly now. Even after taining these macroeconomic indica- more tasks in order to submit a formal we see signs of economic growth pre- tors? candidacy. One of them is preparing cipitated by the success of our anti- the so-called Convergence Program, crisis program, we should expect unem- - Not only that, but I fully expect that which has a deadline by the end of ployment figures to continue increasing. after the first successes of our anti- January 2010. I expect a few hard months in the crisis program, we will return to eco- spring, even if we maintain strict fiscal nomic growth in 2010. When this hap- We are making a few adjustments to discipline and achieve economic pens, the government will have an align it with Budget’2010 and the growth. Currently, unemployment stands easier time balancing its fiscal and expected improvement in the economic at 8.3 percent, and I expect it to grow financial policies, which will help keep growth forecast for 2009 from negative by the end of 2009, but to remain the macroeconomic frame intact. We 6.3% to negative 4.9 percent. By early under 9 percent. In 2010, though, I came through a brief period of January, we will be able to present this anticipate unemployment rates in the unchecked deficit spending in April- strategic document to the government, order of 11.5 percent, which will still be July, but returned to a fully stable fiscal business community and trade unions among the lowest in the EU and in policy and balanced budgets in through the Tripartite Council, so we contrast to many other countries in the October-December. In other words, our can negotiate its domestic approval. region. fiscal position is solid and from this After that we will submit the program to point on, our main goal is the return to the European Commission, where the This situation is ripe for social tensions sustained economic growth. process may take a while because of and it generates additional expenses the anticipated super-deficits in 23 out for the social services. We have includ- - Entering the Eurozone will undoubt- of the 27 member states. Most likely it ed in our 2010 budget such disburse- edly help to maintain economic sta- will not be until mid March when all ments intended to help the socially bility, and thus will be much appreci- parties will have their programs evalu- weak and unemployed. Therefore, of ated by the business community. ated. If Bulgaria receives positive feed- utmost importance in our plans is not What are Bulgaria’s positions with back, we will have all the necessary just maintaining fiscal stability, but also respect to the adoption of the Euro, documents ready to apply for a formal attracting foreign investments. I am cer- and will we be able to keep up with admission to ERMII. tain that the recent increase in our the stated intention of qualifying for Standard and Poor’s credit rating will ERMII by the spring of 2010? - Even though the perspectives you aid in this respect. The adoption of have just outlined seem to be quite Budget’2010 has already helped, as did 12 - The developments have been promis- promising, company layoffs continue, the reforms in the customs system and ing so far. By the end of 2009, Bulgaria unemployment grows and more peo- National Revenue Agency. will be qualified by all criteria for ple are relying on social assistance entrance into ERMII, Eurozone’s “wait- to stay afloat. How far do you think - Many of AmCham member compa- ing room.” The situation will remain can the levels of employment drop nies work with foreign-based coun- similar for 2010, too. By our current before Bulgaria’s economic situation terparts and therefore are concerned estimates, after the adoption of the starts improving? about the prompt refunding of VAT. budget Bulgaria is likely to become the What has the government done to AmCham Magazine Bulgaria December 2009 only EU country, which will fulfill the - In times of crisis, usually exports suf- cut the time for receiving these money

refunds?

- The amendments to tax laws adopted recently allowed us to slash in half the refund times. From Jan. 1 2010, the waiting period will be 45 days (from 90 before) in case of an audit, while in all other instances the time has been decreased from 30 to 15 days. This is a huge success for the government and parliament. We are currently working on another idea, which is to create and publish a so-called “golden list of tax- payers.” This roster will include companies with excellent records as far as their timely tax payments go, and companies whose audits have shown no irregularities. Our ambition is to refund such businesses within a week. Medium- and large-sized companies will benefit most – and those are the majority of your members – because such an arrangement will make their dealings with tax authorities a lot smoother.

- What opportunities do you see for co-operation between the government, specifically your ministry, on one side, and businesses, such as represented by AmCham, on the other? What can the business community do more for the improvement of the economic climate, except by paying taxes regularly?

- Strict payment of all due taxes is indeed a very important contribution to the well-being of Bulgaria. This guaran- tees improved infrastructure, education, health care, social services, which are all that more critical during the times of crisis. Our co-operation with the business community is a priority, because this government’s main foreign-policy AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham goal is entering the Eurozone. I travel a The Minister of finance Simeon Djankov will turn 40 next year. Before Boyko lot all over the EU and talk to the Borissov asked him to lead the Bulgarian state finances in July this year, Djankov respective finance ministers about our was a chief economist on finance and private sector affairs at the World Bank achievements and successes. To sup- from 1995. He worked on the countries mostly threatened by the crisis world- plement such government-level efforts, wide. He participated in various programs of the Bank on privatization, corporate though, we really need to have the lob- governance, regional reforms in North Africa, East Asia and other regions around bying support of Bulgaria’s businesses the world. Mr. Djankov was a principal author of the annual review of the World and non-profit organizations. This will make it abundantly clear to European page Bank - World Development Report 2002. He is an author of more than 70 spe- 13 cialized articles in the most prestigious economic journals in the world - Quarterly politicians, European Commission mem- Journal of Economics, American Economic Review, Journal of Finance, Journal bers and European Central Bank repre- of Financial Economics, Journal of Public Economics. He is creator of the sentatives that entering the Eurozone is annual Doing Business report, the top-selling /in more than 100 000 copies/ a priority not only for the Bulgarian gov- publication of the World Bank Group. He is ranked among the 100 Most Cited ernment, but also for the businesses Economists in the world. He has a master's degree and PhD in International and society as a whole. In this sense I Commercial and Financial Relations, University of Michigan and also established truly hope that AmCham will support us a think-tank at Harvard University. Djankov is married, with two children fully in making this a number-one priority in our foreign policy. n energy Morningstar Praises Bulgaria’s Energy Policy

AmCham BoD Members at the family photo with Ambassador Richard Morningstar (fourth left).

Richard Morningstar, special envoy of the U.S. secretary of The U.S. envoy also commented on the opportunities for state for Eurasian energy, said he was encouraged by the Bulgaria to participate in the gas pipeline projects. efforts of Bulgaria to take a leading position in the EU energy policy. In his address delivered during the AmCham business “Bulgarians have to talk with the Russians regarding South discussion at the Sheraton Sofia Hotel, the guest said that Stream. There is no way to avoid this, but at the same Washington is working closely with Brussels, EU member time when looking at the energy policy of Bulgaria, in my states and Bulgaria on many energy issues as well as on the opinion, you are doing the right thing,” added issues of alternative energy resources. Special Envoy Morningstar. 14 Morningstar assured that he would like to work with Bulgaria to enhance European energy security. In his words, U.S. companies will be interested to work with Bulgarian counterparts in nuclear field projects, energy infra- “Bulgaria is on the right track. We notice and appreciate your structure projects, and storage facilities. efforts. The country is proactive with respect to the completion of the Southern energy corridor, which includes the Nabucco “Bulgaria is looking for gas storage, nuclear options might be gas pipeline. It is important that you work and take a leadership also of interest to the United States, there will be a lot of position among other countries in the region in developing the energy projects to help people of Bulgaria, as well as U.S. AmCham Magazine Bulgaria December 2009 alternative sources and alternative routes,” Morningstar said. companies can be involved, as this will create opportunities,” energy

The media were eager to know more about the U.S. involvement in the energy issues in the Eurasian region. AmCham members and other companies participated in the meeting.

Assen Agov with “Democrats for Strong Bulgaria” asked whether the U.S. administration is ready to support the diversification of energy sources in Bulgaria.

AmCham BoD and designated guests at the head table listen to the speech of Ambassador Morningstar. AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham

Morningstar further said. Angel Semerdjiev, State Energy and Water Regulatory Commission, Chairman and Tasko Ermenkov, executive director of the Agency for Energy Efficiency. He also suggested there will be interest in the proposed privatization of the interconnectors. At the same time it is very important that Bulgaria maintains good investment climate, keeps up with the reforms and transparency, Morningstar added. page “The United States cannot tell Bulgaria what are the country’s 15 interests. Those decisions must be taken here, and those are the decisions of Bulgaria, nobody else.”

Answering a question of whether Iran will be a part of Nabucco project, he said at the time that it is not likely to happen: “We held negotiations with Iran, and if our differences, including in the nuclear field, will be resolved, under these circumstances Anthony Hassiotis, AmCham President (left) talking to Ambassador Richard Iran should participate in Nabucco.” n Morningstar and his assistant. energy Morningstar: Opera and Gas By Boyko Vassilev

He came to Sofia a week earlier than the Russian energy delegation. Richard Morningstar, special envoy of the U.S. secretary of state for Eurasian energy, was quite glib on Bulgarian soil. When I asked him whether he aims to forestall any messages the Russians wanted to make, he said that it was a mere coincidence. The diplomat learned about the Russian visit only after he had landed in Bulgaria.

That may be so. His visit is a good reason to remind our- selves, however, how complex are the options and the dilem- mas facing Bulgaria’s energy policy. These could be best exemplified by the two gas pipeline projects – South Stream launched by Russia and Nabucco, supported by the West. Bulgaria aims to participate in both.

It was considered until very recently that Russia has gas, and the West has plans; that Nabucco (named after the famous Verdi opera, which the five partners saw in 2002, after they had agreed to build a pipeline) will be nothing more than that – an opera; and that the major problem facing the Western project – where to find gas – will not be easy to solve at all. The statements made by Morningstar in Sofia, indicated that things have started to change.

Yes, Nabucco does have problems, the U.S. envoy admitted. But immediately after that he clarified where the gas could Richard Morningstar, Special Envoy of the United States Secretary of State for come from: Azerbaijan, Turkmenistan and Iraq (and obvi- Eurasian Energy meets Bulgarian President Georgi Parvanov during the envoy’s visit in Sofia. Morningstar also has a personal meeting with Prime minister ously not from Iran). A parallel could be made with the prob- Boyko Borissov. lems faced by South Stream: it is not clear who will pay, while Nabucco is backed up by a consortium; will the gas be Nobody doubts that these talks will be exceedingly complex. sufficient for everyone; what are the commitments behind the From Russia’s side, Bulgaria has a legacy of memorandums memorandums, which Russia has already signed? for the South Stream project (with all the question marks), Bourgas-Alexandropoulos (which is opposed by almost all „I will admit that I personally like Nabucco better,” Morningstar Bourgas citizens), and the expensive Belene Nuclear Power said adamantly. Plant project. The cabinet headed by Boyko Borissov will have to perform miracles in balancing the country’s energy ”Nabucco is an opera, but it will be a pipeline as well.” needs, alliance commitments to the West, pro-Russian public opinion and lack of money stemming from the economic Obviously, the West already has some moves left for the crisis. The United States played up not only the progress of energy-geopolitical check board in the region. Until recently, Nabucco as an argument for sticking with the West, but also the call to diversify energy sources was in a limbo, as its readiness to invest in nuclear power utilities in Bulgaria. Bulgaria’s choice was gas from Russia or nuclear fuel from Ambassador Morningstar refrained from specifying what he Russia. The problem was made clear during the gas crisis had in mind, but it seems that Washington is viewing a new last winter. Bulgaria turned out to be one of the most strong- block at the Kozloduy Nuclear Power Plant rather than a new 16 ly affected European states. At the same time, the energy complex in Belene. projects with U.S. participation on the Balkans were slightly off-schedule. The Bourgas-Alexandropoulos oil pipeline „Bulgaria must decide according to its own interests. Neither (where Russia is the main player) was in a somewhat better we nor Russia may tell you what to do.” shape than the AMBO project (Bourgas – Vllora), supported by the Americans. That is why the better perspectives for Ambassador Morningstar repeated this statement five times Nabucco provide an opportunity for Bulgaria to choose from when we talked – and it is, of course, true. Nevertheless, it more maps in the complex negotiations with Russian politi- does not make Bulgaria’s energy problem more simple or AmCham Magazine Bulgaria December 2009 cians and energy experts. easier to solve. n

analysis Domestic Economy Set For Recovery After Rapid Adjustment The global economic crisis has impact- 6.3% of GDP in September compared to forecasts slightly on the downside, in our ed the country causing a substantial 19.2% y/y in 2008. The fall in domestic view GDP decline will exceed 5% this contraction in domestic and external demand has caused a contraction of year. demand and bringing output growth to the current account deficit to 6.3% of a slowdown and ultimately to a reces- GDP in September from 25.4% last year. PRICES sion this year. Strong growth rates over This adjustment was mainly due to the the past few years, fuelled by robust decline in imports to 25% of GDP in domestic demand, large foreign invest- September relative to 45% last year. The ment flows in the real estate and finan- decline in economic activity has brought cial sectors, and fast credit expansion an increase in unemployment, a slow- have come to a dramatic slowdown down in the nominal wage growth and a since the beginning of the year. The deficit in the public accounts. adverse socks from financial instability abroad and more importantly from OUTPUT diminishing foreign demand has exposed the vulnerabilities stemming from domestic and external economic imbal- A downward correction in consumer ances. Foreign investments seeking prices began after inflation peaked at profitable projects in the new European 15.3% in June last year. Annual average Member State have fuelled nominal inflation posted about 12% y/y in 2008. wage growth and inflation. This fed In line with weakening demand, price back to further growth in private con- growth began to decelerate substantially sumption and demand for imports, until a decline of 0.1% y/y was posted worsening the current account balance. in October. The deflationary move in As a result of the fast expansion in After the sharp decline in GDP this year October was backed by the steepening consumption, the tax revenues were from sound growth rates over the past decline in food prices as compared to thriving and the government budget several year, output is expected to begin one year earlier, and the weaker increas- posted persistent surpluses. to recover in 2010 and 2011 albeit at es in services and catering prices. At much lower rates than the pre-crisis. As the same time, the non-food inflation Major adjustments to the new domestic domestic demand is still expected to accelerated in annual terms helped by and external environment have taken remain subdued the recovery has to be footwear and natural gas price hikes. place in the course of 2009. Due to the driven primarily by the export sector and The EU harmonised inflation index limited possibilities to manage money is conditional on improving indicators (HICP) accelerated slightly to 0.3% y/y supply in currency board conditions, the abroad. The latest flash estimates of the in October from 0.2% y/y in September, major burden of the adjustment is statistical institute indicated that GDP rising by 0.2% during the month. The bound fall on the product and labour decline has steepened to 5.8% y/y in government projects average HICP of markets. Credit conditions have become Q3. According to the latest official gov- 2.3% this year and end-of-period of increasingly tight after the eruption of ernment projection, GDP will decline by 1.8%. Next year harmonised inflation is the financial crisis, putting a consider- 6.3% this year and 2% next year. In the expected at 2.2% (both average and able strain on domestic industries. The autumn economic forecast of the EU eop). real estate and construction sectors Commission, GDP is projected to decline by real 5.9% this year and by 1.1% next 18 were hit particularly hard. The credit WAGES AND EMPLOYMENT stock growth subdued to just 15.9% y/y year. The IMF and EBRD also expect as of end-September relative to 33% y/y GDP to decline by about 6% or more The most painful adjustment will take at end-2008. Foreign investments fell to this year. Although we still deem these place in the labour market where unem-

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 Magazine Bulgaria December 2009 or [email protected] analysis

GDP breakdowns in constant prices (%, y/y) cits in the previous two months. Net FDI declined dramatically in the first nine 2002 2003 2004 2005 2006 2007 2008 Q1/09 Q2/09 Q3/09 months of the year, by 56% y/y to EUR Agriculture 4.7 -2.3 2.3 -9.4 -1.0 -29.7 24.6 -4.8 -6.3 3.0 1bn. The net FDI covered the CA deficit at 95.8% in Jan-Sep as compared to Industry 4.6 5.7 4.1 4.8 7.8 14.0 3.0 -12.4 -7.2 -10.0 91.3% in Jan-Aug and 81.6% a year ear- Services 5.9 4.8 5.7 8.2 7.1 7.5 5.9 2.5 1.4 -5.7 lier due to the sharp improvement in the GDP 4.5 5.0 6.6 6.2 6.3 6.2 6.0 -3.5 -4.9 -5.8 CA balance. Consumption 4.2 5.9 5.4 5.3 7.3 4.9 3.9 -5.4 -3.7 -10.6 PUBLIC FINANCES Investment* 8.5 13.9 13.5 23.3 14.7 21.7 20.4 -14.1 -16.3 -22.9 Exports 8.1 10.7 12.7 8.5 8.7 5.2 2.9 -17.4 -15.8 -13.2 Imports 5.1 16.4 14.6 13.1 14.0 9.9 4.9 -21.1 -24.3 -28.7 Source: Statistical Institute, preliminary data for 2007 and 2008 * Investment growth refers to fixed capital formation and does not include change in inventories competitiveness.

EXTERNAL BALANCE

The economic downturn has also pro- duced a sharp decline in government revenue. However, the comparatively better fiscal position of the government at the outset of the crisis with large fiscal surpluses and sound fiscal ployment is crawling up (by 1.6pps y/y reserve positions, will make possible to a period-average of 6.7% in Q3, the achievement of a balanced budget according to ILO/Eurostat methodolo- this year. Balanced budget or small gies; and by 1.9pps y/y to 7.8% in Q3, The most obvious and the most benefi- deficits are also targeted for 2010 and in terms of registrations with the labour cial correction took place in the current 2011, which are largely attainable due office). On the other hand, wage growth account deficit which shrank to just to the strong contractionary stance of began to decelerate to 11.4% y/y to a about 6.3% of GDP in Jan-Sep, com- the new government and the resolve to monthly average of BGN 582.7 (EUR pared to 25.4% of GDP in 2008. The fight tax evasion practices. In addition, 297.9) from 15.4% y/y in Q2 and 16.2% deficit is projected to continue to decline the government has scored success in y/y in Q1, the growth of real wages to about 8% in 2010 in line with faster restoring the flow of EU project financ- decelerated rather marginally to 10.3% export growth on the back of a pick-up ing including the pre-accession pro- y/y. In response to the economic down- in external demand. The current account grammes. EU fund utilisation would be turn, the growth rate of the public sector posted a surplus of EUR 24.3mn in instrumental especially during the crisis nominal wages continued slowing quick- September for a third month in a row period. ly to 8% y/y in Q3 from 16.9% y/y in Q2 after the deficit started to decline as of and 19.4% y/y in Q1. The branches that December last year. All components but Finance ministry data shows that the 2009 December Bulgaria MagazineAmCham suffered the most were the financial the net current transfers contributed general budget posted a deficit of BGN intermediation, the electricity production, positively to the improvement with the 552.3mn (EUR 282.4mn) in Jan-Sep, state services, the real estate business, major impact coming from the foreign which is by 2.1%, or nearly BGN 11.2mn, and the extraction industries. While the trade deficit contraction. The net current more as compared to the preliminary labour market seems more resilient so transfers are still lower on annual basis announced results. The deficit reached far this is due to state policies to sup- in the ytd readings but show consider- 0.87% of the projected full-year GDP, port employment in the crisis as well as able increase in September only. The expanding by 0.12pps during the month to general lag associated with downward financial account turned positive in as compared to surpluses of 0.3% of page wage rigidity. Firms also switched to September after accumulating deficits GDP in H1 and 7.5% of GDP in Jan-Sep 19 more flexible temporary employment in the previous two months but the sur- last year. Revenues contraction flattened terms, part-time arrangements and plus was much lower on annual basis. at 11.2% y/y in Jan-Sep. In CPI-deflated unpaid leaves among others. Unfavorable The inflows in September were gener- terms budget revenues were by 14.3% effects on employment are expected to ated by a reduction in the foreign assets lower ytd as compared to the same become stronger next year. Looser of the commercial banks and foreign period of last year. Expenditures growth labour market conditions and a down- deposits increase. The overall balance slowed further to 20.2% y/y in Jan-Sep ward wage adjustment are bound to of payments turned positive at EUR from 21.9% y/y in Jan-Aug and the peak reduce labour costs and raise domestic 99.4mn in September after posting defi- of 24.6% y/y in H1. n analysis The Haiku President and Complexities of Europe By Boyko Vassilev

A leader must be as well educated as Winston Churchill. Or Baroness Ashton of Upholland, in England. not that much, but the he must be a believer – like Reagan. Or not to be a firm believer, but he must be different from the Even the British media started asking: „Who’s that Catherine? others – like Obama. Or not so different, but he must stand Who’s that Herman?” The journalists have always failed to firmly on the ground as Helmut Kohl. As you can see, a understand the discrete charm of the European Union. Neither leader may be any kind of a person. This fall, however, we Churchill, nor Reagan, nor Kohl, not even the favorite, Tony learned what the President of the European Council may not Blair, would qualify as leaders of united Europe. From the 1957 be. He must not be popular, uncompromising, popular and Rome founding agreement to the Lisbon Treaty, which was favorite. The leader must not be liked by the media and must painfully enacted in late 2009, a real strong leader would stick not represent a great nation; besides, the leader must not be out like a Haiku poet in Sofia’s Sin City night club. strong or authoritative. And he must not be British. Let us look at the Beginning. Great leaders such as Conrad Belgium’s Prime Minister Herman Van Rompuy matched all Adenauer and Charles de Gaulle brought Germany and France 20 these requirements. He was quickly elected as the first ever together and encouraged the European idea. The European President of the European Council in an informal race against institutions, however, were created by Britain’s Tony Blair, Netherlands’ Jan Peter Balkenende and Luxemburg’s Jean-Claude Juncker. All we know about the win- a bureaucrat, Jean Monnet, ner is that he is a master of compromise and likes to write Haiku verses. We learned also that the post of the High together with a pastor-come-politician, Robert Schuman, the Representative/Vice President of European Commission may self-willed Belgian Paul-Henri Spaak and some other less- be handed to a British. The role of the EU foreign minister in than-famous people. Besides, de Gaulle swallowed the Rome AmCham Magazine Bulgaria December 2009 all but name was assumed by Catherine Ashton – that is, Treaty with some distaste. „He was against it, but then he analysis allowed himself to be convinced,” Simon Veil, the first woman been removed from power. Churchill’s Euro-skepticism during ever to chair the European Parliament, told me. the Second World War was consistent and unconditional. Churchill supported closer relations with the United States, and Monnet, the architect of the European Coal and Steel propped by his legacy Great Britain has emerged as one of Community and maybe the most genuine father of United the least willing members of United Europe. Margaret Thatcher Europe, never took any elected office. When I visited his estate transformed this unwillingness into politics, diplomacy – and in Houjarray, I was shown the forest where he walked for an pose. Blair may be grateful to Thatcher for creating the ideo- hour or two every day thinking and generating ideas. A typical logical foundation for his career as prime minister of the intellectual and bureaucrat, he was never a true leader in the United Kingdom, but – ironically – this very legacy ruined his chances to emerge as Europe’s top official.

The problem was not only in the fact that Blair is British, that he waged a war in Iraq and probably “sexed up” some security files. He is simply too strong a leader and the position of “President of the Council” is too small for him. Europe is made up of small steps,

mutual compromises, slight tactical retreats and unavoidable offensives, during which one simply pretends to be absent- minded. You should try to charm, wink friendly, convince or simply break, 27 times in all. The display of genuine Brussels style oratory arts does not fit the voluble Blair. It intends saying a lot by as few words as possible, so that everybody would understand only what they would like to be told.

A Haiku here would do the trick. Let us borrow one from great Kerouac: „Snow in my shoe/ Abandoned/ Sparrow's nest.” This verse could make a brilliant statement if Poland decides to remain alone in a European discussion or Ireland

fundamental sense of this word. Perhaps he even thought that Europe did not need an elected leader (president, chairman, and leader) but rather something that could be called “an enlightened plot of the elites.” AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham

Am I exaggerating? Then how should we interpret the following quote: „Europe's nations should be guided towards a super state without their people understanding what is happening. This can be accomplished by successive steps each disguised as having an economic purpose, but which will eventually and irreversibly lead to a [European] federation.”

This is how the Euro-skeptic British Conservative Adrian Hilton page retells the vision of Jean Monnet – and this quote is often 21 glued to the image of the bureaucrat-dreamer. It is said also that Monnet did say similar things (without, however, intending to mislead voters), or at least acted in this way without speak- ing too much.

The attitude of the said Winston Churchill is also quite interest- ing. In a speech delivered in Zurich in 1946 he spoke about the United European States; at that time, however, he had just analysis

votes again stop the European contract by a referendum. the “green” rather than the “red”) – and the world is becoming Obviously, Herman Van Rompuy has the potential to con- gentler and somehow more streamlined. tribute to the European idea by his substantial experience in poetry. For states like Bulgaria (the small and medium sized EU members) the Van Rompuy news is good. The symbolic top Let us be frank: the Belgian prime minister accomplished a European post was not given to large Great Britain or to much more difficult job before being elected as the first dwarfish Luxemburg. The first makes Europe more accept- President of the European Council – he saved Belgium. The able for the “small,” while the second indicates that country, which hosts the European institutions, was on its way to collapse, causing shock and horror. Flemish and the Union does matter. Wallonian leftists, rightists and nationalists had reached a post-electoral impasse and changed two prime ministers Bulgaria must keep in mind a statement by right-of-centre Van within 12 months. An internet joke to offer Belgium for sale Rompuy: "Turkey is not a part of Europe and will never be part was starting to gain momentum, Van Rompuy solved the of Europe." At the same time it must never forget that the problem with tact, compromise and amenability. The poet- incumbent President said these words as an opposition politi- politician demonstrated a typically European quality – to be cian five years ago. In other words, assuming different views able to save the consensus at a time when all parties have while in power and while in opposition is obviously a European reached to end of disgust. These qualities would be indis- tradition – from Churchill on. pensable for Van Rompuy at the top position in the European Union. Never mind the details, we will have to get used to the fact that Bulgaria already has one more president. The person Besides, the history of his post closely resembles the Belgian bearing a name, which is difficult for Bulgarians to pronounce, drama. First, there was draft European Constitution, which comes from an EU founding member state, no matter how stumbled on the negative referendums in France and the patient he is, he will never tolerate any Balkan tricks. Here Netherlands. Then, the Constitution was replaced by the again, the glass is more half-full than half-empty. The Belgian compromise Lisbon Treaty, which also stumbled on the Irish Haiku-president will understand not only the smaller poetic “no.” At the end, this agreement was also touched up in forms, but also the problems of smaller countries – and, let us order to achieve the current situation. According to its latest hope, will take care of their interests. Europe remains selfless revision, the president of the European Council will be elect- … and complex. ed for two years and a half, an incumbent president may be reelected for only one more mandate; besides, the president Is that good? I am convinced that – yes, that is good. The most is elected by a qualified majority, and his prerogatives are important promise made by Van Rompuy the intellectual, was basically symbolic. It may sound as paradox, but Baroness that Europe will continue to be led by the “enlightened elites” Catherine Ashton will have much more on to do than and not by commercialized forces, populism and demagogu- President Rompuy. ery. United Europe seems to be secretly aiming to avoid the direct choice, the referendum, and the national assembly. Henry Kissinger will be disappointed. He asked once: “Whom Thus, it creates mistrust; popular media grumbles against the shall I call, when I want to talk to Europe?” The post of the “Brussels bureaucrats,” while people simply wait for their president of the European Council was advertised exactly in chance to exercise their right to a punitive “no” vote. When this aspect: Now Europe will have a phone number; the newly the Irish, Danes, Dutch or French manage to stop one agree- elected Belgian said he is ready to take the first call. Well, ment or other, the enlightened elites start talking about the “unenlightened people”. Finally, the voters correct themselves it will not be a single line but a and next time they vote “properly.” switchboard And why is that? Maybe because, above all, there is the per- Kissinger will ring up Van Rompuy, who will pick up and say: ception that European integration is driven by the best among “Oh, Henry! Glad to hear you! But the person you actually want us. Thy, we say, may never be wrong. Time will show whether to talk to is Nicola Sarcozy (or Silvio Berlusconi). What should this is true, as cheap political analysts like to say. That is why I tell him?” we should be more explicit, at the end:

Let us be realists, this is not that bad. United Europe remains "Three waves roll a complex, consensus-prone, sluggish – and entirely insane – Along the harbour mechanism. This is, however, a guarantee, that Europe will not The trio's home." 22 be saddled by a tyrant or silently captured by a corporate or ideological interest. The charm of its “soft power” (as opposed The author of this analysis is Herman Van Rompuy, the first to America’s “hard power”) has already started to generate president of the European Council. The verses are posted on followers. Some say that “the Americans are from Mars,” while his web site and refer to the so called “European trio” – and the Europeans “are from Venus;” others describe Europe as he means something different from what you think. He means Hellas and the United States as Rome; others still, like the former, current and next presidency of the European American Jeremy Rifkin directly claim the “the European age Union is coming.” Whole generations of West Europeans are coming AmCham Magazine Bulgaria December 2009 into being attuned to the “soft” rather than the “hard” (and to Now, everything should be finally clear, right? n

amcham meetings Prime Minister Receives AmCham Board Members Prime Minister Boyko Borissov held a meeting on November 24 with the board of Directors of the American Chamber of Commerce. He was informed about the activities and the current projects of the Chamber as well as given a copy of AmCham White Paper and Recommendations to the Bulgarian Government.

The discussion focused on the business environment and the investment climate in the country as well as how the Chamber can assist the government in developing the regulatory From Left: AmCham Board members Tanya Kosseva-Boshova, ETC, Anthony Hassiotis, President of the framework for foreign investments. BoD, Bulgaria’s prime minister Boyko Borissov, Stefan Ivanov, Citibank Sofia, and Valentin Georgiev, AmCham offered help in promoting the AmCham executive director. business opportunities Bulgaria pro- new government about the open dialog in the process of creating business vides for American companies by orga- with the business community and the regulatory framework based on princi- nizing trade and investment missions in pragmatic approach the government ples of transparency and fair competi- the United States and combining these took in solving many of the issues that tion. AmCham was represented by initiatives when possible with govern- companies have been facing for a long Anthony Hassiotis, president, Stefan mental official visits to the United time. Boyko Borissov acknowledged the Ivanov and Tanya Kosseva-Boshova, States. AmCham representatives con- Chamber for its work in attracting for- vice-presidents, and Valentin Georgiev, gratulated the prime minister and the eign investments and the engagement executive director. n Foreign Minister Meets Chamber Before U.S. Visit At the meeting the minister was informed about the activities and the current initiatives of the chamber. The discussion focused on the future cooperation between the ministry and the chamber to promote further development of the U.S.-Bulgarian economic and trade relations.

AmCham representatives commented on the pragmatic approach of the new government and the openness to engage in 24 a dialog with the business community encouraging economic development and investment in Bulgaria.

The Chamber was represented by AmCham BoD reps in the office of Minister of Foreign Affairs Rumiana Jeleva. Anthony Hassiotis, president, board Prior to leaving on an official visit to on Nov. 18 with the Board of Directors members Tom Higgins and Peter the United States, Minister of Foreign of the American Chamber of Lithgow, and Valentin Georgiev, execu- AmCham Magazine Bulgaria December 2009 Affairs Rumiana Jeleva held a meeting Commerce. tive director. n

amcham events Government Officials Explain HR issues Labor visas for non-EU nationals, development of the labor market, unemployment and training vouchers were the hot topics discussed at the latest AmCham Human Resources Committee meeting on Nov. 25. Guest speakers were Krassimir Popov, deputy minister of labor and social policy, and Rositsa Stilianova, executive director of the National Employment Agency. More than 70 member companies took part in the discussion and inquired on various issues such as ways to ease procedures for employment of U.S. citizens in the country, the difference between high- and low- quali- Krassimir Popov, deputy minister of labour and social policy (second left) and Rositsa Stilianova, executive fied work force, and measures facilitating director of the NEA elaborated on HR and labour issues. temporary employment. Bulgarian legislation of the EU directive About three months are needed in general on the EU Blue Card until 2011, Popov for a foreigner to issue a working permit In the words of the deputy minister, the said, adding that it takes time and con- in Bulgaria, Stilianova said. There is an government launched anti-crisis measures sultations with the business associa- initial procedure of gathering the docu- in order to protect the national labor mar- tions in order to create such legislation. ments that takes 30 days, and issuing a ket as close to 500,000 households have The EU had been preparing the direc- visa takes an additional 1.5 months. The been affected by the unemployment rate. tive for three years. Answering a ques- Agency had acted on many cases in order At the same time hiring of qualified work- tion on the temporary employment to facilitate the visa issuing permits when ers from abroad is not considered as Popov said there is a deadline for there were hindrances, said Stilianova. market problem but rather as a stimulating transmitting in the national legislation According to Deputy Minister Popov, the market factor, he added. of three EU directives: on the tempo- training vouchers will be issued until Dec. rary employment, work from home and 15, and will be distributed in the first two There is a deadline for adopting in the distance working. months of 2010. n

26 AmCham Magazine Bulgaria December 2009 CEO-s of AmCham member companies and HR managers participated in the event.

amcham events Change Your Life to Save the Planet If you want to save the Planet from the devastating climate changes, you should start to make changes in your lifestyle. Especially in case you work from home, as bringing work home is not anymore a taboo. How one can have a green- er office and home? Some nice advice on the topic was provided by Ward Miller, denkstatt at the last AmCham CSR committee meeting on Dec. 1.

It is not regarded as sustainability notion anymore that the development meeting the needs of the present without com- prising the ability of future generation to meet their own needs, Ward Miller explained. What has to be considered in every human activity is the impact on environment, on society and on the economy. The environmentalists call it “triple bottom line”. The big challenges that the world is facing now are: current economic model, climate change, resource depletion, and biodiversity loss. That is why it is vital to reduce the energy resources by different activities: turning off the lights, TV-s and computers when we not use them.

In line with the EU regulations, it is necessary to use energy efficient light bulbs and to keep the office tempera- ture at 25 degrees in summer, and 22 degrees in winter in order to prevent the environment. Purchasing only class A, A+ and A++ energy rating electric appliances is also a AmCham member companies, among them Mobiltel, who participated in the necessity. Volunteer days were awarded with certificates of recognition.

Peter Seizov with denkstatt presented some stunning envi- nice Christmas handicrafts and “fair trade” goods made by ronmental facts: in every 1 minute the deforestation on the small producers from Bulgaria as well as from developing planet is equal to the size of 36 football fields! In addition, countries. Dessislava Chalamova with Integra told the audi- we eat much more than the Earth provides, and for example ence about the activities of the organization in several 76% of the world fisheries have been fully exploited areas: human resource development, adult education qual- already! ity language teaching & learning, entrepreneurial education, training for SMEs, etc. Integra projects are supported by To add to the spirit of green ideas the Association Integra Citibank Sofia. Galina Tomova with Citibank elaborated on welcomed the audience at their stand where one could buy the ways the bank is helping Integra. n

Nice X-mas handicrafts of Association Integra that the guests could buy to sup- AmCham Magazine Bulgaria December 2009 port the people in need. Company reps listening to the denkstatt presentations.

amcham events Tax Seminar Explains U.S-Bulgarian Treaty

Maria Toromanova, director with PWC Bulgaria Around financial experts and 50 accountants took part in the discussion. AmCham Public Affairs & Advocacy Committee and investment. The treaty followed the U.S. model tax conven- PricewaterhouseCoopers Bulgaria co-sponsored a seminar tions. on the U.S.–Bulgarian Treaty for the Avoidance of Double Taxation (TADT) on Nov. 17. The event focused on the pro- Marieta Getcheva, senior consultant with cedures for implementation of the treaty. During the introduc- PricewaterhouseCoopers Bulgaria, elaborated on work permits, tory session Maria Toromanova, director with residency requirements, taxation and social insurance of indi- PricewaterhouseCoopers Bulgaria, presented a general over- viduals covered by the treaty. She focused on the tax resi- view of the Bulgarian tax system. She said that there is a dency criteria, income from employment, directors’ fees and shift from direct to indirect taxes, and more VAT and excise social security, as well as the immigration regime for U.S. citi- audits are introduced. zens.

Krassimir Merdzhov, senior consultant with Tania Pavlova, senior manager with PricewaterhouseCoopers PricewaterhouseCoopers Bulgaria, discussed in detail TADT Bulgaria, spoke on the Bulgarian VAT package that enters into specifics. The treaty went into force on Jan. 1, 2009, and is force as of January 1, 2010. The package will affect any busi- applied to direct taxes. It excludes indirect levies, such as nesses engaged in the cross-border supply of services, includ- value-added and excises taxes, as well as all social contribu- ing those making or receiving inter-company recharges. The tions. TADT applies to all sources of income that residents of VAT package is going to impact the flow of services and recov- either country have received "at source" in the other country. ery of VAT incurred in another member state. It represents TADT reduced the tax burden for residents of Bulgaria and the series of measures designed to simplify VAT accounting for United States, which should stimulate cross-border trade and businesses providing cross-border services. n

30 AmCham Magazine Bulgaria December 2009 Krassimir Merdzhov, senior consultant with PWC Bulgaria. amcham events

Cleveland Mayor Outlines Business Opportunities AmCham member companies enjoyed a business luncheon Nov. 18 with Frank Jackson, the mayor of the city of Cleveland, who was visiting Bulgaria. The mayor was accompanied by representatives of the Greater Cleveland Partnership (GCP), an organization with 16,000 member companies, Small and Medium Enterprises Union, and other business organizations from Ohio.

Mayor Jackson hosted a press conference at the Sheraton Hotel in Sofia where he answered questions about the opportunities for cooperation in fields such as health care, technology, communications, renewable energy, scientific research, intellectual property rights protection, culture and education. Mayor Jackson told journalists that Bulgaria is attractive for U.S. investments because of its strategic geographic location and the business- friendly system of flat taxation. He also expressed confidence that this first visit to Bulgaria will help form a long-lasting friend- ship and open up opportunities for business partnerships both From Left: Peter Lithgow, AES Maritsa East-1, Anthony Hassiotis, AmCham AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham in Sofia and Cleveland. President, and the Mayor of Cleveland Frank Jackson.

“These are hard times both for America and Bulgaria. The purpose of our visit is to do business with you, and in our opinion it is worth founding partnerships here as we value very much the partnership with Bulgaria”, further said the mayor.

Some 62 percent of all foreign investment in Ohio come from Europe, the mayor said. The state features low business costs, page good transport infrastructure and a favorable geographic loca- 31 tion.

A number of large multinational corporations are based in Cleveland; the major sectors in the city are industrial production, financial services, health care services, and high technologies. Over the last few years, the GCP has been working for the mergers of smaller firms in order to bring about the creation of medium and larger entities generating greater income. n Susan Sutton, U.S. Charge d’Affaires and Mayor of Cleveland Frank Jackson. amcham events Five New Members Presented

At least 80 members joined the party.

The quite popular Meet New Members party on Nov. 16 intro- individual customers EKO Cards “Friends” – an attractive loy- duced five companies joining the AmCham family in the Sofia alty program for all types of EKO fuel purchases. When paying Hall of Grand Hotel Sofia. The guests were welcomed by cash with EKO Friends Card, you receive discount, Serkedjieva Tanya Kosseva-Boshova, AmCham vice-president. said.

All Channels Communication/Fleishman-Hillard Associate is a The main activities of Etap Adress is to deal with domestic group of agencies specialized in public relations and advertis- and international passenger road transport, said Nadezhda ing services, and is a leading PR consultancy, said CEO Bogdanova, manager for corporate sales. In addition the com- Alexander Dourchev. The company received awards for the pany is active in food vouchers. It has concessions at the best PR agency in Bulgaria in 2005 and 2007, as well as for Black Sea cost (Kiten – Yug) and sells mineral water from the a business super brand 2007-2008. Barzia well, near Berkovitsa.

32 AIMS International Bulgaria is specialized in professional sup- Power Machinery Business (PMB) is dealing with emergency port, advice and services in the field of congress & exhibition power supply and offers complete engineering in the field, in management, destination management and international meet- the words of Antonia Getova, sales manager. PMB is the sole ing planning, said Rainer Kostka, the company’s founder. official distributor and service provider of the following companies: GE Digital Energy, FG Wilson (Engineering) Ltd. (the Nana Serkedjieva, marketing manager of EKO Bulgaria, pre- United Kingdom), Hitec Power Protection B.V. (The Netherlands) sented the company’s network of 79 filling stations and four – manufacturer of rotary UPS systems for supply of uninter- oil depots, operating all over Bulgaria and selling a wide range ruptible, continuous and conditioned power for critical applica- AmCham Magazine Bulgaria December 2009 of high quality fuels and lubricants. The company offers to the tions. n amcham events

Alexander Durchev, All Channels Communication. Rainer Kostka, AIMS International Bulgaria.

Nadejda Bogdanova, Etap Address company. Antonia Getova, PMB.

Dimitar Lazhov General Manager of the Greek Business Council and Miroslava Nana Serkedjieva, EKO Bulgaria. Kostadinova, Cook Communications (second right) among guests. AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham

page 33 member news

All companies awarded in different categories in the Hewitt Associates survey. McDonald's, AstraZeneca Crowned Best Employers in Bulgaria McDonald’s Bulgaria strode atop of the 2009 list of Best Employers in Bulgaria among large-scale companies, while drug maker AstraZeneca scooped up the gold for small and medium-sized companies for a second year in a row. The nationwide survey’s results were announced in November.

The survey, carried out for a fourth consecutive year by human resources specialists Hewitt Associates and Monday Insight, studied the working conditions at companies with more than 50 full-time employees that have operated on the market for at least two years. This year's poll was carried out among 13,176 employees as well as 353 top executives of 91 businesses.

34 Sodexo Bulgaria granted the “Employer with best social policies and practices” award to AstraZeneca to recognize the company’s social policies. AstraZeneca is a leader in the category for a second year in a row. Explaining the establishment of that award Mr. Jean Istasse, General Manager of Sodexo Bulgaria, said: “It was natural for us to choose exactly this approach, because Sodexo’s services are aiming to improve the quality of the employees’ life both on the working place AmCham Magazine Bulgaria December 2009 and outside the office. Ivan Lissikov, General Manager of McDonald’s Bulgaria. member news

McDonald’s Bulgaria is a socially responsible company committed to addressing society issues. The company supports many charity projects benefiting children.

“It is an important recognition and great responsibility for us to take once more the lead in this prestigious study. And I would like to thank to each and every employee for the commitment and the efforts they show in their work. Hewitt award comes in a very important step of the development of McDonald’s in Bulgaria. In December this year we celebrate 15 years from the opening of the first McDonald’s restaurant in Bulgaria. I believe that this recognition represents a wonderful present for all of us in the eve of our remarkable anniversary and we are all very proud and gratified from this most high appraisal” says Ivan Lissikov – Managing Director, McDonald’s Bulgaria. n Zoya Paunova, AstraZeneca.

Sasha Bezuhanova Was Awarded with the Order of the Star of the Italian Solidarity Sasha Bezuhanova, Director Public Bulgaria gave to Mrs. Bezuhanova “This is the smallest recognition for Sector HP Central and Eastern the prestigious state award. Mrs. the greatest achievements of Mrs. Europe was awarded with the Order Bezuhanova received the Oder for Sasha Bezuhanova. I am confident of the Star of the Italian Solidarity her extraordinary contribution for the that the people we awarded during the Nov. 26. His Excellency Mr. Stefano development of the bilateral eco- 130 anniversary of the foundation of Benazzo, the Ambassador of Italy in nomic relations. the Bulgarian-Italian diplomatic relations really contributed to their development”, stated His Excellency Mr. Stefano Benazzo.

„I accept the award as a recognition for my efforts and for the efforts of all who work actively for the positioning of Bulgaria as a respected and trusted partner in Italy and the other European countries”, said Mrs. Bezuhanova dur- AmCham Bulgaria Magazine December 2009 December Bulgaria MagazineAmCham ing the ceremony.

The other two Bulgarians who were awarded with the Order – the Director of the National Opera Mr. Plamen Kartalov and Acad. Bogdan Petrunov, the Director of the National Centre for Infectious and Parasitic Diseases, were page recognized for their contribution for the 35 development of the bilateral relations in the areas of culture and science.

Mr. Boyko Borissov, Prime Minister of the Republic of Bulgaria was awarded with the title of Commander of the Order of the Star of Italian Solidarity in Sasha Bezuhanova awarded with the Order of the Star of the Italian Solidarity. 2006. n member news

Eurobank EFG Wins the Biggest European Award for Eco-Management Eurobank EFG won the national award EMAS 2009 (Eco- competitions that preceded the European. The choice of Management and Audit Scheme) for Greece, in the European Eurobank to represent Greece was made by the Ministry of EMAS Awards, organized each year by the European Environment. Eurobank EFG is the only Greek bank registered Commission. The aim of this institution is to highlight and in the European Register of Businesses applying the EMAS reward European companies that follow advanced environmen- Regulation among the 69 EMAS certified organizations in all tal policies. It is the highest distinction in environmental man- sectors. agement a European organization can obtain. We would like to remind you that in September Postbank, a The competition theme for 2009 was the Supply Chain includ- member of Eurobank EFG Group, won the award for ing Green Procurement. Specifically, it examined the practices “Ethical and responsible conduct towards stakeholders” in applied by businesses on the management of the policy and the competition for Socially Responsible Company of the “green” profile of their procurement and their overall relation- Year, organized by “Pari” Daily with the cooperation of ships with their suppliers, to meet international standards on Deloitte Bulgaria. Earlier this year the bank won first place green policies. in the category “Investor in Environment” for its long-term social responsibility campaign “Crystal Clear Pancharevo” 32 companies from 12 European Union countries participated within the Sixth Annual Awards for Socially Responsible in the competition. These companies had been qualified by Business organized by The Bulgarian Business Leaders the relevant official bodies of the countries in the national Forum (BBLF). n

new members

AECOM is a global pro- term strategy for development of the transport sector, to vider of professional tech- create a detailed transport model, which will provide the nical and management necessary information and justification for any bids for support services to a funding. For the Ministry of Regional Development and broad range of markets, including transportation, facilities, Public Works we are designing the Water supply network military, environmental, energy, water and government sup- of Plovdiv town from Vacha Cascade. After the construc- port services. With approximately 45,000 employees around tion of the Vucha supply network 22 settlements, will be the world, AECOM is a leader in all of the key markets that provided with pure water. it serves. The company opened the office in Bulgaria the end of 2006. Since then we have developed several major Contacts: projects for different government bodies and private compa- Peter Klissarov nies. Director Shared Services Tel.: +359 2 981 0003 Currently we are developing the General Transport Master Fax: +359 2 981 3309 Plan for the Ministry of Transport, Information Technologies Web: http://www.aecom.com and Communications. E-mail: [email protected] Address: 14, Tsar Osvoboditel Blvd. The main objective of the project is to provide a long 1000 Sofia

PPD is a leading of safe and effective therapeutics to patients. global contract research organization For more information, visit our Web site at http://www.ppdi. providing discovery, com. 36 development and post-approval services as well as com- pound partnering programs. Our clients and partners include Contacts: pharmaceutical, biotechnology, medical device, academic Dana Leff Nedzielska and government organizations. With offices in 38 countries Tel.: ++359 2 9742790 and more than 10,000 professionals worldwide, PPD applies Fax: ++359 2 9742791 innovative technologies, therapeutic expertise and a commit- E-mail: [email protected] ment to quality to help its clients and partners maximize Address: Business Park Sofia, Building 5A, 1st floor returns on their R&D investments and accelerate the delivery 1766 Sofia AmCham Magazine Bulgaria December 2009