Bulgaria

BULGARIA

LOCATION, SIZE, AND EXTENT
TOPOGRAPHY
CLIMATE
FLORA AND FAUNA
ENVIRONMENT
POPULATION
MIGRATION
ETHNIC GROUPS
LANGUAGES
RELIGIONS
TRANSPORTATION
HISTORY
GOVERNMENT
POLITICAL PARTIES
LOCAL GOVERNMENT
JUDICIAL SYSTEM
ARMED FORCES
INTERNATIONAL COOPERATION
ECONOMY
INCOME
LABOR
AGRICULTURE
ANIMAL HUSBANDRY
FISHING
FORESTRY
MINING
ENERGY AND POWER
INDUSTRY
SCIENCE AND TECHNOLOGY
DOMESTIC TRADE
FOREIGN TRADE
BALANCE OF PAYMENTS
BANKING AND SECURITIES
INSURANCE
PUBLIC FINANCE
TAXATION
CUSTOMS AND DUTIES
FOREIGN INVESTMENT
ECONOMIC DEVELOPMENT
SOCIAL DEVELOPMENT
HEALTH
HOUSING
EDUCATION
LIBRARIES AND MUSEUMS
MEDIA
ORGANIZATIONS
TOURISM, TRAVEL, AND RECREATION
FAMOUS BULGARIANS
DEPENDENCIES
BIBLIOGRAPHY

Republic of Bulgaria

Republika Bulgariya

CAPITAL: Sofia (Sofiya)

FLAG: The flag is a tricolor of white, green, and red horizontal stripes.

ANTHEM: Bulgariya mila, zemya na geroi (Dear Bulgaria, Land of Heroes).

MONETARY UNIT: The lev (lv) of 100 stotinki has coins of 1, 2, 5, 10, 20, and 50 stotinki and 1 and 2 leva, and notes of 1, 2, 5, 10, 20, 50, and 100 leva. lv1 = $0.64103 (or $1 = lv1.56) as of 2005.

WEIGHTS AND MEASURES: The metric system is the legal standard.

HOLIDAYS: New Year's Day, 1 January; Labor Days, 12 May; Education and Culture Day, 24 May; Christmas, 2425 December.

TIME: 2 pm=noon GMT.

LOCATION, SIZE, AND EXTENT

Part of the Balkan Peninsula, Bulgaria has an area of 110,910 sq km (42,822 sq mi), and extends 330 km (205 mi) ns and 520 km (323 mi) ew. Comparatively, the area occupied by Bulgaria is slightly larger than the state of Tennessee. Bulgaria is bounded on the n by Romania, on the e by the Black Sea, on the se by Turkey, on the s by Greece, and on the w by Macedonia and Serbia, with a total boundary length of 1,808 km (1,123 mi).

Bulgaria's capital city, Sofia, is located in the west central part of the country.

TOPOGRAPHY

Bulgaria consists of a number of roughly parallel eastwest zones. They are the Danubian tableland in the north, the Balkan Mountains (Stara Planina) in the center, and the Thracian Plain, drained by the Maritsa River, in the south. The Rhodope, Rila, and Pirin mountains lie in the southwestern part of the country. The average elevation is 480 m (1,575 ft), and the highest point, in the Rila Mountains, is the Musala, at 2,925 m (9,596 ft). The Danube (Dunav), Bulgaria's only navigable river, forms most of the northern boundary with Romania. Located along the Eurasian Tectonic Plate, the country does experience some low-level magnitude earthquakes.

CLIMATE

Bulgaria lies along the southern margins of the continental climate of Central and Eastern Europe. Regional climatic differences occur in the Danubian tableland, exposed to cold winter winds from the north, and the Thracian Plain, which has a modified Mediterranean climate and is protected by the Balkan Mountains against the northern frosts. January temperatures are between 0° and 2°c (3236°f) in the lowlands but colder in the mountains; July temperatures average about 22° to 24°c (7275°f). Precipitation is fairly regularly distributed throughout the year and amounts to an average of 64 cm (25 in).

FLORA AND FAUNA

As of 2002, there were at least 81 species of mammals, 248 species of birds, and over 3,500 species of plants in the country. In the northeast lies the typical steppe grassland zone of the Dobrudja, merging into the wooded steppe of the Danubian tableland. Most trees in this area have been cut down to make room for cultivated land. The Balkan Mountains are covered by broadleaf forests at lower altitudes and by needle-leaf conifers at higher elevations. The vegetation of the Thracian Plain is a mixture of the middlelatitude forest of the north and Mediterranean flora. Deforestation has reduced the amount of wildlife, which includes bears, foxes, squirrels, elks, wildcats, and rodents of various types. Fish resources in the Black Sea are not extensive.

ENVIRONMENT

Bulgaria's air pollution problem results from the combined influence of industry and transportation. In the mid-1990s, Bulgaria was among the 50 countries with the highest industrial emissions of carbon dioxide, producing 54.3 million metric tons, or 6.08 metric tons per capita. In 1996, the total was 55.2 million metric tons. Industrial pollutants, especially from metallurgical plants, are responsible for damage to 115 sq mi of land in Bulgaria. Bulgaria's rivers and the Black Sea are seriously affected by industrial and chemical pollutants, raw sewage, heavy metals, and detergents. However, nearly 100% of the population have access to safe drinking water.

Twenty-five percent of Bulgaria's forests have been significantly damaged by airborne pollutants. In 2000, about 33.4% of the total land area was forested. Only 4.5% of the country's total land area is protected, including the Pirin National Park and the Srebarna Nature Reserve, which are both natural UNESCO World Heritage Sites. There are 10 Ramsar wetland sites.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 12 types of mammals, 11 species of birds, 2 types of reptiles, 10 species of fish, and 11 other invertebrates. Endangered species in Bulgaria include the Rosalia longhorn, Atlantic sturgeon, and slender-billed curlew.

POPULATION

The population of Bulgaria in 2005 was estimated by the United Nations (UN) at 7,741,000, which placed it at number 94 in population among the 193 nations of the world. In 2005, approximately 17% of the population was over 65 years of age, with another 14% of the population under 15 years of age. There were 94 males for every 100 females in the country. According to the UN, the annual population rate of change for 200510 was expected to be -0.5%, a rate the government viewed as too low. With one of the lowest fertility rates in the world, Bulgaria has experience population declines since 1990. The projected population for the year 2025 was 6,565,000. The population density was 70 per sq km (181 per sq mi).

The UN estimated that 70% of the population lived in urban areas in 2005, and that urban areas were declining in population at an annual rate of -0.31%. The capital city, Sofia (Sofiya), had a population of 1,076,000 in that year. Other large cities include Plovdiv, 715,904; Varna, 320,668; Burgas, 259,985; Ruse, 266,213; and Stara Zagora, 167,708.

MIGRATION

Emigration between 1948 and 1951 consisted mainly of Jews going to Israel and Turks going to Turkey. A high of 99,477 (of whom 98,341 were Turks) was reached in 1951. Most of the emigrants since the 1950s have been Turks bound for Turkey or other Balkan countries. A total of 313,894 emigrated to Turkey in 1989 because of government persecution. More than 100,000 had returned to Bulgaria by February 1990. Meanwhile, about 150,000 ethnic Bulgarians also emigrated. In 1991 about three million Bulgarians were living abroad. Of those emigrating 85% were under age 30.

According to Migration News, due to low fertility and emigration, Bulgaria's population is shrinking faster than any other nation in Europe. The majority of those leaving Bulgaria are moving to Germany, Spain, the Netherlands, and North America. The net migration rate, estimated for 2005, was -4.3 migrants per 1,000 population. Once the European Union (EU) lifted visa requirements for Bulgarians in 2001, Bulgarians illegally migrated to Western countries. Between April 2001 and October 2002, about 6,561 Bulgarians were arrested and expelled from EU counties, the United States, and Canada. The number of illegal foreigners in Bulgaria is low. Due to the high unemployment rate (12% in 2004), there are serious restrictions on foreign workers.

As of 2004, there were 4,684 refugees and about 920 registered asylum seekers in Bulgaria. Most of the refugees and asylum seekers were from Afghanistan, Iraq, Serbia, Montenegro, and Armenia.

ETHNIC GROUPS

In 2001, Bulgarians accounted for an estimated 83.9% of the total population. The Turks, who constituted about 9.4% of the total, are settled mainly in the southern Dobrudja and in the eastern Rhodope Mountains. Romas account for about 4.7% of the population. Other groups, including Macedonians, Armenians, Tatars, and Circassians, make up the remaining 2% of the populace.

Macedonians live mainly in the Pirin region of southwestern Bulgaria. Romanian-speaking Vlachs live in the towns and countryside of northwestern Bulgaria. Greek-speaking Karakatchans are nomadic mountain shepherds of Romanian origin. The Gagauzi of northeastern Bulgaria are a Turkish-speaking group of Christian Orthodox religion. Bulgaria's cities have small minorities of Russians, Jews, Armenians, Tatars, and Greeks.

LANGUAGES

Bulgarian is classified as a Slavic language of the southern group, which also includes Macedonian, Serbo-Croatian, and Slovenian. Old Bulgarian, also known as Old Church Slavonic, was the first Slavic language fixed in writing (9th century). For this purpose, two Bulgarian monks, Cyril and Methodius, created a new alphabet, based partly on the Greek, that became known as the Cyrillic alphabet. Both the grammar and the vocabulary of modern Bulgarian show Turkish, Greek, Romanian, and Albanian influences.

According to a 2001 census, 84.5% of the population speak Bulgarian, 9.6% speak Turkish, 4.1% speak Roma, and 1.8% speak other languages or did not specify a primary language.

RELIGIONS

According to a 2004 report, about 82.6% of the population belonged at least nominally to the Bulgarian (Eastern) Orthodox Church. There were also an estimated 12.2% who were Muslims. Other religious groups include Roman Catholics, Jews, Uniate Catholics, Protestants, and Gregorian-Armenians.

After seizing power in 1946, the Communist regime, whose aim was eventually to establish an atheistic society, sought during the ensuing period to replace all religious rites and rituals with civil ceremonies. The new constitution of 1991 guaranteed freedom of religion to all, but named the Bulgarian Orthodox Church as a "traditional" religion of state. Under a 2002 Confessions Act, all religious groups except for the Bulgarian Orthodox Church must register with the Sofia Municipal Court in order to offer public worship. The registration process tends to be long and selective.

TRANSPORTATION

The Bulgarian Railway Company (BDZ) oversees Bulgaria's railway system. Railroads are still the basic means of freight transportation in Bulgaria. Of the 4,294 km (2,671 mi) of railroad lines in use in 2004, about 94% were standard gauge. A total of 245 km (152 mi) of narrow gauge right of way accounted for the remainder.

In 2003, roadways extended for 102,016 km (63,453 mi), of which 93,855 km (58,378 mi) were paved, including 328 km (204 mi) of expressways. Road transportation has grown steadily in recent years. Bulgaria has many highway projects underway, including portions of the Trans-European Motorway (TEM), a route connecting Budapest with Athens via Vidin and Sofia and with Istanbul via eastern Bulgaria. As of 2003, there were 2,309,300 passenger cars and 337,200 commercial vehicles registered for use.

Water transportation is also significant. As of 2005, Bulgaria's maritime fleet was comprised of 64 ships with a total capacity of 757,972 GRT, as compared with 97,800 GRT in 1961. The major seaports are Burgas and Varna. Principal river ports are Ruse, Lom, and Vidin. In addition, the country as of 2004 had 470 km of navigable internal waterways.

In 2004 there were an estimated 213 airports. As of 2005 a total of 128 had paved runways, and there was also a single heliport. Sofia's Vrazhdebna Airport is the major air center, but there are also international airports at Varna and Burgas, as well as seven domestic airports. Initially a joint Soviet-Bulgarian concern, Bulgarian Airlines (BALKAN) passed into Bulgarian hands in 1954. Civilian airlines in Bulgaria carried about 75,000 passengers on scheduled domestic and international airline flights in 2003.

HISTORY

Ancient Thrace and Moesia, the areas that modern Bulgaria occupies, were settled in the 6th century ad by Southern Slavs migrating from the area north of the Carpathian Mountains (modern-day Ukraine and Romania). The Thracian tribes, which had populated that territory since the middle of the 2nd century bc, were displaced or conquered. In the 7th century ad, the Bulgars, a Central Asian Turkic tribe, crossed the Danube River to settle permanently in the Balkans. In alliance with the overpowered Slavs, the Bulgars formed the Bulgarian state, which was recognized by the Byzantine Empire in 681 ad. The name and initial political framework of the new state were taken from the Bulgars, but the language and the culture remained predominantly Slavic.

In the late 9th century, Bulgaria became an arena for political and cultural rivalry between the Byzantine Empire centered in Constantinople and the Roman Empire. The Bulgarians adopted Christianity from the Byzantine Empire and embraced the Cyrillic alphabet, named for St. Cyril. As a result, the integration of the disparate tribes into a Bulgarian people was more or less complete by the end of the 9th century.

The early Bulgarian state reached its territorial and cultural height under Simeon I (r.893927). In 1018, Bulgaria, which had struggled to assert itself against Constantinople since its foundation, fell under Byzantine dominance. The country rose again as a major Balkan power in the 12th and 13th centuries, especially under Ivan Asen II (r.121841) whose rule extended over nearly the whole Balkan Peninsula except the Greek islands. However, by the end of the 14th century, Bulgaria was overrun by the Ottoman Turks, who ruled the country for nearly five centuries.

The Ottoman rule was often oppressive and sought to assimilate Bulgarian Christianity, culture, and language. Rebellions were frequent but sporadic and unorganized. However, in the early 19th century, under the influence of Western ideas such as liberalism and nationalism, a well-organized national liberation movement emerged. Its efforts culminated in the April uprising of 1876, which was brutally crushed. Russia, a rival of the Ottoman Empire at the time, insisted on a peaceful solution to the Bulgarian question. When diplomacy failed, Russia declared war on Turkey. The Bulgarian state was restored in the aftermath of the Russian-Turkish War of 18771878.

Apprehensive of the existence of a big Bulgarian state under Russian influence, the Congress of Berlin (JuneJuly 1878) divided the Bulgarian territories into three parts. Northern Bulgaria was given the status of an independent principality under Turkish suzerainty, with its capital at Sofia. Southern Bulgaria (then known as Eastern Rumelia) remained under Turkish rule as an autonomous province. Lastly, ethnic Bulgarians in the regions of Macedonia and Thrace were unconditionally returned to the Ottoman Empire. The decisions of the Congress triggered first the KresnaRazlog uprising (18781879), which sought to unify the Principality of Bulgaria and Eastern Rumelia; and the IlindenPreobrazhenie Uprising (1903), which demanded the liberation of Macedonia. Neither rebellion was immediately successful.

In 1879 the First Grand National Assembly adopted the first Constitution of Bulgaria and elected the German prince Alexander Battenberg as the prince of Bulgaria. In 1885, the continuing unrest in Eastern Rumelia culminated in a military coup, which annexed the province to Bulgaria. Stefan Stambolov, premier from 1887 to 1894, consolidated the country's administration and economy. In 1908 Bulgaria declared itself a kingdom completely independent of Turkey.

Striving to unite "all Bulgarians," the country took part in the First Balkan War (October 1912May 1913) and fought with the anti-Turkish coalition (Greece, Serbia, and Montenegro) against the Ottomans. Bulgaria gained most of Thrace including a long-desired outlet to the Aegean Sea. But as a result of a dispute over Macedonia, Bulgaria became pitted against Greece and Serbia. Turkey joined the Greece-Serbia coalition in the hope of winning back some of its territories. Romania also sided against Bulgaria in the Second Balkan War (JuneJuly 1913), and Bulgaria was defeated. As a result, Bulgaria lost southern Dobrudja to Romania, a large part of Macedonia to Serbia, western Thrace to Greece and southeastern Thrace to Turkey. Having sided with the Central Powers in World War I in an attempt to recoup its losses, Bulgaria also lost its outlet to the Aegean Sea and additional parts of Macedonia and Dobrudja through the Treaty of Neuilly (27 November 1919).

At the end of World War I, Bulgarian ruler Tsar Ferdinand of Saxe-Coburg-Gotha abdicated in favor of his son, Boris III, who ruled Bulgaria until his death in 1943. After an early period of stability and initial progressive reform under the leadership of Premier Alexander Stamboliski (assassinated in 1923 after agreeing to recognize Yugoslav sovereignty in Macedonia), growing political rivalries allowed Tsar Boris to establish a military government in 1934 and then to personally assume dictatorial powers in 1935.

When World War II broke out, Bulgaria moved toward an alliance with Germany in the hope of recovering lost territories. In 1940, Romania was forced to return southern Dobrudja, and during the war, Bulgaria occupied Macedonia and western Thrace. By 1943, some 20,000 Jews were deported but protests from political and clerical leaders stopped further cooperation, thus saving all of the remaining 50,000 Jews in the country. Bulgaria did, however, actively deport Jews in all areas it conquered.

After Tsar Boris's sudden death in 1943, a cabinet, which was in most respects a German puppet, assumed power. Coordinated mainly by Communists, resistance to the Germans and the authoritarian Bulgarian regime was widespread by 1943. In September 1944, Soviet troops entered the country. At that time, the Bulgarian government withdrew from the occupied territories, severed relations with Germany, and intended to sign an armistice with the Western Allies. But Moscow declared war on Bulgaria and proceeded with the occupation of the country. A coalition governmentthe Fatherland Front (Otechestven Front)was established, which, with the assistance of the Soviet army, came under the domination of the Communist Party. Subsequently, anti-Communist political activists were purged.

A plebiscite in September 1946 replaced the monarchy with the People's Republic of Bulgaria and the Communists openly took power. The 1947 peace treaty formally ending Bulgaria's role in World War II allowed the nation to keep southern Dobrudja but limited the size of its armed forces.

Shortly after coming to power, the Bulgarian Communist Party fell under increasing pressure from Moscow to demonstrate its loyalty by stepping up the "socialist transformation" in the country. The Bulgarian leadership moved to ascertain its effective monopoly on political power by eliminating political opposition in the country and "nationalist" elements within the party and to emulate the Soviet economic experience through the introduction of a planned economy. A new constitution in 1947 instituted the nationalization of industry, banking, and public utilities and the collectivization of agriculture. Centralized planning was introduced for the development of the national economy through a series of five-year plans, which stressed the expansion of heavy industry at the expense of agriculture and light industry. Subsequently, Bulgaria joined the Warsaw Pact and CMEA, thus placing itself firmly within the Soviet bloc.

Under Todor Zhivkov, first secretary of the Communist Party since 1954 and president since 1971, the Bulgarian government remained unquestionably loyal to the Soviet Union. This continued even after Soviet leader Joseph Stalin's death in 1953. While some freedom of expression was gradually restored, labor camps closed, and persecution of the Christian church ended, upheavals like those in Poland and Hungary in 1956 or in Czechoslovakia in 1968 were not allowed in Bulgaria. Still, a cultural "thaw" took place in the late 1970s under the leadership of Zhivkov's daughter, Lyudmila Zhivkova. To further strengthen support for the regime, the party leadership devoted enormous resources to the celebration of the national past and culture. However, the period of the so-called "revival process" (with two peaks in 19721974 and 19841985) was marked by a campaign to assimilate members of Bulgaria's Turkish minority by forcing them to take Slavic names, prohibiting them from speaking Turkish in public, and subjecting them to other forms of harassment; more than 300,000 Bulgarian Turks crossed the border into Turkey to escape persecution.

The Communist regime drew its legitimacy by preserving the strong egalitarian and statist political traditions in the country. Additionally, the relatively good economic performance and impressive set of social policy achievements generated a considerable level of popular support. The developmental rise in mechanization, technical sophistication, and productivity was remarkable especially given the lack of natural resources and energy endowment and the very low initial material and cultural levels. However, despite these accomplishments, Bulgaria remained one of the countries with the lowest living standards in both Western and Eastern Europe. Moreover, the many and generous social policies were secured at the expense of economic efficiency.

Thus the radical changes introduced in the Soviet Union by Mikhail Gorbachev were welcomed and readily replicated in Bulgaria. A program of far-reaching political and economic changes was announced in July 1987, including an administrative overhaul meant to reduce the number of Communist Party functionaries by as much as two-thirds, the introduction of self-management for individual enterprises, and liberalization of rules for joint ventures with foreign investors. Economic and political restructuring throughout the Soviet Bloc empowered reformist elements within the Bulgarian Communist Party, which were growing increasingly restive under Zhivkov.

Although Zhivkov was never a despot in the Stalinist mold, by the early 1980s his regime was growing increasingly corrupt, autocratic, and erratic. The long-time ruler resisted attempts to change and moved into a pattern of direct confrontation with reformists, led by his foreign minister, Petar Mladenov. Mladenov, who had close ties to Gorbachev, wanted to change Bulgaria's image, which had been tarnished by Zhivkov's intensifying efforts to "assimilate" the country's ethnic Turks. Finally, in November 1989, Mladenov, backed by other reformists within the party, was able to take advantage of an international environmental conference convened in Sofia to press for Zhivkov's resignation. Mladenov was also successful in winning support from Defense Minister Dobri Dzhurov, thus leaving Zhivkov without resort to the military. Zhivkov had no choice but to resign.

Mladenov had intended to reform the Communist Party, not remove it from power. However, demonstrations on ecological issues in the streets of Sofia in November 1989 soon broadened into a general campaign for political reform. However, as the newly emergent opposition groups signaled their entry into the political arena by organizing the Union of Democratic Forces (UDF), the Communist leaders invited opposition leaders to roundtable negotiations meant to provide the elite with a safe channel against the anticipated popular backlash against communism. A new democratic constitution was negotiated and multiparty elections held in June 1990.

In something of a surprise, the Socialists led by Mladenov received nearly 53% of the 1990 vote, while the UDF got only about a third; the rest of the votes went to the Movement for Rights and Freedoms (MRF), which had emerged to represent the interests of the country's one million ethnic Turks. Popular hostility to Mladenov forced him to resign about a month after the election. Since the Socialists remained generally in charge of the government, there was little tangible progress with economic reform, and Bulgaria's economy, left in poor condition by Zhivkov, continued to decline. In addition, a great deal of effort was devoted to the attempt to prosecute Zhivkov and his prominent cronies for malfeasance, incompetence, and other failings. Zhivkov fought back vigorously, exposing the sins of former colleagues who had remained in power.

Although convictions were eventually obtained (in 1992, with additional charges brought in 1993), the exercise served to undermine public sympathy for the Socialists. That opened the way for the National Assembly to appoint the leader of the UDF and famous dissident, Zhelyu Zhelev, as a president. Moreover, the first Socialist government, led by Prime Minister Andrei Lukanov, a Mladenov ally, collapsed after a few months of its coming to power; in December 1990, the replacement government of Dimitar Popov, an unaffiliated technocrat, outlined an ambitious program of economic reform.

The National Assembly passed a new constitution in July 1991, making Bulgaria the first of the Eastern Bloc countries to adopt a new basic law. Among other things, this document called for new parliamentary elections to be held in October 1991. The UDF received 34%, the Socialists, 33%, and the MRF, 8%. The UDF adamantly refused to cooperate with the former Communists, instead taking the MRF as their coalition partner. Filip Dimitrov of the UDF led Bulgaria's first non-Communist government since World War II; however, most of his ministers were chosen for technical expertise rather than party affiliation and 60% of them were drawn from outside the National Assembly. In January 1992, there were direct presidential elections. Zhelev received 45% of the votes while his Socialist opponent, Velko Vulkanov, received 30%.

Dimitrov undertook an ambitious program of economic and political transformation: he invested his administration in returning property confiscated by the Communists and in the privatization of industry by issuing shares in government enterprises to all citizens. However, Bulgaria's economy continued to deteriorate and unemployment continued to grow as uncompetitive industries failed, exposing strains within the ruling coalition. In late 1992 the Dimitrov government was replaced by a minority coalition of the Socialists, the MRF, and some defecting UDF deputies. Widely seen only as a caretaker prime minister, Lyuben Berov defied predictions, remaining in power for more than 15 months.

The UDF was unrelenting in its hostility to Berov, accusing Berov of trying to "recommunize" Bulgaria; they submitted as many as six votes of no-confidence in a single year. This increasing political deadlock and the continued deterioration of Bulgaria's economy led to new parliamentary elections in 1994.

Pledging to defend ordinary citizens against the excesses of the free market, the Bulgarian Socialist Party and its two nominal coalition partners won an absolute majority in the 1994 elections. The BSP government, headed by Zhan Videnov, failed to move forward with economic reforms and by the end of 1996, Bulgaria had become the poorest country in Europe with average wages at only $30 a month. In the November 1996 presidential elections, Petar Stoyanov of the UDF was elected president by a wide margin over Socialist party candidate Ivan Marazov.

Fueled by a slow pace of structural reforms, rampant corruption, and a failure to establish market discipline, Bulgaria's problems culminated in a severe economic crisis in 19961997. Without a stable government and with their economy in free fall, Bulgarians demonstrated in the capital for new parliamentary elections. After a few months of chaos and hyperinflation, a major foreign exchange crisis, and the collapse of the banking sector, Bulgaria adopted a Currency Board Arrangement with the International Monetary Fund in July 1997. A conservative fiscal policy and a significant acceleration of structural reforms have underpinned the Currency Board Arrangement.

The elections held in April 1997 were won by a four-party alliance, United Democratic Forces (UtDF), anchored by the UDF. The new prime minister Ivan Kostov quickly instituted economic reforms, passed a tough budget, and clamped down on crime and corruption. The economy began to stabilize and popular discontent began to subside. New IMF loans were approved, and the government embarked on a campaign to attract foreign investment and speed up privatization. The battle against entrenched political corruption continued through 1999 and 2000 and included the dismissal of top government officials. The government increasingly embraced the West, declaring its interest in NATO membership and allowing access to its airspace during the NATO bombing of Serbia in the spring of 1999.

In 1999 Bulgaria also started the accession negotiations to become a member of the European Union (EU). Despite much economic and political progress achieved by the Kostov cabinet, the citizenry was nevertheless disillusion with the party's corruption and its inability to address the high unemployment in the country.

In April 2001, Simeon Saxe-Coburg-Gotha, the exiled son of Tsar Boris, established a political party, the National Movement for Simeon II (NMS2), pledging to fight corruption, to improve Bulgaria's chances for EU membership, and to better the economy (through deregulation, privatization, and investment). Saxe-Coburg-Gotha was accused (both by the left and the right) of being an opportunist and a populist without competence and political experience, but he claimed his party's intent was not to restore the monarchy but to move ahead with reforms. And as the elections came closer, Saxe-Coburg-Gotha's popularity kept growing. His NMS2 party won 120 of 240 parliament seats in the 2001 elections. Having failed to win an absolute majority, the NMS2 signed a coalition agreement with the Movement for Rights and Freedoms. Saxe-Coburg-Gotha's cabinet included two MRF and two BSP ministers.

However, only 100 days after Saxe-Coburg-Gotha came to power, workers (including miners, power engineers, health professionals, transport, construction, railway and metal workers, and teachers) took to the streets of Sofia to protest the lack of progress in improving the economy and their living standards.

Saxe-Coburg-Gotha pursued a strongly pro-Western course. Bulgaria sent a nearly 500-strong stabilization force patrol to Iraq. In November 2002, NATO officially invited Bulgaria to join the organization in 2004. Also in 2002, the EU announced that Bulgaria was not ready to become a member in 2004, but was expected to join the EU in 2007. In Luxembourg on 25 April 2005, the Treaty of Accession of Republic of Bulgaria to the European Union was signed. At the time, support for Bulgaria's integration in the EU was about 65%.

Four years after Saxe-Coburg-Gotha came to power, the government reported significant economic growth (5.3 %) but corruption and organized crime continued to plague the country, and high unemployment, low standard of living, and increasing inequality continue to face Bulgarians. Moreover, for the first time in Bulgaria's post-Communist history, ethnic tensions escalated into riots between the Bulgarian and Roma communities in several Bulgarian cities, including Sofia. Hopes for better social protection, disillusionment with Saxe-Coburg-Gotha's policies, and heightened ethnic tensions were all reflected in the results of the 25 June 2005 parliamentary elections. The Coalition for Bulgaria (CfB) won the elections but failed to muster majority. The NMS2 came second but received only half of the votes it got in the 2001 elections. The right was in disarray, as the conservative votes were divided among three parties. Lastly, the rising support for the MRF, the third-largest parliamentary group, was paralleled by the emergence of an ultranationalist coalition, Attack Coalition (ATAKA). After the elections, ATAKA was largely marginalized by other parties and soon began to crumble as its representatives began to defect.

In the political maneuvering that followed the elections, the Socialist bid for forming a government was immediately supported by the MRF but was blocked by the NMS2. The stumbling blocks in the negotiations process seem to be the distribution of key posts and the head of the future cabinet. As negotiations dragged on, the EU urged a rapid resolution of the situation so the country could continue implementing the reforms required for accession in 2007. Ending weeks of postelection deadlock, the new Bulgarian government formally took office on 17 August, after parliament approved the nominations of Prime Minister Sergey Stanishev of the Bulgarian Socialist Party and his 17 cabinet members. The new cabinet was finally elected following a coalition deal among the three leading partiesthe BSP, the NMS2, and the MRFthat jointly control 169 out of 240 seats in the legislature.

Prime Minister Stanishev maintained that EU membership was his government's top priority and pledged to make up for lost time. He also promised to intensify the campaign against corruption and organized crime and confirmed that the 400 remaining Bulgarian troops deployed in Iraq will be withdrawn before the end of 2006.

GOVERNMENT

The Bulgarian constitution of July 1991 provides for a multiparty presidentialparliamentary form of republican government, in which all the citizens of the Republic of Bulgaria take part with the right to vote. The document provides clear distinctions among the legislative, executive, and judicial branches of government.

The Council of Ministers is the main executive body, headed by the prime minister. The Council of Ministers conducts the internal and foreign policy of the state, secures public order and national security, and exercises control over the public administration and the military forces. The president, who is chief of state, is popularly elected to a five-year term, and may serve a maximum of two terms. The president serves as commander-in-chief of the armed forces and appoints and dismisses their senior command. Among the president's duties is also setting the date for national referenda, scheduling parliamentary elections and naming of the prime minister, who must be confirmed by the National Assembly. Together with the prime minister or the respective minister, the president countersigns decrees to promulgate newly adopted laws. The emerging tradition is that the president sets the overall direction of policy, while the prime minister and his cabinet, presently 14 people, are responsible for day-to-day implementation.

The legislative branch of government is the National Assembly, with 240 members elected to four-year terms. Deputies are elected on a proportional voting basis in a mixed proportional/majoritarian system of elections, in which parties must receive at least 4% of the total national vote in order to receive seats. The largest parliamentary group constructs the cabinet. A simple majority is required to approve the Council of Ministers and to adopt regular legal acts. Amendments to the constitution, however, require approval by a three-quarters majority. Members of parliament represent not only their electoral regions but also the whole nation. The National Assembly elects temporary and permanent commissions, where parliamentarians participate. Members of the National Assembly, as well as member of the Council of Ministers, have the right to introduce draft laws, but only the Council of Ministers develop draft laws on the state budget.

POLITICAL PARTIES

Bulgaria did not develop the welter (confusing array) of political parties that most of the other post-Communist societies enjoyedor suffered.

The Bulgarian Socialist Party (BSP) is the successor of the former Bulgarian Communist Party and combines various leftist factions. Some are of social democratic orientation while others remain attached to communism. The 1989 internal coup left the party with strong public support53% of the vote in the 1991 elections. In 1994 the socialists won a majority in the parliamentary elections for the second time after the fall of state socialism but fell out of favor after two years of particularly disastrous economic policies, which had reduced their popular support to 10% by the end of 1996. The reputation of the BSP is still tied to its inability to deal with the problems of 1996 in the minds of the populace. The BSP remained in opposition after the 1997, 2001, and 2005 elections. In 2000, the socialists remaining in the BSP also made a significant break with the past by changing their former negative attitude towards NATO membership (without however cooling down support for good relations with Russia). In December 2001, Sergey Stanishev was elected as the new party leader with a mission to not only redefine and reform the BSP but also to rejuvenate it by trying to attract younger supporters. In addition, BSP became a full member of the Socialist International. In its campaign for the 2005 parliamentary elections, the party chose to focus on the neglected social rights of the Bulgarian citizens.

The Union of Democratic Forces (UDF) was created in the final days of the Communist regime (1989) as a platform movement uniting 15 different formerly dissident political groups. When the UDF came to power in 1992, the divisions between these factions weakened the government, which lost a vote of confidence in parliament in 1994. Under the leadership of Ivan Kostov in early 1997, the UDF was transformed into a single party with liberal ideology. During the 19961997 political and parliamentary crisis, the UDF dominated the a conservative coalition, United Democratic Forces (UtDF), which became the main opposition force to the Bulgarian Socialist Party and won a majority in the 1997 parliamentary elections. Kostov stepped down after the party lost in the 2001 parliamentary elections and was succeeded by his former foreign minister Nadezhda Mikhailova in June 2002. However, despite the party losing the 2003 local elections, Mihailova was reelected as UDF chairwoman.

In February 2004, Ivan Kostov, together with about 2,000 party members (among them 29 members of parliament), left the party. In May 2004, the group around Kostov established a new rightwing party named Democrats for Strong Bulgaria (DSB), which vows to work for a country with strong democracy, capable state institutions, and wealthy society. The party won about 6% of the vote in the 2005 elections.

The Union of Free Democrats (UFD) is one of the smaller rightist parties in Bulgaria. It was founded by Stefan Sofiyanski in December 2001 as a split-off of the Union of Democratic Forces. The party's main goals are economic prosperity, political stability, and integration in the EU and NATO.

The Movement for Rights and Freedoms (MRF) primarily represents the interests of Bulgaria's large Turkish minority (about 10% of the population), which was harshly repressed during the Zhivkov years. In economic issues the MRF advocates neoliberal policies. Even though the party did not participate in Dimitrov's cabinet, the MRF initially supported the UDF and later was the pivot on which the Berov cabinet hinged; then, however, the party switched to being an informal coalition partner of the Socialists. Nevertheless, it supported the UtDF government during its tenure in office. For the 2001 parliamentary elections the MRF formed a coalition with two small parties and got in power together with the NMS2. Yet, nationalist antipathy among many Bulgarians towards the country's large Turkish minority makes the MRF an unpopular coalition partner for most political parties. In fact in 1991 the MRF was accused of "being an ethnic party" and has proven a costly partner in the majority of post-1989 governments.

While ethnic Turks have been represented in parliament since 1990, parties have included very few members of the Roma national minority. Still, compared with Roma in Slovakia and Romania for example, Bulgarian Roma are relatively successful in exercising influence on the government through the formation of an umbrella coalition. Nonetheless, Roma efforts are hampered by corruption and the lack of focused agendas among Roma organizations. Discrimination, unwillingness of mainstream political parties to encourage Roma participation, and the lack of political engagement within the Roma community itself are all obstacles to the political inclusion of the Roma.

The National Movement Simeon II (NMS2) is a coalition of the unregistered movement Simeon II and two registered partiesBulgarian Party of Women (led by Vessela Draganova-Dencheva) and the Movement for National Revival (headed by Tosho Peikov). Registered as a party in April 2002, it was founded by Simeon Saxe-Coburg-Gotha, the exiled son of Tsar Boris. Simeon SaxeCoburg-Gotha's advisors and top ministers were young Bulgarian emigrants who, having built careers abroad mostly in Western finance, returned to their homeland to affect economic change. The NMS2 proposed to bring about change to Bulgaria's economic and political outlook "within 800 days." Thousands of Bulgarians hastened to join the NMS2 in what many saw as a protest against those who ruled Bulgaria since the collapse of communism. In the 2001 elections, the NMS2 took the lead in forming a new government but the popularity of the party quickly declined. The movement places NATO and EU integration high on the political agenda. After the 2005 elections, the party received only half of the seats it had in the previous assembly.

In the 25 June 2005 parliamentary elections, the Coalition for Bulgaria (dominated by the Bulgarian Socialist Party) was backed by 31.1% of votes and received a total of 83 seats in the 240-seat Assembly. The National Movement Simeon II (NMS2) garnered 19.9%, and 53 seats. The Movement for Rights and Freedoms (MRF) ranked third with 12.7% and 33 seats. The surprise in the 2005 elections, the nationalist coalition ATAKA received 8.2% and 17 seats. The United Democratic Forces (UDF), which was supported by 7.7% of the voters, received 20 seats, whereas the other rightist party Democrats for Strong Bulgaria (DSB) won 6.5% and 17 seats. Lastly, the Bulgarian People's Union (BPU), a coalition of the Union of Free Democrats (SSD) and the Agrarian Party of Anastasia Mozer (BZNS), won 5.2% and 13 seats.

LOCAL GOVERNMENT

Bulgaria is divided into 262 municipalities (obshtini). The municipality is the main administrative territorial unit for local government and is governed by a mayor and an elected municipal council. Municipal councils determine the policy of every municipality, including economic development, environmental, and educational policies, as well as cultural activities. Mayors are in charge of the whole executive activity of their municipality, of keeping the public order, and of organizing distribution of the municipal budget.

Bulgaria is also divided into 28 provinces (oblasti), which are larger administrative territorial units through which the government decentralizes its policies. The Council of Ministers appoints the regional governor for each province.

In preparation for EU accession, six planning regions were created in 1999 to fulfill the requirements for receiving cohesion funds. However, as of mid-2006, those regions existed on paper only.

JUDICIAL SYSTEM

Bulgaria has an independent judicial system. The 1991 constitution provides for regional courts, district courts, a Supreme Court of Cassation, which rules on decisions by the lower courts, and a Supreme Administrative Court, which rules on the legality of actions by institutions of government. A Constitutional Court is responsible for judicial review of legislation and for resolving issues of competency of the other branches of government as well as impeachments and election law. Judges are appointed by the Supreme Judicial Council, which organizes and administers the judiciary. The Constitutional Court has 12 judges appointed to a nine-year term by the National Assembly, the president, and judicial authorities.

Military courts handle cases involving military personnel and national security issues. Under the 1991 constitution, the judiciary is independent of the legislative and executive branches. The trials are public. Criminal defendants have the right to confront witnesses, the right to counsel, and the right to know the charges against them to prepare their defense. The constitution prohibits arbitrary interference with privacy, home, or correspondence.

Bulgaria accepts compulsory jurisdiction of the International Court of Justice.

ARMED FORCES

As of 2005, the armed forces of Bulgaria consisted of 51,000 active personnel with reserves numbering 303,000. For that year, the army numbered 25,000 active members, while the navy had 4,370 active personnel and the air force 13,100 active members. The army that year had 1,474 main battle tanks, 18 reconnaissance vehicles, 214 armored infantry fighting vehicles, 1,643 armored personnel carriers, and 1,774 artillery pieces. The navy's major units consisted of one tactical submarine, one frigate, seven corvettes, 16 patrol/coastal vessels, and 20 mine warfare ships. The air force had 137 combat capable aircraft, including 35 fighters and 94 fighter ground attack aircraft. There were also a 34,000-member paramilitary force that included 12,000 border guards, 4,000 security police, and 18,000 railway and construction troops. Bulgaria participated in six missions abroad, including Afghanistan and Iraq. The defense budget for 2005 totaled $630 million.

INTERNATIONAL COOPERATION

Bulgaria joined the United Nations on 14 December 1955 and participates in the ECE and all the nonregional specialized agencies. It belongs to the WTO (1996) and is a candidate for membership in the European Union. The nation also belongs to NATO (2004), the Council of Europe, the Central European Initiative, G-9, the Central European Free Trade Agreement (CEFTA), and the OSCE, and has observer status in the OAS. Bulgaria is part of the Australia Group, the Zangger Committee, the European Organization for Nuclear Research (CERN), and the Nuclear Suppliers Group (London Group). It is a guest in the Nonaligned Movement. In environmental cooperation, Bulgaria is part of the Antarctic Treaty, the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

Before World War II, Bulgaria was an agricultural country, consisting mainly of small peasant farms; farming provided a livelihood for about 80% of the population. After the war, the Communist regime initiated an industrialization program. By 1947, a sizable portion of the economy was nationalized, and collectivization of agriculture followed during the 1950s. Until 1990, the country had a centrally planned economy, along Soviet lines, and its sequence of five-year economic plans, beginning in 1949, emphasized industrial production. In 1956, according to official Bulgarian statistics, industry contributed 36.5% of national income, and agriculture and forestry, 32.9%; in 1992, the respective contributions were 42.5% and 12%.

Although Bulgaria has brown coal and lignite, iron ore, copper lead, zinc, and manganese, it lacks other important natural resources and must export in order to pay for needed commodities. Because it relied on the USSR and other CMEA countries for essential imports and as the major market for its exports, and lacks foreign exchange, the Bulgarian economy was greatly influenced by the breakup of the Soviet bloc and the switch to hard-currency foreign trade. In the 1970s, the economic growth rate was quite high (6.8% annually), but the pace of growth slowed in the 1980s, mainly because of energy shortages. The average annual growth rate was only 2% in that decade.

With the disintegration of Soviet-bloc trade and payments arrangements, GDP declined by about 10% in 1990, 13% in 1991, 8% in 1992, and an estimated 4% in 1993. Meanwhile, Bulgaria began an economic reform program supported by the World Bank and IMF. But the economy remained largely state controlled, although there was progress in privatizing many smaller enterprises. The private sector accounted for only about 20% of GDP in 1993 and 45% in 1996. Efforts at economic reform stalled in 1994 as the Socialist government again failed to privatize state-owned industries and institute structural reforms aimed at creating a market economy. The economy was further plagued by wide-scale corruption among businessmen from the former Communist Party who stripped state enterprises of their assets and transferred the funds out of the country. By 1997, the Bulgarian economy was at the brink of collapse with inflation at 300%, the banking system in chaos, and the government on the verge of bankruptcy. Bulgaria became the poorest country in Europe with average monthly wages of $30 a month.

Angry with the governing Socialists, tens of thousands of Bulgarians demonstrated in the capital calling for early elections. In April of 1997 a new government took power and instituted structural reforms designed to bring order to the economy. The government of Prime Minister Ivan Kostov quickly moved to implement market reforms. While operating under the direction of an IMF currency board, Bulgaria pegged the lev to the deutschmark (and now also to the euro), and reduced inflation to 1%. In 1997, the private sector accounted for 65% of GDP. This milestone marked the first time in the post-Communist era that the private sector outperformed the public sector in production. In addition to structural reforms, the Kostov government also moved to combat corruption by becoming the first non-OECD country to ratify the anti-bribery convention.

As of 2003, industry increasingly was being privatized, and agriculture was almost completely privatized. Bulgaria started accession talks with the EU in 2000, but was not one of 10 new countries formally invited to join the body in December 2002. If Bulgaria completes its accession requirements, it is expected to join the EU in 2007, along with Romania. Bulgaria's laws are being harmonized with EU laws, and customs barriers between them are breaking down. By the end of 1999, more than 50% of Bulgaria's exports went to EU nations.

Following the 2001 elections that brought Simeon Saxe-Coburg-Gotha to office as prime minister, the stock market soared 100%, but the government in 2002 was unable to live up to its pledge to improve living standards. Foreign direct investment rose modestly in 2002, and although economic growth slowed that year from its 5.8% high in 2000, it was higher than that of many other European countries. Tourism was strong in 2002, and although the weather was poor that year, Bulgaria's agricultural sector performed well. Taxes were lowered, and there is a zero percent capital gains tax on stock market investments.

Bulgaria's overall economic performance has been positive in the last couple of years. In 2004, the GDP grew by 5.7%, and was expected to expand by 6% in 2005, and 4.5% in 2006. This growth was fueled by an increase in domestic demand (encouraged by higher real wages and remittances from abroad), a more dynamic job market, and bank credits. Inflation was rather high in 2004, peaking at 6.2%, but was expected to regress to 4% in 2005. At 12%, unemployment was on a downward path in 2004, and was expected to drop even further by 2006, to 10%. This was the result of a more dynamic private job market, and government policies geared towards unemployment reduction. Corruption, however, remains a stumbling block to Bulgaria's economic success, and a challenge that has to be addressed before the 2007 EU accession deadline.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Bulgaria's gross domestic product (GDP) was estimated at $67.0 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $9,000. The annual growth rate of GDP was estimated at 5.4%. The average inflation rate in 2005 was 4.5%. It was estimated that agriculture accounted for 9.3% of GDP, industry 30.4%, and services 60.3% in 2005.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $67 million or about $9 per capita and accounted for approximately 0.3% of GDP. Foreign aid receipts amounted to $414 million or about $53 per capita and accounted for approximately 2.1% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Bulgaria totaled $13.72 billion or about $1,754 per capita based on a GDP of $19.9 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of -0.4%. In 2001 it was estimated that approximately 30% of household consumption was spent on food, 17% on fuel, 8% on health care, and 11% on education. It was estimated that in 2002 about 13.4% of the population had incomes below the poverty line.

LABOR

In 2005, Bulgaria's workforce totaled an estimated 3.34 million. As of third quarter 2004, an estimated 11% of workers were in agriculture, with 32.7% in industry and the remaining 56.3% in the service sector. Unemployment was estimated at 11.5% in 2005.

The constitution guarantees the right of all to form or join trade unions of their own choosing. The labor code recognizes the right to strike when all other means of conflict resolution have been exhausted. Essential employees, mainly military and law enforcement personnel, are forbidden to strike and political strikes are prohibited as well. Although the law forbids discrimination against union members and union organizing activities, there are reports of union members and organizers being harassed, demoted, dismissed or relocated. There are also reports that some newly hired workers are being forced to sign "yellow dog" contracts, namely agreements that they would not join a union or help organize one. About 18% of Bulgaria's workforce is unionized, although that percentage has been decreasing.

Minimum age for employment is 16 years, with 18 years the minimum for hazardous work. In the formal sector these regulations are generally observed, but in certain industries, family operations, and illegal businesses, children are exploited. The law establishes a standard workweek of 40 hours with at least one 24hour rest period per week. Overtime rates of no less than 150% during weekdays, 175% during weekends, and 200% during official holidays are mandated by law. The minimum wage was about $94 per month as of 2005, but is inadequate to support a worker and a family with a decent standard of living. Minimum health and safety standards exist and are effectively enforced in the public sector, but not effectively enforced in the largely unregulated and often informal private sector.

AGRICULTURE

In 2002, the total arable land area covered 3,583,000 hectares (8,834,000 acres). The average annual agricultural growth rate was -2.1% for 198090 and -0.4% for 19902000. By 2000, agricultural output was only two-thirds of what it was in 1990. However, during 200204, crop production averaged 2.9% higher than during 19992001. In 2005, agriculture accounted for 9.3% of GDP. In 2004, agriculture (including fishing and forestry) engaged about 11% of the economically active population.

Collectivized agriculture became the norm under the Communist government after 1958. In March 1991, the government adopted a land law which restored ownership rights to former owners of expropriated land. These owners were to receive 2030 hectares (4974 acres) each of land approximating the type and location of the former holdings, regardless of whether or not the owner cultivates that land. After February 1991, full price liberalization for producers and consumers was to occur. However, the agricultural sector was still shrinking due to the lack of progress in the implementation of privatization and property restitution. A grain crisis developed when Bulgaria exported a million tons of wheat in 1995. Currency depreciations, increased taxes, and lack of funds exacerbated the disintegration of the agricultural sector in the mid-1990s.

The principal grain-growing areas are the Danube tableland and southern Dobrudja. The production of major crops in 2004 (in thousands of tons) was wheat, 3,961; corn, 2,123; barley, 1,181; sunflower seeds, 1,079; and rapeseed, 22.

Bulgaria is a major supplier of grapes, apples, and tomatoes to Europe and the former Soviet Union. Potatoes and paprika are also important crops. Production in 2004 included (in thousands of tons): grapes, 400; apples, 30; tomatoes, 400; and potatoes, 574. About 60,000 tons of tobacco were also produced that year.

Machinery available to agriculture has increased significantly. Tractors rose from 25,800 units in 1960 to 53,800 units in 1985, before falling to 32,100 in 2002; combines increased from 7,000 to 16,000 in 1985, but by 2002 numbered only 9,000 in use. About 16% of the cultivated area is irrigated.

ANIMAL HUSBANDRY

Meadows and pastures make up about 18% of the total land area. Bulgaria had 2,100,000 sheep, 18,000,000 chickens, 1,000,000 hogs, 750,000 goats, 668,000 cattle, 200,000 donkeys, and 150,000 horses in 2004. Meat production (in carcass weight) in 2004 amounted to 479,000 tons. In the same year, the country produced 1,590,000 million tons of milk and 92,000 tons of eggs.

FISHING

Fishing resources in the Black Sea are less than abundant. Before 1960, the annual catch was slightly above 5,000 tons. Fishing output reached a high of 167,100 tons in 1976, then fell to 115,607 tons in 1982. Prior to 1989, Bulgaria used to produce about 20,000 tons of fish from freshwater aquaculture. The fish farms and fish processing industries went through major restructuring and privatization during the 1990s. Only after 2000 did the fish industry register some growth. In 2003, the total catch was 16,498 tons, about 80% from inland waters. Fishing vessels are based at the ports of Varna and Burgas. The most popular river fish is sturgeon. Due to environmental limitations, the government sets an annual sturgeon quota; for 2003 it was 22 tons. The beluga caviar quota set that year was 1,720 kg (3,780 lb).

FORESTRY

Forests cover 3,700,000 hectares (9,143,000 acres), or 33.4% of Bulgaria's territory. About 80% of the total forest area is wooded forest land. Forests are about 34% coniferous and 66% deciduous, and mainly occupy regions of higher altitudes. Over half of the forests in Bulgaria are situated on slopes of over 20°, making harvesting and reforestation very difficult. The principal lumbering areas are the Rila and western Rhodope Mountains in the southwest and the northern slopes of the Balkan Mountains in the center. Forestry and the forest industry contribute about 2% to the GDP.

Intensive exploitation and neglect before and during World War II (193945) and even more intensive exploitation following the war contributed to the deterioration of the forests. So during 194565, 860,000 hectares (2,125,000 acres) were reforested; the 20-year plan (196180) called for the planting of 1.4 million hectares (3.5 million acres). During the 1980s, annual reforestation averaged 50,000 hectares (123,500 acres). Despite the intensive harvesting during 195073 (which exceeded the government's Forest Management PlanFMP), the total timber volume has increased from 165 million cu m (5.8 billion cu ft) in 1934 to 404 million cu m (14 billion cu ft) in 1995. The FMP decreased the amount of timber permitted to be cut from 6.8 million cu m (240 million cu ft) in 1955 to 6.2 million cu m (219 million cu ft) of roundwood in 1995 because fewer large trees are available. Roundwood production has decreased from 8.6 million cu m (304 million cu ft) in 1960 to 4.8 million cu m (522 million cu ft) in 2003. Forestry exports in 2003 totaled $139.3 million. Bulgaria exports logs to Turkey, Greece, Italy, and Macedonia; veneer to Greece and Syria; and particleboard to Greece, Macedonia, and Egypt. The main problems prohibiting greater roundwood production are diseases, drying of trees, and pests. Acid rain and heavy metals have not hurt the local forests. In 1998, the government began a forestry restitution and privatization program covering 3.6 million hectares (8.9 million acres). The average annual reforestation rate was 0.6% during 19902000.

MINING

Bulgaria was an important regional producer of nonferrous metal ores and concentrates, and was mostly self-sufficient in mineral requirements. Mining and metalworking in the region was well documented by Roman times, when Bulgaria and Romania, known respectively as Thrace and Dacia, were important sources of base and precious metals. Small quantities of bismuth, chromite, copper, gold, iron, lead, magnesite, manganese, molybdenum, palladium, platinum, silver, tellurium, tin, uranium, and zinc were mined, as well as the industrial minerals anhydrite, asbestos fiber, barite, bentonite, common clays, refractory clays, dolomite, feldspar, fluorspar, gypsum, kaolin, industrial lime, limestone, nitrogen (in ammonia), perlite, pyrites, salt (all types), sand and gravel, silica (quartz sand), calcined sodium carbonate, dimension stone, sulfur (content of pyrite), sulfuric acid, and crushed stone. Most of the copper deposits were within a roughly 50 km-wide (30 mi) swath from Burgas in the east, to the former Yugoslavia in the west, and almost all was produced by two enterprises, Asarel-Medet, at Panagurishte, and Elatzite-Med, at Srednogorie; copper was also mined at Burgas and Malko Turnovo. Lead and zinc were mined chiefly in the Rhodope Mountains, at Madan and Rudozem. Production outputs for 2003 were: gold, 2,142 kg; gross copper, 26,415,000 tons; barite ore (run of mine), 637,000 metric tons; limestone and dolomite, 11,000,000 tons; industrial lime, 2,902,000 tons; and silica, 610,000 tons. Manganese ore production was zero in 1999 and 2000, but totaled 1,516 metric tons in 2001 and 4 metric tons each in 2002 and 2003.

In 1998, the National Program for Sustainable Development of Mining in Bulgaria was drafted and approved, and the Underground Resources Act was enacted. The latter, which aimed to promote private enterprise and foreign investment, stipulated that underground mineral wealth was the property of the state, and provided for claims by domestic and foreign companies for the development and operation of mineral deposits for up to 35 years with potential 15-year extensions. Improved economic performance at the end of the 1990s, the significant shift away from economic uncertainties during the transition from central economic planning, improving political stability in the Balkans, and greater investor confidence in the legal underpinnings of the growing privatization process combined to contribute to the $1 billion net foreign investment in 2000, one-third more than in 1999.

ENERGY AND POWER

Bulgaria has only modest reserves of oil and natural gas, but somewhat larger recoverable reserves of coal. But it is nuclear power that allows Bulgaria to be an exporter of electricity.

In 2002 Bulgaria's output of electrical power was estimated at between 40.9 and 43.1 billion kWh, of which: around 43% came from fossil fuels; 5% from hydropower; 49% from nuclear energy; and the remainder from geothermal and other sources. In the same year, consumption of electricity is estimated at 31.797 billion kWh to 32.7 billion kWh. Total installed capacity is estimated at about 11.8 GW in 2002, of which: hydropower accounts for 1.672 million kW; nuclear for 3.782 million kW; and thermal for 6.326 million kW.

As previously noted, Bulgaria's nuclear power generating capability accounts for a major portion of the country's electrical power output, as well as allowing Bulgaria to be a power exporter. That capability is based upon its Kozloduy facility, which has six reactors, of which only four are working. In 2002, Bulgaria exported 8.335 billion kWh of electricity. In 2001, it earned $150 million from exports of electric power to Serbia and Montenegro, Kosovo, Greece, Turkey, and Macedonia.

Bulgaria is heavily reliant on petroleum product imports. The country's proven oil reserves, as of 1 January 2005, were estimated at 15 million barrels, with production and consumption estimated in 2004 at 1,000 barrels per day and 86,000 barrels per day, respectively. Exploration for oil and natural gas is primarily centered in the Black Sea and in the northern part of the country. Bulgaria's sole refinery is located at Burgas, the country's main port. In 2002, refinery output was put at 123,140 barrels per day, but according to an Energy Information Administration analysis brief, updated as of March 2005, actual refining capacity was estimated at 115,000 barrels per day.

Bulgaria's consumption of natural gas far exceeds its proven reserves and production, and it must rely on imports to meet almost its entire natural gas needs. As of 1 January 2005, Bulgaria's proven reserves of natural gas were estimated at 0.2 trillion cu f. Output in 2002 was estimated at only 0.1 billion cu ft. Imports and consumption were both estimated at 174 billion cu ft. for that same year

Coal is the most important mineral fuel, with lignite accounting for nearly 90% and brown coal for around 10%. Bulgaria was estimated in 2002 to have recoverable coal reserves of 2,988 million short tons. Production, consumption and imports of coal are estimated at: 28.4 million short tons; 32.4 million short tons; and 4.0 million short tons, respectively

INDUSTRY

Before World War II, Bulgarian industry, construction, mining, and handicrafts contributed only 17% to the net national income and accounted for only 8% of employment. Handicrafts in 1939 contributed almost half the net industrial output, followed by textiles and food processing. In the postwar period, the Communist regime nationalized industry and, through economic planning, emphasized a heavy industrialization program that resulted in a substantial increase in the metalworking and chemical industries. Between 1950 and 1960, the annual rate of growth of output in industry (including mining and power production) was 14.8%, according to the official index of gross output. Official statistics indicate that industrial output grew by 1,100% between 1956 and 1980, with the production of capital goods increasing by 1,500% and the production of consumer goods by 658%. Industrial output increased by 9.1% annually during 197175, 6% during 197680, 6.8% during 198085, and 2.7% during 198590. Ferrous metallurgy was given special emphasis in the 1960s, machine-building and chemicals in the 1970s and early 1980s, and high technology in the mid-1980s.

Even before the collapse of communism, industrial and agricultural production fell annually until 1997 and 1998, respectively, when the Kostov reforms took effect. Although traditional industries remain the foundation of the industrial sector, Bulgaria expects high-technology production to post gains in the future as high-tech companies establish operation there.

Industry accounted for 29% of GDP in 2001. The privatization of Bulgaria's industries was largely complete as of 2002, with the exception of a few large companies, such as Bulgartabac. The construction sector should realize strong growth due to the need to undertake major infrastructure projects. Growth in 2003 was expected in light industry, including electronics, textiles, and food processing.

In 2004, industry accounted for 30.1% of the GDP (and 32.7% of the labor force); agriculture made up 11.5% of the GDP (and 11% of the labor force), while services came in first with a 58.4% representation in the economic output, and 56.3% of the workforce.

Primary industries included electricity, gas and water, food, beverages and tobacco, machinery and equipment, base metals, chemical products, coke, refined petroleum, and nuclear fuel. Bulgaria also produces electrical components and computers. The industrial production growth rate reached 5.2% in 2004.

SCIENCE AND TECHNOLOGY

In 1996, Bulgaria had 25 agricultural, medical, scientific, and technological learned societies and 117 research institutes. The Bulgarian Academy of Sciences (founded in 1869) is the main research organization. The Academy of Medicine (founded in 1972) has five higher medical institutes. Total expenditures on research and development (R&D) in 2002 totaled $278.313 million or 0.5% of GDP. Of that amount, 69.8% came from the government, while 24.8% came from business. Higher education and nonprofit sources each accounted for 0.2% in 2002. The remainder came from foreign sources. In that same year there were 1,158 researchers and 466 technicians per million people, actively engaged in R&D. High technology exports in 2002 totaled $85 million, accounting for 3% of the country's manufactured exports. A large-scale program of scientific and technological cooperation of CMEA countries was adopted at the end of 1985.

Bulgaria has 18 universities and colleges offering degrees in basic and applied sciences. In Sofia are the National Natural History Museum (founded in 1889) and the National Polytechnical Museum (founded in 1968). In 198797, science and engineering students accounted for 27% of university enrollment.

DOMESTIC TRADE

Private shops and small supermarkets are open in many cities and local farmer's markets are still active. A few warehouse stores have opened in Sofia. The government has remained committed to privatization efforts. By the end of 1999, 71% of state-owned assets had been privatized. Bulgaria has also attracted a number of foreign investors, including US companies such as American Standard, McDonald's, Kraft Foods, and Hilton International. However, Germany is the top foreign investor.

Newspapers and magazines are the important means of advertising to the population at large. Radio advertisements are permitted for half an hour each day.

Offices are open from 8:30 am to 12:30 pm and from 1:30 to 5:30 pm, Monday through Friday. Normal banking hours are 8 am to 12 noon, MondayFriday, and 8 to 11 am on Saturday.

Country Exports Imports Balance
World 7,540.2 10,901.1 -3,360.9
Italy-San Marino-Holy See 1,057.5 1,114.7 -57.2
Germany 812.1 1,555.1 -743.0
Greece 781.8 725.0 56.8
Turkey 690.0 667.4 22.6
Belgium 457.7 149.7 308.0
France-Monaco 382.5 614.5 -232.0
Area nes 352.3 100.1 252.2
United States 337.0 279.3 57.7
Serbia and Montenegro 249.0 249.0
Romania 230.0 262.2 -32.2
() data not available or not significant.

FOREIGN TRADE

The principal imports were crude oil, natural gas, diesel fuel, fuel oil, coal, textiles, and machinery and equipment.

Geographic distribution of trade has changed radically twice: since World War II and the collapse of the Soviet bloc. Whereas before the war Bulgaria traded mainly with the countries of Western and Central Europe, after the war, trade shifted almost entirely to the countries of the Communist bloc. In 1991, 49.8% of all exports still went to the former USSR and 43.2% of all imports still came from the former USSR.

By the mid-1990s, weak demand in the former Soviet bloc markets led to an increase in exports to European Union countries which now take about 56% of Bulgaria's exports. Other important export areas include Central and Eastern European, and other OECD countries. Principal export markets in 2004 included Italy (with 13.1% of all exports), Germany (11.6%), Turkey (9.3%), Belgium (6.1%), Greece (5.6%), US (5.3%), and France (4.9%). The main import partners were Germany (with 15.1% of all imports), Italy (10.2%), Russia (7.9%), Greece (7.5%), Turkey (6.9%), and France (4.4%). Exports totaled $9.1 billion (FOBFree on Board) in 2004; imports grew to $12.2 billion (FOB); the trade deficit was $3.1 billion.

BALANCE OF PAYMENTS

During the postwar industrialization program, Bulgaria had a trade imbalance, made up largely by credits, particularly from the former USSR. From 1952 to 1958, the country had visible export surpluses, but another industrialization drive resulted in a trade imbalance during 195961, and there were persistent imbalances during the latter part of the 1960s. In the early 1970s, export surpluses were reported for most years; there were also small surpluses in 1979, 1980, and 1984. With the collapse of COMECON trade, Bulgaria began exporting agricultural products and light manufactured products in exchange for consumer goods. During the first nine months of 1992, Bulgaria recorded its first surplus in many years. Failure of the government to institute economic reforms, however, led to severe economic hardship and trade deficits of $1.4 billion in 1993 and $1.6 billion in 1994. In 1994, the

Current Account -1,675.8
    Balance on goods -2,478.0
      Imports -9,922.8
      Exports 7,444.8
    Balance on services 599.6
    Balance on income -489.1
    Current transfers 691.7
Capital Account -0.2
Financial Account 2,058.1
    Direct investment abroad -21.8
    Direct investment in Bulgaria 1,419.4
    Portfolio investment assets -72.0
    Portfolio investment liabilities -130.0
    Financial derivatives -1.1
    Other investment assets 147.5
    Other investment liabilities 716.1
Net Errors and Omissions 349.9
Reserves and Related Items -732.0
() data not available or not significant.

deficit was partially financed by almost $1.1 billion in aid from other countries and international financial institutions. In 2000, the current account deficit was financed by $1 billion in foreign direct investment and additional funding from international financial institutions.

The US Central Intelligence Agency (CIA) reported that in 2002 the purchasing power parity of Bulgaria's exports was $5.3 billion while imports totaled $6.9 billion resulting in a trade deficit of $1.6 billion.

The International Monetary Fund (IMF) reported that in 2001 Bulgaria had exports of goods totaling $5.11 billion and imports totaling $6.7 billion. The services credit totaled $2.42 billion and debit $1.88 billion. By 2004, the exports of goods and services grew to $14 billion, while the imports totaled $16.5 billion. The resulting resource balance was thus -$2.5 billion, while the current account balance hit -$1.8 billion. Bulgaria's total reserves (including gold) amounted to $9.2 billion in 2004.

BANKING AND SECURITIES

All banks were nationalized in 1947 in accord with Soviet banking policies. Until 1969, the Bulgarian National Bank (BNB) was the chief banking institution handling deposits of state and local governments and national enterprises. It was the bank of issue and was authorized to credit enterprises with funds for facilities and activities not covered by the capital investment plan. In 1969 it was renamed the Bulgarian Central Bank and remained the bank of issue. Two new banksthe Industrial Bank and the Agricultural and Trade Bankassumed the functions of providing credit for industry and for agriculture and individuals, respectively. In 1968, the Bulgarian Foreign Trade Bank was established as a joint-stock company. The State Savings Bank was the chief savings institution.

In 1996, the Bulgarian National Bank, lacking reserves, virtually gave up attempts to stabilize the exchange rate and contain inflation. However, the outlines of future economic policy under a new government appear to be decided, given that all parties agreed that a currency board was the linchpin of economic stabilization. The IMF opened negotiations with the caretaker government on the introduction of a currency board, which it made a condition of further funding. When Bulgaria achieved independence in 1991, a two-tier banking system was formed. The Bulgarian National Bank became the country's central bank. The country has a state savings bank with 491 branches. There are about 80 commercial banks in Bulgaria. Some of the commercial banks are cross-border banks that are involved in the foreign exchange market. Some of the banks licensed for cross-border foreign exchange include: Agricultural and Co-operative Bank (1987), Balkenbank (1987), Biochim Commercial Bank (1987), Bulgarian Post-Office Bank, Economic Bank (1991), Hemus Commercial Bank, and the Bank for Economic Enterprise (December 1991).

In a related move that was also seen as a step towards the restrictive regime of a currency board, the central bank announced in late January of 1997 that it would no longer be fixing a base interest rate. Instead, the BNB would set an indicative rate defined by the interest on short-term government bonds. Banks themselves would be able to set their own rates according to market principles, without interference from the central bank. In 2001, the exchange rate to the dollar was 2.1847 leva. The International Monetary Fund reports that in 2001, currency and demand depositsan aggregate commonly known as M1were equal to $2.2 billion. In that same year, M2an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual fundswas $5.5 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 3.74%.

The First Bulgarian Stock Exchange was established in Sofia on 8 November, 1991 as a joint stock company with capital of Lv10,000,000 divided into 10,000 shares of Lv1,000 each. Designated as SOFIX, it is managed by a Board of Directors and by a Chief Executive. The exchange currently trades mainly in unlisted securities. As of 2004, there were 332 companies listed on the SOFIX. Market capitalization as of December 2004 stood at $2.804 billion, with the SOFIX Index up 37.6% from the previous year at 625.3.

INSURANCE

Private insurance companies were nationalized in 1947 and absorbed into the State Insurance Institute. Property insurance and life insurance are compulsory for collective farms and voluntary for cooperatives, social organizations, and the population in general. Insurance policies and premiums have increased steadily for both. Third-party automobile liability and workers' compensation are also compulsory insurances. The Insurance Regulatory body is the Ministry of Finance. Since March of 1998, foreigners have been permitted to own a Bulgarian insurer. In 2003, total direct premiums written totaled $387 million, of which nonlife premiums accounted for $343 million. Bulgaria's top nonlife insurer was Bulstrad, with $58.9 million of gross nonlife premiums written in 2003. That same year, DZI was the country's top life insurer with $18.1 million of gross life premiums written.

PUBLIC FINANCE

An annual budget for all levels of government, becoming effective on 1 January, is voted by the National Assembly, after having been prepared by the Ministry of Finance. The disintegration of the Communist system in November 1989 and the subsequent collapse of the Soviet trade bloc caused severe economic disruption, pushing the government's budget deficit to 8.5% of GDP in 1990 (not including interest payments on commercial foreign debt). However, by the late 90s the country was seeing unprecedented growth (5.8% in 2000), due to aggressive market reforms put in place by the government during the prior decade.

The US Central Intelligence Agency (CIA) estimated that in 2005 Bulgaria's central government took in revenues of approximately $1.1 trillion and had expenditures of $1 trillion. Revenues minus expenditures totaled approximately $0.1 trillion. Public debt in 2005 amounted to 32.4% of GDP. Total external debt was $15.46 billion.

The International Monetary Fund (IMF) reported that in 2003, the most recent year for which it had data, central government revenues were lv12,484 million and expenditures were lv12,417 million. The value of revenues was us$7,092 million and expenditures us$7,054 million, based on an exchange rate for 2003 of us$1 = lv1.7604 as reported by the IMF. Government outlays by function were as follows: general public services, 17.1%; defense, 6.6%; public order and safety, 7.6%; economic affairs, 11.9%; housing and community amenities, 0.7%; health, 11.9%; recreation, culture, and religion, 1.6%; education, 5.2%; and social protection, 37.3%.

TAXATION

Bulgaria revised much of its tax system in 1996. One of the changes states that foreign persons receiving remuneration as lecturers and consultants, royalties, license payments, and remuneration for technical services, are charged with a 32% tax at the time of payment. The personal income tax is progressively rated up to 24%. As of 1 January 2005, the standard corporate or profit tax rate is 15%. A withholding tax of 7% is assessed on dividends. Employers are required to contribute 37% of employees' gross salaries for social security insurance while the employees contribute an additional 2%. The value-added tax covers all goods, services and imports at a standard rate of 20%. However, exemptions include insurance and financial services, the transfer of or the renting of land, and educational and health related services. Other taxes include a property tax at a rate of 24%.

CUSTOMS AND DUTIES

Most imports are subject only to declaration and registration. However, special licenses are required for imports of tobacco, alcoholic beverages, oils, military hardware, radioactive materials, jewelry, precious metals, pharmaceutical items, and narcotics. The Ministry of Foreign Trade supervises the collection of customs duties. The amount collected is not published.

Goods arriving from foreign points to be unloaded in Bulgaria must have customs manifests and other shipping documents as specified by law. Customs duties are paid ad valorem at a rate of

Revenue and Grants 12,484 100.0%
    Tax revenue 6,527 52.3%
    Social contributions 3,654 29.3%
    Grants 306 2.5%
    Other revenue 1,997 16.0%
Expenditures 12,417 100.0%
    General public services 2,127 17.1%
    Defense 815 6.6%
    Public order and safety 949 7.6%
    Economic affairs 1,477 11.9%
    Environmental protection
    Housing and community amenities 87 0.7%
    Health 1,479 11.9%
    Recreational, culture, and religion 195 1.6%
    Education 651 5.2%
    Social protection 4,637 37.3%
() data not available or not significant.

540% on industrial products and 570% on agricultural products. Goods from EU nations receive preferential tariff rates. Duty must be paid on all goods except those specifically exempt, such as many foods products, farm machinery, toiletries, fertilizer and pesticide, mining equipment, and medical and dental supplies. In August 1987, the national assembly adopted a law to establish tariff-free zones to attract foreign investment beginning in January 1988. Taxes on imports include a value-added tax of 20%, a 0.5% customs clearance fee, and a 3% import surcharge.

FOREIGN INVESTMENT

Bulgaria has realized the need to attract foreign investment and has one of the most liberal foreign investment laws in the region. The 1997 Foreign Investment Law set up the Foreign Investment Agency (FIA) to administer the regime. In 1999, currency laws were liberalized to conform with IMF Article VIII obligations. Foreign investors can enter into joint ventures, start new (greenfield) ventures, purchase companies in Bulgaria's privatization process, or acquire portfolio shares. The law governing privatizations is the 1992 Law on the Transformation and Privatization of State and Municipal Enterprises. In November 2000, amendments were made to enhance the transparency and efficiency of the privatization process and to bring it under parliamentary control, but domestic political turmoil and austerity under an IMF stand-by program combined with the external economic slowdown to bring foreign investment in privatization to a low of less than $20 million in 2001. By 2000, about 78% of the state enterprises slated for privatization had been sold off with foreign investors participating mainly through direct cash purchases. The government encourages the use of Brady bonds (debt-for-equity swaps) in payment instruments. Bulgarian bad debt bonds (zunks) can be purchased on the local market at a 3035% discount on the face value and are accepted at a 40% premium in privatization sales.

Under legislation from 1987 and since revised, Bulgaria has six free zones where companies with foreign participation can receive equal or preferential treatment. The most profitable free zone is the one at Plovdin. Others are on the Danube (at Ruse and Vidin), near the Turkish border (at Svilengrad), near the Serbia border (Dragomen), and on the Black Sea (at Burgas, which has the most advanced warehousing and transshipment facilities).

In 1992, foreign direct investment (FDI) was $34.4 million, mostly from Austria and Hungary. In 1993, FDI jumped to $102.4 million, $22 million from privatization and over half ($56 million) from Germany. By 1997, FDI inflow had risen to $636.2 million. Most ($421.4 million) came from privatization sales and the largest source was Belgium ($264 million). In 1998, the effects of the Russian financial crisis helped produce the first postindependence decline to $620 million; $155.8 million was from privatization and Cyprus was the largest source ($109 million), mainly from Stambouli Enterprises. In 1999, FDI inflow recovered to $818 million, with $226.7 million coming from privatization sales and with Germany, Cyprus, and Russia each the source of over $100 million FDI. FDI inflow peaked in 2000 at $1 billion, with $366 million from privatization. The largest sources were Italy ($339.7 million) and Greece ($241million). The global economic slowdown beginning in 2001 reduced FDI inflow to $812.9 million in 2001 and to an estimated $478.7 million in 2002. Contributions from privatization reached a low of $19.2 million, recovering to an estimated $135.6 million in 2002. In 2001, Greece ($240.2 million) and Italy ($146.5 million) were the sources of the largest investments, and in 2002, the only FDI inflow over $100 million was from Austria ($137.7 million). A main source of disinvestments was Korea (Daewoo and Hyundai), with negative flows of -$9.2 million in 2001 and -$41.3 million in 2002.

From 1992 to 2002, total FDI inflow was $5.14 billion, $1.58 billion from privatization sales. Sources include at least 25 countries, with the top five being Greece (12.4%), Germany (12.2%), Italy (10.5%), Belgium (9.4%), and Austria (8.7%). The sectors receiving the most net FDI 1998 to 2002 were banks and other financial activities (23.5%); trade and repair services (14.1%); telecommunications (9.1%); petroleum, chemicals, rubber and plastics (7.2%); and mineral products including cement and glass (6.8%). In 2004, FDI reached a record high of $2.5 billion (the equivalent of 9.2% of the GDP), and was expected to remain high in 2005 at around $2.1 billion. The main source of FDI has been the EU, with around 67% of total investments.

Capital markets are small and underdeveloped in Bulgaria. The new Bulgaria Stock Exchange opened in 1998 with 998 companies and a total market valuation of $992 million. In December 2001, there were 399 listed companies with a market capitalization of $505 million. However, Bulgaria offers a favorable investment climate, boasting strong economic growth, political stability, a well educated workforce and competitive costs. It is a good springboard to other markets in Europe and the Middle East, and as EU accession candidate in 2007 it can serve as an entry point to otherwise well protected markets.

ECONOMIC DEVELOPMENT

Until 1990 when the post-Communist government began a program of privatization, the economy was almost entirely nationalized or cooperatively owned and operated on the basis of state plans. These were designed to expand the economy as a whole, with emphasis on the growth of heavy industry (fuels, metals, machinery, chemicals) and on the development of export goods. In 1971, productive enterprises were grouped into more than 60 state concerns responsible for almost all nonagricultural production.

Bulgaria's first five-year plan (194953) emphasized capital investment in industry. The period was marked by a slow pace in agricultural production (owing largely to collectivization and small investment), an inadequate supply of consumer goods, and a poor livestock output. The 195357 plan provided for a decrease in industrial investment, with a resultant improvement in agriculture, housing, and living conditions. The food-processing industry, important for export, began to receive greater attention in 1958, as did textiles and clothing. The lagging rate of growth during the early 1960s was due mainly to poor agricultural output and to a slower industrial pace. The third five-year plan (195862), with its "big leap forward" (195960), was claimed to have reached its goals by the end of 1960, but definite shortcomings remained. The fourth plan (196165) devoted 70% of total investment to industry, while agriculture received only 6.5%. Investments directed by the fifth plan (196670) adhered essentially to precedent, with some shift toward agriculture, and this trend continued under the sixth plan (197175). Of total investment during 197173, over 40% went to industry and 15% to agriculture. The 197680 plan resulted in a 35% increase in industrial output and a 20% increase in agricultural output. The overall growth rate began to slow down in the late 1970s, and the 198185 plan reflected the concept of a more gradual economic growth. Under the 198690 plan, it was projected that national income would grow by 2225%, industrial output by 2530%, and agricultural production by 1012%. Priority was to be given to the development of high technology.

In the 1990s, the post-Communist government began a program to reform of the nation's economy. It rescheduled the foreign debt, abolished price controls, and became a member of the International Monetary Fund (IMF) and IBRD. The reforms, however, were not embraced by the Socialist government that took power in 1994 and by 1996 the economy was in a tailspin. The government led by Prime Minister Ivan Kostov that took power in 1997 laid the financial groundwork for a market economy by selling off state firms, strengthening the currency (lev), and doing away with price controls, state subsidies, monopolies, and trade restrictions. As a result of its successful stabilization of the lev and inflation, Bulgaria is viewed favorably by investors and is a candidate for membership in the European Union (EU). Membership in that body was expected for 2007 if accession requirements are met, including progress on privatization.

The government of Prime Minister Simeon Saxe-Coburg-Gotha, which came to power in 2001, took steps to reduce taxes, rein in corruption, and encourage foreign investment. Bulgaria nevertheless suffers from high unemployment and low standards of living. A $337 million stand-by arrangement with the IMF, approved in February 2002, expired in February 2004. The government, while pledging to the IMF that it would adhere to sound macroeconomic policies (including controlling spending, strengthening tax administration, curbing inflation, balancing the budget, and strengthening the country's external financing position), stated the improvement of Bulgarians' living standards was central to the country's economic development.

Although Bulgaria has registered some of the highest GDP growth rates in Europe, the real income of the population (and subsequently their living standards) have failed to develop as quickly. Policy makers in Bulgaria are therefore looking to match the macroeconomic boom with similar improvements at the population level, particularly in terms of lower unemployment and more job opportunities. The national elections from June 2005 were followed by political turmoil, none of the parties being able to gain a clear majority. Eventually, the socialist party managed to form a government around Prime Minister Sergei Stanishev and promised to continue economic reforms and market restructuring. Together with Romania, Bulgaria is seeking to meet the EU accession date of 2007. Corruption remains the main point of contention for both countries, and is an issue that needs to be addressed promptly in the coming period.

SOCIAL DEVELOPMENT

The code for compulsory social insurance was revised in 2000. It provides for dual coverage by a social insurance system and mandatory private insurance. The program covers all employees, selfemployed persons, farmers, artists, and craftsman. Old age benefits begin at age 61 and 6 months for men and 56 and 6 months for women; these will be increased incrementally until 2009 when retirement age will be 63 for men and 60 for women. Survivors' and disability pensions are also provided, as well as work injury and unemployment benefits. Maternity benefits amount to 90% of earnings for 135 days. The government provides family allowance benefits based on the age and number of children.

Although women have equal rights under the constitution, they have not had the same employment opportunities as men. Although many women attend university, they have a higher rate of unemployment, and are likely to work in low paid jobs. Violence against women remains a serious problem, and domestic violence is considered a family problem and not a criminal matter. The government provides no shelter or counseling for women. There exists societal stigma against rape victims, and no laws prohibit sexual harassment. Trafficking in women remains a huge problem.

A significant problem of discrimination against the Roma minority continued in 2004. Although freedom of speech is provided for by the constitution, the government maintains influence over the media and libel is a criminal offense. The government and public have limited tolerance for religious freedom.

HEALTH

The Ministry of Health is the controlling and policy-making agency for the health system in Bulgaria. An estimated 4% of GDP went to health expenditure. The Bulgarian government passed a bill restoring the right of the private sector to practice medicine and permitting the establishment of private pharmacies, dentists, and opticians. Bulgarian citizens resident in the country still have use of the free national health service. Bulgaria is in the process of restructuring its health care system from one based on command and control to one founded on pluralism. Medical care has never been well funded, but the shift from a centrally planned to a private enterprise system has left the medical sector in disarray. Doctors continue to receive low wages and operate inadequate and outdated machinery and patients on the whole receive minimal health services. In 1993, the World Bank assessed the country's problems and recommended numerous changes and improvements. The Ministry of Health sought funding for 1921 additional health centers and the rehabilitation of 67 secondary centers served by 283 emergency medical teams. Utilization of health care services, including hospitalization, outpatient treatment, and preventive care, declined throughout the 1990s.

Bulgaria has 98 municipal hospitals with an average of 227 beds apiece, and 32 general district hospitals with an average of 874 beds. In addition there were 12 university hospitals in Sofia. As of 2004, there were an estimated 338 physicians, 443 nurses, 81 dentists, and 16 pharmacists per 100,000 people. Mortality in 2000 was 13 per 1,000, compared with 8.1 in 1960.

Stroke mortality is among the highest in Europe and circulatory diseases account for more than half of all deaths. Smoking is on the increase; alcohol consumption is high; physical activity is low; and obesity is common. Bulgarians have a high intake of fats, sugars, and salt. One out of eight people has high blood pressure. Improved maternal and child care lowered infant mortality from 108.2 per 1,000 in 1951 to 13 per 1,000 in 2000. However, by 2005 the infant mortality rate increased to an estimated 20.55 per 1,000 live births. In 1999, there were 46 cases of tuberculosis per 100,000 people despite high immunizations for this disease. In the same year Bulgaria immunized children up to one year old as follows: diphtheria, pertussis, and tetanus, 96%, and measles, 96%. An estimated 76% of married women (ages 15 to 49) used contraception. The fertility rate has deceased from 2.2 per woman in 1960 to 1.3 per woman in 2000. Bulgaria's maternal mortality rate is below the average for countries of medium human development. Approximately 99% of the population had access to safe drinking water. Life expectancy in 2005 was 72 years on average.

The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 346 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

HOUSING

There are two main types of housing environments in the country: street district and housing complexes. Most of the street district housing was built before World War II and consists of private lots built to follow a street regulation plan. Beginning in the 1950s, housing complexes were built on public property, though the homes themselves are privately owned. Over 120 complexes have been built in the last 50 years, with a large number of prefab homes. Capital investment for housing construction during the period 197680 amounted to Lv3.5 billion. At the end of 1985 there were 3,092,000 dwelling units in the country, 24% more than in 1975; by 1991, this figure had risen to 3,406,000. In 2004 there were an estimated 3,704,798 dwellings; about 477 per 1,000 population. The average number of people per household was 2.09. About 11% of all housing stock are one-room dwellings; about 65% are two or three-room units. About 63% of all dwellings are in urban areas.

Although housing construction during the period 197685 averaged about 60,000 units per year, the housing shortage continues, especially in the larger cities, because of the influx into urban areas of new workers and because of the emphasis placed on capital construction. In 1975, to curb urban growth, the government instituted tight restrictions on new permits for residences in major cities. In December 1982, the Communist Party decreed that, in order to halt the growth of Sofia, a number of enterprises in the capital would be closed or moved elsewhere.

EDUCATION

Education is free and compulsory for eight years between the ages of 7 and 19. Primary education is divided into two stages of four years in each stage. Secondary students then choose either a general studies or vocational training program, each of which lasts for four years. The Academic year runs from September to June. The language of instruction is Bulgarian.

In 2001, about 70% of children between the ages of three and five were enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 90% of age-eligible students. The same year, secondary school enrollment was about 87% of age-eligible students. It is estimated that about 97% of all students complete their primary education. The student-to-teacher ratio for primary school was at about 17:1 in 2003; the ratio for secondary school was about 12:1.

There are over 30 higher education institutions, including four universities. The most important is the University of Sofia, founded in 1888. The others include the University of Plovdiv (founded 1961), the University of Veliko Tarnovo (founded 1971), and the American University in Bulgaria (founded 1991). All higher level institutions had a total of 262,757 students and 26,303 teaching staff in 1997. In 2003, about 39% of the tertiary age population were enrolled in some type of higher education program. The adult literacy rate for 2004 was estimated at about 98%, with fairly even rates for men and women.

As of 2003, public expenditure on education was estimated at 3.6% of GDP.

LIBRARIES AND MUSEUMS

The St. Cyril and St. Methodius National Library, established in 1878 in Sofia, is the largest in Bulgaria (2.52 million volumes); since 1964, the Elin Pelin Bulgarian Bibliographic Institute has been attached to it. Other important libraries are the Central Library of the Scientific Information Center (with 740,000 volumes), the Bulgarian Academy of Sciences library (1.74 million volumes), the Sofia University Library (1,500,000 volumes), and the Ivan Vazov National Library in Plovdiv (with 1,300,000 volumes). The Pencho Slaveykov Public library in Varna has over 800,000 volumes. The Union of Librarians and Information Services Officers was established in Bulgaria in 1990.

Bulgaria has some 200 museums, of which the most important include the National Archaeological Museum (attached to the Academy of Sciences) and the National Art Gallery (with a collection of national and foreign art), both in Sofia. Other museums are devoted to history, science, and the revolutionary movement, and include the Bojana Church Museum in Sofia, the Museum of Wood Carvings and Mural Painting in Trjauna, with an important collection of artifacts from the Bulgarian National Revival Period in the 18th and 19th centuries, and the Open-Air Museum of Ethnography in Gabrovo.

MEDIA

Telecommunications systems are owned and operated by the state. In 2003, there were an estimated 380 mainline telephones for every 1,000 people; about 114,600 people were on a waiting list for telephone service installation. The same year, there were approximately 466 mobile phones in use for every 1,000 people.

In Spring 2000, the government awarded a license for the first privately owned television station with nationwide coverage to the Balkan News Corporation; in 2003, Nova TV became the second national commercial station. All other national television stations are state-owned, though there are a number of privately operated regional stations. In 2003, there were an estimated 543 radios for every 1,000 people; the number of television sets was not available in the same survey. It is estimated that about 133 of every 1,000 people subscribe to cable television services. In 2003, there were 51.9 personal computers for every 1,000 people and 206 of every 1,000 people had access to the Internet. There were 46 secure Internet servers in the country in 2004.

The principal Sofia papers, with their publishers and estimated daily circulations (2002), are: 24 Chasa, Vest Publishing House, 330,000; Bulgarska Armiya, Ministry of Defense, 30,000; Demokratsiya, Union of Democratic Forces, 45,000; Duma, Socialist Party, 130,000; Trud, Confederation of Independent Trade Unions, 200,000; Zemedelsko Zname, Agrarian People's Union, 178,000; and Zemya, Socialist Party, 53,000.

The constitution of Bulgaria ensures freedom of speech and of the press, and the government is said to generally respect these rights. National television and radio broadcasting remain under supervision of the Council for Electronic Media and the Communications Regulation Commission.

ORGANIZATIONS

Bulgaria's important economic organizations include the Bulgarian Chamber of Commerce and Industry (1985) and organizations dedicated to promoting Bulgaria's exports in world markets. There are trade unions representing a wide variety of vocations. The Confederation of Independent Trade Unions of Bulgaria was founded in 1901 and taken over by the Communists after World War II. In 1990, it became an independent organization. It has about 75 member federations and four association members. There are professional and trade organizations representing a variety of fields.

The Bulgarian Medical Association serves as a national organization promoting high standards of healthcare, advancement in medical research, and the free dissemination of health information. There are also several similar medical organizations dedicated to promoting research and education concerning specific conditions and diseases.

There are several associations promoting a wide range of sports and leisure activities, including bobsledding, badminton, baseball, chess, yoga, and amateur radio. The National Federation of Sports in Schools was established in 1993 to promote and coordinate sport activities through the schools. There are national branches of the Olympic Committee, the Special Olympics, and the Paralympic Committee.

The Bulgaria Academy of Science promotes scientific study and advancement, conducts research projects, and maintains a museum. The Institute of Art Studies is cosponsored by the Academy of Science as an organization dedicated to promoting Bulgarian art and culture.

Since 1990, a number of youth organizations have developed throughout the country. The Bulgarian Democratic Youth, with about 90,000 members, became the successor to the Dimitrov Young Communist League. The group serves to advance civic enterprise and control and promote a social environment for enterprising youth. Student groups include the Federation of Independent Student Associations, the Bulgarian Association of University Women, the Independent Student Trade Union, and the Student League of Beliko Turnovo. There is an Organization of Bulgarian Scouts and active branches of YMCA/YWCA.

There are national chapters of the Red Cross Society, UNICEF, Habitat for Humanity, and Caritas.

TOURISM, TRAVEL, AND RECREATION

Bulgaria is rich in mineral waters and has numerous tourist spas. Visitors are attracted to the Black Sea resorts and the archaeological monuments. There are three national parksPirin, Rila, and Central Balkanall rich in historic sites and self-regulating ecosystems. Lying between the slopes of the Balkan and the Sredna Gora mountain range is the Valley of Roses. Foreign visitors to Bulgaria must have a passport. Visas are not required for stays of up to 30 days.

In 2003, about 6.2 million tourists visited Bulgaria, a 12% increase from 2002. In that same year, tourist receipts totaled $2.1 billion. There were 143,960 beds available in hotels and other establishments, with an occupancy rate of 34%. Visitors stayed in Bulgaria an average of four nights.

In 2004, the US Department of State estimated the cost of staying in Sofia at $221 per day. In smaller towns the daily costs were approximately $87.

FAMOUS BULGARIANS

The founders of modern Bulgarian literature, writing before the end of Turkish rule, were Georgi Rakovski (182167), Petko Slaveikov (182795), Lyuben Karavelov (183579), and Kristo Botev (184876), who was one of Bulgaria's greatest poets. The most significant writer after the liberation of 1878 was Ivan Vazov (18501921), whose Under the Yoke gives an impressive picture of the struggle against the Turks. Pentcho Slaveikov (18661912), the son of Petko, infused Bulgarian literature with philosophical content and subject matter of universal appeal; his epic poem A Song of Blood recalls an insurrection suppressed by the Turks in 1876. In the period between the two world wars, Nikolai Liliyev (18851960) and Todor Trayanov (18821945) were leaders of a symbolist school of poetry. Elin Pelin (18781949) and Iordan Iovkov (18841939) wrote popular short stories on regional themes. More recent writers and poets include Nikola Vaptzarov, Christo Shirvenski, Dimiter Dimov, Orlin Vassilev, and Georgi Karaslavov. Elias Canetti (190594), Bulgarian born but lived from 1938 until his death in the United Kingdom, received the Nobel Prize for literature in 1981. Tzvetan Todorov (b.1939), is a Bulgarian philosopher and literary theorist living in France; he is the author of The Conquest of America (1982). Ivan Mrkvicka (18561938), a distinguished Czech painter who took up residence in Bulgaria, founded the Academy of Fine Arts in Sofia.

A prominent Bulgarian statesman was Alexander Stamboliski (18791923), Peasant Party leader who was premier and virtual dictator of Bulgaria from 1920 until his assassination. The best known modern Bulgarian, Georgi Dimitrov (18821949), was falsely charged in 1933 with burning the Reichstag building in Berlin; he became general secretary of the Comintern until its dissolution and prime minister of Bulgaria in 1946. Traicho Kostov (18971949), an early revolutionary leader, was a principal architect of Bulgaria's postwar economic expansion. Caught up in the Tito-Stalin rift, he was expelled from the Politburo and executed in December 1949. Todor Zhivkov (19111998) was first secretary of the Bulgarian Communist Party between 1954 and 1989, the longest tenure of any Warsaw Pact leader. His was marked by ardent and steadfast support of Soviet policies and ideological positions. Zhivkov's daughter Lyudmila Zhivkova (194281), a Politburo member since 1979, was regarded by Western observers as second only to her father in power and influence. Zhivkov was replaced by Dimitar Popov as premier of a coalition government headed by the Socialist Party (formerly the Communist Party). Simeon II (b.1937) was the last tsar of Bulgaria from 194346, and was prime minister from 200105. He is also known as Simeon of Saxe-Coburg-Gotha.

DEPENDENCIES

Bulgaria has no territories or colonies.

BIBLIOGRAPHY

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International Smoking Statistics: A Collection of Historical Data from 30 Economically Developed Countries. New York: Oxford University Press, 2002.

McElrath, Karen (ed.). HIV and AIDS: A Global View. Westport, Conn.: Greenwood Press, 2002.

Otfinoski, Steven. Bulgaria. 2nd ed. New York: Facts On File, 2004.

Petkov, Petko. The United States and Bulgaria in World War I. Boulder, Colo.: East European Monographs, 1991.