Bulgarian Telegraph Agency (BTA), 97-03-20

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From: Embassy of Bulgaria <bulgaria@access1.digex.net>

EMBASSY OF BULGARIA - WASHINGTON D.C.

BTA - BULGARIAN TELEGRAPH AGENCY

19-20 March, 1997

CONTENTS

[01] PRESIDENT STOYANOV: "CLEAR POLITICAL WILL FOR NATO MEMBERSHIP"

[02] PRESIDENT STOYANOV ON THE AGREEMENT WITH THE IMF

[03] POLITICAL FORCES BACK THE IMF AGREEMENT

[04] PM SOFIYANSKI VISITS WASHINGTON

[05] PRIVATIZATION REVENUES TO BE $350 MLN

[06] BANKING SYSTEM TO BE STABILIZED BEFORE CURRENCY BOARD INTRODUCTION

[07] HOUSEHOLDS TO RECEIVE EU AID

[08] MEETINGS OF US AMBASSADOR BOHLEN

[09] EARLY ELECTIONS

[10] UDF PROGRAMME

[01] PRESIDENT STOYANOV: "CLEAR POLITICAL WILL FOR NATO MEMBERSHIP"

"Bulgaria is maintaining good, friendly relations with both Greece and Turkey. Naturally we have no intentions of taking sides in the frequent disputes between these two countries, and this balanced policy is best for Bulgaria. Let us not forget that both countries are members of NATO and Greece is member of the European Union," President Stoyanov said.

Asked about the language dispute between Bulgaria and Macedonia, Stoyanov said: "I am afraid a series of clumsy acts by both sides almost made this dispute fatal for bilateral relations. Bulgaria quickly lost the advantage of having been the first country to recognize Macedonia. (...) it is foolish to raise obstacles before the bilateral relations. To the contrary, we should avail ourselves of all opportunities to make the border between Bulgaria and Macedonia more permeable, to intensify cultural exchange between the two countries and boost bilateral economic and commercial exchange," he said.

"The Balkan countries should regulate their relations using European standards. These European standards brought success to postwar Europe and helped quickly heal the wounds of World War II. (...) This is the model the Balkans should follow. I am happy that Bulgaria's foreign policy is steady and consistent and I have stated repeatedly that Bulgaria should categorically oppose all political geometric figures," President Stoyanov said.

"It is my ambition to lead Bulgaria out of political provincialism by pursuing a categorically European policy. (...) Joining Europe, we should learn to behave and speak in a European manner, i.e. to show national dignity, being a country of centuries-long political and cultural traditions, and at the same time take into account what is expected of us on the road to European integration and achieve it in an open and straightforward manner. I am happy Germany supported us and lend us a hand on this road," Bulgarian President Stoyanov said in his interview for Deutsche Welle.

[02] PRESIDENT STOYANOV ON THE AGREEMENT WITH THE IMF

Stoyanov called all Bulgarians, politicians and institutions to support the reform process. He expressed a hope the currency board and new financial order would help hard-working, enterprising people to find their feet. The agreement with the IMF, he said, will give risk-taking, industrious Bulgarians a chance to set in motion the "success machine".

"Bulgaria achieved a lot in a matter of weeks. We regained some of the nation's dignity. The world came to refer with respect to Bulgaria. We all shared the effort," Peter Stoyanov said. "We managed to regain the chances we wasted during the past four years of political fault- finding, short- sightedness and egoism," he also said.

The accords with the IMF will give some fresh air to the Bulgarian people, Peter Stoyanov said. In his view it will help them come with dignity out of the catastrophe and the "humiliating poverty that has taken by the throat our brothers and sisters, mothers and fathers."

[03] POLITICAL FORCES BACK THE IMF AGREEMENT

The joint declaration says that the political forces "express a common will in support of the initiatives of the government for the signing of an agreement with the IMF and declare their readiness for prompt passage of the laws required for the realization of the agreement with the IMF after a constructive dialogue in the future Parliament."

"We support the efforts of the government towards signing a fresh agreement with the IMF as well as the short-term measures it will take," said Georgi Purvanov, leader of the BSP, the party in power until this January. According to Purvanov, however, the Socialist Party is cautious about the long-term parameters of the agreement. The BSP pledges for increased transparency in the process of applying the stabilization programme, Purvanov said.

The UtdDF backs the agreement reached between the Government and the IMF, said Ivan Kostov, leader of UtdDF (the political force expected to have a majority in the future parliament). The Businessbloc declared itself in support of a middle-term economic programme.

This is the first agreement of its kind in seven years and it indicates a majority behind the reforms, said the leader of the Euro-Left Alexander Tomov. He said the declaration will be sent to IMF Managing Director Michel Camdessus and Premier Stefan Sofiyanski.

On Monday Bulgaria and the IMF signed a new standby agreement worth some $650 million. The first $180 million are expected in April and will be used to pay salaries and import wheat. Some $50 million are earmarked for the stabilization of commercial banks before the introduction of a fixed exchange rate regime (currency board) and bank privatization.

[04] PM SOFIYANSKI VISITS WASHINGTON

On Monday Bulgaria and the IMF reached an accord, ad referendum, on the parameters of a fifth stand-by stabilization agreement. The agreement envisages the adoption of a currency board regime in June, financial stabilization, and structural reforms in the real economy and the state- financed sector. Bulgaria has taken a decisive step towards sound budgetary and monetary policies, immediately and in the future by committing to the adoption of a currency board arrangement in June, the IMF Resident Mission said Monday.

This commitment represents a clear break with the past, and can be expected to bring a rapid stabilization of prices and the exchange rate, the IMF said. "We also expect that these policies will begin to relieve the many hardships experienced by the population in recent months. The financial programme is complemented by measures to strengthen the banking system, a far reaching privatization of banks and enterprises, enterprise reform to reduce quasi-fiscal deficits and liquidate non-viable enterprises and other structural reforms, including land reform and price and market liberalization. For the immediate future, the programme provides for increases in budgetary wages and pensions and contains a social safety net to cushion the effects of the present recession on the poor," the IMF said.

[05] PRIVATIZATION REVENUES TO BE $350 MLN

The agreement envisages privatizing 25 per cent of the country's capital assets, primarily through voucher privatization, though cash privatization also has an important role to play, Vesselin Blagoev, Executive Director of the Privatization Agency, said on national radio on Monday. Blagoev stressed the Agency was working hard to speed up the privatization of large entities.

The 1997 privatization programme of Zhan Videnov's cabinet projected privatization revenues at 1,000 million dollars. On Monday the cabinet revoked the programme on the grounds that the parliament which will be elected on April 19 will appoint a government that will set its own priorities. The government's act will not block any deals because the law does not require a privatization programme, said Bozhkov.

[06] BANKING SYSTEM TO BE STABILIZED BEFORE CURRENCY BOARD INTRODUCTION

Unless the troubled banks are stabilized before the introduction of a currency board, the country will witness a third wave of bank bankruptcies. The financial institutions to be affected in this process will be those that now rely on financing from the National Bank of Bulgaria (BNB, the central bank) and the State Savings Bank. According to experts if this is to happen, it better does so now or else possible collapses of the banking system may call into question the success of the currency board.

At this stage sustained interest has been shown in the privatization of just two of the six large state-owned banks (Bulbank, United Bulgarian Bank, Post Bank, Biochim, Hebrosbank, Expressbank), a source of the BNB who wished anonymity said. The European Bank for Reconstruction and Development (EBRD) has declared interest in United Bulgarian Bank (UBB) and the Austrian Reiffeisenbank is interested in Expressbank.

The South-Korean concern Daewoo continues the search of a Bulgarian bank to service its financial transactions here. The concern purchased last year the luxury Sheraton hotel in Sofia and intends to take part in the privatization of large enterprises in the chemical and the chemical processing industry. The South-Korean concern has shown interest in Post Bank but the Bulgarian party obviously prefers to have the bank under the control of the state, bankers commented.

In late June, 1996, the BNB signed a memorandum for understanding with 19 commercial banks. The memorandum envisaged rehabilitation of the losing banks and revoking of licenses in case of violation of the agreement. In late September 1996 the central bank placed 9 commercial banks under special supervision. The 9 banks, which signed the memorandum with the BNB and which were placed under special supervision, Balkanbank, Economic Bank, TSBank, Slavyani, Elitbank, Businessbank, Mollov, Dobroudja bank and Yambol bank represented the second wave of banks endangered by bankruptcy.

In 1996 the BNB demanded that another five banks be declared insolvent. The licenses of three of those were revoked and the private Agrobusinessbank in Plovdiv (southern Bulgaria) was purchased for one lev by the BNB.

[07] HOUSEHOLDS TO RECEIVE EU AID

The change was necessitated by the steep hike in energy sources prices as of March 1 and the new hike in prices expected on April 1. As much as 1.5 million (50 per cent) of the households would have been entitled to aid under the old system and this would have required 10,000 million leva a month, which is the sum provided for the entire year, Social Affairs Deputy Minister Evgenia Spassova said. The EU has also stipulated the condition that its ECU 20 million aid be distributed among not more than 20 per cent of all households in Bulgaria.

Only registered unemployed are entitled to vouchers. Another condition is for the persons receiving aid not to own housing other than the one they are living in. In order to be entitled to vouchers, a pensioner's savings should not exceed 60,000 leva (around USD 40) and those of handicapped persons 30,000 leva. The Social Affairs Ministry admitted, however, that they do not have a reliable system for control.

[08] MEETINGS OF US AMBASSADOR BOHLEN

The sides discussed the meeting Mr. Anchev had with the chief executives of the national media who requested that the coverage of the election campaign and the elections be financed through the budget. "The electoral law does not contain explicit provisions for subsidizing the national media but it would be justified to help national radio, television and BTA with some funds because of the great public interest in the elections," Mrs. Anchev said.

Ambassador Bohlen expressed her conviction that Bulgaria is well experienced in the holding of fair and legitimate elections as well as her hope that the coming parliamentary elections will be peaceful and democratic. She assured Mr. Anchev that a US delegation would be in Bulgaria during the elections as part of the group of foreign observers. "We think that these elections are of paramount importance for Bulgaria," Mrs. Bohlen said stressing that the US Government has high opinion of the cabinet which began its work very energetically.

Mrs. Bohlen said that the US is inspired with hope by the accords the cabinet had reached with the International Monetary Fund and the consensus of the political forces on the issue.

Ambassador Bohlen raised the question of the protection of intellectual property and the problem the Bulgarian producers of pirate discs are creating. Deputy Prime Minister Anchev stressed the Bulgarian Government's commitment for vigorous actions against such offenders using special instruments provided buy the law, the Government Press Office said.

[09] EARLY ELECTIONS

Despite the large number of registered parties, pollsters say that only five or six formations stand the chance of clearing the four per cent barrier to Parliament.

Opinion polls now predict that the Union of Democratic Forces(UDF) will most certainly gain a majority in the future Parliament. For the April 19 poll, the UDF formed a broader coalition named United Democratic Forces (UtdDF) with the Popular Union (the Bulgarian Agrarian National Union and the Democratic Party), the Bulgarian Social Democratic Party and a number of other smaller parties.

Initial expectations that the Movement for Rights and Freedoms will join the UtdDF proved wrong. The MRF declined to do so and formed a coalition called Alliance for National Salvation, with six smaller parties. MRF leader Ahmed Dogan said that the new coalition will seek to form a strong centre in the future Parliament. According to Dogan, for this idea to be realized, there should be a group of more than 30 MPs in the 240-seat Parliament. In the previous National Assembly the MRF had 15 seats. "There will be nothing wrong if we compete with the UtdDF but it will be wrong if we do not observe a tolerant tone," Dogan said about the relations with the UtdDF. He said also that the coalition is ready to sign an agreement with the UtdDF on governing this county after the elections. Under a decision the UDF took during its national conference in February, the Union will seek joint governance with the other democratic forces even if it has a majority in Parliament.

Another surprise in the formation of the election coalitions was the last- minute refusal of former president Zhelyu Zhelev's party Liberal Democratic Alternative (LDA) to join the Alliance for National Salvation. According to Zhelev, the reason for the refusal is LDA's disagreement with the arrangement of the lists of candidates as well as the presence of monarchist formations in the coalition. Zhelev's party will form an election coalition with the Radical Democratic Party outside the UDF and the youth federation of radical democrats. Analysts say that in practice the three coalitions will compete for the votes of the anti-Communist minded voters.

Competition among the left formations will be mainly between the Bulgarian Socialist Party and the newly established Euro-Left which is formed by the extra-parliamentary Civil Alliance for the Republic headed by Alexander Tomov and prominent MPs who left the BSP. Opinion polls show that it is very unlikely that any of the several communist parties registered for the elections will be able to clear the four per cent threshold.

The BSP approval rating plummeted after street protests in January against the grave economic crisis forced the party to step down from power. However, opinion polls conducted in March show that the trend has stopped. At the same time, the drafting of the lists of candidates and the assessment of the BSP's two-year governance causes serious controversies within the party. The BSP postponed the approval of an election platform. Analysts say that the party is divided into two camps of members who support the new Socialist leader Georgi Purvanov and of those who support the former one - Zhan Videnov. For the first time over the past seven years the BSP has no ambitions to win an election. Socialist leaders say that the Left will try to gain enough seats in Parliament so as to be able to block possible amendments to the Constitution which it finds unacceptable.

The Euro-Left which stated that it will follow the principles of the European social democracy, believes that its entry in the future Parliament will help put an end to the bipolar model of the past seven years. Euro- Left leaders believe that the formation will win the votes of those of the BSP's supporters who were disappointed with the party's rule and the slow pace of reform in it.

The Bulgarian Business Bloc (BBB) too said it will try to put an end to the bipolar model. Pollsters however say that it is yet not certain that the BBB will make it to the future Parliament.

[10] UDF PROGRAMME

The NATIONAL SECURITY section underscores the determination of the UtdDF to work for Bulgaria's accession to international, European and regional systems for order, security and cooperation; to wage an relentless battle against organized crime and corruption. The UtdDF further undertake to work for a gradual introduction of a professional army, civilian control on the army and a reduced length of military service, and to prepare the country for its accession to NATO.

The FOREIGN POLICY section declares Bulgaria's aspiration to full membership in the European Union, NATO and all other democratic international political and economic organizations. It also states the nation's determination to maintain relations of equality with all democratic countries, based on the principle of sovereignty and noninvolvement in the internal affairs. It further pledges involvement in all initiatives for establishing goodneighbourliness, stability and cooperation in the Balkans, and for the region's integration into Europe. The UtdDF vow to take action to remove Bulgaria from the EU visa blacklist.q

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