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Economy of Bulgaria

Bulgaria's economy contracted dramatically after 1989 with the collapse of the COMECON system and the loss of the Soviet market, to which the Bulgarian economy had been closely tied. The standard of living fell by about 40%. In addition, UN sanctions against Yugoslavia and Iraq took a heavy toll on the Bulgarian economy. The first signs of recovery emerged when GDP grew in 1994 for the first time since 1988, by 1.4% and then by 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to shortsighted economic reforms and an unstable and de-capitalized banking system.

Under the leadership of former Prime Minister Ivan Kostov (UDF), who came to power in 1997, an ambitious set of reforms was launched, including introduction of a currency board regime, bringing growth and stability to the Bulgarian economy. The currency board contained inflationary pressures and the three-digit inflation in 1997 was cut to only 1% in 1998. Following declines in GDP in both 1996 and 1997, the Bulgarian Government delivered strong, steady GDP growth in real terms in recent years. Prime Minister Simeon Saxe-Coburg's economic team of young, Western-educated financiers continued to implement measures that helped sustain stable economic growth and curb unemployment. Measures introduced by the government were targeted at reducing corporate and individual taxes, curtailing corruption, and attracting foreign investment. The government also restructured the country's foreign debt, revived the local stock market, and moved ahead with long-delayed privatization of some major state monopolies. As a result of this progress, in October 2002 the European Commission declared Bulgaria had a "Functioning Market Economy."

Successive governments continued these reforms, and in 2007 the country joined the European Union. According to the World Bank, in 2006 Bulgaria attracted the highest levels of foreign direct investment, as a share of GDP, among Eastern European countries. In early 2007, to attract additional foreign investment, the Bulgarian Government lowered corporate tax rates to 10%, reportedly the lowest rate in Europe. A flat-tax rate of 10% for personal income, in place as of January 1, 2008, has helped to bring down domestic labor costs and reduce the share of the "gray" economy. In response to local governments' demand for financial independence in 2006, parliament passed fiscal decentralization of municipalities, granting them authority over collection and administration of some taxes, thus further enhancing local economic stability. The 2007-2009 global financial and economic crisis erased many of the gains attributed to conservative fiscal policies and tax reforms. After 10 years of steady growth, Bulgaria's economy fell into recession in the fourth quarter of 2008, causing an increase in both unemployment and household debt. The new government responded with an 82-point "anti-crisis" plan to maintain fiscal stability and promote economic recovery. The government also committed itself to strengthening control over EU funds and fighting organized crime and corruption.

GDP (2009, est.): $48.7 billion.
Real GDP growth: -5.0% (2009 est.); 6% (2008); 6.2% (2007); 6.3% (2006); 6.2% (2005); 6.6% (2004); 4.3% (2003).
Per capita GDP (2009, est.): $6,423.
Inflation rate: 1.6% (2009); 7.2% (2008); 11.6% (2007), 6.1% (2006); 7.4% (2005); 4.0% (2004); 5.6% (2003).
Unemployment rate: 9.1% (2009); 6.3% (2008); 6.9% (2007); 9.1% (2006); 10.7% (2005); 12.2% (2004); 14.3% (2003).
Natural resources: Bauxite, copper, lead, zinc, coal, and timber.
Official exchange rate: Lev per $1 U.S. = 1.36 (2009); 1.39 (2008); 1.33 (2007); 1.49 (2006); 1.66 (2005); 1.44 (2004).

Geography of Bulgaria

Located on the Balkan Peninsula, Bulgaria extends from the western shore of the Black Sea to Yugoslavia in the west. In the north, the Danube River forms the greater part of Bulgaria's common boundary with Romania. Greece and European Turkey lie to the south and southeast of Bulgaria.

The country is divided roughly into three parallel east-west zones: the Danubian tableland in the north, the Stara Planina (or Balkan) Mountains in the center, and the Thracian Plain and the Rhodope and Pirin Mountains in the south and southwest. About one- third of the country lies at an altitude of 500 meters (1,640 ft.) above sea level. The average elevation is 480 meters (1,575 ft.) above sea level.

On the fringe of the humid continental climate zone, Bulgaria has a climate similar to the U.S. Midwest. The weather varies considerably from year to year, as do the several climatic subzones within the country. Summer temperatures average about 24 C (75 F); winter temperatures average around 0 C (32 F). Annual precipitation averages 63 centimeters (25 in.).

Official Name: Republic of Bulgaria
Area: 10,994 sq. km. (slightly larger than Tennessee).
Major cities: Capital--Sofia (1.2 million). Others--Plovdiv (350,000), Varna (300,000).
Terrain: Bulgaria is located in South Central Europe. The terrain is varied, containing large mountainous areas, fertile valleys, plains and a coastline along the Black Sea.
Climate: Continental--mild summers and cold, snowy winters.

Government of Bulgaria

Bulgaria is a parliamentary republic. The unicameral National Assembly, or Narodno Subranie, consists of 240 deputies who are elected for 4-year terms through a mixed electoral system: 209 members of parliament (MPs) elected according to the classic proportional representation system (voters vote for fixed, rank-ordered party lists for each of the 31 electoral districts, with a different list for each district), and 31 majority MPs elected individually under the majority representation system in each and every district (the winning candidate receives a plurality of the votes in the region). Parliament selects and dismisses government ministers, including the prime minister, exercises control over the government, and sanctions deployment of troops abroad. It is responsible for enactment of laws, approval of the budget, scheduling of presidential elections, declaration of war, and ratification of international treaties and agreements.

A 1-month official campaign period precedes general elections. The voting age is 18. Preliminary results are available within hours of poll closings. Parties and coalitions must win a minimum 4% of the national vote to enter parliament. Seats are then allocated to the parties in proportion to the distribution of votes in their respective electoral districts. Votes belonging to parties not passing the 4% threshold are distributed to other parties using the method of the smallest remainder. The lists of newly elected members of parliament are announced 7 days after the elections. The president must convene the new parliament within 1 month after the elections, and calls upon parties, coalitions, or political groups to nominate a prime minister and form a government. If the three largest parties, coalitions, or political groups fail to nominate a prime minister, the president can dissolve parliament and schedule new elections. In recent years, it has taken approximately a month for the new government to form.

A general election was held in Bulgaria July 5, 2009; turnout was 60.20%. Results were as follows: GERB 39.7%, BSP 17.7%, MRF 14.4%, ATAKA 9.4%, Blue Coalition 6.8%, RZS 4.1%, other 7.9%; seats by party were GERB 116, BSP 40, MRF 38, ATAKA 21, Blue Coalition 15, RZS 10.

Results of the June 7, 2009 European Parliament elections were GERB 24.36%, 5 seats; BSP 18.5%, 4 seats; DPS 14.14%, 3 seats; ATAKA 11.96%, 2 seats; NDSV 7.96%, 2 seats; Blue Coalition (SDS-DSB and other right-wing parties) 7.95%, 1 seat (turnout: 37.49%).

The president of Bulgaria is directly elected for a 5-year term with the right to one re-election. The president serves as the head of state and commander in chief of the armed forces. The president is the head of the Consultative Council for National Security and while unable to initiate legislation, the president can return a bill for further debate. Parliament can overturn the president's veto with a simple majority vote. Bulgarian Socialist Party candidate Georgi Parvanov won the November 2001 presidential election and was re-elected in October 2006 as an independent candidate in a run-off against Volen Siderov, the leader of extreme nationalist Ataka Party. The next presidential election will be held in 2011.

The prime minister is head of the Council of Ministers, which is the primary component of the executive branch. In addition to the prime minister and deputy prime ministers, the Council is composed of ministers who head the various agencies within the government and usually come from the majority/ruling party or from a member party of the ruling coalition in parliament. The Council is responsible for carrying out state policy, managing the state budget and maintaining law and order. The Council must resign if the National Assembly passes a vote of no confidence in the Council or prime minister.

The Bulgarian judicial system became an independent branch of the government following passage of the 1991 constitution. Reform within this branch has been slow, with political influence, widespread corruption, and long delays continuously plaguing the system. In 1994, the National Assembly passed the Judicial System Act to further delineate the role of the judiciary. In 2003, Bulgaria adopted amendments to the constitution, which aimed to improve the effectiveness of the judicial system by limiting magistrates' irremovability and immunity against criminal prosecution. Additional amendments to the constitution in 2006 and 2007 further increased oversight of the judicial system by the legislative branch. They introduced the Supreme Judicial Council as a permanently operating supervisory body, as well as an Inspectorate responsible for overseeing the performance of the judicial system as a whole and its individual members. The prosecution service was given absolute authority over all investigations, and the police received a mandate to investigate 95% of all crimes, which reduced the role of the investigative service.

The trial, appellate, and cassation (highest appellate) courts comprise the three tiers of the judicial system. Military courts (at trial and appeal level) handle cases involving military and Ministry of Interior personnel. Administrative courts, effective since March 2007, specialize in reviewing appeals of government acts.

The Supreme Administrative Court and the Supreme Court of Cassation are the highest courts of appeal and determine the application of all laws.

The Supreme Judicial Council (SJC) is composed of 25 members serving 5-year terms. Those who serve on the council are experienced legal professionals and are either appointed by the National Assembly, selected by the judicial system, or serve on the SJC as a result of their position in government. The SJC manages the judiciary and is responsible for appointing judges. In 2007 parliament revised the Judicial System Act to make it compliant with the latest constitutional amendments, which provided for the establishment of the Inspectorate with the Supreme Judicial Council: a standing body with 11 members who investigate complaints of magistrates' misconduct, with no right to rule on the substance of judicial acts.

The Constitutional Court, which is separate from the rest of the judiciary, interprets the constitution and constitutionality of laws and treaties. Its 12 justices serve 9-year terms and are selected by the president, the National Assembly, and the Supreme Courts.

Principal Government Officials
President--Georgi Parvanov
Prime Minister--Boyko Borissov
Deputy Prime Minister/Minister of Finance--Simeon Dyankov
Deputy Prime Minister/Minister of Interior--Tsvetan Tsvetanov
Minister of Foreign Affairs--Nickolay Mladenov
Minister of Defense--Anyu Angelov
Minister of Economy, Energy, and Tourism--Traicho Traikov
Bulgaria's Commissioner to the EU--Kristalina Georgieva, Commissioner for International Cooperation, Humanitarian Aid, and Crisis Response

Bulgaria maintains an embassy in the United States at 1621 22nd Street, NW, Washington DC 20008 (tel. 202-387-0174; fax: 202-234-7973).

Type: Parliamentary democracy.
Constitution: Adopted July 12, 1991.
Independence: 1908 (from the Ottoman Empire).
Branches: Executive--president (chief of state), prime minister (head of government), Council of Ministers (cabinet). Legislative--unicameral National Assembly or Narodno Subranie--240 seats. Members are elected by popular vote of party/coalition lists of candidates for 4-year terms. As of January 2008, seat allocation is as follows: CfB--82, NMSS--36, MRF--34, UDF--16, DSB--16, BND--16, BPU--13, Ataka--11, and independents--16. Judicial--three-tiered system.
Administrative divisions: 28 provinces plus the capital region of Sofia.
Suffrage: Universal at 18 years of age.
Main political parties: Coalition of Bulgaria or CfB (coalition of parties dominated by BSP); Bulgarian Socialist Party (BSP); National Movement Simeon II (NMSS); Movement for Rights and Freedoms (MRF); United Democratic Forces (UDF); Democrats for Strong Bulgaria (DSB); Bulgarian Peoples Union (BPU); Bulgarian New Democracy or BND (a parliamentary group formed by NMSS defectors); Attack Coalition (ATAKA); and Citizens for the European Development of Bulgaria (GERB). Results from the June 25, 2005 general election are as follows: CfB 31.1%, NMSS 19.9%, MRF 12.7%, ATAKA 8.2%, UDF 7.7%, DSB 6.5%, BPU 5.2%.

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History of Bulgaria

Ancient Thrace was partially located on the territory of modern Bulgaria, and Thracian culture provides a wealth of archeological sites within Bulgaria. In the second century A.D., the Bulgars came to Europe from their old homeland, the Kingdom of Balhara situated in the Mount Imeon area (present Hindu Kush in northern Afghanistan).

The first Bulgarian state was established in 635 A.D., located along the north coast of the Black Sea. In 681 A.D. the first Bulgarian state on the territory of modern Bulgaria was founded. This state consisted of a mixture of Slav and Bulgar peoples. In 864, Bulgaria adopted Orthodox Christianity. The First Bulgarian Kingdom, considered to be Bulgaria's "Golden Age," emerged under Tsar Simeon I in 893-927. During this time, Bulgarian art and literature flourished. Followers of Saints Cyril and Methodius are believed to have developed the Cyrillic alphabet in Bulgaria in the early 10th century.

In 1018, the Byzantine Empire conquered Bulgaria. In 1185 the Bulgarians broke free of Byzantine rule and established the Second Bulgarian Kingdom. A number of Bulgaria's famous monasteries were founded during this period. Following the 1242 Mongol invasion, this kingdom began losing territory to its neighbors. Ottoman expansion into the Balkan Peninsula eventually reached Bulgaria, and in 1396 Bulgaria became part of the Ottoman Empire. During the five centuries of Ottoman rule, most of Bulgaria's indigenous cultural centers were destroyed. Several Bulgarian uprisings were brutally suppressed and a great many people fled abroad. The April uprising of 1876, the Russo-Turkish War (1877-78), and the Treaty of San Stefano (March 3, 1878, the date of Bulgaria's national holiday), began Bulgaria's liberation from the Ottoman Empire, but complete independence was not recognized until 1908.

During the first half of the 20th century, Bulgaria was marred by social and political unrest. Bulgaria participated in the First and Second Balkan Wars (1912 and 1913) and sided with the Central Powers, and later the Axis Powers, during the two World Wars. Although allied with Germany during World War II, Bulgaria never declared war on the Soviet Union and never sent troops abroad to fight under Nazi command. Near the end of World War II, Bulgaria changed sides to fight the German army all the way to Austria; 30,000 Bulgarian troops were killed.

Bulgaria had a mixed record during World War II, when it was allied with Nazi Germany under a March 1941 agreement. The Law for the Protection of the Nation, enacted in January 1941, divested Jews of property, livelihood, civil rights, and personal security. Despite a February 1943 agreement requiring Bulgaria to transfer Bulgaria's Jews to Nazi extermination camps in Poland, Bulgaria did not actually deport any Bulgarian Jews or Roma to Nazi concentration camps. Under that agreement, however, Bulgarian forces transferred approximately 11,000 Jews from Bulgarian-occupied territory (Thrace and Macedonia) to Nazi concentration camps. In June 1943 the government "re-settled" Sofia's 25,000 Jews to rural areas. Tsar Boris--supported by the parliament (especially its prominent Deputy Speaker, Dimitar Peshev), the Orthodox Church, and the general public--aided the Jewish community and helped its 50,000 members survive the war, despite harsh conditions. The Bulgarian Jews remained safe, and when they were permitted to emigrate to Israel after the war, most of them did.

King Simeon II assumed control of the throne in 1943 at the age of six following the death of his father Boris III. With the entry of Soviet troops into Bulgaria in September 1944 and the defeat of the Axis Powers in World War II, communism emerged as the dominant political force within Bulgaria. Simeon, who later returned and served as Prime Minister, was forced into exile in 1946 and resided primarily in Madrid, Spain. By 1946, Bulgaria had become a satellite of the Soviet Union, remaining so throughout the Cold War period. Todor Zhivkov, the head of the Bulgarian Communist Party, ruled the country for much of this period. During his 27 years as leader of Bulgaria, democratic opposition was crushed; agriculture was collectivized and industry was nationalized; and the Bulgarian Orthodox Church fell under the control of the state.

In 1989, Zhivkov was removed from power, and democratic change began. The first multi-party elections since World War II were held in 1990. The ruling communist party changed its name to the Bulgarian Socialist Party and won the June 1990 elections. Following a period of social unrest and passage of a new constitution, the first fully democratic parliamentary elections were held in 1991 in which the Union of Democratic Forces won. The first direct presidential elections were held the next year.

As Bulgaria emerged from the throes of communism, it experienced a period of social and economic turmoil that culminated in a severe economic and financial crisis in late 1996-early 1997. With the help of the international community, former Prime Minister Ivan Kostov initiated a series of reforms in 1997 that helped stabilize the country's economy and put Bulgaria on the Euro-Atlantic path. Elections in 2001 ushered in a new government and president. In July 2001, Bulgaria's ex-king Simeon Saxe-Coburg-Gotha became the first former monarch in post-communist Eastern Europe to become Prime Minister. His government continued to pursue Euro-Atlantic integration, democratic reform, and development of a market economy. Bulgaria became a member of the North Atlantic Treaty Organization on March 29, 2004, and a member of the European Union (EU) on January 1, 2007.

Following June 2005 general elections, Sergei Stanishev of the Bulgarian Socialist Party became the new Prime Minister of a coalition government on August 16, 2005. In October 2006, Georgi Parvanov, the former leader of the Bulgarian Socialist Party, became the first Bulgarian president to win re-election. Despite his limited constitutional powers, President Parvanov has played an important role in helping to ensure a consistent, pro-Western foreign policy. The Stanishev government continued Bulgaria's integration with the Euro-Atlantic world and its close partnership with the United States. Bulgaria has attracted large amounts of American and European investment, and is an active partner in coalition operations in Afghanistan as well as in UN-led peacekeeping operations in the Balkans.

In the July 2009 general elections, Bulgarian voters punished the Socialist-led government for corruption scandals and frozen EU funds. GERB took 116 of 240 seats in parliament, and its leader (and former Sofia mayor) Boyko Borissov became the Prime Minister. Borissov formed a minority government supported by the Blue Coalition, Ataka, and RZS. The government's priorities include: promoting economic stability, unblocking the frozen EU funds, and fighting corruption. According to the latest opinion polls, Borissov’s government is the most popular government since the beginning of the transition in 1989.

People of Bulgaria

Partly due to its mountainous terrain, Bulgaria's population density is one of the lowest in Eastern Europe, about 81 persons per square kilometer (207/sq. mi.). About two-thirds of the people live in urban areas, compared to one-third in 1956. Sofia, the capital, is the largest city. Other major cities are Plovdiv-site of a major annual international trade fair, the Black Sea cities of Varna and Burgas, and Ruse on the Danube River. The principal religious organization is the Bulgarian Orthodox Church, to which most Bulgarians belong. Other religions include Islam, Roman Catholicism, Protestantism, and Judaism. Before 1989, religious activity was discouraged by the Bulgarian Communist Party, but its new leadership has pledged to support the rights of all citizens to worship freely.

Bulgarian is the primary language spoken in the country, although some secondary languages closely correspond to ethnic divisions. The most important of these is Turkish, which is widely spoken by the Turkish minority. From 1984-89, the government, in effect, banned the use of the Turkish language in public. The new leadership has repudiated that policy. Russian, which shares the Cyrillic alphabet and many words with Bulgarian, is widely understood.

Education is free and compulsory to age 15. Scientific, technical, and vocational training is stressed.

Population (July 2009 est.): 7,204,687.
Population growth rate (2009 est.): -0.79%.
Ethnic groups (2001): Bulgarian 83.94%, Turkish 9.42%, Roma 4.68%, and other 2% (including Macedonian, Armenian, Tatar).
Religions (2001): Bulgarian Orthodox 82.6%, Muslim 12.2%, Roman Catholic 0.6%, Protestant 0.5%, others.
Language: Bulgarian 84.5%, other 15.5%.
Health: Life expectancy (2009 est.)--male: 69.48 years; female: 76.91 years. Infant mortality rate (2009 est.)--17.87 deaths/1,000 live births.
Work force: 2.67 million (2008 est.). Agriculture--7.5%; industry--35.5%, services--57% (2007 est.).