A m e r i c a n C h a m b e r o f C o m m e r c e i n B u l g a r i a

h o m e p a g e : w w w . a m c h a m . b g e - m a i l : a m c h a m @a m c h a m . b gBus in e s s Pa rk So f i a , M lados t 4 A re a , Bu i l d ing 2 , F lo o r 6 , 1 7 1 5 So f i a

Te l . : ( 3 5 9 2 ) 97 6 9 5 6 5 Fax : ( 3 5 9 2 ) 97 6 9 5 6 9

i s s u e 7 3o c t o b e r 2 0 0 6

Analysis: The Killer Building; Presidential Elections 2006; EU Accession - Closer to HeavenInterviews: Martin Dimitrov, MP; Mark Lumer, Contracting Executive US Army

Charit y, Communit y Ser vice, Generosit y

I must admit that I have never stopped

reflecting - until today, that is - whether I

am doing enough to help those in need.

Indeed, I have sent text messages for

donations in favor of the Bulgarian

Christmas Initiative, which benefits sick

children; I gave money for the victims of

the South-East Asia tsunami and

Hurricane Katrina. But this seems to be all

- unless you count the time when I

changed the light bulb in our building

myself, after enduring three months of

climbing stairs in pitch darkness.

So when we decided to make community service responsi-

bility topic of this issue of AmCham Bulgaria Magazine, I felt

a distinct sense of guilt. How could I be such a Scrooge?

Then I was promptly reminded a sad fact. Last December, I

was meeting with Vyara Ankova, the news editor-in-chief of

Bulgarian National Television, and Boyka Bashlieva, presi-

dent's press secretary, to discuss various charitable activities

for Bulgarian Christmas. We were wondering how much

would the campaign accrue in donations. How many

Bulgarians would sent a one-Lev text message to save a

child's life?

I remember saying quite cheerfully, "No problem - at the final

of the Big Brother television show, a million text messages

were sent in just a day. I am sure many more will join in to

help sick kids."

Alas, between December 2005 and January 2006, donations

for Bulgarian Christmas barely breached the 1 million Leva

threshold. That is, Bulgarians gave as much during a two-

month charitable campaign as they did in one day of a real-

ity show.

Sad, isn't it? In this particular case, the good news was that

another million came via bank transfers from various private

businesses.

While I was working on the issue and reading through arti-

cles on charity and community service responsibility, my

mood improved. Serious companies always find a way to

donate, and the government seems to understand the impor-

tance of supporting charitable initiatives. I am proud that

AmCham Bulgaria members find the time and funds to aid

those in need. I can only hope that after this issue we will

all become a bit more generous.

Sincerely,

Milen Marchev

Editor-in-Chief

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Dear Reader,

Dear Members and Friends,

It is not by chance that we put the

article "Shattered Illusions " by Emil

Spahiyski before the news from the

seminal European Commission report

on Bulgaria. This journalist has pre-

sented a snapshot of one of the many

corruption schemes in the country: an

issue that European Union has

emphasized as causing serious con-

cerns and requiring immediate action.

A four-story building collapsed in

downtown Sofia killing two young girls

(see page 4). This tragedy was not a

mere accident; it was predetermined by the municipal authorities'

systematic disregard of the rule of law and heartless attitude

toward people.

In the past 15 years, downtown areas of Bulgaria's big cities have

become de facto construction sites, which included renovations

and erecting new structures. Old residential buildings - some of

great historical value - have been turned into commercial venues

for offices, shops or restaurants. The buildings have been often

renovated without any regard for safety regulations. Despite

numerous protests by NGOs, warnings by prominent construction

engineers and scholars, tragedies happened - and the city admin-

istration still remained indifferent!

The core of this scandal lies in the corruption pervading Sofia

municipality, which has become the rule rather than the exception

in issuing construction permits and licenses. State control bodies

have also become embroiled in corruption schemes, instead of pre-

venting them. Any attempts to stop that by the means of the judi-

cial system have been unsuccessful so far.

The European Commission pointed out in its report that the mea-

sures against corruption should include further indictments, crimi-

nal trials, convictions of the guilty and strict sentences that would

dissuade potential wrongdoers.

But will this happen?

Since the times of the former Sofia mayor Stefan Sofianski and

then chief architect Stoyan Yanev, interests of private developers

have routinely received priority consideration to the exclusion of

everything else. While construction projects flourished, transporta-

tion, infrastructure, garbage-collection and environmental problems

only deepened.

As long as we see such Bulgarian politicians representing the

country in the European institutions rather than being held respon-

sible for their actions, the fight against corruption will remain a

shattered illusion.

.

Best regards,

Valentin Georgiev

Executive Director

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Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1715, Bulgaria

e-mail: amcham@amcham.bg

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

Layout, Design & Printing:

Milen Marchev

Writers:

Boyko Vassilev, Marina Tzvetkova,

Mina Georgieva, Panayot Angarev,

Yuliana Boncheva

Advertising

AmCham Bulgaria:

Nadejda Vakareeva, nadia@amcham.bg

AmCham Bulgaria Magazine:

Milen Marchev, milen@milenmarchev.com

The AmCham Bulgaria Magazine reaches a broad audience

of AmCham members, leading US, Bulgarian and internation-

al companies, US and Bulgarian decision-makers, all

AmChams around the world.

Subscription is free of charge. If you would like to subscribe

to AmCham Bulgaria publications, please contact the

AmCham Bulgaria office.

i s s u e 7 3o c t o b e r 2 0 0 6

AmCham Bulgaria Magazine is a primary forum for political and economic analyses, news, viewpoints as well as for the presentation of new business oppor-

tunities. The articles in the AmCham Bulgaria Magazine express the opinions of the authors and do not necessarily reflect the position of the American

Chamber of Commerce in Bulgaria.

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a m c h a m b u l g a r i a

3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . AbCRO - Bulgaria . Accor ServicesBulgaria . ACSIOR . ADIS Ltd. . Advance International Transport (Balkan) EAD . AESCorporation . AFA OOD . AGS Bulgaria Ltd. . AIG Bulgaria Insurance & Reinsurance CompanyEAD . AIG Life Bulgaria . AIMS Human Capital . ALEXANDROV GROUP CORPORATION .Allan Collautt Associates, Inc. . Allied Pickfords Bulgaria . Alter Ego Company OOD .American College of Sofia . American Construction Products JSC . American English Academy. American University in Bulgaria (AUBG) . Anglo-American School of Sofia . Anton Preslavski,Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . Argento Human Resource Solutions. Aries Commerce . Ashtrom International AD . Association of Bulgarian Broadcasters - ABBRO. AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . Avendi Ltd. . AVONCosmetics Bulgaria Ltd. . Balkan News Corporation Plc. . Balkan Star . Baxter AG . BayerBulgaria EOOD . BearingPoint, Inc. . BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. .Borislav Boyanov & Co. . Braykov's Legal Office . Bristol-Myers Squibb . Brown FormanBeverages Worldwide Sofia Branch LLC . BULBANK . Bulgarian American Enterprise Fund .Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Post Bank . BulgarianTelecommunications Company EAD . Business Media Group . Business Park Sofia EOOD .CA IB Bulinvest . CableTel . Car Rental Bulgaria Ltd. . Carlsberg . Cefin Bulgaria EOOD(IVECO dealer) . Center for the Study of Democracy . Century21® . Chelopech Mining EAD. Cisco Systems Bulgaria . Citibank N.A.- Sofia Branch . City University . Clockwork Ltd.. CMS Cameron McKenna EOOD . Coca-Cola Bulgaria EOOD . Coca-Cola HBC BulgariaSA . COLLIERS International . ConsulTeam Recruitment and Selection Ltd. . CookCommunications . Corstjens Worlwide Movers Group . CPM International Ltd. . Curtis /Balkan Ltd. . DeConi M&A . Deloitte Bulgaria EOOD . DHL Express Bulgaria Ltd. . DiageoBulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Kalaidjiev . DIMON Bulgaria . Djingov,Gouginski, Kyutchukov, & Velichkov . Dobrev, Kinkin & Lyutskanov Law Firm . Domaine BoyarAD . Dr. Emil Benatov & Partners . Dr. I.S. Greenberg Medical Center, Ellen Ruth Greenberg,Ph.D. . DynCorp International LLC . Effekten Und Finanz - Sofia AD . Electron Progress AD. Eli Lilly and Company . Elido (Lamel Ltd.) . Elmek Sport Bulgaria EOOD . Elta consultAD associated partner of CB Richard Ellis for Bulgaria . Emerson Process Management AG .Encouragement Bank AD . Engineeringservice Sofia Ltd. . Epsilon Interactive . Equest EAD. ERATO HOLDING PLC . Ernst & Young Bulgaria . Expo Team Ltd. . Flying Cargo BulgariaLtd. - Licensee of FedEx . Force Delta Ltd. . Forem Consulting Bulgaria . Forton InternationalJSCo . General Electric International . Genmark Automation Bulgaria . GiTy Bulgaria ltd. .GlaxoSmithKline . Goodyear Dunlop Tires Bulgaria . Grand Hotel Sofia . Grenville . GreyWorldwide Bulgaria EOOD . Group 4 Securitas (Bulgaria) OOD . Hewlett-Packard Bulgaria Ltd.. Hilton Sofia . Honeywell EOOD . Horizon . HVB Bank Biochim AD and HEBROS BankAD . IBM Bulgaria . Ideal Standard Bulgaria . Industrial Holding Bulgaria . In Time Ltd.. Infoguard - Stefan Nedkov . ING Bank Sofia Branch . Intel Czech Tradings, Inc. .Interbrands Marketing & Distribution Inc. OOD . Interdean . Investbank Plc. . IP ConsultingLtd. . ISI Emerging Markets (Internet Securities, Inc.) . Johnson & Johnson Doo. . JuniorAchievement Bulgaria . Kaliakra AD . Kamenitza AD . Kamor Auto Ltd. . Kempinski HotelGrand Arena Bansko . Kolbis International Transfer Corporation . KPMG Bulgaria . KraftFoods Bulgaria . LANDMARK Properties Bulgaria . Lexim Sofia Ltd. . Lindner Bulgaria OOD. Lirex BG Ltd. . Lowe Swing Communications . M & M Air Cargo Service BG OOD . M3Communications Group, Inc. A Hil & Knowlton Associate . Maersk Bulgaria Ltd. . MagneticHead Technologies . Maritza East III Power Company AD . Marsh EOOD . MARTERN EOOD. McDonald's Bulgaria Ltd. . Merck Sharp & Dohme IDEA Inc. . Meridian Hotels BulgariaOOD . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, Public Affairs & Public RelationsConsultants . Mobiltel EAD . Monbat Plc. . Moody International . Moten Sport . MotoPfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO Defense CollegeAnciens' Association . NDT Equipment Supplies LTD . Net Is Ltd. . Neterra Communications. Neumann International AG . New Europe Corporate Advisory Ltd. . Nexcom Bulgaria EAD. Nu Image Bulgaria EOOD . Opet Aygaz Bulgaria EAD . Oracle East Central Europe Limited- Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSG Records Management . Parsons E&CBulgaria Limited . Pfizer H.C.P. Corporation, Representation Office Bulgaria . Philip MorrisInternational Inc. . Pioneer Semena Bulgaria EOOD . Popov Legal Office . PostPath Inc.. Pratt & Whitney . PricewaterhouseCoopers . Prima Soft Ltd. . Procter & Gamble Bulgaria. ProSoft . PSG Payroll Services Ltd. . Radisson SAS Grand Hotel . Reader's DigestEOOD . Rising Force Co., Ltd. . Rockwell/Intelpack . S&T Bulgaria . Sante InternationalOOD . Schenker . Schering - Plough Central East - Bulgaria . SEAF Management BulgariaEOOD . Seplex Law Offices . Sheraton Sofia Hotel Balkan . Sherita M Ltd. . Sienit Ltd.. SigmaBleyzer Investment Group LLC - Representative Office . Soravia Bulgaria Ltd. . StefanDimitrov, Norman Management Co. Ltd. . Symix Bulgaria . TechnoLogica EOOD . TeleLinkAD . Tero Halmari, European Bank for Reconstruction and Development (EBRD) . TheAmerican Research Center in Sofia . The Atlantic Club of Bulgaria . The Executive Centre. Tishman Management Company Ltd. . Tissue Bank Osteocenter Bulgaria EAD . TM AutoLtd. . TMF . Tumbleweed Communications EOOD . Unimasters Logistics Group AD .Unisys Bulgaria Branch . United Consulting Ltd. . United Medical Communications . Urban2000 Ltd. . Vaptsarov Joint Stock Company . Vector Management Bulgaria EOOD . VideoluxHolding / Technopolis . VIP Security Ltd. . VISA International Service Association . VSKKentavar Ltd. . Westinghouse Energy Systems Bulgaria Branch . World Courier . WrigleyBulgaria EOOD . Xerox Bulgaria Ltd. . Yavlena Ltd. . Zlati Dinev Studio in partnership withOuterbridge/Morgan .

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Borislav Boyanov Borislav Boyanov & Co.

Vice President Mr. Stefan Dimitrov Allied Pickfords Bulgaria

Second Vice President Mr. David Hampson Grenville Financial

Treasurer Mr. Anthony Hassiotis Bulgarian Postbank

Members Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory

Mrs. Olga Borissova AUBG, Director European Programs

Mrs. Tanya Kosseva Landmark

Mr. George Randelov IBM Bulgaria

Mrs. Elitsa Tsaneva Ideal Standard Bulgaria

Mrs. Maria Vranovska Eli Lilly and Company

Ms. Evgenia Stoichkova Coca-Cola Bulgaria

Mr. Christopher Thompson Bearing Point, CLRP

Ex-Officio Member Mr. James Rigassio US Senior Commercial Officer

Executive Director: Valentin Georgiev

Contentsa n a l y s i s

Shattered Illusions . . . . . . . . . . . . . . . . . . . . . .4

By Emil Spahiyski

e u a c c e s s i o n

Closer to Heaven . . . . . . . . . . . . . . . . . . . . . . .8

By Yuliana Boncheva

c o v e r s t o r y

Give and Save . . . . . . . . . . . . . . . . . . . . . . . .11

Practicing Corporate

Social Responsibility at Toyota . . . . . . . . . . . . .14

Going Up the River . . . . . . . . . . . . . . . . . . . . .15

Prepared by Elitsa Barakova and Kristina Muglova (Bulgarian CAF); Stephen Ainger (CAF UK) and Susan Saxon-Harrold (CAFAmerica)

Anglo-American School

Community Service Program . . . . . . . . . . . . . . .17

By Maria Mihailova

p o l i t i c s

Indian Summer Elections . . . . . . . . . . . . . . . . .19

By Boyko Vassilev

i n f r a s t r u c t u r e

Government Promises Freeways Finished

in 10 Years . . . . . . . . . . . . . . . . . . . . . . . . . .22

By Mina Georgieva

a n a l y s i s

Economic Growth Accelerates . . . . . . . . . . . . . .25

i n t e r v i e w

MP: Reforms Are Stalled . . . . . . . . . . . . . . . . .26

a m c h a m e v e n t s

Paul Dyck: More European Union Means

More United States . . . . . . . . . . . . . . . . . . . . .28

U.S. Experts Teach Bulgarian Companies Nuts

and Bolts of Government Contracts . . . . . . . . . . .30

a m c h a m i n t e r v i e w

Millions for the Taking . . . . . . . . . . . . . . . . . . .33

l o b b y i n g

K Street Comes to Sofia . . . . . . . . . . . . . . . . .34

By Irina Bacheva

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Visa Presents Government Services . . . . . . . . . . .36

c o m m i t t e e r e p o r t s

Environmental Expert Presents EU Environmental

Liability Directive . . . . . . . . . . . . . . . . . . . . . .38

m e m b e r n e w s

Hopes and Dreams Through Education

and Franchising . . . . . . . . . . . . . . . . . . . . . . .40

By Charles Gilbert, Berlitz

CENTURY21 Enters the Bulgarian Market . . . . . . .42

Privatization Agency Endorses

Interim Certificate granted to CEZ for the

Purchase of TPP Varnа . . . . . . . . . . . . . . . . . .43

Anglo-American School of Sofia Turns 40,

Moves to New Home . . . . . . . . . . . . . . . . . . . .44

s p o r t s

National Golf Tournament Showcases

Young Stars, Experienced Players . . . . . . . . . . .46

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . .48

Moody International

Schenker

United Medical Communications

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Buildings fall everywhere in the world -because of age, nature, human activity, orfolly. In Sofia, too, a building collapsedand buried beneath two girls. The case isspecial. It is representative of the viciousproperty acquisition system and construc-tion in Bulgaria. A system rotten with indo-lence, corroded by corruption and fed bya multitude of interests and a feeble jus-tice system.

The building is located, sorry, was locat-ed just a few feet away from the courtsof justice, facing the National Bank, afive-minute walk from the office of thepresident and the Council of Ministers,and just opposite a borough city hall.There seems to be something symbolicalin its collapse.

Preordained fall

The four-story building at 39 Alabin St.was for a long time known mainly for thebrand-name clothes and shoes sold onthe ground floor. Otherwise, because ofunsettled ownership rights, it hadremained unoccupied for years. A weekbefore the fatal Sep. 19 the ownersmoved in and started repairs.

The way in which the construction worksbegan was a tragedy in the making. Thebuilding was erected more than 70 yearsago and its structure was quite specific:any intervention would make it unstable.Moreover, it was registered as a monu-ment of culture, which made the obtainingof permits an even more cumbersomeprocedure.

To avoid time-consuming dealings withthe authorities, the owners started illegalrepairs. While that continued, the workersdamaged the supporting and stabilizingstructures. Just a few hours before thebuilding collapsed the workers wereinside, taking out beams and demolishingwalls. Suddenly they started hearingstrange noises. The men felt that therewas something wrong and left the build-ing before the workday was over. Only thesecurity guards remained in the building.

Shattered IllusionsA building collapsed in downtown Sofia, killing two girls and exposing a rotten

systemBy Emil Spahiyski

Firemen are exploring the remains of the building at 39 Alabin street downtown Sofia after the four-story

structure collapsed.

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It is a little strange for three armed mento guard an empty building but probablyknowing that something illegal was goingon inside, the owners had decided toinsure themselves against possible check-ups.

Obviously a lot of people were worried bythe repairs. That is evident from a tip-offreceived on the fatal day, when someonecalled and warned of illegal constructionworks going on at 39 Alabin St. Thatmight cause an accident.

At 5:45 p.m. on Sep. 19 the noises of thebuilding became increasingly frighteningto the guards. Dozens of people weredown on the street, caught up in the tra-ditional evening jam. They did not realizethe threat.

At 6:05 p.m. a large piece of plastercame off and smashed on the sidewalk.The owner of a Mercedes saw that andmoved his car to avoid damage. He wasof the lucky ones on that day. Shortlyafter he left, more slabs came off. Thepedestrians, frightened, instinctivelycrossed the street to the opposite side-walk.

At 6:06 p.m. the security guards rushedaway, having seen the walls sag. On thelast floor of the building next door twojournalists from Standart Daily were sittingsmoking and discussing some articles.

"First the floor began to shake and wethought that that was an earthquake,"says one of them. "Then the roofbelow us started to give way and sankwith a terrible roar. Then there was acrash and everything disappeared. Wefelt as if we were in the air and would

fly off any moment."

Two innocent girls died in that instant.The whole facade crashed onto theirPeugeot stuck in the traffic jam. Nothingremained of the car, as if it had beensmashed in a press. Pieces of brickswere flung into a few more cars. It is amiracle that nobody else got hurt. But thesecurity guards missed to do somethingmore than run away and save their ownskins.

A minute later, ambulances and fire trucksstarted to arrive at the place. The policecleaned up the scene, looking for morepeople buried under the debris and tryingto take the girls out of the crushed car.They did not know how many there were,nor who they were.

Could happen to anyone

It is frightening to think that anybodycould have been in the girls' place. It iseven more frightening to say that down-town Sofia is dangerous.

During the past couple of years, four peo-ple have perished in this area of the cityalone as a result of lack of control overconstruction and repairs. A passer-by waskilled by piece of plaster in GaribaldiSquare; one died of an electric shock atthe fountain in Slvaveykov Square; now,these two girls.

Of course, that caused a lot of stir aboutthe dangerous buildings in Sofia, whichturned out to come in dozens. MayorBoyko Borissov threatened to demolishthem and inspect all construction sites.Statements from a multitude of politiciansfollowed the same line. But we can be

more than sure that there will be no con-sequences. At least not the conse-quences we as citizens desire.

Why?

Because no matter what we get into, wealways reach to corruption and to lack oftransparency in what companies and offi-cers do.

Ownership change -

an obscure business

The fall of the building was predestined,given the fact that the transfer of owner-ship from ex municipal-owned BSKSredets into private-owned Hrisoma wasaccompanied by some shady dealings.

The building may have looked aban-doned, but it was built on golden land(and now even cleared for new construc-tion). When such deals are made, none ofthe parties needs transparency. We allknow why. Most municipal properties thatwent into private hands were sold for wellbelow their market price. That concernsapartments, buildings, shops (small andlarge ones); that concerns hundreds ofproperties from which the municipalityhas lost millions.

But when someone loses, someone elsegains. If the municipality, i.e. the public,has lost millions, someone else hasgained millions. It is not unusual thatpoliticians are always involved in suchdeals, because a shadow presupposes anumbrella. The tragedy with the fallenbuilding, too, brought to the surface par-ties, politicians, and their relatives. It isobvious that business and politics haveintertwined into common deals and inter-

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ests, which is disturbing in itself.

It is disturbing that the authorities shuttheir eyes to the utterly brazen way inwhich buildings are repaired and con-structed (not only in Sofia). Buildings arebeing erected near water reservoirs, innature reserves, parks, gardens and evenin places dangerous to the owners them-selves. There are dozens of buildings inthe capital city the ground floors of whichhave been remodeled into shops: recon-struction that puts at stake the structuralintegrity of the whole building. It is full ofbuildings designed in one way and thenredesigned and superstructed with thetacit agreement of the controlling bodies.

False supervision

You may ask: But don't we have laws?

A tragedy like that on Alabin St makespoliticians change the laws. New laws aredrafted, stricter regulations and penaltiesare adopted. But that is more of anobstacle than help. It hampers the activ-ities of law-abiding companies. There areso many and such tough requirementsconcerning change, repair and construc-tion that developers prefer to circumventthe law and officers prefer to extort busi-nessmen and add something to theirincomes.

One thing makes it clear that there is nopolitical will to put an end to that essen-tially criminal activity. No matter howmany laws are drafted and regulationsrevised, nobody has made anything toestablish civil control on construction yet.The creation of an easily accessible reg-ister and the appointment of an indepen-dent body would allow neighbors, com-petitors and journalists to quickly detectillegal repairs, construction and recon-struction.

A reformed justice system would easilyturn tip-offs into legal proceedings andentail financial and punitive measures onthe offenders. Seems as simple as 1-2-3,right? Corruption is everywhere, but inSofia it obviously kills people as well.

It is despairing that Bulgarian politicianshave no will for real reforms and that isprobably the reason why Bulgarians arehappy with the "political board" imposedby the European Commission. Brusselsseems to be the only real opposition inBulgaria. ■

Construction workers have to destroy the standing remains of the building in order to secure the site.

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Bulgaria and Romania can now get thefireworks ready and chill the champagnefor Jan. 1, 2007. The EuropeanCommission's report has cleared alldoubts that their EU entry can be post-poned by a year. The EC recommendedthat the two countries be admitted to theEU according to the enlargement sched-ule.

The good news about the firm entrydate, however, was clouded by specialmeasures and conditions envisaged as aprecaution. The Commission's report,which was announced on Sep. 26, con-tains a list of benchmarks. If the newestEU members fail to fulfill them, they willbe punished with sanctions unprece-

dented in EU history.

The to-do list

EC's report on Bulgaria's (un)prepared-ness for EU membership consists of 26chapters in 48 pages. Two are the mostoften repeated phrases: "concerns per-sist" and "immediate action." The areasof concern are well known from previousCommission reports. Brussels recom-mends that Bulgaria press on with thereform of the justice system, cope withorganized crime, present clear evidencethat it fights corruption through investiga-tions and legal proceedings. Other prob-lematic areas are agriculture, food safe-ty, and the control over the spending of

European funds.

Weaknesses

EC's report pinpoints the Achilles' heelsof the two Balkan states. For Bulgaria,there are six areas "causing serious con-cern and requiring immediate action."The areas for Romania are four.

Bulgaria

● Delay in setting up an IntegratedAdministration and Control System(IACS) in agriculture;

● Delay in building facilities for collec-tion, disposal and treatment of animalproducts: quite a sensitive issuebecause of the mad cow disease;

Closer to HeavenBulgaria and Romania join the EU on Jan. 1, 2007, but under special supervi-

sion. The European Commission's report sparkled disputes as to how many

types of membership cards Brussels issues

By Yuliana Boncheva

EU Commission President Jose Barroso (L) and Enlargement Commissioner Olli Rehn during the Plenary Session in Strasbourg Tuesday 26 September 2006.

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● Lack of results in the investigation andprosecution of organized crime net-works;

● Not quite efficient enforcement of lawsrelated to the fight against fraud andcorruption;

● The fight against money launderingneeds to be intensified;

● Efficient control is needed on theabsorption of Structural Funds and theCohesion Fund.

Romania:● IACS has not been built;● The agencies for direct payments to

farmers and those managing the otherinstruments of the common agricultur-al policy are not ready;

● The facilities for collection and treat-ment of animal by-products are notready;

● The information system for tax man-agement is not ready to be connectedto the networks of the EU countries -that has to facilitate VAT collectionthroughout the European market.

Without precedent

To make sure that progress will be madein the problem areas, Brussels hasresorted to means unprecedented inEU's history to influence the two coun-tries. Such for instance is the threat thattheir portion of the huge European fundswill be trimmed due to corruption andweaknesses in administration. Alsounprecedented is the strict monitoringthat will accompany the start of Romaniaand Bulgaria's membership. The mea-sure is called a "mechanism for cooper-ation and verification of progress afteraccession."

Every six months Brussels will carry outinspections to verify the implementationof the benchmarks and Sofia andRomania will report on progress inaddressing them. The first reporting peri-od has already started and will finish onMarch 31, 2007. That date is even moreimportant than January 1. Because atthe end of March it will become clearwhether Brussels will fulfill its threats toinvoke the safeguard measures. Untilthen properly functioning financial man-agement and control systems have to bein place for the agricultural funds.Otherwise the funding envisaged in sup-port of farmers in Bulgaria and Romaniawill be cut by 25 percent. That meansthat the newest member states will lose

hundreds of millions of Euro. The sanc-tion can be imposed not only in 2007 butalso in the coming years.

Martin Dimitrov, a Bulgarian right-wingMP and observer at the EuropeanParliament, says that no matter how youcall the safeguard measures, their pricewill be high.

"Trimmed subsidies, a ban on the exportof certain foods - such actions will defi-nitely hamper the access of Bulgariancompanies to the European market.When Bulgarian businessmen exportproducts to the European Union the con-ditions for them will be worse than whenEuropean businessmen export goods toBulgaria," Dimitrov said.

The commentaries in the Western presson the report were surprisingly diverse.Some accused the EC - that is, theEuropean government - of being exces-sively demanding and demonstrating adiscriminatory attitude to the Balkancouple. Others criticized the Europeanpoliticians for hurrying to issue EU mem-bership cards #26 and #27, as theycould not cope with more pressingissues.

Britain's The Independent wrote that justlike the previous waves of enlargementto the East, Romanians and Bulgarianscan be justified for feeling second-rateEuropean citizens. Just like in Poland'scase, the products of the Romanian andBulgarian agriculture will only have a lim-ited access to the EU markets. That ispartially due to legitimate health consid-erations, but the doubt remains that thatis also a protectionist measure of thecurrent member states, which fear thatthe common agricultural policy of the EUmay fall under the weight of Polish porkand Romanian milk, The Independentcommented.

What "prepared" means

The eight Central European countries,which have been members of the EU formore than two years already, also expe-rience and cause problems with theirweak public administration. As far ascorruption and organized crime are con-cerned, these problems plague Italy,Hungary, and Germany, too. It is true thatthe gross domestic product and incomesof Bulgarians and Romanians are thelowest in EU's history. But we should

remember that some ten years agoIreland joined the Union as a poor farm-ing country and now it is among the besthigh-tech performers, while Greece,Spain and even Germany and Francecan only be jealous of its economicgrowth rates.

Also, many recall that Portugal, Greeceand Poland were no better prepared atthe time they were admitted to theEuropean family.

Then why that strictness to Bulgaria andRomania? Because we have learned ourlesson from the previous EU enlarge-ment in 2004, enlargementCommissioner Olli Rehn admitted.

Visible obstacles and hid-

den threats

In fact the strict measures planned byBrussels have much deeper roots. Theactual problem is not that Brussels hasleft loopholes for a drastic cut in thesubsidies of the new members. Therewill be reductions only if Bulgaria andRomania prove themselves unable tocope with the management and absorp-tion of the ample funds. If the localagencies managing the European fundsare not up to standard they will simplynot receive certification by the respectiveEU bodies and will not be able to allo-cate the amounts budgeted by Europe insupport of the two countries.

That is the real threat: if Bucharest andSofia fail to organize their own systemsfor absorption of the generous Europeanfunds. That is also the reason for thecritically poor absorption of the currentpre-accession funds. So it is all up to theexecutive authorities in Sofia andBucharest, not to Brussels.

EU will surely cut the funds if it finds outthat the chief manager of the Europeangrants is corrupt. That is reasonablestrictness: it will punish those corruptofficers, politicians and crony companiesthat have embezzled the lion's share ofthe subsidies. The rest of Bulgarians andRomanians will not object to suchactions at all, as they welcome all mea-sures against graft. It is the hope thatwith EU's help the power of white-collarsworkers and cheap politicians will besubstantially limited that is one of theserious reasons for the citizens of thetwo Balkan countries to strongly desire

EU membership.

Second rate, third rate

During the debates on EC's report in theEuropean Parliament voices were heardthat the countries admitted in 2004 hadbeen treated as second-rate membersand that Romania and Bulgaria wouldeven travel third class on the Europeantrain.

To forestall such speculations, EuropeanCommission President Jose ManuelBarroso stated that the possible mea-sures would in no case place Bulgariaand Romania into a lower category. Herecalled that safeguard clauses hadbeen envisaged for other countries uponaccession, including for his native

Portugal.

It is a fact that the poorer and lessreformed countries in the EU more oftenraise the question about inequality. Haveyour heard entrants Slovenia or Cyprus,which are comparable with the EU vet-erans in terms of income, to complain ofunfair treatment?

It is also a fact that Bulgaria andRomania can only blame themselves forthe conditional membership. TheEuropean Commission, just like the ordi-nary citizens of the two countries, isdeeply convinced that if the authoritiesdo not feel a sword of Damocles hang-ing over their heads there will be noreforms. It is a fact that whether the spe-cial measures and sanctions will be

applied depends on their own efforts andprogress.

Pre-Christmas emotions

Now that EC's report has been pub-lished, there are a few more things thathave to take place before Romania andBulgaria's actual accession. TheCommission will present its report to theEuropean Council, which is the standingbody of the member states. If somecountries have objections to EC's report,they can share them at the forum. TheEuropean Council will sit in the middle ofDecember. For the last time then it willbe presided by Finland, which will havethe honor of announcing the completionof the European Union's fifth enlarge-ment round.

Meanwhile, the ratification of the twoBalkan countries' treaty of accession tothe EU has to be finalized. The parlia-ments of Germany, Denmark andBelgium have to say 'yes' to Bulgariaand Romania's membership. ECPresident Jose Barroso has alreadyurged them to ratify the document asquickly as possible.

EC also to enlarge

The European Commission will alsoexpand. The new member states willhave their "ministers" in the Europeangovernment. The president of theEuropean Parliament has already takena decision that the future commission-ers from Bulgaria and Romania will beelected in the beginning of January2007. In late November the candidatesfor the posts have to appear for hear-ings at the respective committees. TheEuropean Parliament will vote theirnominations at a special plenary ses-sion on Jan. 4. Sofia and Bucharesthave not yet officially discussed nomi-nations.

Getting wiser?

Latest public opinion polls in Bulgariashow that support for membershipremains very high: about 70 percent. Atthe same time only 30 percent view EUentry as a panacea - the other 70 per-cent are well aware that the EU is not amagic wand solving problems overnight.That is excellent news, because untilrecently Bulgarians trusted Brusselsmore than their own powers. ■

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8 days after the European Commission approved the Monitoring report on the state of preparedness for

EU membership of Bulgaria and Romania, the head of the EC Delegation to Bulgaria Dimitris

Kourkoulas was awarded with the highest distinction of the Republic of Bulgaria. At a ceremony in the

Coat of arms hall in the Presidency on October 4, 2006 the Bulgarian head of state Georgi Parvanov con-

ferred the Stara planina - first degree order on Mr Kourkoulas. Ambassador Kourkoulas is honoured with

the highest state order for his exceptional merits for the development of the Bulgarian - EU relations, for

promoting the Bulgaria's prestige as a reliable partner and future EU member, and also for the completion

of his term.

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You want to donate money for charity inBulgaria? It is still a tough proposition.You cannot simply give your money to asick child or pay for the education of ayoung talent. In order for the state torecognize your gesture, the money forcharity has to be paid through legalfinancial entities only: foundations, non-government organizations etc., whichare registered at the tax services.Despite this unpleasant detail and acouple of other small hindrances,Bulgaria has been recently doing a lotfor charity.

Technological progress also helps. SMSdonations are already the most popularbut the VAT paid on them goes directlyto the state and does not reach thoseyou want to help.

The biggest amount of charity moneylast year was raised through SMSs andtelephone calls. The BulgarianChristmas campaign alone, which washeld under the auspices of the presidentof Bulgaria, raised 2,011,751 Leva.

Tax relief for donors

People who make donations to theBulgarian Red Cross, budget-subsidizedhealth establishments and schools, thedisabled, initiatives for the preservationof cultural and historical monuments,non-profit non-government organiza-tions, the Energy Efficiency Fund etc.have the right to deduct up to 10 per-cent of their taxable income.

Donations can be made in cash or in

kind (property, equipment), foreign cur-rency, securities, etc. In this case thedonations are estimated on the basis ofthe price paid by the donor up to threemonths before the donation. Otherwisethe value is determined by various crite-ria: the BNB rate is used for donationsin foreign currency and precious metals;the purchase price or the tax evaluationof the property, whichever is higher, forreal estate; and the market value forsecurities.

The donations made by individuals,companies and freelancers to the Fundfor Medical Treatment of Children havebeen recognized since last year. Therelief for such donations is 50 percentof the taxable income, because theresources are intended for expensive

Give and SaveRules on the taxation of charitable donations are still in development - here is a

example on dos and don'ts

o n e t o o n e

Tax relief for legal entitiesAccording to the amendments to the Corporate Income

Taxation Act (Art. 35, Para. 2), which entered into force on Jan.

1, 2005, companies can report donations as expenses exempt

from withholding tax and thus directly reduce their financial

result. If donation expenses exceed 10 percent of a compa-

ny's profit, the surplus is added to the financial result and

levied a corporate tax.

The rate of the withholding tax on donation expenses is 17

percent. The tax also has to be paid by legal entities mak-

ing donations to non-profit legal entities for private benefit.

The relief applies to: donations in favor of health and med-

ical establishments; specialized institutions for social ser-

vices; medical and social care facilities for children and

homes for children deprived of parental care under the

Medical Establishments Act; nurseries, kindergartens,

schools, universities or academies; budgetary enterprises

within the meaning of the Accountancy Act; legally registered

religious faiths; funds supporting people with disabilities;

specialized enterprises or cooperatives for people with dis-

abilities; supports for the disabled; victims of natural disas-

ters, industrial accidents and catastrophes or their families;

the Bulgarian Red Cross; supporting the socially disadvan-

taged; supporting sick children or orphans; restoration and

preservation of historical and cultural monuments, cultural

institutions, or supporting cultural, education or scientific

exchange under agreements to which the Republic of

Bulgaria is a party; non-profit legal entities registered at the

Central Register of Non-Profit Legal Entities as performing

activities of public benefit; scholarships established and

granted for education of pupils and students at Bulgarian

schools; municipalities; the Energy Efficiency Fund; the

Fund for Medical Treatment of Children.

To be eligible for tax relief, however, companies have to meet

two more conditions:

● the donations shall not benefit the managers providing them,

nor those spending them;

● evidence is required that the donation has been received.

Tax relief for natural personsAccording to the Natural Persons' Income Taxation Act, indi-

viduals donating to the persons, institutions and organizations

listed in the Corporate Income Taxation Act can use the same

tax relief to the amount of 10 percent of the taxable income,

except for donations to the Fund for Medical Treatment of

Children, where the relief is 50 percent.

Another condition for tax relief is that donors should not have

outstanding debts to the state, as declared in a tax statement

or established by an audit, as at the time the donation is made.

Tax relief can be used by people with incomes received under

employment agreements; sole proprietors either registered

under the Commercial Code or not; free-lancers and other

people working on a non-salary basis; persons performing

managerial and controlling functions for consideration.

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procedures abroad.

Disabled people who have lost morethan 50 percent of their ability to workcan reduce their taxable income bytwice the size of the tax-exempt incomeminimum for the respective year for allincomes received.

The tax relief for donations is used afterall recognized expenses, social securityand health contributions, and install-ments for unemployment and life insur-ance are deducted from the taxableincome. Donations can also be deduct-ed by lessors, as well as by peopleworking under employment agreementsonly.

The tax services recognize donationsonly when the money has been trans-ferred to the entities specified by law.Donors should not have debts to thestate as established by an audit. Allaccompanying documents, such asdonation certificates, bank transfer doc-uments etc., have to be attached to thedonation dossier.

From 2007 the tax relief will be waived

for donations made by natural personsto disabled people, according to the law.A total of 750,000 people with disabili-ties are currently registered in Bulgariaand the donations to them increaserapidly every year as a means of evad-ing taxes. The treasury loses more than

6 million Leva from that.

Parliament's new proposals

According to a bill recently sponsored bySimeon II National Movement's MPsMariana Assenova and Plamen Kenarov,

e v o l u t i o n

Number of changes were made in the Bulgarian legislation in late 2004 and in

2005, which substantially contributed to improving the tax environment for dona-

tions. However, for the first time in Bulgaria drastic differences were introduced

in tax treatment: 50 percent tax relief for donations to the Fund for Medical

Treatment of Children and 15 percent for donations to culture. That gives advan-

tage to certain causes and the non-government organizations that promote them,

which is unjust and ungrounded. That is not so much due to certain preferences

on the part of the legislator as to the lack of a comprehensive strategy for the

drafting of laws that regulate donation and the organisations working for the ben-

efit of the public.

In December 2005, the 40th National Assembly approved the Patronage Act. The

law provides for a 15-percent relief concerning gross income tax and profit tax

for donors to Bulgarian art and culture. In addition, when the donation is made

in non-excisable goods or services it is exempt from VAT. The aid is envisaged

to be provided directly or indirectly, i.e. through non-government organizations

supporting culture - in such cases the intermediary can keep up to 5 percent

of the donation. A lottery will also be organized in support of culture under the

regulations of the Gambling Act: at least 75 percent of the proceeds will go to

national funds supporting the creation of works of culture.

In January 2006 the Bulgarian Red Cross delivered food and blankets to the devastated by f loods areas near Novi Iskar.

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0.10 Leva a month shall be deductedfrom the wages and salaries of workingBulgarians for the medical treatment ofseriously ill children.

The deductions will be transferreddirectly to the BNB, the control will beexercised by the Audit Office and theparliament. According to the draft, theministers of health and finance and rep-resentatives of the Bulgarian MedicalAssociation will sit on the managementboard controlling the collection of funds.

The money will be channeled to thebank accounts of children waiting formedical procedures. According toPlamen Kenarov, some 3 million Levawill be raised every year that way. In hiswords an option is being sought to givea legal form to the proposal that themoney donated for charity by naturalpersons and legal entities be recog-nized as expenses and exempt fromtaxes.

The so-called tax loopholes for individu-als and sole proprietors are officiallyregulated by the law on natural persons'income taxation. The Bulgarian constitu-

tion stipulates that any tax concessionor surtax shall be established by a law.

Up to 10 percent of the annual taxableincome can be deducted for installmentsmade for voluntary pension insuranceand voluntary unemployment insurance.

The "privilege" can be used by peopleworking under employment agreementsand contracts of service, sole propri-etors and free-lancers. Another up to 10percent can be deducted for install-ments for voluntary health insuranceand life insurance.

On June 1st, Children’s Day, the Bulgarian Red Cross delivered presents to handicapped children in Isperih.

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Toyota was ahead of its time in recog-nizing early that if you want to be suc-cessful in the long term, you have tocontribute to the society you operate in.This thinking is now embedded in thecompany’s philosophy. The company hasjust published a leaflet titled ContributionTowards Sustainable Development, whichwill be distributed to every Toyotaemployee around the world. In Bulgaria,TM Auto (the official distributor ofToyota) organized a team-building week-end for its employees devoted to

Corporate Social Responsibility (CSR). Atthe seminar, TM Auto announced that thehybrid vehicle Prius is going to be intro-duced in the Bulgarian market as earlyas November 2006.

AmCham Bulgaria Magazine talked toStefan Crets, manager of the CSRDepartment at Toyota Motor Europe'sheadquarters in Brussels, who deliveredthe presentation. He agreed to identify forus the pressing need to develop strongerinternal and external communication ofthe company's approach to CSR.

"The Contribution Towards SustainableDevelopment leaflet reinforces Toyota'sideas and values in terms of CSR," Cretssaid. "It is an effort to communicate themmore explicitly to employees. Toyota is abusiness committed to society and this issomething employees at every level inthe company can contribute to, whether

they are in Purchasing, Finance, Sales,Aftersales, HR or wherever. The pamphletunderlines the fact that we work for thecompany and know what our companystands for."

Toyota's Crets: How to put

CSR into action

"CSR, as defined by Toyota, is essential-ly about the simultaneous managementof the economic, environmental andsocial performance of the company. It is

not an easy balancing act. Maximizingeconomic performance - i.e., by satisfy-ing the global demand for cars andachieving the necessary profitability tofulfill shareholders' expectations andmaintain employment levels - might becompletely contradictory to environmen-tal performance concerns, becausethose very vehicles and the plants thatbuild them produce emissions. Toyota isvery aware of this contradiction and con-stantly asks itself how it can improve thesituation without damaging its own eco-nomic base.

A vital way of looking at this is through amodel that uses a risk-based approach.The questions will be what is the social,economic and environmental perfor-mance on one hand, and on the other,what are society's expectations? Whereare the gaps, and what risks or opportu-nities do these gaps represent? For

example, an environmental gap repre-sents an opportunity to make an environ-mentally friendly car like Prius or the newLexus RX400h - and thus becomes anopportunity rather than a risk, enablingthe company to meet consumer demandat the same time as meeting environ-mental challenges.

Toyota asks itself how it can improve itsmanagement systems to deal better withthese challenges. As such, it is coordi-nating a number of projects in collabora-tion with different divisions within ToyotaMotor Europe - Purchasing, HR, AfterSales, Legal. CSR development will assistToyota and TM Auto in particular inensuring its long-term profitability and tofulfill its role as a good corporate citizen.It also links to Toyota's social contribution- its philanthropy.

The CSR Department also operates agrant system whereby the Toyota Fundfor Europe gives grants to environmentalNGOs, road safety NGOs and in the fieldof technical and engineering education.Toyota seeks to find out their opinionsabout what are the main social and envi-ronmental issues on the horizon, andabout how they see the evolution of thecar industry and how the company canimprove its role in this. Philanthropy is notjust about giving money, then, but alsoabout creating partnerships."

TM Auto has been a member ofAmCham's CSR Committee since itsfoundation in November 2005. ■

Practicing Corporate SocialResponsibilit y at ToyotaManager presents company philosophy, philanthropy; hybrid Prius

coming to Bulgaria in November

Participants learned a great deal about corporate social responsibility during the presentation organized by TM

Auto for its employees.

Stefan Crets, manager of the CSR Department at

Toyota Motor Europe's headquarters in Brussels,

delivered a presentation on his company's social

responsibility philosophy

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Let's start with a story I read years ago.It is about a man standing on the bankof a river. He suddenly sees a babydrawning down the waves. The manjumped to save the baby. The next daysame thing happens again. And the nextday, and the next day. Some time laterthe catcher decides to go up the riverand see who is throwing children in thewater. He starts fighting these men.There are more and more men coming,and there is more and more fighting. Sosome time later, the catcher thinksabout what makes these men come andthrow their kids and he goes further upthe river, seeking a change.

I like the story as it describes the pathof changing the way we can contributeto social well being. Saving children isas necessary and as valid as creatingenvironment to prevent their parentsmistreating them. It is an individualprocess of choice and maturing.

Helping people on different parts of theriver is the mission of Charities AidFoundations in different countries, on sixcontinents.

CAF is the not-for-profit organizationwhich is committed to effective giving,providing a range of specialist servicesto donors, companies and charities inthe United Kingdom, and internationally.

For its 10th anniversary, BulgarianCharities Aid Foundation, part of theCAF network, hosted an international"Committed to effective giving" confer-ence on Sep. 18, 2006.

Bulgarian CAF is a professional interme-diary organization, offering informationand support to individual givers and cor-porate community programs. For the firsteight months of 2006, BCAF has raisedmore than 220,000 Leva from individualsand companies in Bulgaria and is help-ing the work of some 25 organizations.

"Committed to effective

giving" conference

Conference attendees were reminded

about the necessity to be transparent intheir finances and activities, togetherwith taking steps to report charitable giv-ing that is both effective and impactful.

Some 120 representatives of not-for-profit organizations, companies andbusiness associations attended and par-ticipated in the event. The conferenceprovided an excellent opportunity forsharing contemporary data about localand international practices and successstories in the area of philanthropy.

The conference was sponsored by CAFInternational and BNP Paribas. The juryand the audience awarded threeBulgarian not-for-profit organizations fortheir effectiveness in promoting andgaining financial support for their caus-es: Association of Women with Cancer;Green Balkans - Stara Zagora; and aDoze of Love - Bourgas.

The participants in the conference hadthe opportunity to listen and discuss theexperience of CAF international officesfrom the United States, Russia, India,Brazil, Australia, Southern Africa and theUnited Kingdom. The workshops exam-ined topics as broad as fundraising, cor-porate social responsibility, social invest-ment, partnership with nonprofit organi-

zations, effective cause related market-ing, introducing employee volunteeringand giving from the workplace.

Impact of the Not-for-Profit

Sector

By Stephen Ainger,

CEO, CAF - United Kingdom

CAF UK holds more than 2 billion Euroon behalf of donors and charities.

Charities have entrusted 1.5 billion Euroof their cash with CAF Bank, the bank

for charities.

Over 380,000 employees give more than100 million Euro every year through pay-roll, CAF distributed over 400 millionEuro to 50,000 charities across theworld on behalf of donors in 2005/06

In the United Kingdom giving is well overGBP 12 billion plus per annum, with gov-ernment funding to non-profit sector asimilar amount; people have a right toknow where the money is going, andwhat is being done with it. The donorsare increasingly, and rightly, asking whatdifference has it made.

In the private sector there is a hugearmy of people, an industry in its own

Going Up the RiverPrepared by Elitsa Barakova and Kristina Muglova (Bulgarian CAF);

Stephen Ainger (CAF UK) and Susan Saxon-Harrold (CAFAmerica)

Yana Georgieva from Women with Cancer Association receives the first prize in Effectiveness Awards.

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right, dedicated to the monitoring andanalysis of company performance.Whether it is a product, or a range ofservices, the 'for-profit' enterprise isdependent on its ability to win cus-tomers, to perform for those customers,and hopefully keep them; to do it betterthan the competition, to add value anddeliver.

Donors - the high net-worth individuals,companies and governments - areincreasingly bringing the practices ofprivate-sector investment to bear on thenot-for-profit marketplace. Questionsabout effectiveness in approachingproblems, outcome for beneficiaries,value added and cost-effectiveness ofexpenditure are to be answered.

It is clear that charities need to saymore about how they measure success,using objective indicators. There is nosingle solution to the issue of measuringthe impact and effectiveness of chari-ties. Unlike the private sector wherethere is an economic imperative to driveperformance, the imperatives driving theaccountability, performance, indeed thevery existence of some organizations inthe third sector, are not so simple to dis-cern.

So what does this mean for CAF inBulgaria and elsewhere?

Our challenge in the coming years is tohelp drive the sector towards a way ofworking that will help measure impact.The sector is making progress onimpact reporting but unless we acceler-ate that work we will increasingly findourselves unable to meet the needs ofour stakeholders and ultimately losetheir trust.

There is much to be done, but I am con-vinced that CAF, with others, can helpdeliver a new culture of transparencyand reporting that will place 'impact' inthe hands of those who want to know -our donors, funders and corporates,without which the work the sector doeswould not happen.

Engaging U.S. Donors

by Susan Saxon-Harrold,

CEO, CAF America

CAFAmerica's mission is to stimulateU.S. global giving by assistingAmericans and corporate donors with

safe, easy and effective charitable solu-tions for international grantmaking. Weare a U.S. registered 501(c)(3) publicNGO, which enables us to receive tax-deductible contributions from U.S.donors. CAFAmerica makes over 1600grants a year to nonprofits in 72 coun-tries.

US private giving topped $260 billion in2005, and 15 percent of those dona-tions are given internationally to chari-ties. Many use CAFAmerica to do sobecause of the tax benefit to them.

I would like to say to all Bulgarian non-profits present at this conference thatthere is no time like the present to seekout new sources of income to replacetheir overdependence on foreign founda-tions. I am glad that the conference

exhibition reveals the enthusiasm forwork of Bulgarian nonprofits.

A U.S. company working in Bulgaria canhelp a local nonprofit build a diverseincome base by making grants orencouraging their employees to givetime or money. Companies should notforget that a U.S. company may wellhave an international matched givingprogram where local employee givingand volunteering to nonprofits arematched by the U.S. headquarters.Paying the annual administrative cost of$3,000 for raising money by U.S.Bulgarian Diaspora via a CAFAmerica'Friends of Charity Fund.' is another wayof support. U.S. companies can alsofulfill a valuable role by offering employ-ee expertise to help build capacity innonprofits. ■

23 non-profit organisations competed for the Effectiveness Awards demonstrating their achievements to the vis-

itors of the Exhibition during the conference

Opening panel of the Effective Giving Conference. Stephen Ainger, CAF UK speaks about transparency and

impact after the opening speech of Michael Tachev, chair of BCAF

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The Community Service Program (CSP) has existed for sever-al years at AAS and although it has its important place in theschool life it is completely voluntary. During the last 11 yearsthe program has developed substantially. It started as a singledonation of food and clothes to an orphanage in GornaBreznitsa in 1995, and now it functions as a well-structuredand well-planned social program which involves everyone atthe school on a voluntary basis. It now has a special page inour web-site.

Mission of the Program: The CSP aim is to help needy placesin the host country, but above all, "to enhance academic, per-sonal, social and intellectual growth by instilling students witha sense of compassion, justice and responsibility in their questto develop as global citizens", as defined in the mission state-ment of the program..

The Goals of the program are:● To integrate community service into the school's programs;● To blend service into learning activities in such a way that

both service and learning are enriched;● To involve students actively in the service learning process:

planning and preparation; implementing a project, reflectingand assessment, acknowledgement; and

● To develop a service learning program at school, within thecommunity and in a more global context.

The Target Groups/ Buddy Places● Baby Orphanage in Zone B-5● Elderly People's Home in Zone B-5● Hospice "Milosardie" - hospice for old and very sick people● Faith, Hope and Love Center for Street Children

● Roma School, 75 State School in Sofia ● School for the Deaf and Hearing Impaired Children,

Buckston● "Alexandrovska" Children's Pulmology Hospital ● Otec Ivan Orphanage, Novi Han- added in this year's pro-

gramValue: The social impact is un-measurable - the real measuresare in the disadvantaged people's hearts.

The school has established a system to pair each class to aneedy place in Sofia in order to establish a year-long relation-ship. Each class chooses to work with a buddy place throughthe year. The service includes a wide range of social activitiesrather than simple donation of gifts and money only.

Anglo-American SchoolCommunit y Ser vice Program

AAS lower school student (left) shares time together with a child from the

Mladost Orphanage

By Maria Mihailova

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For example: AAS children from different age groups makeregular visits, perform plays, sing songs or cook together withpeople from the Old People's Home. Grade 8 students regu-larly visit Milosardie Hospis and chat with the sick and old peo-ple. Baby orphans from the Mladost orphanage come to schooland joined in class activities of our kindergarten class. TheSchool of the Deaf students have an art class or play soccerand other games together with our students. There is alwaysa two ways benefit - AAS children learn to help the needy andthe elderly people and disadvantaged children see us asfriends in us and enjoy the natural human attention they may

rarely receive. All buddies are part of our holiday celebrations.During a Christmas show a popular song was sung by the AASstudents on the stage. The children from the School for theDeaf, sitting among the audience, recognized the song andstarted to sign with their hands in their own language. Themoment had been so beautiful and impressive that there has-n't been any dry eye left in the rest of the audience.

Besides the visits to and from the buddies, where projects andactivities are carried out together, AAS also has all school-wideprojects, such as the Harvest Food Drive in October and theChristmas Angels Tree Project in December which mobilize theefforts of the entire school community to help needy placeswith donated food items or to enhance their Christmas holi-days with gifts from our children.

The main funding of the Program comes from Monthly PizzaLunches or Bake Sales. The net income goes into theCommunity service account and helps purchase presents, foodsupplies and materials for class projects. This month(September 2006) the sports department offered to contributeand started the campaign "Fitness for Charity"- until today,since the activity started last week, the children have raisedover 800 leva from fitness activities.

In 2004-2005 Grade 4 class raised money for a new play-ground for the street children in the Faith Hope and LoveCenter. The Students advertised their project regularly in theWeekly Newspaper. They met and made personal requests fordonation from corporate companies as well. At the end of theyear they had BGL 30000 leva for the renovation of the play-ground area around the center. The disadvantaged children

received a new playground facility together with new friendsfrom the near neighborhood to play with.

Students from the Roma School were encouraged to raisemoney for Cancer Research. In September 2005, AAS childrenhelped their buddies from the Roma school to raise 160 levaby running for health. 1000 leva was donated to the Terry FoxInternational - Foundation for Cancer Research. The event wasalso enriched with a concert performance in which the Romaschool, the School of the Deaf , and AAS students took part.

Money was raised for the purchased 10 new electric inhalersfor the Department "G" at Alexandrovska Pulmology Hospitalalong with new sets of bed sheets chairs, hangers, books andtoys. Each AAS class created art work, which were exposed inthe rooms of the department.(amount was over 2000 leva)

The Tsunami victims in Asia were supported by 3000 levaraised by AAS students a month after the disaster. To achievethis amount students organized every week in January 2005 aconcert for parents and teachers, with an entrance fee;

A photo exhibition on Tsunami topics make visitors aware of thetragedy and encourage them to participate in the campaign.

Grade 3-4 helped their parents at home with the householdwork, and were paid for the job done. Grade 2 printed a cal-endar with their artworks and sold them in school.

The kindergarten group made a few plastic "Stotinki"-jars frombig mineral water bottles, put them at the entrance hall of theschool and collected coins during the entire month.

Few parents also helped the cause offering cookies and cakesat a Bake Sale organized during recess time. It was outstand-ing that the campaign was entirely initiated and managed bythe AAS students.

After the tragedy in Beslan every student in AAS drew a greet-ing card and bought a present for a Russian child. The cardsmeant to express support and encourage the victims to believein life and good will. Money, new clothes and school materialswere also collected and sent to Bulgarian Red Cross.

A flooded school in Gnilyane, Novi Iskar was also supported bythe CSP. The AAS Middle school organized a raffle with prizesand a popcorn sale to raise funds for the renovation of theschool in that almost destroyed by the floods last summer. ByJune 2006 children have raised 1600 leva, which was not suf-ficient to meet the cost of the entire repair. AAS is looking fora partner from the building or construction sector to donate thematerials for the re-plastering of 4 school classrooms and theschool yard fence.

It's already October, and Harvest time too. The Harvest FoodDrives is coming soon and AAS students will start collectingpacked food for the needy places again. Is there a way you oryour company could support this young people's efforts andachieve more? These young responsible citizens keep theirpromises. They might become your best trusted partner.

Think about it, they are just a click away.http//sofia.ecis.org ■

A class from the School for the Deaf Visits AAS

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The most boring or the most interest-ing elections in Bulgaria are coming.

Hundreds of thousands of citizens aresitting and watching noisily launchedreality shows and television cam-paigns. Or going to concerts ofDepeche Mode and Eros Ramazzotti.Or to the promotion of the latesthypermarket. Or, as a last resort, to aLevski-Sofia's game in the ChampionsLeague. But not to a rally, parade,election event. Bulgaria is on thethreshold of the European Union (EU).

Gone are the clashes of the 1990s,gone are the passions, the ideologicalbattles. Bulgarians seem politicallypacified, lost in an easy pre-Europeannap in the beginning of the Indiansummer. If you have lived in Bulgariafor long, you must know well the fol-lowing mid-summer horror: it is threeo'clock in the afternoon, the sun isbaking the asphalt with vengeance,lounging in the shade, can't prop youreyelids open.

Just at a moment like that there comesthe big storm.

It is the same with Bulgarian politics:situations long asleep can suddenlyawake, to everybody's horror. A savvy

journalist used to say: "What I fearmost is a dull news day. It always turnsupside down."

I am not saying that inevitably there willbe a surprise. I am not saying eitherthat what has been will be again - thatis a cliche. I am just giving a chanceto human genius, fortuity or folly to dis-prove the forecasts that we journalistshave to make on the basis of the evi-dent, because this is what we do.

And what is evident, what we knowabout the presidential elections onOctober 22, is this:

1. The straightening of voter registriesnow gives

a chance for victory

at the first round

For the first time the Bulgarian CentralElectoral Commission has radicallycleaned the voter registries of variousphantoms. A vast number of peoplehave not voted for long: they haveeither left the county or passed away.

But their registration until now hasmade it almost impossible to achieve a50-percent voter turnout at the firstround of elections, as required by thelaw. That has changed now.

2. Nevertheless, less and less peoplein Bulgaria today declare any interestwhatsever in politics and more particu-larly in elections.

3. Therefore there are two reasons tomotivate voters: "End of the statusquo" and "Let's not rock the boat."

The first reason is based on the factthat obviously Bulgarians do not livewell and the powers should be fre-quently changed. The second reasonagain is based on the fact thatBulgarians do not live well, but rockingthe boat will just bring insecurity andnew risks, which is even worse thanthe status quo.

Both reasons are deeply rooted in thepolitical culture of Bulgaria's transitionperiod. They are united by the power-ful Bulgarian pessimism that is hard to

Indian Summer ElectionsExercise in Bulgarian political weather forcasting*

By Boyko Vassilev

* Due to the production requirements of the printer of the AmCham Bulgaria Magazine, this articleby Boyko Vassilev was written 3 weeks prior the presidential elections in Bulgaria 2006. The editor-ial staff recognizes that some of the figures and events mentioned in the article will go troughchanges, but the article describes in a great way the pre-elections situation in Bulgaria. AmChamBulgaria Magazine will publish a complete analysis of the presidential election in our next issue.

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explain. They are divided by voters'individual histories. The name of thesecond reason is 1990. The name ofthe first is 2001.

Two symbolic elections

for the mentality of Bulgarians, whochose tranquillity in the one case andeternal change in the other. What willthey choose now? If they choose tran-quillity, the incumbent president GeorgiParvanov can safely make plans for2011. But if they choose eternalchange, Parvanov has a problem.

Only a superficial observation showsthat "end to the status quo" is the morecommon reason in Bulgaria. It is truethat neither a president, nor a govern-ment has won two mandates - exceptfor the two minor coalition partners inthe current cabinet. But there areBulgarian elections where the statusquo is the winner: the majority localelections. No matter how filthy thetowns are, no matter how much cor-ruption is the talk of the town (mostoften discussed vaguely, and in pri-vate), no matter how angry the resi-dents are, they always elect the samemayors - they have got used to them.In 2003 the ten biggest Bulgarian citiesre-elected their mayors: status quo vic-tories par excellence.

How reasonable all that is is anotherstory. Probably Bulgarian voters areconservative in lifestyle and radical inpolitics and voting drifts them into oneof the two feelings. Or it may be thecase that everything can be explainedwith political situations long past. Butone thing is certain: the answer to thequestion about the presidential electionon October 22 should not be lookedfor in the past. So let's look for it intoday's candidates.

Georgi Parvanov. The incumbentpresident has good chances to be thefirst to win a second term by publicvote. He may be tripped up by a seri-ous campaign blunder or by his posi-tion to the status quo. Therefore,Parvanov's opponents are trying toshow him as the candidate of the sta-tus quo, the father of the triple coali-tion and the patron of the Movementfor Rights and Freedoms (MRF). Butfirst, as we saw above, that is notalways the losing position in Bulgaria.Second, Parvanov may play a complexgame by positioning himself above thestatus quo, outside it, or - which is thebest - against another status quo (seebelow). Third, Parvanov may promiseor delicately hint at changes in the sta-tus quo after his re-election. Andfourth, he has the resource of his cur-rent position of authority, which is aclear advantage everywhere in theworld.

Nedelcho Beronov. The chairman ofthe Constitutional Court, though nomi-nated by Democrats for StrongBulgaria, has become the candidate ofthe larger segment of the dividedBulgarian Right. He will rely on the dis-appointment from the triple coalition(and MRF's participation in it) and theold democratic sentiment. His oppo-nents, however, will try to show him asthe candidate of an older status quo:Ivan Kostov's government from 1997until 2001; delicately but persistentlythey will hint at his venerable age andthe squabbles in the Right.

Will a second place be a success forBeronov? And

will a third place be

a failure?

The politicians in the Bulgarian Center-Right are thinking about the answers to

these questions from now and prepar-ing a strategy in case of failure (e.g.Kostov's theory that poor turnout is initself a punishment to the incumbents).The stakes are high: besides every-thing else, Beronov's nomination is anattempt at solving the problem with thefuture of the Right.

Volen Siderov. Ataka's leader is theauthentic mouthpiece of protest -against the triple coalition, against theMRF, against the elite, against the gov-ernment, against Parvanov, against theAmericans, against the WestEuropeans, against the Turks… Theformer journalist now stakes on con-stant negation and constant 'ifs' and'buts.' But as with all other protestleaders, what puts a rake in the wheelis some private story: the obscureaccident on the Trakia freeway and theattempts at concealing the truth willweigh on Siderov for long.

Only a fresh scandal with an ethnictaste can fill the sails of his ship andrank him second, after which theBulgarian Right will have to chooseParvanov over him willy-nilly. A horrorscenario for the Right; a discomfortingscenario for Parvanov; a triumph sce-nario for Volen Siderov himself.

Georgi Markov. Yet another formerconstitutional judge, a former legendof the democratic rallies in the early1990s, president of Levski-Sofia soc-cer club. Markov relies on the old sup-porters of the Union of DemocraticForces who are defiant toward partisandiscipline, on those who gained fromrestitution, on the New Time party thatdidn’t win anything in the parliamentaryelection, on the new right-wing dream-ers - no matter which way you look atit, he has few people to rely on. Hisopponents in the Right will accuse himof splintering opposition votes; his

Volen SiderovGeorgi Parvanov Nedelcho Beronov

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opponents in the Left will pay him noattention. But after nine years at theConstitutional Court, driven by passionand energy, Georgi Markov wants tofind a place in the new politics - wherehis heart seems to be: the presidentialelection as a long comeback.

Lyuben Petrov, Grigor Velev, and

Petar Beron. These are the candi-dates who believe that they have hitthe wind of change, the new niche ofideas and

the future miracles in

Bulgarian politics

According to Petrov that is the extremeLeft; according to Velev and Beron,that is nationalism. With their nomina-tion, Petrov will split votes fromParvanov; Velev and Beron, fromSiderov; and Beron will also split votesfrom Beronov because of the similari-ty in names (that has happened inBulgarian politics already: in 2001, 5percent of voters mistook like-sound-

ing parties for Simeon Saxe-Coburg-Gotha's SNM). It is interesting to seehow many votes they will get. But agood result for Petrov would meanpotential for a new Communist Party,while Velev and Beron's performancewill show if nationalism in Bulgaria isjust a passing fashion, a personal pro-ject or a permanent phenomenonahead of EU entry.

These are the players. No less inter-esting are the big non-players. Sofiamayor Boyko Borissov skipped theelection and announced an assault onthe executive power in the winter.Former president Petar Stoyanov twicerefused to be the common candidateof the Right and did not get the much-desired revenge on Parvanov, hopinghe would not bear the blame forBeronov's possible failure. VMRO'sleader Krassimir Karakachanov alsogave up the race after seeing thecrowd in the Right and on the nation-alist track. All these people made wisechoices. But time will be their judge.

As time would have been GeorgiParvanov's judge if in 2001 he had lis-tened to all observers and to half hisparty fellows and had not run in whatthen seemed a doomed election. Butso is it in Bulgaria. It is nearly three inthe afternoon. The sun is hot. Thehand is holding the eyelids open, andthe throat is thirsty for cold water. Is itgoing to rain? As Bulgarian weatherforcasters and pollsters say, there is afifty-fifty chance to get the rightanswer. ■

Georgi Markov Lyuben Petrov Petar Beron

Grigor Velev

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Bulgaria's national strategy for infra-structure development drafted by thegovernment weighs exactly 5 kilograms.The hefty document was presentedrecently to foreign ambassadors byPrime Minister Sergey Stanishev.

"We have to fill the vacuum that sepa-rates Bulgaria from the European stan-dards for roads, transport and environ-mental preservation," he said.

The cabinet's strategy reads that

714 km of freeways

will be built in Bulgaria by 2015 andsome 90 km will be opened by thisyear's end. Currently, the total length offreeways in this country is 350 km. TheBourgas - Karnobat section of theTrakia freeway will be completed by the

end of September. Another 2 km ofStruma with a total indicative value of600 million Euro will be finished beforethe end of the year.

Public-private partnership will be soughtfor Struma, Hemus and Cherno More;negotiations are already under way withthe European Investment Bank on apossible feasibility study and review ofthe rules for concession. A similar part-nership scheme is considered for portsand airports.

These ambitions are simply unattain-able, given today's realities in construc-tion and investment in this country,especially as Bulgarian roads are con-cerned, economists from the non-gov-ernment sector commented. It is prettyobvious that the road infrastructure is ina deplorable state, despite constant

repairs; money is never enough and fig-ures speak for themselves: an averageof 16 km of new freeways have beenbuilt annually for a period of more than30 years.

Government PromisesFreeways Finished in 10 YearsBulgaria is way behind in autobahn construction, its roads are in potholes

By Mina Georgieva

MONEY FOR ROADS (1994-2005)

(in million $)

1994 . . . . . . . . . . . . . . . . . .5

1995 . . . . . . . . . . . . . . . . .42

1996 . . . . . . . . . . . . . . . . .26

1997 . . . . . . . . . . . . . . . . .26

1998 . . . . . . . . . . . . . . . . .73

1999 . . . . . . . . . . . . . . . .158

2000 . . . . . . . . . . . . . . . .188

2001 . . . . . . . . . . . . . . . .176

2002 . . . . . . . . . . . . . . . .164

2003 . . . . . . . . . . . . . . . .201

2004 . . . . . . . . . . . . . . . .265

2005 . . . . . . . . . . . . . . . .126

The new bridge between Harmanli and

Lubimec, one of the construction facilities

to be built on Trakia freeway.

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Freeways in Bulgaria make up just 1.7percent of the republican road network(331 km) - a shameful record for aprospective EU member. The statisticsfor the past 15 years is even more illus-trative. Since 1991 no more than 54 kmhave been built. That runs counter toBulgaria's claim to be a key logisticcenter not only in the Balkans but alsoin Southeastern Europe. Croatia, whichwe readily cite as a laggard in the EUaccession talks, has built and put intooperation more than 500 km of auto-bahns for the past two years. Thatmeans that given the current speed,

Bulgaria will need 50 years

to catch up with Croatia.

Bulgaria is one of the few Europeanstates that has no completed freewaysstretching from border to border. Thereis only one bridge at the 500-kilometer-long border with Romania along theDanube river, experts recall. The twounfinished freeways inherited from com-munist times are a total of 345 km long.Their construction was only resumed inthe past few years. The residents of thecapital city still travel up to eight hoursto cover the 450 km distance to theseaside. Some of the national roadshave been rehabilitated with funds underthe Phare program but traffic there isslow because they pass through townsand villages.

The rest of the roads are riddled withpotholes and many accidents occurbecause of that. About 60 percent ofthe road network needs

urgent rehabilitation

Some 3.3 billion Euro is needed for theconstruction of 714 km of freeways until2015 and an additional 5.7 billion Eurofor repair and refurbishment of the otherroads. Priority projects include the free-ways of Trakia (Sofia - Bourgas),Maritsa (Orizovo - Kapitan Andreevo),Struma (Sofia - Kulata), and ChernoMore (Bourgas - Varna).

The railway network needs 1.2 billionleva, according to government assess-ments. Finance minister PlamenOresharski explained that half of theamount would come from Europeanfunds.

Sofia municipality has been carrying out large-scale construction projects, which

included repaving 11 main boulevards in the capital city from August 12 until

September 20. The basic repairs of boulevards, for which the municipality bor-

rowed 20 million Leva from HVB Bank Biochim, were finished as planned. The

renovation of General Skobelev, Knyaginya Maria Louisa, Peyo Yavorov,

Alexander Stamboliyski, and Ivan Evstatiev Geshov started on August 12.

A second wave of repairs, which includes another four streets, will start in late

September and finish in early November. Repairs will be made on 202 Street and

boulevards Nikola Vaptzarov, Yanko Sakazov and Shipchenski Prohod. The plans

envisaged repavement of Yanko Sakazov Street, part of Vasil Levski Boulevard,

and Fritjof Nansen Street, but municipal authorities decided that the streets did

not need urgent repair. Instead, they included a section of 202 Street (between

the Nadezhda overpass and the Central Cemetery), which is in very poor con-

dition.

The companies making the repairs offer a 10-year warranty on the new pave-

ment. According to their contracts with the municipality, if any section gives way

while under warranty, the company will repair the damage at its own expense.

The rehabilitation of streets in Sofia may continue with repavement of district

alleys - district mayors have insisted on that for long. For the purpose Sofia can

use the 2.5 million Leva it recently received as dividend from Municipal Bank.

The municipality's 2007 draft budget envisages only 11 million Leva for street

repairs - the same amount as initially budgeted for 2006.

"We will hardly be able to take out a loan for re-asphalting next year, because

we are starting the construction of a waste treatment plant. Even if the project

is funded with EU money, we will have to provide 20 to 25 percent of the amount

as co-financing," said deputy mayor Minko Gerdjikov.

Funds will also have to be allocated for other projects under the EU cohesion

and structural funds. Gerdjikov expressed hope that the municipality will apply

with projects for street rehabilitation as well.

Sofia Under Construction

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The government's infrastructure strategyallocates 5.2 billion Euro for the imple-mentation of infrastructure projects bythe public-private sector in the period2006-2009, including 4 billion Euro fortransport and 1.150 billion Euro for envi-ronment. Another 50 million Euro isenvisaged for the energy sector, andsome 12 million Euro for veterinary med-icine and irrigation systems.

The government has also calculated theinvestments needed over a longer-termperiod. A touch above 8 billion Euro isenvisaged for infrastructure projectsbetween 2007 and 2015, including 6 bil-lion Euro for transport, 2.4 billion Eurofor environment, and 3.3 billion Euro forveterinary medicine and irrigation sys-tems. Some 5.3 billion Euro is plannedfor projects in the real sector until 2009and about 72. billion Euro for the period2007-2015.

To carry out infrastructure projectsunder the National Strategy forIntegrated Infrastructure DevelopmentBulgaria will rely on budget funds andon the European Investment Bank (EIB),the European Bank for Reconstructionand Development (EBRD), the WorldBank (WB), and the Council of EuropeDevelopment Bank (CEB).

Cooperation will be also sought throughpublic-private partnership, said PlamenOresharski.

The finance ministry expects that

Bulgaria will receive some 500 millionEuro from the EIB in each of the nextthree years in support of EU fundabsorption. After 2009 funding from thebank will reach 700 million Euro. Insome years Bulgaria will rely on financ-ing worth up to 150 million Euro from theEBRD. The same annual amount isexpected in the next three years fromthe WB, Oresharski explained. Bulgariacan receive between 50 and 70 millionEuro a year from CEB for social pro-jects.

The government hopes to attract up to2 billion Euro through public-privatepartnership in freeway construction andbetween 130 and 140 million Euro forports and airports.

On an institutional level, a

council of three ministers

will take all major decisions concern-ing roads in Bulgaria: which roads willbe repaired, which projects need morefunds to be channeled to, if and wherenew freeways will be built. The trio willcomprise the ministers of finance,transport, and regional developmentand public works. They will managethe recently established RepublicanRoad Infrastructure Fund, which willreplace the Roads Agency at the min-istry of regional development. Thefund's rules of procedure wereapproved by the government on August31. The fund will receive all the finan-

cial resources provided for roads bythe republican budget, the Europeanstructural funds and other internationaldonors. It will also collect the proceedsfrom toll stickers. The managementboard of the fund will be chaired bythe minister of finance. The trans-portation minister will determine thepolicy and priorities concerning roadsand prepare projects for freeways,first-class roads and some second-class roads. The projects for repairand construction of municipal roadswill be prepared jointly by the min-istries of transport and regional devel-opment and the mayors of the respec-tive regions.

The fund is attached to the finance min-istry in order to balance the interests ofthe three ministries that will manage theEuropean funds for roads under differentoperative programs, said a governmentsource acquainted with the restructuringtalks. From 2007 until 2013 Bulgaria willreceive funding for roads under theRegional Development operative pro-gram, which is managed by the ministryof regional development and publicworks (350 million Euro); the Transportprogram, managed by the ministry oftransport (900 million Euro); and theplan for agriculture, managed by theministry of agriculture (500 millionEuro).

These three ministries will organize the

tenders for awarding

contracts

on road projects financed by theEuropean funds.

The government is already working onthe next stage of the National Strategyfor Integrated InfrastructureDevelopment, which will include thesocial infrastructure as well.

A priority project in the energy sector isthe Belene nuclear power plant, thecabinet's infrastructure strategy reads.Bulgaria must be independent in respectto energy, the prime minister said. Heunderscored that this country would ful-fill its commitment to the EU concerningthe closure of units 3 and 4 of theKozloduy nuclear power plant. Theinstallation of household gas utilities,which is still lagging behind, is also apriority of the cabinet. ■

Priority Freeways1. Trakia (Sofia - Bourgas): on a concession basis. The deal, which was closed

by the previous cabinet, remains shelved, awaiting the ruling of the court. Apart

from that, an independent financial audit will establish whether the terms of the

concession are beneficial for Bulgaria. The government will grant a concession

on the freeway, no matter whether Magistrala Trakia or another company will

operate it.

2. Maritsa (Orizovo - Kapitan Andreevo): one of the ideas discussed is to set

up a special state investment company to finish the construction and operate the

freeway. That could attract financial resource from the budget and from banks.

The freeway lies on a strategic European route. It generates traffic to Trakia and

is extremely busy.

3. Struma (Sofia - Kulata): on a concession basis. A short but relatively expen-

sive freeway. An option will be sought to offer good terms to the future opera-

tor. Interest is expected to be manifested by companies operating freeways in

neighboring countries. It is intended to generate additional traffic, which will make

it economically efficient.

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a n a l y s i s

The economic growth accelerated toreal 6.6% y/y in Q2 and 6.1% y/y in H1relative to 5.6% in Q1, according to pre-liminary data of the national statisticalinstitute. The pace of expansion in Q2is the fastest since the first quarter of1998 but it is to a large extent a conse-quence of lagged positive effects fromprivatisation and investment develop-ments in the past several years. TheGDP figures were fully consistent withthe earlier announced strong perfor-mance in the industrial and export sec-tors. The same real sector indicatorspoint to a certain slowdown in Q3, whichis the biggest of the four quarters of thecalendar year, but signs of rebounds inthe agricultural and tourist sectors arelikely to keep the growth pace above5%.

In all cases, the GDP figures for H1 willkeep the full-year growth above the gov-ernment projection of 5.5%. As far asFDI inflows continued to accelerate thisyear and bank credits remain on a solidrise, GDP growth rates in the range of5.5% to 6.5% should be considered sus-tainable in medium terms. It is even pos-sible to see slightly steeper hikes for ashort period of time in case of suc-cessfully utilised EU funds in the ailingagricultural sector and transport infra-structure.

On the supply side of the economy, theindustry expectedly surged by 9% y/y inQ2 to mark a slight acceleration from8.8% in Q1. The agricultural value addedremained on the downside but otherrelated indicators shaped up favourableexpectations for Q3, including one-offgains from base effects due to flooddamages that hit large farm areas in thesame period last year. The growth ratein the service sector slowed to 4.7% y/yin Q2 from 6% y/y in Q1 but foreign

tourist visits reported for July and anec-dotic evidences for August andSeptember set better expectations forQ3.

The economic breakdown by demandcomponents unveiled a strong reboundin aggregate consumption paced by a7.4% increase in private spending in Q2and 6.4% y/y in H1. The rates are abovethe earlier reported household statisticsbut well below retail sale and consumercredit growth. Investments expanded by20.3% y/y in Q2 and 20.8% in H1 interms of net accumulation of fixedassets but without account of invento-ries. On the external side, imports grewslightly faster than exports to confirmour observations that a large share of

the merchandise export gains seen inthe balance of payments for Q2 weredriven by price effects.

The GDP pace of expansion matchedthe average for the 10 new memberstates in Q2 and remained significantlyabove the benchmarks for the euro-zone and the old member states.Nevertheless, the economic perfor-mance is not that impressive when com-pared with the best performing membersfrom the Baltic region. And the countrycertainly needs a more impressive pacein order to catch up with the averageincome levels in EU as Eurostat data forlast year place Bulgaria at 32% of theEU-25 per capita GDP in purchasingpower standards which is in fact thelowest level among all EU members.The other acceding country Romania isranked slightly higher at 35%. Bulgaria isthus outperforming only the EU candi-dates Turkey and Macedonia, whichstand at 31% and 26% of the EU aver-age respectively. On the other hand, thecountry's growth path since mid-1997 isquite stable unlike short-term volatilitiesobserved in most of the new EU mem-bers and applicant countries inSoutheast Europe. ■

This article is based on extracts from ISI Emerging MarketsIntelliNews publications: Bulgaria This Week and BulgariaCountry Report. For more detailed information please contactISI Emerging Markets office in Sofia at +359 2 8160404 or info_bg@securities.com

Economic GrowthAccelerates

GDP breakdowns in constant prices (%, y/y)

2001 2002 2003 2004 2005 Q1/06 Q2/06 H1/06

Agriculture 0.3 5.5 -1.0 3.0 -8.6 -2.7 -1.1 -1.7

Industry 4.1 4.6 6.8 5.8 7.3 8.8 9.0 8.9

Services 4.7 5.1 4.0 5.7 6.6 6.0 4.7 5.3

GDP 4.1 4.9 4.5 5.7 5.5 5.6 6.6 6.1

Consumption 4.4 3.6 6.6 5.1 6.8 4.8 6.7 5.8

Investment 23.3 8.5 13.9 13.5 19.0 21.4 20.3 20.8

Exports 10.0 7.0 8.0 13.0 7.2 12.9 10.2 11.4

Imports 14.8 4.9 15.3 14.1 19.6 20.0 11.4 15.3

Source: Statistical Institute, preliminary data for 2005, 2006

GDP in constant prices (%, y/y)

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- Mr. Dimitrov, how do you assess

the policy of Sergey Stanishev's cab-

inet in the field of finance and econ-

omy during the first year of the coali-

tion government?

- When the coalition was formed itmade a very important promise, i.e. thatthe redistribution of gross domesticproduct (GDP) through the budget willnot exceed 40 percent. But in thebeginning of 2006 the share suddenlyjumped to 41 percent. Though the dif-ference may seem small, that meanshundreds of millions of leva that will betaken from the Bulgarian citizens.

Another important thing: there were fiveor six areas in which fundamentalreforms had to be carried out, i.e. wel-fare, healthcare and education. Butthere is not even a hint of reform. Wecan safely say that there is not a sin-gle important area in which reformshave been started.

That is the big problem of the govern-ment, which affects economic growthand will become more sensible nextyear. There is a big risk for budget rev-enues in 2007, because the externalborders in relation to the EU will ceaseto exist and the principles of revenuecollection will change. There are seri-ous problems with the NationalRevenue Agency (NRA) this year and,if not settled, they may turn into a timebomb.

In the past one year privatization waspractically halted. We can hardly behappy with the progress made in eco-nomic liberalization. State-owned enter-prises like railway carrier BDZ, theNational Electric Company and heatingutility company Toplofikatsiya remaininefficient and continue incurring loss-es. The fact that inefficiency breedsmalfeasance is proven by the scandalsabout Toplofikatsiya - Sofia.

- It has been suggested recently that

the next fiscal year will be tough due

MP: Reforms Are StalledPrivatization is halted; the government has little will to restructure the fiscal

system, healthcare, welfare and education, says UtDFs Martin Dimitrov, deputy

chairman of the parliamentary budget and finance committee

Martin Dimitrov was born on April 13, 1977. He has a master's degree in inter-national economic relations from the University of National and World Economy.He has worked on international projects at the Institute for Market Economics inpartnership with the European Union, the International Monetary Fund, the U.S.Agency for International Development. Currently he is member of parliament fromthe United Democratic Forces (UtDF). He is deputy chairman of the parliamen-tary budget and finance committee, and observer at the European Parliamentsince August 26, 2005.

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to Bulgaria's contribution to the EU

budget. Can this be used as an argu-

ment for freezing tax rates in this

country?

- Bulgaria will pay 1.24 percent of GDPto the Community's budget, or about620 million Leva. If certain conditionsare in place, some 1.5 billion Euro ofthe amount, or 3 billion Leva, canreturn to Bulgaria. That depends main-ly on two things: administrative capaci-ty and quality control. The problemswith capacity are well known; neverthe-less the government is conducting apolicy that would take five years tosolve them. The situation with controlseems even worse.

In reply to my inquiry during the parlia-mentary hearings, the prime ministersaid that Bulgaria would absorb notmore than 20 percent of the Europeanfunds. Hundreds of millions of euro willnot come to Bulgaria, because thetriple coalition has not done its job.

- Do you think that there are reasons

for the government to keep on fulfill-

ing the requirements of the

International Monetary Fund (IMF)

concerning the budget policy and

especially the imperatives for a bud-

get surplus in 2007?

- The government liked complainingthat it could not carry out its socialprogram because of the IMF. Later thesame government decided to extendthe agreement with the fund for anoth-er six months. For the past few yearsthe IMF has helped Bulgaria achievefinancial stability. It is another questionthat Bulgaria should put an end to thepractice of maintaining enormous bud-get surpluses, which are the result ofpurposeful underestimation of rev-enues.

- Which taxes can be revised next

year and how much?

- The huge surplus allows cutting thecorporate tax rate (from 15 to 10 per-cent) and introducing a zero tax onreinvested profit, reducing the socialsecurity burden (by 6 percentagepoints) and the income tax.Unfortunately, the triple coalition has nowill for such a policy. The incumbentsstill cannot understand that low ratesencourage people to pay their taxes

and move out of the gray economy.The corporate tax abatement in recentyears has inevitably resulted in higherbudget revenues.

- Bulgaria is one of the countries fea-

turing the lowest profit tax rate in

Europe, 15 percent. How a further

reduction in the tax can attract for-

eign investment and, respectively,

ensure economic growth?

- About 80 percent of the investmentgrowth in Bulgaria is due to real estate.That means that investment in produc-tion remains insufficient to guaranteehigh economic growth. Therefore thecorporate tax reduction is crucial.

- What concrete proposals for taxa-

tion changes is the UtDF going to

file?

- UtDF's proposals will be similar towhat I replied to the previous question.To build a competitive economy thestate has to provide more freedom andopportunities to economic agents. It iscompetitiveness that is at the basis ofboosting exports and solving the prob-lem with the current account deficit. Afunctioning market economy is a pre-condition for high wages and real wel-fare policy.

- What is the reason behind the idea

of reducing social security contribu-

tions, given the fact that that will fur-

ther widen the deficit in state social

security?

- Last year the Union of DemocraticForces insisted on cutting the socialsecurity burden by 12 percentagepoints. In the end the installments werereduced by 6 percentage points. TheBulgarian Socialist Party predicted acollapse of the pension system, but itis clear today that the lower rates haveimproved collection.

- Can it be said that the management

of public finance has become more

transparent?

- Unfortunately, we cannot yet speakof transparency of public finance.Program budgeting is just pro formaand the budgets of the separate min-istries are still determined on thebasis of the expenditure for the pre-ceding year. Such an approach guar-

antees inefficiency and ballooningspending.

- How do you assess the stability of

the banking system in Bulgaria, the

credit expansion of financial institu-

tions and the measures proposed by

the IMF to rein in lending?

- The curbing of lending was a mistake,because it forced many market agentsto seek direct financing from abroadand thus avoid the existing restrictions.

- Will Bulgarians be poorer on aver-

age in 2007?

- Given an inflation rate of 4 to 5 per-cent on an annual basis - yes, they will.The government has no intentionswhatsoever to do anything and accel-erate economic growth, which wouldput more money in people's pockets.Instead, it is increasing the tax burdenand not making reforms. The bad newsis that next year people will becomepoorer. Or in the best-case scenario,they will not be able to emerge frompoverty and the status quo will be pre-served.

- The government grounds most of

its measures on the fact that the cur-

rent account deficit has to be nar-

rowed. Do you think that is going to

happen?

- The current account deficit will startdecreasing when Bulgaria's economybecomes competitive and exportsbegin to increase. That requires agood business environment but nomeasures are taken in this direction.There is no tax abatement, noimprovement in the work of the admin-istration, no electronic government etc.Businesses are pessimistic about theirdevelopment and that is the actualestimation of the government's perfor-mance.

As concerns finance, it is obvious thatthe 2007 budget will provide for a bigsurplus. That may have been agreedwith the IMF but the public has notbeen informed, which is inadmissible.The government cannot collect taxpay-ers' money and not account for it. Thesituation is just like what has happenedthis year: more and more money istaken out of people's pockets, butsecretly. ■

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Paul Dyck: More European UnionMeans More United StatesU.S. trade turnover with Europe is $1.8 billion per day

Sixty AmCham members, guest companies, and media representatives, were presented at the event.

"I am very excited to be in Bulgaria at the time when you areat the European doorstep," said Paul Dyck, deputy assistantsecretary at the U.S. Department of Commerce, at the begin-ning of his address to the guests at the AmCham business lun-cheon Sep. 29.

Around 60 AmCham members, guest companies, and mediarepresentatives attended the event. Atanas Paparizov, chair-man of the Parliamentary Committee on EU Integration, wasamong the guests. Prior to the lunch, Paul Dyck participatedin a media discussion with representatives from Reuters,Dnevnik, Capital, Europe TV, Sega Daily.

Dyck congratulated the Bulgarian government with theprogress made in its reforms and said the purpose of his tripwas to talk about extending the U.S. - Bulgarian commercialrelationships.

"We already have to discuss new exciting opportunities inregard with the Bulgaria's EU accession, because our bilater-al relationships could be better," Dyck said. Better relationshipswould affect both American and Bulgarian governments, andthe businesses, he added.

U.S. trade turnover with Europe is $1.8 billion per day, with

more than $2 trillion in total foreign direct investments andtransatlantic partnership creating 14 million jobs on both sidesof the Atlantic, Dyck said. He added that U.S. trade withEurope is much larger than with China, India and Canada,pointing that the total of all U.S. exports to Europe has beenflat since late 1990s.

"It is important for us to develop strategies so E.U.-U.S. rela-tionship remains dominant," Dyck stressed. The guest quotedthe Bulgarian ambassador in Washington, Elena Poptodorova,who said, "More EU does not mean less U.S., but more EU,means more U.S."

"That is the message I would like to deliver here as well," PaulDyck said in front of the guests. He would like to know moreabout the obstacles businesses face in Bulgaria, so that bothgovernments can be effective in developing better businessstrategies.

In 2005 U.S. exports to Bulgaria stood at 700 million Leva andthe Bulgarian exports to the United States was 560 millionLeva. Many U.S. companies are interested in investments herein the energy and infrastructure sectors, Dyck said. He remind-ed that Bulgarian GDP in the first quarer of 2006 is 5.6 per-cent, unemployment is below 10 percent, which by American

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Paul B. Dyck was appointed to serve as Deputy AssistantSecretary for Europe at the U.S. Department of Commerceby President George W. Bush in June 2006. He is respon-sible for directing the department's efforts to open marketsand ensure fair treatment for American exporters in 50countries, including all of Europe, Russia, and Eurasia. Heis also responsible for development strategies and programsto enhance U.S. commercial position in the region andengaging with foreign government officials to resolve com-mercial disputes.

Before joining the Department of Commerce, Dyck servedat the U.S. Department of State as senior advisor toSecretary of State Condoleezza Rice. In this position hehelped coordinate the Secretary's strategic planning effortsand transformational diplomacy agenda. From 2001 to2005, Dyck served in the White House Office of PoliticalAffairs under President Bush. As associate White Housepolitical director, he was responsible for managing the pres-ident's domestic political and policy priorities for the south-ern states.

Prior to moving to Washington, Dyck worked on then-Governor Bush's 2000 presidential campaign in Austin,Texas. From 1998 to 2000, he worked for the TexasWorkforce Commission , focusing on federal budgetary andlegislative issues relating to state workforce development.From 1996 to 1998, Dyck served in several capacities forthe House of Representatives, including legislative directorfor State Representative Jim Keffer.

Dyck received a master's degree from the University ofLondon and a bachelor's degree from Austin College inSherman, Texas.

Paul B. Dyck, Deputy Assistant Secretary for Europe, International Trade

Administration U.S. Department of Commerce

standards is not low, but in the Bulgarian case it is a progress.

Trade relationships between the United States and Bulgariawould not change much after 2007, Dyck said. After Bulgariabecomes an EU member, the agreements would be standard-ized in a way that was applied to the new EU member statesin 2004. The new agreements were discussed at the meetingsDyck had in Brussels last week.

Among issues discussed in Bulgaria he mentioned corruption,intellectual property rights, keeping a fair and predictable reg-ulatory environment and improving the judicial system.

"What we would like to do is to develop specific areas of ourconcerns. For example for the IPR, we have these concernsin Asia, Europe, but the protection of intellectual propertydirectly affects the investments," Dyck said in conclusion. ■

James J. Werner (left), Regional Mgr - Europe, International Business

Development Integrated Defense Systems at Boeing Company meets Vesselin

Valchev, Counselor of Minister of Foreign Affairs.

Paul Dyck meets Tanya Kosseva-Boshova, Landmark Properties Bulgaria and

Georgi Randelov, IBM Bulgaria.

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With over 50 participating companies

in Yambol and 160 companies in

Sofia, the training seminars on U.S.

contracting procedures turned out to

be the ideal venue for business

opportunities in Bulgaria created by

the establishment of U.S. - Bulgaria

training facilities. The training was

organized by the U.S. Defense

Acquisition University, American

Chamber of Commerce in Bulgaria

and U.S. Commercial Service in

Sofia. Public contracts worth tens of

millions of dollars are expected to be

awarded in the next couple of years.

Several Bulgarian companies have

already obtained registration.

Eighteen Bulgarian and foreign com-

panies won contracts for 1.5 million

Leva during the joint military exercise

of Bulgaria, United States and

Romania in July 2006 in Novo Selo.

Every year the U.S. government isbuying products and services for $400billion, approximately $250 billion of itfor the U.S. military. Once they knowthe procedures, Bulgarian companiescould apply together with other com-panies for those $250 billion.

The seminars in Yambol and in Sofiawere a follow up of the AmCham con-ference on June 27-27. During thetraining in September the companiespresented in Yambol and in Sofiareceived a practical guidance of howto register in the Central Contractor

Registration (www.ccr.gov) to be ableto participate in the ongoing tendersnot only for opportunities in Bulgariabut also in Iraq, Turkey and for theneeds of the U.S. military throughoutthe world. The U.S. team of expertswas headed by Mark Lumer, contract-ing executive with U.S. Army Spaceand Missile Defense Command.Among other guests were: MarciaColeman, lead contracting officer,Wiesbaden Contracting Center; BrunoWengrowski, professor of ContractManagement at Defense AcquisitionUniversity-South Campus in Huntsville,Ala.; and David Lewis, of DefenseAcquisition University, Midwest Region.

Alexander Karagiannis, deputy chief of

U.S. Experts Teach BulgarianCompanies Nuts and Bolts ofGovernment Contracts

By Irina Bacheva

From left: David Hampson, AmCham Vise President and Manager of

Grenviille Bulgaria, Marc Lumer, Contracting Executive, US Army

Space&Missile Defense Command and Alexander Karagiannis, Deputy

Chief US Mission to Bulgaria, welcomed the businesses with new exciting

opportunities arising from the US Bulgaria training facilities.

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the U.S. mission to Bulgaria, wel-comed the companies and guests atthe seminar. He stressed that Bulgariais a strong partner of the United Statesand after the completion of the U.S.-Bulgarian Defense Agreement, goodopportunities for local companies havebeen created. Joint facilities, forinstance, would be good for both coun-tries, as far as they will generatestrong economic activities.

"Strong and vibrant Bulgaria is good forthe region," Karagiannis said, pointingout that the United States would likevery much to see Bulgaria in theEuropean Union in the beginning of2007.

The U.S. contracting procedures aretransparent and candidates are treatedequally regardless of their nationality,Bruno Wengrowski of the DefenseAcquisition University explained. Theonly condition for a company to beadmitted to a tender is to obtain theso-called DUNS number and CAGEcode and register at the US CentralContractor Registration. The proce-

dures are free of charge.

Tutors presented a detailed picture ofthe U.S. contracting system, which isvery structured and predictable, but thecandidates should be very careful ofthe deadlines and tender conditions.According to Wengrowski, the processis mechanical, not political, and thefederal acquisition system aims at sat-isfying the customer in terms of cost,quality, and timeliness of the delivered

product or service. The U.S. contract-ing procedures are very complex andare based on 700 U.S. laws. Tenderrules are clear and accessible mainlyelectronically, Wengrowski said.

The potential candidates could act asprime contractor, partner, sub-contrac-tor or supplier. Concerning businessopportunities in U.S.-Bulgarian trainingfacilities, the tutors mentioned as mostneeded the hotel services, water and

About 160 companies have registered to participate for the training in Sofia

Marcia Colman, Lead Contracting Officer, US Army and Rumen Gardev, Deputy Mayor of Yambol at the

seminar.

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Mark Lumer is the Principal Assistant Responsible forContracting for the US Army Space and Missile DefenseCommand with offices in Washington, DC, Huntsville. As theDirector of Contracts, he oversees over 12 billion USD in activecontracts, annual expenditures of about 2 billion USD and a staffof approximately 85. Mr. Lumer is a member of the SeniorExecutive Service and the Army Acquisition Corps with Level IIIcertifications in both Contracting and Program Management. Heis nationally known expert and author in the field of governmentcontracting and has received many awards. He is listed in sev-eral editions of Who's Who, including the 1995 and 1996 editionsof Who's Who in the World, and the Army has awarded him theMeritorous Civilian Service medal, the Superior Civilian Servicemedal, and the Commander's Award for Civilian Service twice.

food supply, engineering and construction ser-vices, transport, mobile telecommunications, officeconsumables, fuel, electricity supply, portable toi-lets and showers, laundry and dry cleaning, med-ical services, custom services. In addition, U.S.military will enjoy the recreation and leisure timein the surroundings of the facilities, which in factwould be extra investments in the local economy.

The criteria for evaluation of company offers arespecified in advance in the tender announcement,Mark Lumer explained. The companies have tofollow strictly the rules of the respective tender,doing neither more, nor less. It is almost impossi-ble to abuse the federal tender rules and if thishappens, the "candidates" are disqualified and putin a list with no right to participate in tenders forthree consecutive years. In worst cases thoseindividuals and companies are treated as criminalsand put in jail, Lumer said.

Past performance of the candidates is also ofgreat importance for successful funding. Thecompanies should submit written evidence ofskills, for example, acknowledgment letters ofpartners and names f previous contractors.

"If a company does not have past performance, itis evaluated "zero". It is not harmful for the over-all performance but is not beneficial as well,"Bruno Wengrowski said. The candidates that donot succeed in a tender receive feedback infor-mation with guiding points and recommendationson how to do better in the next tender. Dependingon the tender, the whole process of applying andreceiving of financing may take from one week toone month.

A successful candidate from Kotel who had won atender for water delivery for one of the militaryexercises in Novo Selo shared his personal experi-ence. By winning a contract, he got good referencesand now he would be able to participate in missionsand tenders of U.S. Army all over the world. Thebusinessman participated as a subcontractor of aU.S. company. The quality of the water was testedin Germany because it had to meet certain stan-dards.

According to the visiting U.S. experts, once thecompanies get DUNS and CCR Registration, theyapply for the NATO Cage code (NCage), whichclassifies a company in the NATO codificationcatalogue.

Bulgarian expert Kalina Damianova of the Ministryof Defense said that over 70 Bulgarian companieshave already obtained NCage code in order toenlarge their activities and businesses. Afterapplying, within 90 days a company receivesNCage code, which in emergency cases could bereceived within two days, Damianova added. ■

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Millions for the TakingFixed-price government contracts are rewarding risk with higher profit, says

Mark Lumer, Contracting Executive, U.S. Army Space and Missile Defense

Command

- Now that you have been teaching

Bulgarian companies, how do you

appreciate their skills in participat-

ing successfully in tenders?

- The Bulgarian companies havealready started participating in tenderswith the recent joint military exercisesin Bulgaria, and 26 companies wereawarded contracts, one of the firmsfrom Yambol. The companies awardedwith contracts have all performedsuperbly. We have been veryimpressed with the quality and thescope your companies have pro-duced. These contracts are connect-ed with the military exercises, andnow what we are doing during theseminar, is to download tenders forBulgarian companies to look at, andthey can start competing right now ifthey have DUNS numbers and CCR.The result of this seminar is that yourcompanies would be registered andfully eligible and they will have thetools and the capability to look at anyU.S. government procurement aroundthe world, so they can compete foranything.

- How many companies do you

expect to participate from Bulgaria?

- We anticipate a hundred Bulgariancompanies to register and be fully eli-gible. Then they have to work hard toget a contract.

- Year 2007 would be very busy for

the interested Bulgarian companies,

right?

- I believe yes, even some of compa-nies starting immediately, so within thenext year we would see contractsawarded to Bulgarian companies. Inregard with the bases coming, Ibelieve there would be millions of dol-lars available. These tenders are notonly for Bulgaria, but all across theborder. There is a lot of money avail-

able in Iraq, with the same procure-ment rules applied.

- When do you expect the infra-

structure of the U.S. training facili-

ties here to be completed?

- I do not know. It depends on thecontracts with suppliers. Within thenext seven to twelve months weexpect to see tenders beingannounced for future work. The ten-ders would be out there next year toset up the infrastructure.

- What suppliers you would need

most?

- It is really anything across the board:suppliers, vendors, constructionworks, water and food deliveries, allsorts of services.

- How do you see the benefits for

Bulgarian economy?

- The U.S. government buys about$400 billion in goods and servicesevery year. After the registrations, theBulgarian companies would be readyto compete on equal foot with anyother company in the world.

- If the documents are very well pre-

pared, and a company wins the ten-

der, what is the profit?

- Generally speaking we have twosorts of contracts: One is "fixed price"contract where we pay a certainamount. That is the most of the con-tracts we use. If a Bulgarian companysays the project will cost a million dol-lars, we agree that this is a goodprice, and we would pay a million dol-lars. If the Bulgarian companybecomes very efficient, and theyspend only $900,000 dollars, theykeep the extra $100,000. If they areefficient and perform well, there aretremendous opportunities to make

profits. There are also "cost type" con-tracts which are reimbursed with thecost of the project. And that is gener-ally 10 percent or less of the contract,of the invested capital. If the cost toperform is $500,000, we would typi-cally pay an additional fee of $50,000or less. Most opportunities are in thefixed price contract, because there werecognize the contractor a largersharer of the risk.

- How much time does it take to fill

out the documents and receive the

needed numbers?

- The process can be time consum-ing, it really depends on what you arebuying and how much we are buying.If it is water, it may take a couple ofhours, but if you build a base thatwould be more complex and couldtake several weeks to fill out all thedocumentation together. That is whywe tell the companies it is critical toread the tender rules. For example, weneed 3,000 liters of water. That couldbe very fast putting the documents in,and it may take one hour. We do havemajor procurements, major tenders,where it takes companies months toput a proposal. Generally speaking wepay in 30 days. We are having anelectronic payment, sending themoney on the wired transfer, there isno physical mailing of the check.

- Does the company need to invest

the initial sum beforehand?

- The company has to have an ongo-ing business. If it is brand new one,then we will ask questions of itsfinancial capability. We do not requirecompanies to have a lot of money inthe bank, if they have a performancetrack record. We also have advancepayments, which are unusual, but inthis case the company says, I can dothis work and I need the moneyupfront. ■

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- CEC Government Relations is delivering lobbying and

strategic communications campaigns in Central Europe,

and now through its office in Sofia. Is lobbying in Bulgaria

different compared with the other East European coun-

tries? Are there public misunderstandings in Bulgaria in

this regard?

- Lobbying is really no more than effective communicationwith political decision makers, on the basis of analysis andintelligence of whom to lobby in the first place. More infor-mation for decision makers leads to improvements in theoverall legislative and regulatory framework. So it's an edu-cation process - that of the decision makers and public atlarge.

In most emerging economies - as this is not unique toBulgaria - communication channels to senior government andindustry decision makers are often blocked or regulated by"gatekeepers" who distort the communication process and insome cases resort to unethical means of regulating access.What we are trying to do with CEC in Bulgaria is to be a sym-bol of professional and transparent lobbying, understood aseffective communication of issues, policies and strategies.

- The services you provide are quite unique for the

Bulgarian society. How do you appreciate the atmosphere

here, on the one hand from governmental side, and on the

other hand, from your clients? What are the challenges?

- Government relations and the lobbying of key issues is anintegral part of the democratic process everywhere. As I said,it is essentially the effective formulation of a problem and itsrecommended resolution, and the identification of key stake-holders who can contribute to the resolution. Lobbyistsimprove communication between those who decide and thosetheir decisions affect, and act in the name of interest groupswho might not otherwise be heard, complementing the workof expert teams. The final decision, however, is always up tothe politicians.

Effective communication, honesty and integrity in the formu-lation of the problem and its proposed resolution, consisten-cy and resilience, effective networking and a passion for"doing the right thing" are the key elements of effective lob-bying. For this reason, we will not accept work that does notmeet this model of activity. The main challenge in Bulgaria islinked to expectations and past practices, and there is aneed to educate local stakeholders that there is such a thingas professional and ethical lobbying. It is to be still appreci-ated in Bulgaria that professional lobbying has an entirelylegitimate and positive role to play in any democratic system.We are firmly resolved to be a part of that standard-settingin our country.

We believe we are part of that adaptation process, as theCEC Bulgaria team consists of Bulgarian nationals who arealready held in high regard within both the public and privatesectors. They are experienced communicators who havebeen "tested and tried" before being invited to join a compa-ny that has already built its reputation in other CentralEuropean markets. Our clients are primarily big internationalcompanies and now an increasing amount of business isbeing brought via pan-European lobbying campaigns onbehalf of individual companies or industrial associations whofeel they want to conduct a campaign on an issue. We arehoping to see more Bulgarian companies coming to usappreciating the real benefits that a professional lobbyingagency can bring to the economic and political environmentthey operate in.

A piece of news concerning our company is that we recent-ly decided to form a strategic relationship with Burson-Marsteller, one of the most respected global public affairsagencies, to become their exclusive public affairs partners inCentral Europe. Working together with Burson will enable usto capture the growing pan-European lobbying market I men-tioned earlier.

- Is the current blueprint of the Lobbying Act satisfying

your needs to develop your campaigns?

- The blueprint for the proposed lobbying act is a necessaryeffort by the Bulgarian political class to regulate itself andthe lobbying activity surrounding it. The law attempts to bringtransparency to the existing "informal" lobbying processes

K Street Comes to SofiaLobbying through open communication is normal, secretive meetings are not,

says Diana Pazaitova, managing director, and Kirko Kirkov, founding partner of

CEC Government Relations - BulgariaBy Irina Bacheva

Kirko Kirkov, founding partner and Diana Pazaitova, managing director of

CEC Government Relations - Bulgaria

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and the individuals and companies involved in it. By itself, thisis a positive initiative, however much attention needs to bepaid as to the specific requirements and mechanisms setforth in the act such that these not be used to benefit spe-cific stakeholders only. If lobbying is a natural, legitimate andinseparable part of a democratic system, it is wrong torestrict it as if it were a negative phenomenon.

Professional lobbyists could actually profit from regulation bygetting easier access to decision-making authorities. If, how-ever, professional lobbyists are to make publicly availabledata about themselves and be as transparent as possible,their subject of work, i.e. contact with politicians, then it willactually be more difficult to openly lobby than it is now. Thatis because officials will then in fact be reluctant to meet lob-byists openly, because they could be accused of being influ-enced. Instead, secretive meetings will become normal. Thiswould go against the logic of such a law and in fact wouldencourage a return to covert lobbying.

Any influencing of the decision-making process with the pur-pose of achieving an aim is lobbying, regardless of whetherit is performed by a citizen communicating with an MP, anofficial communicating with a politician, or even two politi-cians communicating with one another. The lobbying of anatural person/voter is not prohibited or regulated in anymanner. How will we make the distinction whether lobbyingfor the same issue is performed by somebody as an employ-ee of a lobbying agency, as a director general of a large cor-poration, or as a natural person/voter? This would also leadto a strengthening of non-transparent links, pushing out pro-fessional lobbyists.

- Talking about EU accession, do you think the Bulgarian

companies can prepare themselves for compliance with

EU directives on environmental regulations, concerning

pollution and recycling of waste, for example?

- Right now in Europe a very important area of activity interms of directives is energy and environment - these are theareas where there is a lot of transposition, which basicallymeans taking EU directives and transposing them to the locallegislative environment. So if you just take the issue of envi-ronment you will find that there is a whole range of industriesthat are affected by that: potential polluters, transport com-panies, insurance firms, car producers, etc.

It is our assessment that there has been a growing aware-ness among most large companies and SME's affected bydirectives, such as those governing environmental matters, asto their implications. The real concerns are, first, the capac-ity of the Bulgarian government and its associated regulato-ry institutions to participate and "equitably control" the imple-mentation of the directives within their proper spirit; second,the cost of implementation to Bulgarian companies. In manycases, this implies retooling with technology, which may notbe economically justified within the context of the Bulgarianmarketplace. Most companies would have preferred longertransition periods, though it is unclear whether that wouldhave really benefited industry as it is often common practiceto wait to the last possible minute before doing one's home-work. ■

Visa products, ranging from government services to creditcards, were presented on Sep. 19 by Catalin Cretu, VP forBulgaria and Romania of Visa International CEMEA, at anAmCham Bulgaria Business after Hours cocktail.Approximately 100 AmCham member companies and guestsattended the presentation at the Hilton.

Presenting the corporate profile of Visa, Cretu said that it is aprivately held membership association owned by 21,000 mem-ber financial institutions worldwide. Visa has 1.4 billion brand-ed cards in circulation globally. The cards have unsurpassedacceptance in more than 24 million locations in over 160 coun-tries, including 1 million ATMs. Visa connects cardholders,merchants and financial institutions through the world's largestelectronic payments network.

Commercial cards developed to tackle unique problems thattoday's businesses face include expenses management, cashmanagement and procurement defined as needs. As explainedby Cretu, in today's environment, business thrives on manage-ment of information, supply-chain management and efficiency.Visa commercial products meet business needs and providetransparency, expense management, cost savings and accu-rate reporting.

Visa government services products help governments reduce

bureaucracy and grey economy, thereby increasing tax rev-enues. The services range from procurement cards, socialcards, customs payments to eProcurement.

Can Bulgaria's public sector benefit from Visa products?

Yes, answered his own rhetorical question Catalin Cretu,explaining that procurement programmes are on cards, togeth-er with social and medical benefits payments as well as cus-toms payments on cards too. He gave an example with theexperience of the government in the United Kingdom. The totalsavings to the public purse exceed GBP 200 million in Visagovernment procurement programs, which means savings ofmore than GBP 5 million per month. ■

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Visa PresentsGovernment Ser vices

Catalin Cretu, VP for Romania and Bulgaria, VisaInternational Central Europe, Middle East and Africa(CEMEA) region

Catalin Cretu joined Visa CEMEA in July 2004 as areamanager for Romania and Bulgaria and was appointedregional manager for Romania and Bulgaria in May 2005,heading the newly opened Visa office in Bucharest. Dueto the growing activities of Visa International in these twocountries, Cretu now currently holds the position of vicepresident for Bulgaria and Romania.

Before joining Visa, Cretu was project manager and man-ager for North American reporting with HSBC Bank USA,where he was responsible for managing major domesticand cross-border business initiatives. His projects includ-ed the creation of a wealth tax subsidiary for HSBC BankUSA; the implementation of HSBC's Corporate SocialResponsibility Agenda in the United States, Canada, andPanama; and the outsourcing of various bank services toIndia. He represented HSBC Bank USA & HSBC Holdingsat UN and NAFTA conferences and on the North AmericanUNEP-FI Task Force.

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Randy Mott, Regional EnvironmentalCoordinator for CEC GovernmentRelations was guest speaker at theAmCham EU Affairs Committee Sep. 19at the Hilton Sofia. In front of 20 repre-sentatives of AmCham member compa-nies he presented the EU Directive onEnvironmental Liability. The committeewas chaired by Olga Borissova, directorfor European Studies in the AUBG, ElieffCenter, and co-chaired by DianaPazaitova, managing director of CECGovernment Relations Bulgaria, a lead-ing independent public affairs companyin Central Europe and now with office inBulgaria.

The transposition of the EUEnvironmental Liability Directive (ELD),2004/35/CE, in Central Europe affects abroad range of companies in complexways. The Directive is addressing eventsthat occur after April 30, 2007. TheDirective creates liability for environmen-

tal cleanup and damages to naturalresources, specifically habitats protect-ed by EU Directives.

Randy Mott has rich litigation and envi-ronmental experience, being involved in145 hazardous waste sites since 1978.He coordinated water discharge permitproceedings for multiple facilities includ-ing industrial plants and remedial pro-jects, litigated air and water permitcases in several jurisdictions. In Poland,Mott worked in privatization of pollutioncontrol industry in 1991-1994.

The Directive is applicable to a broadtype of "operators", as IPPC permits,water discharges, waste permits andtranspositions. Mott explained furtherthat the damage covered is narrowlydefined: it focuses on corrective actions,not monetary compensation and is gen-erally strict liability for "operators." TheDirective uses the term "operator" very

broadly to cover every party actuallyinvolved in causing contamination. Somewording in the Directive (Article 9) evensuggests a producer of a chemical soldand used by third-parties might be heldliable. The national legislation will large-ly decide the scope of liable parties andwhether the liability is truly "strict" orbased on fault.

Commenting on the current BulgarianEnvironmental Protection Law versusELD, Mott said: "The persons foundguilty of harming others by pollution ordamage to the environment must befound to remedy the damage. Thecompensation may be not less than thesum required to repair the damagescaused."

Damage to the environment is definedas: "Such a change of one or more ofthe components it consists of whichleads to impairment of the quality of life

Environmental Exper tPresents EU EnvironmentalLiabilit y Directive

From Left: Olga Borissova, Director European Programs AUBG, Diana Pazaitova, CEC Government Relations Bulgaria and Randy Mott, Regional Environmental

Coordinator for CEC Government Relations, led the discussion with reps of various businesses.

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of people to a poorer biological diversi-ty or to an impeded restoration of thenatural ecosystems." According to theU.S. expert, in case of Bulgaria it isgood to have a single set of standardsand the European Union model is anexcellent one to follow.

Unlike some directives, the ELD leavesmany issues to the member states' dis-cretion. The scope of liability, the legaldefenses available, the scope of habi-tats covered, and the financial securityprovisions are all largely open issues.Any business that handles chemicals orproduces waste will face a new set ofnational rules arising out of the transpo-sition process for the ELD.

Randy Mott further said that there is anopportunity to use the ELD transpositionto address other issues in national lawsrelating to existing contaminated sites. InPoland, for instance, the existing soilcontamination standards are rigidnumeric criteria that are unrealisticallyexpensive. The ELD uses risk assess-ment procedures to make this determi-nation, which are much more cost-effec-tive.

There is a logic and appeal to makingthe existing law use the same criteria,now advocated by the EU. In the CzechRepublic, as in Bulgaria, there is noclear soil and groundwater contamina-tion law; authorities use existing laws onwater resources and other rules to pro-vide some "make-shift" coverage. Usingthe transposition law to create an inte-grated, coherent legal scheme is alsoappealing.

In general, the interests of all busi-ness groups are virtually identical,Randy Mott said. Everyone wants aresponsible regulatory scheme thatwill allow for the risk to become com-mercially insured on a realistic basis.Mott concluded that the Directive isone of the most controversial, andpotentially far-reaching, pieces ofenvironmental legislation negotiatedby the EU to date. ■

Around 30 representatives of businesses attended the environmental discussion.

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What is the ultimate purpose of anyspecific business? Making money forthe owners, or perhaps building a greatbrand name? I think these are only by-products that come from the achieve-ment of our real goal - and that is ofhelping our customers realize their owndreams whether large or small.

Language study yields

business success

Over 20 years ago I was academicdirector of an English-as-a-second-lan-guage program in Texas. One of themany students who came to us fromabroad was a recent high school gradu-ate from Mexico. This young lady's fam-ily was not happy for her to leave herhome for English study in another coun-try, but they finally gave in to her desireto complete a language program in theUnited States.

When she finished her English coursewith a certificate of university-level pro-ficiency, she returned home to MexicoCity to major in English and, it so hap-pened, to become an English teacher atthe local Berlitz Language Center. Aftercompleting her degree she continuedwith Berlitz and finally formed a part-nership to open a Berlitz franchise inTampico, Mexico, and then a secondfranchise in the city of Reynosa. Twentyyears after she was my student forEnglish, she was my student again inour Berlitz New Franchise Orientationprogram at our world headquarters inPrinceton, New Jersey.

She told me this was her dream cometrue: owning her own business. Whenshe enrolled in the English program in1985, she was not buying an Englishcourse; she was investing in her future.

No business can afford to think only ofthe immediate product or service it isselling, but rather of the ultimate appli-cation of that product and its contribu-tion to society. At Berlitz we are not sell-ing language lessons. Our service is toequip students to realize their potential -to gain confidence in conducting theirprofessional life in another language - to

improve their lives: in other words, toreach their own hopes, dreams anddesires.

In the business of private education andtraining, as of course in other fields, ourfinancial success depends exclusivelyon our ability to help our clients reachtheir personal goals. For Berlitz student-customers the goals are access to moreand better job prospects, educationalopportunities, and career advancementin general. This success pertains also tothe human resources manager whochooses Berlitz to train the company'semployees - the employees' successreflects positively on the manager'sdecision making.

Our clients already have professionalcompetence. We aim to bring their lan-guage competence also to a high level,helping them overcome their fears andshyness in the foreign language so thattheir language ability commands thesame respect that their subject matterknowledge does.

With the vehicle of fluency in a new lan-guage, they can deploy their talents inbroader circles. And in those circles findmore opportunities for new growth, net-working and professional enrichment.

Language education and

franchising in Bulgaria

Success of individual people and thusof society itself is the number one goalof education and, as noted, ultimately ofbusiness as well. Economic growth andeducation together drive nations for-ward. This truth is in harmony withBulgaria's European Union accessionand long-term prospects for continueddevelopment.

In Bulgaria, we see the demand for avariety of languages, not just English,which reflects modern internationalbusiness diversity. Similarly, develop-ments across broad sectors of theeconomy encourage yet more new pro-jects, both international and national.This environment brings opportunity forimagination and hard work. Maximizing

the yield of this work occupies everyoneinvolved. Entrepreneurs turn to experi-enced resources for guidance, especial-ly when a project is envisioned as thefirst of its kind in the market. Often thenecessary expertise lies beyond nation-al borders in the form of a franchisedbusiness system.

Many factors complicate the cross-bor-der introduction of expertise for newbusiness concepts. How can a multina-tional company ensure proper imple-mentation of its system, values andknow-how when starting from scratch ina new market? Instead of entering amarket with direct investment, a growingnumber of companies are choosing thefranchising model.

Contemporary "business concept" fran-chising provides not only a proven brandname for local use, but also an "operat-ing system" to define that franchisor's

Hopes and Dreams Through Educationand Franchising

By Charles Gilbert, Berlitz

Berlitz OpensNew SchoolBuildingWith a ribbon cutting ceremony on

Sep. 18, U.S. Ambassador John

Beyrle opened the new school

building of Berlitz in Sofia, near the

Russian Monument square (31

Macedonia Blvd.) Berlitz Inc. is a

worldwide foreign language instruc-

tion network. Founded in 1878,

today Berlitz has over 400 opera-

tions in more than 60 countries

around the world. In 2002, Berlitz

started an operation in Bulgaria.

Foreign language instruction at

Berlitz is conducted through the

unique Berlitz method - a fast,

entertaining and highly effective for-

eign language instruction technique

which focuses on developing learn-

ers' speaking skills. At its three lan-

guage centers in Sofia, Plovdiv and

Varna, Berlitz, Bulgaria offers

instruction in English, German,

French, Italian, Spanish and

Bulgarian for foreigners.

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characteristic procedures, as well asessential "ongoing support" personnel toinsure implementation of that system.

Rapidly developing national economies

with growing legal and physical infra-structures offer franchisors an environ-ment that generally moves forward onthe energy of an expanding entrepre-neurial spirit. In this context, for the

entrepreneurs who wish to benefit fromthe proven success of an internationalbusiness concept, and conform to itstenets, franchising provides a uniqueopportunity. The entrepreneurs are stillresponsible for the ultimate success orfailure of the local franchises, but theyhave the advantage of using a systemalready refined through other people'strial and error.

These entrepreneurs, by virtue of beinglocal persons, provide the market knowl-edge and business expertise appropriatefor application in the territory. To a fran-chisor these two points are key advan-tages. Working together the franchiseeand franchisor see the brand take rootmore quickly and yield sweeter fruit thanif the entrepreneur worked alone.

Our franchise goal at Berlitz mirrors oureducational goal: we are the personalcoach and trainer to help students andfranchisees alike develop confidence intheir performance. With this achieve-ment they can realize their greatestdreams. ■

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Century21 appears on the Bulgarianmarket 35 years after its foundation inParsippany, New Jersey. Currently, morethan 8000 offices and over 144 000sales associates operate on 5 conti-nents. The company is already estab-lished in more than 48 countries aroundthe world. The services and systemsoffered by Century21 are identical for allpartners and clients regardless the con-tinent or country they are in.

The Bulgarian office will be offering allfranchise products and systems ofCentury21 for this country and for theFYRO Macedonia. The main goal of thecompany is to add to its global family asmany as possible companies andoffices operating in the real estate sec-tor.

Century21 Bulgaria strives to create asituation on the real estate market inwhich everyone could sell their propertyat any moment and simultaneouslyacquire a new one in an effortless andpainless process. Utilizing informationtechnologies, not only to track informa-tion, but also to acquire a professionaladvantage in marketing, the companyuses established multinational instru-ments and applications in the realestate business.

The sale of Century 21 franchise prod-ucts and systems includes: "know-how",brand name (the use of trade marks,owned by Century21 LLC), access to theworld-wide Century21 network, training,business consultation. The rules andsystems, which Century21 has beenestablishing already for 35 years are apremise for order and consistency, dire-ly needed on the real estate market.

Century21 will provide professional busi-ness consulting to the individual officesin regards to their successful establish-ment and development on the market.

The main goal is to optimize the man-agement of all offices, which will allowfor the most effective use of eachagent's abilities and for the maximizationof profits. ■

CENTURY21 Enters the Bulgarian Market

From Right: Thomas Kunz - President, Century21 LLC , Onik Latfian - Executive Director, Century21

Bulgaria, Nikolaos Pratikakis - Managing Director, Century21 Greece & Cyprus, Paris Zachariades -

Executive Chairment, Century21 Greece & Cyprus, Mrs. Dona Kunz - wife of Mr. Thomas Kunz

From Left: Todor Groudev - Executive Chairman, Century21 Bulgaria, together with James Rigassio, US Commercial Attache and Alexander Karagiannis, Deputy

Chief US Mission to Bulgaria.

The Privatization Agency endorsed toCEZ a.s., Czech Republic the interimcertificate for 572 821 shares, repre-senting 100% of the capital of "TPPVarna" EAD, after the Buyer had paidthe total purchase price. Thereby theCzech company acquires the right ofpossession of the shares sold and theprivatization procedure is terminated.

On October 2 Citigroup, which is theescrow bank in the transaction, afterreceiving a termination notification,transferred the purchase price on thePrivatization Agency's account. Thatwas the final preliminary provision, pre-ceding the transfer of 100% of theshares of TPP Varna to the Buyer -CEZ a.s., Czech Republic.

The temporary letter-certificatory wassigned by the Executive director of thePrivatization Agency - Mr. TodorNikolov, who thanked the teams ofCEZ, Citigroup and the agency for theprofessionalism and expressed his cer-tainty that the benefits for theBulgarian society from this transactionsoon will be felt, as a result of theexperience, competitive prices and theEuropean management, typical for theCzech Company.

Amin Manekia, Citigroup CountryOfficer for Bulgaria said, "It is an hon-our and privilege for Citigroup to hostthe closing of the privatisation ofVarna TPP. Citigroup is proud to haveworked along with the Government ofBulgaria and CEZ on this landmarktransaction and to have played a rolein the closing of one of the largest pri-vatization deals in 2006 in Bulgaria."

Mr Bogdan Malanuik, Head of theTeam "Mergers and Acquisitions forEastern Europe" thanked the legalteam and CA-IB, who consulted andstructured the transaction on the partof the Buyer, and also to thePrivatization Agency for the perfectlydone work and stated that this trans-action once more confirmed the seri-ous investment commitments of the

Czech company in Bulgaria.

Consultant on the transaction on thepart of the Privatization Agency was"Credit Suisse First Boston" (Europe)Limited, London. The experts of theinternational bank have worked in con-sortium with Linklaters Miculiti &Asociatii scpa, "Earnst and YoungBulgaria" EOOD, Sofia and legal office"Djingov, Guginski, Kjuchukov andVelichkov".

The parameters of the privatizationcontract: The Buyer shall acquire 100%of the company's shares. The price ofthe shares to be sold (total number ofthe shares - 572 821) is to the amountof EUR 206 003 616,23, price pershare - EUR 359,63. The Buyer isobliged to finance capital growth of thecompany with 16%, through emissionof new shares to the amount of EUR99 879 680,27, which are to be ownedby the Buyer. It is allowed non-cashpayment for 53 800 shares of TPPVarna. The Buyer is obliged to keep

the major subject of activity of thecompany for at least 3 years, as wellas to withhold from undertaking orsupporting such actions as: termina-tion, liquidation, merger, acquisition,division, separation, etc. which couldtransform the company itself. TheBuyer is obliged to ensure that theactivities of the company are in accor-dance with the granted licences.

The level of expenses for manpowerand wages at the end of each of thethree years should be at least thesame as those the company had madetill 31th of December, 2005. The Buyeris obliged to keep the restrictions forair contamination, caused by heavyfuel equipment, as well as to observefor general

prevention and pollution control. TheBuyer is obliged to accomplish allactivities, dependent on him, in orderto ensure the acting of the company inaccordance with the stated require-ments. ■

From left: Bogdan Malaniuk (CEZ), Amin Manekia (Citigroup), Todor Nikolov (PA)

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Privatization Agency Endorses InterimCertificate granted to CEZ for thePurchase of TPP Varna

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The confirmation of Bulgaria's upcoming EU membership seemsto be a fitting present for the 40th anniversary of the Anglo-American School of Sofia. But that is not all this educationalinstitution has to brag about.

On Sep. 10, 2006, the entire AAS community, alumni and fami-lies, friends and business partners celebrated the grand openingof the new state-of-the-art school complex. U.S. and U.K.ambassadors John Beyrle and Jeremy Hill, Sofia's mayor BoykoBorissov, and a deputy minister of foreign affairs, GerganaGrancharova, welcomed everyone and congratulated AAS on thisachievement.

"This school is a symbol of the significance Bulgaria has as asite for foreign investments. It is an expression of our investmentsin the future of Bulgaria,"

Ambassador Beyrle said in his greeting at the ceremony.

Accredited by the Council of International Schools and NewEngland Association of Schools and Colleges, AAS representsthe best practices and teaching methods in international educa-tion in Bulgaria. Offering an instructional program from pre-kindergarten to 8th grade in previous years, AAS has now openeda 9th-grade class. With this addition, the school is committed todeveloping a full high school program in the next few years.

Hosting students from some 42 nationalities, the new schoolcomplex of the Anglo-American School is an outstanding com-bination of modern style and Bulgarian Revival architecture. Thenew facility provides students with all the necessary space, light,comfortable classrooms, and at the same time, keeps the feelingof home, learning comfort and aesthetical warmth inside and out-side the building.

The school now has a huge and bright gym, which provides day-light through its unique roof construction. Most of the classroomson the second floor also receive natural illumination through sky-lights. Rainwater and underground water are captured anddrained into a retention pond.

The water from the retention pond will be used for watering theplaygrounds, said Eric Larson, director of AAS. He hopes todevelop the pond into environmental center in the near future.

A regulation size soccer field is being built by the pond. It will beready for use next spring. New tennis courts are already open.The lower school playground facility offers the children a richvariety of opportunities to play.

Sixteen solar panels heat water, allowing constant provision of hotwater for the children. The basement ceilings are exposed onpurpose so the students are able to see the water pipes andother infrastructure inside the building. Every detail is planned tobe used to further their education.

Another accent of the building is the great new library - a large300 sq. m space, situated in the front part of the campus. Thelibrary complex includes a separate center for students and par-ents, and a small conference room for video watching.

Surrounded by a stunning views of the mountain, staffed withdevoted teachers who utilize the best education practices, AASis ready to take a leading role in the advancement of educationin Bulgaria. As an international school, AAS intends to supportBulgarian education system in its efforts to meet the standardsof the expanding European Union. ■

Anglo-American School of Sofia Turns 40,Moves to New HomeStudents from 42 nationalities receive elite education through 9th grade

Their excellences Ambassador John Beyrle, Ambassador Jeremy Hill, the Mayor

of Sofia Boiko Borissov, and the Deputy Minister of Foreign Affairs Gergana

Grancharova welcomed everyone and congratulated AAS on this achievement.

Mr. Eric Larson, Director of AAS showing to the gestts the new school facilities.

The new home of AAS

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The State National Golf Championships took place onSep. 16-17 at St. Sofia Golf Club& Spa. The tournament- first of its kind - was organized by the Bulgarian Golf

Association in partnership with Vivatel, and is one of the mostimportant events of the golfing year.

The cream of the Bulgarian golfers entered with players com-peting in the four categories: men, ladies, junior boys, juniorgirls.

The course was in perfect condition, with the full front nineholes (played twice) opened for this event. Several newbunkers had also been added to the course which consider-ably tightened the approach to many greens. The wind was afactor on both days and certainly proved to be the doom ofmany players who returned uncharacteristically high scores.

The format of the men's and ladies' competition was 'gross,'which meant that players would have to record each shotplayed.

Peter Kaloyanov, a young member of the national teamreturned an excellent 77 gross in round one. He was closelyfollowed by Ivan Trassiev on 78 gross, who had made a greatrecovery from an injury in a skiing accident earlier in the year.

Other good scores were Roumen Anastassov on 79, Stefan

Kralchev on 79, Michael Kanev on 81and and Ivo Bojkov on 82.

In the ladies category, Iliana Dimitrova, recognized as being thebest lady golfer in Bulgaria was a clear leader after round onewith an 84 gross.

Day two and the blustery conditions continued. There was abuzz of excitement as the last two groups teed off. The Men'swinner would come from one of these two groups as the lead-ers were playing together.

The leader, Peter Kaloyanov, had an unfortunate start to hisround, but playing with the experienced Roumen Anastassovand Ivan Trassiev it was clear that win or lose, he would

Ivan Trassiev during his play Krassimir Guergov (right) presented the trophy to Ivan Trassiev.

National Golf Tournament ShowcasesYoung Stars, Experienced Players

STANDINGSmen GROSS

IVAN TRASSIEV, 1st PLACE (152 GROSS)

MICHAEL KANEV, 2nd PLACE (156 GROSS)

ROUMEN ANASTASSOV, 3rd PLACE (157 GROSS)

women

ILIANA DIMITROVA, 1st PLACE (172 GROSS)

juniors boys

MICHAEL KANEV, 1st PLACE (148 GROSS)

juniors girls

SVETOZARA GENOVA, 1st PLACE, (136 GROSS)

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benefit from this experience.

Another youngster, Michael Kanev, a national team member,playing in the second group made a great comeback from apoor start, and began the back nine with an eagle, birdie,birdie! This put him back into contention with Ivan Trassiev whowas a model of consistency. Roumen Anastassov also was notbacking off and returned a level par 36 for the front nine.

Ivan Trassiev stepped up a gear and completed the back ninein a brilliant two under par 34 strokes. This gave him a totalof 74 to go with his 78, and would prove to be too good for achasing Michael Kanev who completed his round in a brilliant75 strokes to go with his first round 81 and second place.Roumen Anastassov finished with a 78 and put in a creditableperformance to claim third place.

Iliana Dimitrova finished with an 88 in her second round andshe claimed the title of Ladies State National Champion for2006. The young Svetozara Genova had an excellent 84 in hersecond round and she will be a player to watch in the future.She won the trophy for Junior Girls National Champion.

Young star Michael Kanev took the Junior Boys NationalChampion title. Krassimir Guergov, President of the BGA pre-sented the trophy to Ivan Trassiev, the Men's State NationalAmateur Champion for 2006.

Gary Radcliffe of Vivatel presented the trophy to IlianaDimitrova, the Ladies National State Amateur Champion for 2006and confirmed Vivatel's commitment to the development ofjunior golf and to the growth of amateur golf in Bulgaria. ■

name hcprd 1

GrNett

rd2

grnett

tot

gross

tot

nett

Ivan Trassiev 8 78 70 74 66 152 136

Michael Kanev 4 81 77 75 71 156 148

Roumen Anastassov 5 79 74 78 73 157 147

Emil Markov 9 83 74 78 69 161 143

Ivo Bojkov 12 82 70 81 69 163 139

Teodor Todorov 14 84 70 85 71 169 141

Jivko Tenev 7 87 80 82 75 169 155

Petar Kaloyanov 10 77 67 93 83 170 150

Stefan Kralchev 12 79 67 92 80 171 147

Iliana Dimitrova 11 84 73 88 77 172 150

Konstantin Ikonomov 10 86 76 92 82 178 158

Atanas Golomeev 20 88 68 91 71 179 139

Svetozara Genova 22 96 74 84 62 180 136

Georgi Boyadjiev 11 93 82 88 77 181 159

Krassimir Guergov 17 90 73 92 75 182 148

Georgi Golomeev 19 91 72 92 73 183 145

Nikolay Dimitrov 13 87 74 96 83 183 157

Miroslav Kaneti 19 95 76 90 71 185 147

Emil Kaloyanov 17 90 73 95 78 185 151

Borislav Malinov 19 93 74 95 76 188 150

Svetlozar Petrov 25 98 73 92 67 190 140

Ventsislav Stoilov 17 95 78 95 78 190 156

Todor Krastev 18 94 76 97 79 191 155

Kalina Markova 21 97 76 95 74 192 150

Ivaylo Gumishev 20 92 72 102 82 194 154

Hristo Chepishev 21 96 75 99 78 195 153

Krassen Pendov 18 102 84 93 75 195 159

Ivan Golomeev 20 103 83 95 75 198 158

Dimitar Radev 13 98 85 100 87 198 172

Iordan Boshnakov 26 100 74 99 73 199 147

Radoslav Rashev 19 98 79 101 82 199 161

Alexander Evtimov 18 108 90 91 73 199 163

Boris Chakarov 13 99 86 101 88 200 174

Andrey Russinov 26 104 78 99 73 203 151

Bojana Dimitrova 27 105 78 99 72 204 150

Yuli Botev 21 106 85 98 77 204 162

Rumiana Guergova 31 104 73 105 74 209 147

Denislav Skorchev 20 105 85 105 85 210 170

Oleg Chernev 26 105 79 109 83 214 162

Bilian Balev 24 102 78 115 91 217 169

Grigori Grigorov 26 113 87 106 80 219 167

Polina Girginova 25 98 73 121 96 219 169

Boris Konstantinov 26 111 85 109 83 220 168

Nikola Kiurkchiev 25 108 83 113 88 221 171

The winner in Junior Girls - Svetozara Genova

n e w m e m b e r s

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Moody International (ISO Certification

Body / Registrar) is a world-wide, multi-

accredited, Quality organization provid-

ing professional, cost effective and non-

bureaucratic assessment and certifica-

tion / registration services of Quality

Management Systems to the interna-

tionally renowned ISO 9000, ISO 14000,

AS 9000, ISO 3834, QS 9000, TS

16949, OHSAS, HACCP and VDA 6.1

Quality Standards. Moody International

is also an accredited notified body for

CE Marking/PED requirements. Moody

International Certification is also autho-

rized by IRCA [International Register of

Certificated Auditors] to provide Lead

Auditor and Internal Auditor training ser-

vices. A certificate of successful IRCA

registered course completion is one of

the pre-requisites to becoming an offi-

cially registered IRCA Lead Auditor or

Internal Auditor of Quality Systems.

Courses can be presented in various

languages.

Contacts:

Ivan Savov Manager

Tel: 950 0640

Fax: 950 0640

E-mail: admin@moody.bg

3, Narodno Sabranie Sq., Fl. 3

1000 Sofia

The first office of Schenker in Bulgaria

was established in 1889. After the World

War II it was nationalized and closed.

Schenker returned in Bulgaria again in

1993, when Schenker Bulgaria as 100%

Schenker AG subsidiary was registered.

Based on the Schenker-principles

dynamics, reliability, quality, the company

ranked in a short time the leaders on the

logistics market. Schenker EOOD is

offering in Bulgaria the full range of

logistics services: land, air and sea

operations as well as fair and removal

services, customs brokerage and insur-

ance. Besides the head office in Sofia

the company has 5 branches in the

country - in Bourgas, Plovdiv, Rousse,

Sevlievo and Varna, with over 134

employees.

Schenker EOOD was certified in 2002

to ISO 9001-2000 by the Austrian com-

pany OQS. The company joined the

Top 100 of Bulgarian companies with

highest revenues for 2004, ranked by

the Bulgarian Chamber of Commerce

and Industry. In 2005 Schenker suc-

ceeded even to move up to the 77 posi-

tion in the list.

Contacts:

Vassil Atanassov Marketing Manager

Tel: 9429 100

Fax: 973 1839

E-mail: sales@schenker.bg

7, Iskarsko Shosse Blvd.

1592 Sofia

UNITED MEDICAL COMMUNICA-

TIONS is a sales and marketing com-

pany, which specializes in marketing

and sales of a broad range of prod-

ucts: prescription medicines, over the

counter medicines, nutritional supple-

ments and rapid clinical tests. UNITED

MEDICAL COMMUNICATIONS is com-

mitted to the highest standards of mar-

keting and sales excellence. The cur-

rent partners of UNITED MEDICAL

COMMUNICATIONS are Bristol-Myers

Squibb (USA), Flora Health (Canada),

GNC (USA). UMC strives to develop

trusted relationship with other compa-

nies, wholesalers, physicians and phar-

macists to pursue opportunities in the

healthcare industry. UMC has 45

employees and in 2005 reached 7.5

mln euro turnover of the marketed

products in Bulgaria. UMC is a mem-

ber of AESGP -European Association

of Self-Medication Industry.

Contacts:

UNITED MEDICAL

COMMUNICATIONS Ltd

6, 20th April

Sofia 1606

Bissera Pramatarova, MD

Executive Director

Tel: 9533654; 952 2934

Fax: 953 1692

bissera.pramatarova@umc-bg.com