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

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i s s u e 9 4n o v e m b e r 2 0 0 8

U.S. Election 2008

Amcham Events:U.S. Ambassador to Sofia: Americans Voted As War time Nation

Meeting with Marshall Memorial Fellows

Ecopack Discuss Recycling, Waste Management

Businesses Deliver T wo Days of Volunteer Projects

ECACC Meets to Discuss Engagement and Value to Members

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Dear Reader,Dear Members and Friends,

As America and the world hail

the election of Barack Obama

as the 44th president of U.S.

so AmCham Bulgaria is excit-

ed with this historic moment.

Hope, enthusiasm, inspiration,

vital change, charismatic lead-

ership, impressive campaign,

brilliant victory, new dawn for

America – whatever we say it

will not match the real emotion

of this exceptional moment.

World leaders, politicians, analysts, international media and

ordinary people do not stop to praise the election of the

new president pointing the transformation he brings and the

challenges he has to address.

The New York Times: “Barack Hussein Obama... sweeping

away the last racial barrier in American politics with ease as

the country chose him as its first black chief executive.” And

at the same time: “On the shoulders of a 47-year-old first-

term senator, with the power of inspiration yet no real

executive experience, now falls the responsibility of prosecut-

ing two wars, protecting the nation from terrorist threat and

stitching back together a shredded economy.”

The Independent: “EU leaders… bubbling with excitement

at the prospect of a more creative, transatlantic partnership

with President elect -Barack Obama.” And at the same

time the French President, Nicolas Sarkozy: “At a time

when we all face immense challenges, your election will

inspire immense hope… in the entire world”.

And while the focus is on Barack’s extraordinary personal-

ity he himself praises the victory to all Americans – young

and old, rich and poor, Democrat and Republican, black

and white: “But above all I will never forget who this vic-

tory truly belongs to. It belongs to you.”

With the charismatic strong leadership come the tiny

actions of millions of people which make possible that

“change has come to America”, prove “that a government

of the people, by the people and for the people has not

perished from this earth”, open doors for opportunity “to

restore prosperity and promote the cause of peace, to

reclaim the American Dream and reaffirm the fundamental

truth that out of many, we are one” and respond Yes We

Can!

Valentin Georgiev Executive Director

When two different TV channels broadcast the same event live, it

must be something truly important. Re:tv and BBT had wall-to-wall

coverage, and the national television networks provided extensive

video reports from the improvised political debate between Barack

Obama and John McCain fans in Sofia two weeks before the Nov.

4 elections.

This spectacle, of course, was prepared

by the American Chamber of Commerce.

Panorama’s Boyko Vassilev moderated

the debate. He reminded the participants

of 1980, when the then Communist Party

children’s newspaper (yes, there was a

children’s newspaper!) managed to com-

bine in the same propaganda article

President-elect Ronald Reagan, President

William Henry Harrison and the Indian

tribal chief Tecumseh (you can read

details in Vassilev’s story on p. 12).

I felt the same nostalgia about 1988, when after two Reagan terms,

America elected George H.W. Bush. So what exactly did I remem-

ber about that year? Almost nothing, except the name of the

president. By the end of 1988, though, the world was changing fast.

Gorbachev was transforming the U.S.S.R., Solidarnosc was gaining

strength and respect in Poland, the perspectives before the Soviet

bloc looked bleak. Even that children’s newspaper of the Communist

Party, which informed Boyko Vassilev of the relation between

Tecumseh and the presidents, was stopped published.

A year later, the system collapsed. During such times, it is hard to

recognize the true importance of what is happening, because you

often can’t see the forest for the trees.

Something similar is going on in the United States on Nov. 4, 2008.

The first African-American president received a commanding

majority of the votes. Not only was he able to mobilize people who

otherwise would not have voted at all, but his grasp of philosophy

can put to shame any student of Kierkegaard and Heidegger, his

oratorical skills are second to none, and his little daughter will

become the youngest person to ever live in the White House.

I cannot get rid of the feeling that this date will become so impor-

tant in the U.S. history, that nobody will remember – just like me

about 1988 – the numerous details surrounding it: the financial

crisis, attempts of Russian President Medvedev to revive Cold War

rhetoric, and even the Japanese researchers, who cloned a live

mouse from a body frozen 16 years ago.

Enjoy this historic issue of AmCham Bulgaria Magazine!

Milen MarchevEditor-in-Chief

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Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1766, Bulgaria

Tel.: +359 (2) 9742 743

Fax: +359 (2) 9742 741

e-mail: amcham@amcham.bg

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

ISSN 1312-935X

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 9 4n o v e m b e r 2 0 0 8

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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3M (East) AG . AA KRES EOOD . ABB Bulgaria EOOD . Abbott Laboratories S.A. . AbCRO - Bulgaria . Accor Services Bulgaria . ACO Building Elements Ltd. . ACSIOR Ltd. . ADIS Ltd. . Advance International Transport (Balkan) EAD . AES Corporation . AFA OOD . AIG Bulgaria Insurance & Reinsurance Company EAD . AIG Life Bulgaria . AIMS Human Capital . Alcoa Packaging Bulgaria . Alexander Hughes Bulgaria OOD . ALEXANDROV GROUP CORPORATION . Alfred C.Toepfer International . Alliance One Tobacco Bulgaria . Allied Pickfords Bulgaria . Alter Ego Company OOD . American College of Sofia . American English Academy . American Resarch Center in Sofia . American University in Bulgaria (AUBG) . Anglo-American School of Sofia . Anton Preslavski, Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . Aries Commerce . Ashtrom International Ltd. . Association Integra-BDS . Astra Zeneca UK Ltd. . Astral Holidays AD . AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . AVON Cosmetics Bulgaria Ltd. . BAE Systems International Ltd. . Balkan Accession Fund . Balkan News Corporation Plc. . Balkan Star Automotive EOOD . Baxter AG . Bayer Bulgaria EOOD . BC Serdon . Berlitz Schools of Languages . BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. . Braykov's Legal Office . British American Tobacco . Brown Forman Beverages Worldwide Sofia Branch LLC . Bulgaria Platinum Group EAD . Bulgarian American Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Land Development EAD . Bulgarian Telecommunications Company AD . Bulgarian VIP Travel . Business Media Group . Business Park Sofia EOOD . CallPoint New Europe AD . Candole Partners EOOD . Car Rental Bulgaria Ltd. . Carlsberg Bulgaria AD . Cefin Bulgaria EOOD (IVECO dealer) . Center for the Study of Democracy . CENTURY 21 Bulgaria . Chelopech Mining EAD . Chris Thompson, Independent Consultant . Cisco Systems Bulgaria . Citibank N.A.- Sofia Branch . City University of Seattle . Cleves EOOD . CMS Cameron McKenna EOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD . Colgate-Palmolive Adria . COLLIERS International . ConsulTeam Recruitment and Selection Ltd. . Cook Communications . Corstjens Worlwide Movers Group . CPM Consultancy Sllc . Curtis / Balkan Ltd. . D&IC (Dun and Bradstreet Representative) . DeConi International . Deloitte Bulgaria OOD . DENIMAR Ltd. . Devin AD . DHL Express Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Co. . Djingov, Gouginski, Kyutchukov, & Velichkov . DLA Piper Weiss-Tessbach Branch Sofia . Dobrev, Kinkin & Lyutskanov Law Firm . Domaine Boyar International AD . Dr. Emil Benatov & Partners . Dr. I.S. Greenberg Medical Center, Ellen Ruth Greenberg, Ph.D. . DuPont de Nemours International S.A. . DynCorp International LLC . Economedia AD . Effekten Und Finanz - Sofia AD . Ekotoi - Service Ltd. . Electron Progress EAD . Eli Lilly and Company . Elido (Lamel Ltd.) . Elmec Sport Bulgaria EOOD . Elta consult AD associated partner of CB Richard Ellis for Bulgaria . Emerson Process Management AG . Emporiki Bank Bulgaria EAD . Encouragement Bank AD . Enel Maritza East 3 AD . Enemona SA . Engineeringservice Sofia Ltd. . Environmental Quality Management, Inc. . Epsilon Interactive International . Equest EAD . ERATO HOLDING Plc . Ernst & Young Bulgaria . European Bank for Reconstruction and Development (EBRD) . Faustina Group Ltd. . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . Force Delta Ltd. . Forem Consulting Bulgaria . Fortel Engineering LTD. . Forton International JSCo . Foster Wheeler Energia Polska, Branch Office Bulgaria . Foundation for Local Government Reform . G4S Security Services Bulgaria JSC . General Electric International . General Security ltd. . Genmark Automation Bulgaria Plc. . GlaxoSmithKline . Global Benefits Group GBGI CEE LLC Representrative Office . Goodyear Dunlop Tires Romania . Grand Hotel Sofia . Grenville Bulgaria . Grey Worldwide Bulgaria EOOD . HelmsBriscoe . Hewlett-Packard Bulgaria Ltd. . Hild Group . Hilton Sofia . Holiday Inn Sofia . Honeywell EOOD . Hotel Yastrebets Wellness & SPA . IBM Bulgaria . IBS Bulgaria Ltd. . Ideal Standard Bulgaria . Immo Industry Bulgaria . In Time Ltd. . Industrial Holding Bulgaria . ING Bank Sofia Branch . Interbrands Marketing & Distribution Inc. OOD . Interdean . International University College . Investbank Plc. . IP Consulting Ltd. . ISI Emerging Markets (Internet Securities, Inc.) . Johnson & Johnson Doo. . Johnson Controls Electronics Bulgaria . Junior Achievement Bulgaria . Kaliakra AD . Kamenitza AD . Kamor Auto EOOD . Katilin Popov Enforcement Officers . Kempinski Hotel Grand Arena Bansko . Kimimpex Trade and Leasing Ltd. (2be) . Kolbis International Transfer Corporation . KPMG Bulgaria . Kraft Foods Bulgaria . LANDMARK Property Bulgaria . Lexim Sofia Ltd. . Lindner Immobilien Management EOOD . Lirex BG Ltd. . Lowe Swing Communications . M & M Air Cargo Service Bulgaria Ltd. . M3 Communications Group, Inc. A Hill & Knowlton Associate . Magnetic Head Technologies . Maria Vranovska, MD, MBA . Marsh EOOD . MARTERN EOOD . Mathnasium (Rossimat Ltd.) . MBL Ltd. . McDonald's Bulgaria Ltd. . Mellon Bulgaria EAD . Merck Sharp & Dohme Bulgaria . Mercurius-Sofia . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, Public Affairs & Public Relations Consultants . Mobiltel EAD . Monbat Plc. . Moody International Ltd. . Moten Sport . Moto-Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO Defense College Anciens' Association . NDT Equipment Supplies Ltd. . Neochimiki Bulgaria S.A. . Neterra Communications . Neumann International AG . New Europe Corporate Advisory . New Europe Directories Bulgaria . Nexcom Bulgaria EAD . On Bulgaria Ltd. . Opet/Aygaz Bulgaria EAD . Oracle East Central Europe Limited - Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSG Records Management . Outsource Partners International . Ozone Laboratories Bulgaria . PANDA - IP Ltd. . Pedersen & Partners . Penev & Partners Law Offices . Penkov, Markov & Partners OOD . Pfizer Luxembourg SARL, Representation Office Bulgaria . Philip Morris Bulgaria EOOD . Pioneer Semena Bulgaria EOOD . Piraeus Bank Bulgaria AD . Plesio Computers Jsc . Popov Legal Office . Postbank (Eurobank EFG Bulgaria AD) . PostPath . Praktiker EOOD . Pratt & Whitney . PricewaterhouseCoopers . Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. . Radisson SAS Grand Hotel . Reader's Digest EOOD . Regus Bulgaria Ltd. . Renault Nissan Bulgaria SRL . Rising Force Co., Ltd. . Rockwell/Intelpack . S&T Bulgaria . Sanofi - Aventis Bulgaria EOOD . Scandinavia Motors Ltd. . Schenker EOOD . Schering - Plough Central East - Bulgaria . SEAF Management Bulgaria EOOD . Sheraton Sofia Hotel Balkan . Sherita M Ltd. . Siemens EOOD . Sienit Ltd. . SigmaBleyzer Investment Group LLC - Representative Office . SKE Bulgaria EOOD . Sofstroy AD . Soravia Bulgaria Ltd. . Stanton Chase International Bulgaria . Stefan Dimitrov, Norman Realestate Co. Ltd. . Symix Bulgaria OOD . TechnoLogica EOOD . TeleLink EAD . The Coca-Cola Company Bulgaria . Tishman Management Company Ltd. . Tissue Bank Osteocenter Bulgaria EAD . TMF . Totema Engineering . Trans Company Ltd. . TravelStoreMaker.com . Tumbleweed ® Communications Corporation EOOD . UniCredit Bulbank . Unimasters Logistics Plc . Unique Estates . Unisys Bulgaria Branch . United Bulgarian Bank . United Consulting Ltd. . United Healthcare Bulgaria Group of Companies . United Medical Communications . Vaptsarov Holding AD . Vector Management Bulgaria EOOD . Videolux Holding / Technopolis . VIP Security Ltd. . VISA Europe . VM Finance Group . VSK Kentavar Ltd. . Welcome to Bulgaria . Westinghouse Energy Systems Bulgaria Branch . Winslow Developments . World Courier Bulgaria . WorleyParsons Europe Energy Services Ltd. . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. . Yavlena EOOD . Zlati Dinev Studio in partnership with Outerbridge/Morgan .

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Borislav Boyanov Borislav Boyanov & Co.

Vice President Mr. Anthony Hassiotis Bulgarian PostBank

Vice President Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory

Treasurer Tanya Kosseva-Boshova Landmark Property Bulgaria

Members Mr. George Georgiev Motorola Bulgaria

Mr. Thomas Higgins Balkan Accession Fund

Mr. Andon Ichev General Electric

Mr. Stefan Ivanov Citibank N.A.

Mr. Bernard Moscheni BTC

Ms. Dana Leff AbCRO Bulgaria

Mr. Chris Thompson Consultant

Ms. Elitsa Tsaneva Ideal Standard Bulgaria

Ex-Officio Member Mr. Scott Pozil US Senior Commercial Attache

Executive Director Valentin Georgiev

Contentsc o v e r s t o r y

Us Elections: An Unending String Of Surprises . . . . 4

By Boyko Vassilev

What Changes Come With Obama . . . . . . . . . . . . 8

The Mutt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

By Christopher Karadjov

U.S. Presidential Elections

Fever Echoes in Sofia. . . . . . . . . . . . . . . . . . . . .12

By Irina Bacheva

Obama and McCain, Bulgarian Style . . . . . . . . . . .16

By Boyko Vassilev

e c o n o m y

Crisis Budget . . . . . . . . . . . . . . . . . . . . . . . . . .18

By Mina Georgieva

f i n a n c e

Credit Interests Surge Up . . . . . . . . . . . . . . . . . .22

By Marina Georgieva

Central Bank Loosens Reserve Requirements

in Efforts to Boost Interbank Lending. . . . . . . . . . .28

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

U.S. Ambassador to Sofia: Americans Voted

As Wartime Nation . . . . . . . . . . . . . . . . . . . . . . .30

AmCham Meets with

Marshall Memorial Fellows . . . . . . . . . . . . . . . . . .34

AmChams:

Europe Needs Common Energy Strategy. . . . . . . . .36

AmCham, Ecopack Discuss

Recycling, Waste Management . . . . . . . . . . . . . . .38

Businesses Deliver Two Days

of Volunteer Projects . . . . . . . . . . . . . . . . . . . . .40

ECACC Meets to Discuss

Engagement and Value to Members. . . . . . . . . . . .41

m e m b e r n e w s

National Campaign оf

Kamenitza Ad “Alcohol Is а Bad Driver”

Appeals Not To Drink-Drive . . . . . . . . . . . . . . . . .42

ING New York City Marathon . . . . . . . . . . . . . . . 42

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . . 43

Construction Management Group (CMG)

PM Group Bulgaria

Reed Personnel Services PLC

s p o r t s

American Football in Razlog. . . . . . . . . . . . . . . . .44

4

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„When Hilary Clinton becomes President, US priorities will become quite differ-ent”, a Bulgarian politician told a year and a half ago. „Let us not forget that Rudy Giuliani still has a chance, I said. The Republicans are still not defeated.” A noteworthy conversation, with at least three false forecasts. That is how God punishes analysts, who think they know it all.

Let us get even further back: the 2004 elections. A young senator flashed at the Democratic Party Convention in Boston by his speech in support of John Kerry: „There is no liberal and no con-servative ... white and black America. There is the United States of America”. Or even further back: to the elections in 2000, when the same young politician was not provided even with a floor pass to attend the Democratic Convention.

And why not get as far back as 140 years from now: the same young politi-cian’s party, the Democratic Party, was defending the South and the slavery during the American Civil War. Now, however, the son of a white female American and of a Kenyan, brought up in Indonesia, was elected as the new president of the United States with the name of Barack Hussein Obama.

These elections were full of surprises – from the very start of the primaries to the last victorious advance of the Illinois senator. Let us focus on five of them only.

The Clinton Surprise.

New York Senator Hillary Clinton was sure she would pierce through the pri-maries like on a parade. Her husband

Bill Clinton left the White House with a 60-percent approval, with an economic boom and uncontested world leader-ship. Even Monica was a component of the sympathies harboured by liberal America for him; Hillary had just to draw on the dividends. And still, the machine got stuck. Maybe because Hillary was arrogant in her eliticism. Or because she was the queen of half-moves, cau-tious tactics and of a strategy based on the hope “just mind not to make a mis-take”. Besides, after the Bush era,

America simply did not want one more dynasty.

Not to mention the gaffs Hillary made. She was slow to admit defeat. She used the “super delegates” as a threat. People from her staff claimed Obama is winning because of the colour of his

By Boyko Vassilev

U.S. Election 2008: An Endless String Of Surprises

President-elect Barack Obama and his wife, Michelle, left, and Vice President-elect Joe Biden and his wife, Jill, wave to the crowd after Obama's acceptance speech at his election night party at Grant Park in Chicago, Tuesday night, Nov. 4, 2008

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skin. She lied that during the war in Bosnia she was met by sniper fire when leaving the plane in Tuzla. And at the end she slipped by saying that Barack might not push it to the end of the cam-paign and thus ultimately enraged the Obama supporters. The factors, which closed the road before Hillary, were thick in the air: Americans preferred the promise of change to memoirs of some-body’s competence. It would be interest-ing to see what would happen if the crisis erupted before the defeat of Hillary – however, no ”ifs” are allowed in history.

The McCain Surprise.

During the early stages of the primaries the Republicans had a favourite – the former New York Mayor, the hero of the tumbling towers of the World Trade Centre Rudi Giuliani. Expectations for a surprise were linked to two more con-tenders – the Mormon from Massachusetts Mitt Romney and the preacher with the guitar Mike Huckabee. There was even an actor – former senator Fred Thompson had appeared as a prosecutor in the “Law and Order”

series, why not try his luck as president as well? McCain was not among the unknowns. A veteran fighter pilot from Vietnam, downed, taken prisoner and tortured for 5 years without pleading for mercy; a veteran of many political battles, lost to Bush in the 2000 prima-ries. The Arizona Senator was an old hand in American politics. And when sceptics admitted that age has won, McCain brought his 95-years old mother

under the floodlights and flashed his victorious smile afterwards. At that time Giuliani opted for the large states, underestimated the small ones and by the time he got to his cronies in Florida, the wind in his sail had changed direc-tion. Romney, on his part, was not only a Mormon; he had a perfect family and numerous offspring... Americans, how-ever, were not attracted by synthetics. As far as Huckabee was concerned, he managed to seduce only the religious right and demonstrated, that the extreme

conservatives in the South are in retreat...

The bottom line was that even the Republicans wanted a candidate, who was the least similar to Bush, and found their man in the former prisoner of war.

The Sarah Palin Surprise.

McCain served his second surprise: during the campaign he seemed like he is losing it. He pretended to be rational and pro-business, and still he admitted

Sen. Hillary Rodham Clinton, campaigns for Democratic presidential candidate Sen. Barack Obama.

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openly that he does not know a lot about economics. He pretended to be playing a fair game with both parties, albeit finally he went far into the field of the Republican hardliners. He seemed to have overcome the conservatives from the South and the TV preachers (whom he called “agents of intolerance” in 2000), while, finally, he made peace with them and gave them a present – a hockey mommy, used to cutting moose – the Alaska Governor Sarah Palin, selected after two encounters only. People will talk about it for a long time, perhaps, whether

Palin helped McCain,

or damaged his chances. it is true that she energized the campaign and drove mad the imagination of the conserva-tives, who like family values, God and rifles – and McCain won in the South and in most of the Midwest. At the same time however Palin scared the independents, the moderate Republicans, “Reagan’s” liberals on the West Coast and McCain’s friends in Europe – and he lost almost everything that he possibly could, including the “swing states” Ohio, Pennsylvania, Florida, even Virginia. Why, then, did the Senator, who always claimed he is proud of his self-command, suddenly lost his command at the most important moment of his life? Is it possible that without “fiery Sarah”, the bulldog with lipstick, the loss would be even worse? Again, we have to remind ourselves that history allows no “ifs”. It would be good however to read McCain’s concession speech – full of gallantry, patriotism and political fortitude; it was built on McCain’s admiration of his opponent, which is a virtue untypical for the world of politics.

The Crisis Surprise.

It was perhaps the crisis, and not the abilities of the candidates, that brought about the final result. Under the rumble of collapsing mortgages, homes for sale and jobs and money lost, no one was willing to listen to the traditional song of the Republicans – liberalism in economy plus conservatism at home. The first was subjected to suspicions after the collapse of Wall Street, the second – by the collapse of the neoconservatives. The Americans, of course, did not sud-denly embrace abortion, gay marriages

and Madonna’s lifestyle – just the oppo-site. Simply put, the crisis demonstrated that there are other issues, which deserve to be the subject of politics – and these issues are not in any way related to marital behaviour but with the kitchen table; not related with what we do at home but with what we do when we are at work. And most of all with whether we have a job at all. Look at the blue collar swing states mentioned before, which Obama lost in favour of Hillary, only to win them back decisively against McCain. What happened between the two instances, when people had to make a choice? “It’s the crisis, stupid”, to use in a slightly different wording the famous phrase used by Bill Clinton on economy.

The big Obama surprise.

From now on a lot will be written about the Barack Obama phenomenon – about his speeches and energy, about his profile in Facebook, about his improbable two-year campaign, about the discipline of his “army” led by the two Davids – Plouffe and Axelrod, about his decision to refuse to take federal funding for his campaign and the record amount he collected mainly from small donations

– more than 700 million US dollars,

about the support voiced by Oprah Winfrey, Warren Buffett, George Soros,

President-elect Barack Obama, right, and Vice president-elect Joe Biden wave to supporters during their elec-tion night party at Grant Park in Chicago, Tuesday night, Nov. 4, 2008.

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Sean Penn, Bruce Springsteen – the best from Hollywood and Wall Street simultaneously; about the internet technologies and the huge TV spots – one of these infomercials was as much as 30 minutes long; about the elegant way, in which he distanced himself from the scandal with Pastor Jeremiah Wright; about his post-racial message, which, superficially, seemed to disregard Afro-American activism but nevertheless collected 90 percent of the Afro-American vote; about his appeal to the young and to minorities; about the death of his grandmother immediately before the elections – well, there will be a lot of things to write about.

According to me the most important thing that the Illinois senator managed to do was to match two basically unmatchable issues – he brought the barricades back in politics and won by a message of integration and unifica-tion. He inflamed the spirit of the American left, mobilizing it to an unprec-

edented zeal – and at the same time he was adamant that there are no “blue” and “red” states. He focused on himself the hatred of extreme conservatives – and at the same time attracted many Republicans, including Collin Powel and the son of the conservative icon William Buckley. He triggered the issue of race and class – and managed to go beyond by saying: Let us work together! Even McCain did not manage to remain impartial to this call.

How was all that possible? What was the magic that did it? I will quote one of the most difficult statements of the media theoretician Marshal McLuhan – “the medium is the message”. The mes-sage is in its medium, the medium IS the message – and the medium does not have to say more than what the medium is; the medium speaks about itself. Obama (who has already written two books about himself) personifies the dream and the change – the guy, who started from nothingness to ascend the world’s political Olympus.

“Look at him, he has no contents, all he has is a form”, his opponents said. Yes, it might be true. “He only delivers pre-polished political speeches and does not respond to spontaneous questions like McCain”. This might be true as well, even in his first speech as the newly elected president his aloofness was obvious, despite the sparkling words. “He is talking about hope and change in general and makes impossible promis-es”. Even this might be true. So what? Are we not living in a world, in which form often triumphs over contents? What about the markets – are they not managed rather by rumours than by arguments? And in such a situation, would it not be better to elect a person, whose aura could stop the fall of col-lapsing stock exchange indexes? Well, we could wait for the contents.

As I learned from my conversation I had a long time ago with a Bulgarian politi-cian, there is no such thing as an impossible surprise. Obama could even keep his election promises. n

Sen. John McCain, R-Ariz.,left, delivers remarks during an election night rally in Phoenix Tuesday, Nov. 4, 2008. Joining him on stage are from right, wife Cindy McCain, Gov. Sarah Palin, R-Alaska, and her husband Todd.

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“Everything,” say the enthusiasts. “Nothing,” skeptics claim. After a campaign marked by extremes, however, it is high time that we cede the floor to realists.

1. The Crisis

Everyone capable to forecast the response of stock exchanges is not an analyst but a millionaire. And although I do not belong to the community of analysts, I will risk and predict that the election of Barack Obama will send a soothing signal to Wall Street. The stock exchanges needed the inherent optimism of the slogan “Yes, we can” – et voila, now they have it. Besides the purely psychological effect, however, there must be genuine actions as well, and that is why we should wait at least until Jan. 20, 2009, in order to see what Obama’s administration will look like. A deci-sive positive shift may be expected not earlier than that.

2. The Economy

Here we are waiting for Obama’s magic trick: reducing taxes of the poor and at the same time raising taxes of the rich, while following a prudent fiscal policy. Is it possible to have iron wood, figuratively, at the current U.S. budget deficit? We will have to wait and see. President elect is always reminding his "Stimulus packages" which will have to help American to over-come the financial crisis. I will dare to make one more predic-tion, namely, that the administration of the new U.S. president

will smoothen the sharp edges of the most radical tax and economic proposals. One could always find excuses (see the previous item); besides, economic solutions offered by the Illinois senator’s campaign did not boast abundance of specif-ics.

3. Self-confidence and U.S. internal cohesion

СNN showed celebrating people – African-Americans, Latin-Americans, the liberal white elite (doctors, lawyers, yuppies), Europeans, Kenyans… Barack Obama defeated the Republicans in states like New Mexico, Colorado, Nevada, Virginia, Ohio, Florida and North Carolina. At the same time, detailed analyses indicate that he fared much worse among middle-class whites. President Obama still has to prove that he will represent all Americans. Yes, McCain did, during a speech, tame twice those, who were jeering at the mentions of Obama’s name. From now on, however, the former Chicago community organizer should find his own key to the hearts of his opponents. Today, while it is sending a positive signal to the world, America should not choke on internal contradictions and calls for retribution. The right tone must by all means be set by the winner.

4. Energy

Many people missed it, but it is right in this sphere that Obama

What Changes Come With Obama

Delicia Jones and her sister Portia celebrate at a Democratic election night party at the Century Plaza hotel ballroom in the Century City section of Los Angeles Tuesday, Nov. 4, 2008, after Obama was elected president.

Phot

o by

AP

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set a new horizon – let us look beyond oil, invest in alternative fuels, invent the energy of the future, let us manage global warming. Even Bush, who has the support of the oil lobbies of his Texan friends, had to admit, that that America is oil-addicted. Similar revelations restored the image of Al Gore, who lost the presidential race in 2004 and who raised the banner of the fight against climate change. I expect that Barack Obama will take this banner from Al Gore’s hand.

5. Iraq

As a U.S. senator, Obama spoke against the war in Iraq and made a rare pledge of political capital, which was later repaid tenfold. Paradoxically, the Iraqi surge of General Petraeus brought a partial victory – and some dividends to America. I believe that President Obama will draw from both sources – he will loudly demonstrate troops withdrawal, while trying to strengthen the victory on the ground. At that, he will listen atten-tively to the Iraqis: their government has already proposed its own framework for the U.S. troop withdrawal. I do not expect any rush actions and premature steps: the United States will try to leave Iraq the way it left Kosovo, and not the way the Saigon was evacuated.

6. Russia

It may sound strange, but all U.S. presidents, who rattled their sabers against Russia, in the end sat down to negotiate. And vice versa, those who spoke about principled relations and readiness for dialogue, have always harvested a crisis. Until now, Russia’s new international ambitions were motivated, besides the expensive oil, by Bush’s actions and by the unipolar world. What would Russia do, after the first factor does not exist any longer, but the second is gaining momentum – the newly elected president has promised that he will restore America’s leader-ship? Russia may subject Obama to a test. We shall be able to judge what is Obama really made of by the way he performs in such a test.

7. Dictatorial regimes

Dictatorial regimes will also give Obama headaches – maybe even before Russia and maybe their test will be even more demanding. They will assess his readiness for a dialogue – even with the Satan. But these regimes have a problem – American friends in the world will no longer be ashamed of loving America.

8. Europe

The fact as stated above seems to bring good news for the trans-Atlantic partnership. There are no problems that would prevent it from being fully restored – old enmities have been forgotten; besides, Berlin, London and Paris are governed by America’s friends. The main outstanding issue lies with the extreme left of the anti-globalist persuasion. As early as the primaries, newspa-pers such as Monde Diplomatique, Die Zeit and New Statesman published analyses raising suspicions about the new idol. They claimed that Obama is not sufficiently interested in social issues, that he was ready to step back on Iraq, that he preferred race to climate, that he had no intentions to pull down the American Empire, that he is not a true revolutionary like Ernesto “Che”

Guevara. OK, it is true that Obama is a hero of pop-culture, and not of the barricades. An American, and not a European hero at that. Now, after he has been elected to be the next president, America is jubilant, because one more frontier has been crossed. And his opponents understand this well. The ascent of Obama will make it perfectly clear whether the European left hated just Bush or America as a whole.

9. The New Europe, Balkans and Bulgaria

The East of Europe has a different problem – it supported Bush in Iraq, and today this does not seem to be such a great invest-ment. There are only a few (including in America), who under-stand that the New Europe did not support Bush, but rather the trans-Atlantic relations; that the New Europe has strongly voiced its warning: “You there, in the West, do not become split.” Here comes the good news – if Western Europe and America man-age to reach an understanding, countries like Bulgaria will not be torn apart between the West and the West.

Otherwise, Barack Obama recognizes the genocide against the Armenians and supports Greece’s claims against the name of the Republic of Macedonia – which means that Ankara and Skopje will be somewhat nervous. The president’s administration will try to tone down these problems, because Macedonia and especially Turkey are valuable U.S. allies. Generally speaking,

US interest in the Balkans remains stable,

almost settled and does not depend on partisan factors. The appointments at the Department of State and especially the appointment of the future Secretary of State will be of key importance, as well as the opinion of the future Vice-president Joe Biden, because of his experience in foreign policy matters. Central and East Europe, Europe’s Southeast and Bulgaria have no grounds to expect bad news – regardless of whether John Kerry, Hillary Clinton, Sam Nunn or Richard Holbrooke will be in charge of the Department of State.

The Balkans, and Bulgaria in particular, are not at the center of the world’s attention any more, and thanks God. Our insistence on being liked and loved (or the opposite – hating the world dominant power, whichever it might be) must be replaced by self-assurance and our own priorities. Sooner or later a Bulgarian leader will meet with Barack Obama – and then he, the Bulgarian leader, will have to carefully judge what kind of conversation he will have to engage in.

There are analysts, who consider that the strategic issues in the bilateral relations have been closed – Bulgaria is a U.S. ally in and out of NATO; the military bases are already on Bulgarian soil; what remains to be settled are minor issues like visas, investments and culture. I do not think so. Bulgaria has still not answered the most important strategic question: What kind of country does it want to be as a NATO and EU member state? What will Bulgaria opt for – tourism, industry, energy, high-tech industries, education? And how will Bulgaria inspire its skeptic population?

Bulgaria will need the strategic cooperation of the United States in order to answer this question during Barack Obama’s presi-dential term. n

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Most superlatives about the just-concluded presidential

election in the United States have already become

clichés, even though few of them can be considered

outright wrong. Nov. 4, 2008, capped the longest political cam-

paign in the U.S. history (22 months); it became also the most

expensive one, with the two principal candidates raising and

spending just over a billion dollars (Obama outspent McCain

2-1, though, and if you factor in

all expenses on Congressional

races and state propositions,

the total comes to a staggering

$4 billion); such a massive

electoral turnout has not been

seen since 1908, and the sheer

number of voters had no prec-

edent (138 million vs. 122 mil-

lion in 2004); Democrats won in

a landslide they have not

enjoyed since Lyndon Johnson

in 1964; and so on.

No, I am not forgetting the

most intriguing outcome of

this election: the 44th U.S.

president will not be of

Caucasian descent, but of a

mixed racial heritage, born to

a Kenyan father and white

U.S. mother. The world gasped

at this development, judging

from the media reactions,

because a year ago it seemed

hardly possible at all.

Americans themselves have

not come to grips with what

exactly this change signifies.

Is it the true beginning of the

end of racial separation in

America? Is it the final “no” to

slavery, segregation, Jim Crow,

inequality, and other ugly

tenets of racism? Can we,

please, forget about race now? Or is it just a glitch, a nice

but transient timeout to the racial tensions that have been

haunting the United States since the earliest years of the

republic? We cannot know the answers to such fundamental

questions that early, albeit it is tempting to rush to conclu-

sions as many pundits on the left and right have been doing.

(Incidentally, have you heard that Nostradamus predicted

Obama’s victory five centuries ago?)

The world is changing fast, though, and this is evidenced by the

fact that younger Americans are a lot less sensitive to issues of

race than the older generations. The population over 45 and

especially those over 55 still view the world in racial terms. You

see either overt or covert racism, or attempts to be excessively

politically correct, sing Kumbaja and pretend we are all alike in

everything (sometimes we are; often we are not). The younger

set, contemporary 18-to-29-year-olds, seem to be better attuned

to the spectacular diversity of the United States. Many of them

do not care about race, period.

I live in Long Beach, Calif., where the school district boasts having

students from 88 linguistic backgrounds, an all-American record.

My 10-year-old son does not even comprehend divisions by

“race” – to him, it is an irrelevant term. His best friends include a

Cambodian-American, a Thai-American, a Caribbean-American,

plus a mainstream kid from an Orange County “waspy” family

and a girl with a white ex-hippie father and a Latino mother who

practice a form of vegan

Catholicism (don’t even

ask).

Obama’s campaign gener-

ated an unprecedented

level of political activity

among voters under 29,

who are typically consid-

ered much lazier in exercis-

ing their civic duties than

the older generations (you

can check some exit polls

here http://pewresearch.

org/pubs/1023/exit-poll-

analysis-2008). Many rea-

sons underlie his appeal

with the younger crowd, but

one of them is exemplified

by what he said during his

first news conference as a

president-elect on Nov. 7,

when he called himself “a

mutt.” All U.S. presidents

try to sell themselves as

coming from modest back-

grounds, even those like

George W. Bush who can-

not plausibly deny being

raised in a patrician family.

Yet no commander-in-chief

has ever subjected to doubt

his 100-percent

“Americanness” by blood.

Obama irreverently did

exactly that, by reminding everyone of his racially and nationally

mixed heritage, which should not make him any less American.

Suddenly, pure lineage does not seem like such a big deal.

It is not that race or national origin stopped mattering after Nov.

4, 2008. They still affect those who are not 10-years-old in many

ways – for instance, UCLA evolutionary psychologists remind us

that we have an innate aversion to people who do not look like

us, and the debates on immigration are just heating up. In world

affairs, too, purebreds still seem to be the dominant caste.

Pedigreed dogs may be refined, but they are a spitting image of

each other. Every mutt is one of a kind. Mutts are never boring.

Haf-haf. n

Christopher KaradjovLos Angeles

Special to AmCham Bulgaria Magazine

The Mutt

President-elect Barack Obama and Vice President-elect Joe Biden supporters celebrate on a car after Obama's acceptance speech at an election rally in San Francisco's Mission District.

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U.S. presidential campaign fever of this year grasped not only the minds of ordinary Americans, but attracted the attention of voters and analysts through-out the world. Political topics no longer dominate discussion; another reason for so much heat in the air is the con-sequences of the world financial cri-sis.

In Sofia, on Oct. 16 a selection of emi-nent political analysts, Americans resid-ing in Bulgaria and journalists gathered to share views in a discussion: “US Presidential Elections 2008: Sofia Perspective.” AmCham Bulgaria initiated the event as follow up of the last presi-dential debate in the United States on October 15. AmCham members and analysts debated on how they see both candidates.

Ken Lefkowitz, NECA, was sympathizing the Republican candidate John McCain; Alan Levy, Tishman International,

remained undecided; Dana Leff, AbCRO and Tom Cangiano, American College of Sofia, were keen supporters of the Democrat Barack Obama. Moderator of the discussion was the TV journalist Boyko Vassilev who was eager to rouse the moods by asking the first question, “Who is your champion?”

Tom and Dana appeared confident that Obama will bring change and optimism to the White House, and also build a better economic team. Alan Levy said he remains undecided and considered Obama as a politician who lacks experi-ence and has doubts that the Democrat could lead the country in the direction it had to go.

At the opposite corner was Ken Lefkowitz: “Although Obama talks a lot about change, and regardless of his confidence, Washington administration is well set in its ways and it is hard to transform quickly and easily.”

Leff recalled the political situation during the Bill Clinton government and the way the United States was perceived world-wide. “Looking back to the eight years of Clinton administration, we had a bud-get surplus, and now after Bush we have a huge deficit,” Leff added. She was sure Obama is going to change this situation.

The president of the American College in Sofia, Tom Cangiano, revealed that historically and within family tradition he gravitated toward the Democratic party. “Now I see the difficulties that the United States experiences in the econ-omy and in politics. I am optimist about the future of the United States,” Cangiano said.

Answering the question from Boyko Vassilev about who is going to calm the financial crisis, Cangiano said that both candidates talk much about regulation, and both of them are promising greater

U.S. Presidential Elections Fever Echoes in Sofia

Boyko Vassilev, journalist and moderator of the AmCham discussion anticipating the next question from the audience.

By Irina Bacheva

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oversight of what is happening on Wall Street. “What makes me gravitate towards Obama support is his tax policy, targeting middle class, which represents a majority of Americans,” he added further.

To add to this point, Alan Levy said that what was perceived to be the cure appeared not to be working in taming the financial crisis on a worldwide basis. The confidence level is basically zero, he said.

The moderator was willing to find out how the crisis would affect foreign busi-nesses in Bulgaria. Dana Leff said that it is not likely that the crisis will be felt in the short term. “In general, the bio-technological companies rely on joint venture funding and in long term it is possible that they will experience diffi-culties,” she said.

The world financial turmoil that started

with the crisis on the U.S. real estate market dictates that the time has come to completely change the political elites way of thinking. That was not only the message that Americans residing in Bulgaria put at focus, but also what the Bulgarian political ana-lysts said in their addresses to the forum. Among these were Ivan Krastev with the Center for Liberal Strategies, Ognian Minchev with the Institute for regional and international studies, Dimitar Avramov, political analyst, and Ivo Indzhev, journalist.

“The old order to govern the world has gone for good, and a new order is com-ing,” said Minchev. “Now we stand at the end of an era that started with the conservatism of Ronald Reagan who on his part ended with the communism era. Today the stocks plummeting and the nationalization of the banks show clear-ly that this period has come to an end,” Minchev added.

Ivan Krastev said that McCain’s genera-tion has completed its historical mission: “Europe needs a generational change, and from this viewpoint the lack of experience of Obama might be an advantage.”

According to Krastev, “For McCain it is important for the world to conform with America and for Obama it is important for the world to like America.” He added, “At the moment I think that America needs to be liked more than anything else,” he said.

The Balkans will not be a priority for whoever would be the next U.S. presi-dent because the United States already reached their goals in the region and would follow a policy of a balance, Ognian Minchev added.

Analyst Dimitar Avramov said the Balkans should not be a place for geopolitical interests and put more stress on the role

Ekaterina Mihailova, deputy chair of the Democrats for Strong Bulgaria party (DSB), Svetoslav Malinov, deputy with DSB were welcomed at the event by Valentin Georgiev, AmCham executive director.

Ken Lefkowitz , NECA sympathizing to the Republican candidate John McCain; Alan Levy, Tishman International, undecided.

Deputy Chief of Mission Alexander Karagiannis talks to Dimiter Ivanovski, Bulgarian deputy minister of finance before the beginning of the event in the National Palace of Culture.

Dana Leff, AbCRO and Tom Cangiano, American College of Sofia keen support-ers of the Democrat Barack Obama.

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of the future economic relations on the Balkans and the importance of the type of economy Bulgaria would develop.

“Barack Obama has a wrong notion of how the state should act on an interna-tional scene – this is clear from his statements that the U.S. companies abroad must cut jobs and move them to America. At the same time the under-standing of the Republican candidate McCain is quite frightening when he proposes Iraq to be divided into three ethnic parts,” Avramov said. He described both candidates by their atti-tude to modern technology: “Obama is definitely a man from the Google gen-eration, while McCain does not have a cell phone, nor he has a computer. Who could be more popular in this situa-tion.”

“When talking with the ordinary Americans it is obvious that the US economy is out there, and it is a para-dise for the consumer. Imagine trillions of dollars that are moving every day in the virtual space,” Ivo Indzhev fol-lowed.

“Whoever becomes president of United States will not concentrate much on the Balkans, in particular Bulgaria, but he would take Asia into greater consider-ation,” Krastev pointed out. In the near future Asia would be in the focus, just as Europe has been in the last 50 years, Krastev said further. n

5,000 New Appointees to Enter the White HouseDeputy Chief of Mission Alexander Karagiannis talked about the U.S. electoral

system at the discussion “U.S. Presidential Elections 2008: Sofia Perspective”

organized by the American Chamber of Commerce on Oct. 16. Karagiannis

explained the mechanisms of the Electoral College, the uniqueness of the cur-

rent presidential elections, and the expectations that both Europe and the United

States may have of each other. Karagiannis said that America will ask more of

its friends in terms of the challenges lying ahead of us because “we have to

consult together, we have to coordinate together, and we have to take actions

together.”

The next U.S. president will be inaugurated on Jan. 20, 2009, and there is a long

transition period for the new administration at the White House, said the diplomat.

It is expected that about 5,000 new political appointees will enter the administra-

tion in the coming months. Karagiannis presented seven election maps in the

United States for the years 1980, 1984, 1988, 1992, 1996, 2000, 2004. Republican

President Ronald Reagan spent eight years in power, with successful votes in

1980 and in 1984. George H. W. Bush served as the 41st president of the United

States from 1989 to 1993.

Democrat William Clinton was sworn in 1993 and in 1996 he won his second

term in office. In 2001, Republican George W. Bush was inaugurated as the 43rd

US president, who took the 2004 elections, too.

More than $3 billion were spent in the United States during the election cam-

paigns of both presidential candidates. Karagiannis mentioned that non-serviced

mortgage credits are at the amount of $175 billion, which represents 5 percent

of the U.S. economy.

Deputy Chief of Mission Alexander Karagiannis

Boyko Vassilev was moderator of the event, wich was brodcasted life by BBT and Re:tv

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It was hot, it was deep, it was wise. And it was neither New York, nor Los Angeles. In Sofia, Bulgaria, American Chamber of Commerce organized a debate – U.S. ex-pats and high-profile Bulgarian experts raised their swords for Senator Obama and Senator McCain. Two local televisions aired it live, several others filed reports. Distinguished guests entered the hall. Bulgarians seemed to care about U.S. presidential election, just like almost any-body else in the world and surely everyone on the Balkans.

It’s almost madness: I remember making my first U.S. election forecast in front of an intrigued adult audience in 1980. Then I was 10, rightly predicting that embattled Jimmy Carter will succumb to the rising star of Ronald Reagan. Later that year I read a mysterious article in the communist pioneer newspaper “Septemvriiche” about President William Henry Harrison, his pre-mature death in 1840 and the famous Tecumseh Curse. I had already seen Yugoslav actor Gojko Mitic play Tecumseh in an East German movie, but I did not know that the chief’s brother cursed Harrison and since then every U.S. presi-dent, elected on a year to end with 0, died while in the White House (Harrison, Lincoln, Garfield, McKinley, Harding, Roosevelt, and Kennedy). The children’s newspaper was nasty enough to remind that Reagan was elected in 1980 – and indeed, he was shot later, but luckily sur-vived and broke the curse together with communism. As it goes, George W. Bush (first elected in 2000) will be the second to follow suit in surviving the curse - and to be an ally of East Europeans. What about the next one? A generation of grown up “Septemvriiche” readers still considers U.S. presidential elections a mysterious and important affair.

Obama or McCain? This is the question today. Obama is the undisputed Old Europe’s darling, yet McCain visited Bulgaria, assisted her Euro-Atlantic integra-

tion and even received the highest Bulgarian medal. But if Old Europe adores somebody, is it sure that New Europe will adore him as well? And if McCain knows Bulgaria, is it sure that he will like it, with its problems right now? Owls are not what they seem in the Balkans. Let’s consider Russia. During the Sofia dispute some-body rightly pointed out that “Senator John McCain is tough on Russia.” And some-body else immediately retorted that, according to polls, Russians prefer McCain to Obama – partly because of his race, but also because of his war experience – and yes, of this very toughness. So the hard-line McCain could end up talking to Russia, whereas the leftist Obama would easily entangle himself in a conflict over principles. It often happened in history: tough U.S. presidents dealt well with Soviet Union; liberals were belligerent and often frustrated. Nixon and Reagan had freer hands with Moscow than Carter and Kennedy – because nobody would accuse the former two of sympathy towards Reds.

And will it be good for Bulgaria if the next U.S. president talks to Russia? The debate did not answer this question. Yet one could smell the particular New Europe con-sciousness in the sound-bites. “Obama

and McCain talked to the plumber Joe Wurzelbacher,” remarked journalist Ivo Indjev. “Just imagine that in Bulgaria. Or in Old Europe, which turned the Polish plumber into a symbol of alien menace from the East.” Afterwards Wurzelbacher turned out to be not a real plumber, not even really a Joe, but this is another story.

“Bulgaria will profit from a U.S. president who restores the transatlantic partnership,” said Ognyan Minchev from the Institute for Regional and International Studies, clearly implying that this one is Barack Obama. Ivan Krastev from Centre for Liberal Studies seemed to back him, arguing that, when pre-election messages are general and vague, the messenger is the message: “It is important for McCain that the world respects America. But I think right now America needs rather love than respect.” Maybe this is the voice of reason. Obama has better chances anyway. The new U.S. allies would not like to recall the awful days of the Iraqi war when they had to choose painfully between the United States and Old Europe; between West and West. Important people in America with interest in the Balkans also support Obama, most notably George Soros, the billionaire-philanthropist and ardent

Obama and McCain, Bulgarian St yle By Boyko Vassilev *

“I am a hard-line supporter of Barack Obama.” “I am a disgruntled Republican.” -“I am undecided, but I question Obama’s experience.” “John McCain will be stronger in foreign policy” - “Yet Obama will make a difference”.

Bulgarian political analysts addressing the forum: From Left: Ivan Krastev with the Center for Liberal Strategies, Dimitar Avramov, political analyst, Ognian Minchev with the Institute for regional and interna-tional studies, and Ivo Indjev, Journalist.

This feature was originally written for Transitions Online and first published at www.tol.cz

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Democratic Party donor.

The moon, however, has a dark side. It is an old saying that U.S. Republicans play with the Middle East, while U.S. Democrats – with the Balkans. This play has left some divisive memories of Kosovo war and the bombardment of Bosnian Serbs. The sheer notion that Richard Holbrooke will have an important post in the new admin-istration’s foreign policy, if not to determine it altogether, throws Serbs, Macedonians and Greeks in cold sweat, makes Croats, Bosnians and Albanians giddy, and leaves the rest with mixed feelings. Few people remember that Senator John McCain per-formed much more hawkishly towards Kosovo, insisting on a ground invasion with the famous saying “nobody has ever sur-rendered to an airplane.” They are vastly outnumbered by those who recall the Belgrade graffiti from 1999: “Clench your teeth, Monica!” The Clinton guys, i.e., the Democrats, are the villains for many: after the wars of our own, Iraq did not strike a chord with Balkan hearths.

On the surface of it, American left has always looked down at former communist countries that turned into staunch U.S. allies after 1989. In “Fahrenheit 9/11” Michael Moore laughed at new democra-cies’ support for Bush; various New York Times op-eds asked with sarcasm and disgust: “Are these our allies?” It is not only that the American left failed to grasp the roots of Eastern European backing for Dubya (a desperate cry to the West not to split). The liberal Ivy League intellectuals (and their Rive Gauche brothers-in-arms) had always treated with suspicion those countries’ newborn enthusiasm for market principles and centre-right values. The Western leftists have never lived in Utopia, but often criticized Eastern Europeans for betraying it.

It was also quite telling that during the Sofia event the only ones who raised their voices against Sarah Palin were U.S. citi-zens. Even the McCain defender, business-man Kenneth Lefkowitz, said he is a dis-gruntled Republican because of her. Clinical research expert Dana Leff went further, saying, “As an American woman I don’t identify with Palin.” Bulgarians, how-ever, kept mostly silent. Feminism is not the most popular Balkan creed. People here have some tradition with tough-look-ing, funny-speaking and bold-behaving politicians, only they are predominantly male. If Sarah Palin needs a lesson in

boldness, Velja Ilic from Serbia, Boyko Borissov from Bulgaria and Traian Basescu from Romania could easily teach her one. “Whoever wins, he will be a good friend of Bulgaria,” insisted Alexander Karagiannis, deputy U.S. chief of mission. This is true: the most important events in U.S.-Bulgarian relations have already happened. Bulgaria is a firm American ally, with troops in Iraq and Afghanistan, with joint military bases on Bulgarian soil and with substantial U.S. investments in its economy. “This will not change, whoever wins,” stated the American ex-pats in the Sofia debate, most of them U.S. investors. Their only preoccupation was the crisis and hence the ability of Obama or McCain to handle it. “However, our money does not depend on politics.”

“The old era is bidding farewell,” summed up Minchev, “the conservatism of Reagan and Thatcher is pushing its limits in poli-tics, economics and finance. McCain would be the honest conclusion of this old era, Obama would be the start of a new one.”

Whatever the era, its focal point will be not Balkans, not even Europe, but Asia. Krastev joked: “Some may feel offended, but the next president will think of Bulgaria no more than three-four times in the next four years – and it will be for the name of

the person he is going to meet.” This person, Bulgarian president or prime min-ister, will have a short and formal agenda to discuss with the leader of the free world. That is, unless somebody from the rising Balkan Diaspora in the United States climbs to the political top. People with Balkan descent have rarely reached the high positions in Washington’s White House, especially the presidential and vice-presi-dential post. Actually, the only one is Spiro Agnew, Nixon’s unfortunate deputy, who resigned facing charges of previous tax evasion. Officially, he has Greek ancestors, but Bulgarians and Macedonians also claim this fame, despite Agnew’s bad record. Another grandchild of Greeks, Michael Dukakis, failed to be the first U.S. president with Balkan origin in 1986. No one else has appeared yet on the radar.

Despite that, Balkan people think they understand the complexity of U.S. and international politics in full extent. They love, they hate, they debate. Why so pas-sionately? Maybe small nations get big issues best. Or America is still important to the Balkans, providing it with power and warmth which Europe is lacking.

Or maybe because, as Ivan Krastev said in Sofia debate, “While Obama and McCain talk to a plumber, politicians here talk to themselves.” n

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In line with the financial problems experi-enced on a global scale, government financiers expect a slower economic growth, at 4.7 percent. The cabinet fore-casts were downgraded by 0.3 percentage points over the last two weeks. In early October, Prime Minister Sergei Stanishev announced that the draft budget is based on a 5-percent target economic growth.

At the end, the government admitted that the world financial crisis will, after all, hit Bulgaria as well – regardless of such nuances whether the impact will be sub-stantial or moderate. The incumbents pretended for a long time that they are oblivious of what is happening on the world’s financial markets and were even adamantly avoiding the issue. The execu-tive start talking about anti-crisis mea-sures a whole month after European Union leaders had embarked on specific actions, while public pressure was build-ing up and the opposition and indepen-dent analysts urged the Cabinet to act.

Even the top financier Plamen Oresharski insisted that the crisis will not affect directly Bulgaria’s finances, claiming that, with the Bulgarian Lev firmly anchored to

the Euro, the Forex risks are low. The financial sector in Bulgaria, he said, is operating with more traditional and more conservative tools and products. Even U.S. banks, which suffered most from the collapse of the mortgage markets, prefer to operate in developed countries, and wherever they have penetrated an emerg-ing market, they have applied traditional instruments because of the profitable interest levels, Oresharski said. That is why, he claimed, the banking crisis in the United States will not directly affect the local commercial treasuries, which will avoid the hits suffered by almost all large European banks, he argued.

The indirect effects of the crisis, however, are unpleas-ant enough,

the finance minister admitted. These effects will emerge in several aspects – a slow-down of foreign investments, increased price of credits, and an almost unavoidable economic reces-sion in Europe – and all these will affect Bulgaria’s exports, of which more than 60 percent is dedicated to EU member states.

These forecasts were mirrored in

one more adjustment of the budget macro-framework

for next year. Growth is expected to slow down to less than 6 percent, compared to the 7-percent increase for the first half of last year; in practical terms this means a withdrawal to the levels of 4-5 years ago, with investments expected at some 20 percent of the GDP and with employment rates slowing down too.

It is exactly for these reasons that the Bulgarian government will have to pre-serve its traditionally strict and conserva-tive fiscal policies over the next several years. The budget surplus is targeted at not less than 3 percent, and spending will be limited to 40 percent of the GDP. Some 7 percent of the GDP has been allocated to public sector investments as an indirect measure to boost growth and divert the overall impact on the economy.

Social priorities will remain unchanged, with some 400 million Leva allocated to each healthcare and education in excess of their current share. Emphasis will be

Crisis BudgetThe key parameters of Bulgaria’s fiscal plan for 2009 have been drafted to account for the world’s financial crisis

By Mina Georgieva

Council of the ruling parties coalition during the debate about the new state budget in the end of October in Sofia.

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placed on science and research, with plans to gradually raise their financing in terms of percentage of the GDP, with the target set at 3 percent as set out in the Lisbon Strategy.

Tax policies will undergo next year the least possible amendments, compared to previous years, with the focus placed on synchronizing tax laws with European legislation. According to a recent survey conducted by the Estat Agency on atti-tudes towards tax legislation in Bulgaria, higher living standard population groups and prosperous companies with large turnovers and personnel are most sup-portive of the existing tax arrangements. No consensus exists in the society on these matters, however. Estat Agency found out that different social groups have different expectations.

The minimum wage next year will rise by 20 Leva to 240 Leva per month. Inflation at the end of 2009 is targeted at 6.7 percent. Pensions and wages in the bud-

get sector will be increased in the middle of next year to offset the expected appre-ciation of life. Senior persons will have their income adjusted by almost 20 per-cent, and the employees of the public sector well be paid some 20 percent more, after the relevant personnel redun-dancies are eliminated. Social Affairs Minister Emilia Maslarova was quoted as saying that the increase of the minimum salary is pegged to the revenues from taxes. That is why the lowest pay cannot be increased to 260 Leva, for instance.

The state will assume a more active stance in social insurance with a 12-per-cent contribution – a promise made by the incumbents some six months ago. Health insurance will be notched up by two points to 8 percent, with employers and employ-ees paying the same share as before. The change in the index at retirement, which will raise the relative weight of one year of employment, will come into effect as of April 1, instead of Jan. 1, as planned ini-tially.

The coalition partner of the Bulgarian Socialist Party (BSP) – the National Movement Simeon II (NMS) – has announced that it is ready to discus an even higher reduction of the insurance burden. The ruling coalition has accepted the proposal made by the NMS to provide support to young families by extending tax preferences on mortgage credits. The incumbents expect foreign investments next year to fall, hence the state primes for allocating 7 percent of the GDP, or 4 billion Leva, to public sector investments.

We are ready to discuss even more radi-cal cuts in social insurance, but we accept the version that was approved at previous coalition summits, as the overall social insurance burden was reduced by 4 percentage points, said Milen Velchev, deputy chairman of the NMS.

There are no differences in opinions within the ruling coalition also on the issue of increasing pensions by applying the so called Swiss rule. Raising invest-

Bulgaria is still in a more favorable

position due to the effects of the exist-

ing currency board arrangement,

according to experts and financial

analysts. The currency board has both

positive and negative aspects, but at

the bottom line, in a crisis situation

and in view of what has happened to

other small economies, the system

seems to bring some advantages.

Investors may rely on a stable exchange

rate. However, on the background of

global fears, the slow-down of econo-

mies and the all-out leak of capitals

from developing countries, the advan-

tages of a currency board arrange-

ment are hidden elsewhere.

The major benefit is that company

and households indebtedness, when

denominated in euro, remains less of

as problem due to the fixed exchange

rate. This is a major trump for

Bulgaria’s economy, especially when

compared for instance to Romania,

where all fees for communal services

are quoted in Euro, while wages are

paid in Lei, which means that any

drop in the exchange rate results in

higher expenses.

The risk for the banking system is also

attributed to external rather than internal

factors; that is why the government has

nothing actually to discuss – the share

of default credits is still very limited,

while the exposure of a single bank to

risks specific for a single sector should

not be assigned as a problem of the

whole banking system. The major prob-

lem is whether the mother banks will

resort to retracting funds from their

daughter banks in Bulgaria. This is, how-

ever, a low-probability scenario. Although

small, Bulgaria’s credit market still has a

potential for a credit growth, while inter-

est rates are high above those banks

can receive on the European markets.

Even lower crediting, which rings an

alarm for many, would hardly bring

about dramatic aftershocks. There is

one thing, which is clear – crediting

may not be stopped, it will continue

albeit at a higher price, and these fac-

tors will cause anyone to think twice

before deciding to apply for credit. The

amount of credits for vacations abroad

and for the purchase of consumer

goods like mobile telephones and

washing machines will perhaps

decrease, which will have a positive

effect on the deficit in the trade bal-

ance. This could hardly be recognized

as a negative development.

The only measure that the government

will have to apply regarding the finan-

cial market is simply to refrain to inter-

fere. It will simply have to follow the

approved budget framework and stick

to a policy of strict fiscal discipline.

This was the conclusion that leading

economists made after meeting the

prime minister last week, when they

were invited to discuss the options to

resist the effects of the crisis.

All these considerations, however,

should not be accepted to mean that

Bulgaria is an isolated island – on the

contrary. At the same time, risks

should not be used as an argument for

cataclysmic forecast. Everybody knows

that the highest risk is related to the

reduction of investments in this coun-

try. Judging by the latest data pub-

lished by the national statistics, there

is no danger of this to happen.

However, the ongoing crisis and the

limited access to credits in Europe will

unavoidably have a negative effect on

cash flows to this country.

The currency board arrangement as a life-buoy

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ments in infrastructure, increasing the limits allowed to the Bulgarian export insurance agency were among the mea-sures to offset the crisis that were dis-cussed as well.

Form the viewpoint of the financial system,

small and medium enterprises are expect-ed to find it more difficult to access financing, as banks will proceed more cautiously and the available resources will appreciate, which will affect interest rates. The state may support the Development Bank by increasing its capital by another 50 million Leva to 100 million.

Finance Minister Oresharski confirmed that the Bulgarian National Bank (BNB) is studying the possibility to lower the compulsory minimum reserves held by the commercial banks, in order to release assets in support of bank liquidity. This decision however may be made only by the BNB. Currently, the minimum compulsory reserves held by commercial banks, are set at 12 per-cent, with the last increase introduce ed several months ago with the objec-

tive to reign in the growth of crediting.

Another political decision would allow using the fiscal reserve

as a buffer against the crisis. The fiscal reserve will be used to cushion eventual problems within the banking system trig-gered by the global financial crisis. One more measure has been proposed – to compensate the reduction of direct for-eign investments by increasing public investments.

The possibility that the excess budget money – the fiscal reserve – may be used to prop up the banking system is an entirely new option. The measure allows the BNB to use the funds in the fiscal reserve to buy back state securities from banks, thus offering them a source of liquidity. This equivalent to a direct trigger-ing of a protective mechanism in a cur-rency board environment, which bans the BNB from direct crediting of the commer-cial banks. Thus, commercial banks will receive assets without increasing their debts. Another option provides for secur-ing government deposits with commercial

banks not only by treasury paper, but also by reserve assets or with funds allocated to other accounts of the financial institu-tions held with the BNB.

According to the parameters of the 2009 budget, drafted by the Finance Ministry, direct foreign investments are expected to decrease next year by 12.4 percent to 5.374 billion Euro, compared to the 2008 target of 6.136 billion Euro. The nominal decrease of 762 million Euro will be countered by the incum-bents by pouring 857 million Leva (437 million Euro) into public investment projects, in excess of the funds used for this purpose this year. The state plans to invest a total of 7 percent of the GDP, or 5.143 billion Leva. At the same time, however, there are no measures planned to increase the portion of the incomes available to people.

Opposition deputies were quick to criti-cize the budget and its parameters even before it was formally submitted to the Council of Ministers, and branded it as “pre-election,” a warmed-up version of the 2008 budget or as simply as providing for excessive spending. n

The unstable situation on the international financial markets

will affect also the emerging markets in Central and East

Europe (CEE); however, if the countries in this region man-

aged to negotiate a “soft landing”, economic growth will only

slow-down and not stop completely, UniCredit said in an

analysis presented at a Euromoney international confer-

ence.

The UniCredit scenario for Bulgaria sets a slow-down of

economic growth to about 4.2 percent in 2009 and will

settle at levels close to targets for the potential growth in

2010 and 2011 announced before the deterioration of the

international situation. The gradual slow-down of the econo-

my will allow the current account deficit and inflation to be

reduced to more stable levels in the medium term, the

analysis said.

„Conditions have changed on a global level and we shall

have to face some challenges, but – acting prudently –

investors will be able to soften the impact of the crisis

fallout,” said Debora Revoltela, chief economist for CEE at

the UniCredit Group. She claims that the banking markets in

the region still have a major untapped potential left.

One of the major problems facing this region stems out of

the fact that the amount of extended credits exceeds the

amount of bank deposits. The average loan per capita in the

CEE region is estimated at 2,423 Euro, and the average

deposit per capita – at 2,221 Euro. Still, the overall situation

in terms of indebtedness remains better than in the euro

zone, with recent studies indicating that the ratio of credits

to GDP stood at 54 percent in Southeast Europe, and at 126

percent in the euro zone, by the middle of this year.

“The major challenge for Southeast Europe countries in this

situation is related to their economic dependence on incom-

ing capital flows,” said Revoltela. Calculations made by

UniCredit Group analysts indicate that credits exceed depos-

its by some 50 billion Euro in Southeast Europe and the

Baltic states, with a similar tendency expected to emerge

over the next several years in the whole of Central Europe.

Kazakhstan, Latvia and Estonia are among the countries

most sensitive to incoming capitals.

The situation may become even more complex due to the

financial crisis, as access to external financing will become

more difficult, and prices will be substantially higher. This will

affect the three sectors, which were the engines behind the

economic growth in Bulgaria over the last several years –

real estate, building construction and financial services. Still,

the deceleration of the economy will be neither abrupt nor

dramatic, UniCredit Group expects.

UniCredit: We shall not avoid the crisis, but growth will continue

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If a year and a half ago anyone had mentioned in public that he expected any increase of bank interests, he would have been considered most probably crazy. Currently, things look different. People seem to get used to words like “crisis,” “losses,” “problems,” “reces-sion.”

No one seems to be impressed by the information about a new bank bank-ruptcy, just the opposite – they enjoy themselves and bet who would be the next. Provided trust among financial institutions is no longer there, it is far-fetched to speak about a normally func-tioning money market. There is such a market, certain deposits are exchanged between banks, but at continuously ris-ing interest rates.

When interest rates go up, bankers step into the role of polite diplomats. Financiers claim that the process of making loans expensive “depends on the market status and the current risk assessment.” Anyway, this position of the financial institutions is not a sur-prise.

Although the risk of “bad loans” is not negligible, debtors are those that have to consider the situation. Everyone knows how nice it is to spend money that is not yours, and how terrible when you have to pay it back. What you spend is not yours, the saying goes, but what you pay back is.

And what if you do not have it?

Bank credits started getting more expen-sive because of the higher interest rates. First Investment Bank has already announced its intention to do it. “We raise interest rates in order to compen-sate “sleeping” money at the [Bulgarian National Bank] BNB,” Director Matyo

Mateev said recently. The financial insti-tution will not seek new sources of funding, but will continue its current moderate policy of crediting, the director added.

As of Sep. 1, a set of new measures of BNB became effective to slow down the rate of borrowing. Banks had to place at the Central Bank 12 percent of their total deposits as reserves instead of the current 8 percent. This will freeze about a billion and a half Leva, which will not make profit for the banks. That is why banks have to increase interest rates on loans they extend in order to compen-sate losses due to the frozen money. The other big banks are still considering whether they should raise the interest rates or wait for a certain period after Sep. 1.

UniCredit Bulbank said they would come up with a corresponding decision. The United Bulgarian Bank (UBB) has no decision yet, as is also the case with

Bank DSK. It is quite probable that they will also increase the interest rates, bankers told Standart News daily. UBB Director Stilian Vutev said that after the new restrictions’ implementation, the bank resources will become more expensive by about half a percent. So, it will be logical loans to become more expensive by 0.25-0.5 percent. Thus, in the case of a 20-year mortgage credit the monthly payment will be about 15 Leva higher.

Most of the banks in Bulgaria are owned by foreign safety-vaults, that are prone to pour in money regardless of the BNB measures. Because of the strong competition, some might even keep the low interest rates. According to CreditCentre consulting company CEO Tihomir Toshev,

about 70 percent of the credit borrowers in Bulgaria

are affected by the increased interest rates on housing credits. Bank custom-ers have already started depositing higher monthly pay-downs since April and the difference in Leva liabilities will be the most serious one. About 15 per-cent of people, who have decided to ease their payments on mortgage cred-its, have made a choice to do it through refinancing and the rest prefer to rene-gotiate the loan.

Annual percentage of expenses (APE) on housing credits is inching up to 10 percent, data from the interest statistics of BNB showed as of the end of June 2008. Only six months earlier, in January, these expenses were 8.77 percent.

The annual percentage of expenses includes, besides interest, all charges and commissions related to the loan servicing. APE on the newly negotiated housing credits for June is 9.72 percent.

Credit Interests Surge UpThe global financial crisis has reached Bulgaria. Mortgages and consumer cred-its have become more expensive, and Bulgarians find it harder to solve their problems with borrowed money.

By Marina Georgieva

United Bulgarian Bank (UBB) director Stilian Vutev said that after the new restrictions’ implemen-tation, the bank resources will become more expen-sive by about half a percent. So, it will be logical loans to become more expensive by 0.25-0.5 per-cent.

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APE on consumer loans is 11.96 per-cent, with a rate of growth of 1.21 per-centage points per year.

According to bankers’ forecasts,

another increase of interest rates by the year-end

will affect credits by 0.25 to 1 percent. Interest rates on all types of loans, for both companies and households, con-tinue growing compared to previous months. Numbers show that the rate of growth of interest rate on newly negoti-ated loans was faster in June. A couple of months before that banks increased interest rates of existing clients and, in a pursuit of new market shares, promoted favorable conditions for new clients.

In June, however, interest rates on newly extended consumer loans for house-holds have increased by 1.38 percent-age points up to 10.80 percent, while for the existing ones the same indicator dropped by 0.11 points down to 11.03 percent. In the case of housing loans, the price of the newly extended loans increased by 0.41 percentage points up to 8.81 percent, and that of old credits grew by 0.31 points up to 8.94 percent. Thus in practice, price of new and exist-ing loans is almost the same, while some months ago new credits were extended under more favorable condi-tions.

With regard to company loans, the aver-age interest rate of the ones of up to 1 million Euro increased by 1.27 points in a year up to 10.73 percent, and of cred-

BankCurrency Assets in Thou Leva

Currency Liabilities in Thou Leva

Difference Currency Assets Minus Currency

Liabilities in Thou Leva

DSK Bank 2 786 604 3 370 584 -583 980

UBB 3 727 903 4 111 724 -383 821

Societe Generale Expressbank 1 009 546 1 206 941 -197 395

Alpha Bank Sofia Branch 1 645 863 1 815 653 -169 790

ProCredit Bank (Bulgaria) 406 774 546 426 -139 652

First Investment Bank 441 295 547 755 -106 460

Investbank 479 874 562 082 -82 208

Encouragement Bank 111 392 160 744 -49 352

UniCredit Bulbank 5 951 271 5 985 928 -34 657

Tokuda Bank 149 692 174 543 -24 851

Emporiki Bank 212 588 231 750 -19 162

International Asset Bank 264 901 268 600 -3 699

NLB West-East Bank 162 916 166 546 -3 630

EIBank 1 075 784 1 074 291 1 493

Teximbank 26 849 21 378 5 471

TeCe Ziraat Bankasi 36 997 16 602 20 395

ING Bank N.V. – Sofia Branch 197 565 172 958 24 607

MKB UnionBank 901 986 873 113 28 873

CCB 622 705 593 728 28 977

Allianz Bank 1 002 409 950 543 51 866

Piraeus Bank 3 051 244 2 987 630 63 614

Municipal Bank 353 520 289 317 64 203

D Commerce Bank 217 424 139 826 77 598

City Bank Branch Sofia 242 738 160 860 81 878

BACB 719 048 579 754 139 294

Corporate Commerce Bank 1 011 564 864 774 146 790

BNP Paribas Sofia Branch 603 189 455 668 147 521

Eurobank EFG 2 988 506 2 267 762 720 744

Raiffeisenbank (Bulgaria) 4 958 234 4 017 608 940 626

Total 37 360 381 36 615 088 745 293

BNB data

Among the banks of greatest disproportions between currency assets and liabili-

ties are Raiffeisen Bank (Bulgaria), which had 940.6 million Leva net currency

assets by June 30. Eurobank EFG Bulgaria AD had positive currency balance of

720.7 million Leva. DSK Bank had negative currency balance of 584 million Leva,

from which currency assets of 2.8 billion Leva and currency liabilities of 3.37 bil-

lion Leva.

Most balanced regarding currency by June 30, 2008 is the portfolio of EIBank,

whose balance was only 1.5 million Leva surplus of the currency assets over the

currency liabilities.

„Anatomy” of Bulgaria’s Banking System

First Investment Bank (FIB) director Matyo Mateev said their bank will not seek new sources of funding, but will continue its current moderate pol-icy of crediting.

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its of above 1 million Euro it reached 9.74 percent, up by 1.83 points. The rate of increase of the average interest rate regarding newly made deposits from non-financial enterprises is higher than that of the credits. The average interest rate on deposits of negotiated maturity is 5.20 percent, thus increasing by 1.79 points per year.

As far as deposits for households are concerned, the average interest rate is also above 5 percent - 5.33 percent. High interest rates of deposits, mainly those in national currency, result from the decreased resources on the inter-bank market in Bulgaria. Inevitably, some of the higher interest rates on deposits are transferred onto the price of loans.

Analysts claim that

Bulgarians observe the rule to draw credits in the cur-rency of their income.

After BNB data, 77.41 percent of the new credits to households in 2008 are in Leva, 22.5 percent are in Euro and only 0.09 percent - in US dollars. Data cover the January - August 2008 peri-od. Anyway, the share of credits in Leva decreased from 80.11 percent in January to 73.82 percent in July. In this way, Bulgarians pay higher interest rates as the ones on the credits in Leva compared to those in Euro, but save the costs related to the currency exchange and the eventual currency risk, receiving income basically in Leva.

The opposite of this are the non-finan-cial companies that draw 68.85 percent of the size of their credits in Euro, 29.7 percent in Leva and 1.46 percent in US dollars. The big share of credits in might be explained with the strife to lower interest rates as well as the balancing of the currency flows in cases of revenue in currency from export. Quite often an argument for a credit in currency is the purchase of equipment from abroad. Probably the fact that companies have revenues in US dollars makes them confident to draw 1.46 percent of their credits in dollars compared to 0.09 per-cent share of these credits for house-holds. In August 2008, even 2.48 per-cent of credits were drawn in US dol-lars.

The mortgage crisis in the United States, officially started on Aug. 9, 2007, will

cost us at least 519 million Leva (in currency) on the basis of the increased costs

for interest. At the end of July 2008, the gross foreign debt of Bulgaria was 32.67

billion Euro. From Aug. 9, 2007, to Sep. 26, 2008, the interest rates on the six

month Euribor in Euro have grown by 0.813 percentage points up to 5.29 percent.

The six-month Euribor in euro is the most often used basic component in specify-

ing the size of the floating interest rates on credits in Bulgaria. It is the growth of

0.813 percentage points of this interest indicator that leads to an increase of the

annual costs on credits of 265.6 million Euro or 519 million Leva.

Although the increase of 0.813 percentage points does not seem that big, it has

two serious effects, one of which is the more expensive servicing of debts. The

second effect is that it decreases the amount for which new credit borrowers,

whose credits maintain currently the balance of payments of Bulgaria, could apply.

At 5.29 percent annual interest rate, the total sum of due interest rates on

Bulgaria’s foreign debt may reach 1.73 billion Euro per year or 3.38 billion Leva.

The risky premium for the Bulgarian enterprises and households results in an

allowance that is usually between 0.5 percent and 5 percent. If we assume that

it is 2 percent, this means 2.38 billion Euro or 4.66 billion Leva expenses to cover

the external debt. For example, the effective interest rate on households’ housing

credits for July 2008 is 9.12 percent in Euro.

Only 3.9 billion Euro of the gross foreign debt were state debt by the end of July,

while 28.8 billion Euro are private debts, a big part of which are credits to com-

panies in Bulgaria from their foreign owners. The increase of the interest rate

levels is a result of poor liquidity and trust on the inter-bank market in Western

Europe and the United States after the bankruptcy of more than 10 banks in the

USA, the last of which are Lehman Brothers and Washington Mutual, as well as

because of the reduced prices of real estate in the United Kingdom, Spain, the

United States and other countries.

For 2007, Bulgaria’s GDP was 56.5 billion Leva, in other words the annual interest

rates for servicing the Bulgarian foreign debt were between 6 and 8 percent of the

GDP. Under the conditions of a substantial trade deficit according to the qualifica-

tions of IMF and Moody’s, this imposes the necessity of borrowing new credits to

service the old ones in order to keep positive the balance of payments. This could

happen by attracting investments, utilization of blocked EU funds money and state

policy in support of export and tourism of Bulgaria. A steady negative balance of

payments would bring down the rating of Bulgaria and the subjects in it, would

increase the interest costs, reduce money stock, which will result in reduced eco-

nomic activity, volume of trading, consequently the size of revenues from VAT,

revenues to the budget and the state expenditure.

This would additionally reduce consumption and the revenues from VAT that are

the main source for the budget. At reduction of state expenditure for pensions, for

example, there might be social discontent that might cause amendments to the

legislation regarding the currency board. The alternative is that the state reduces

the share of the gray economy increasing the collectability of taxes and the excise

duties including the fight against illegal import of cigarettes that is still existing

according to Philip Morris.

All this might have effect of delay in the economic growth or recession like that in

Ireland, that was the first among the EU member states to find itself in a period

of economic decline after 11 years of growth.

Unfortunately, the world financial crisis will also affect Bulgaria’s tourism.

Annual interest on the external debt of Bulgaria amounts to more then 1.73 billion Euro

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Throughout the year, the share of com-pany credits in Euro increased from 66.8 percent in January to 69.78 percent in August. On an annual basis interest rates on housing credits in Leva increase by 1.18 percentage points and in Euro – by 0.46 percentage points in August.

Bulgarian economists calculated that

the total value of house-holds in the country stands at 32 billion Leva.

This is approximately 55 percent of the GNP of Bulgaria. Besides that, annual growth in value was 23 percent, com-pared to the same period of the previ-ous year.

The financial assets of Bulgarians, excluding credits and mortgages, stand at 22 billion Leva. A great deal of the saving Bulgarians keep their money in cash, deposits, securities, shares. In the last year only, households decided on low risk assets – deposits and money in cash.

Among actual assets the biggest share is that of housing. It has become more expensive by 32 percent since July 2008, calculations of Industry Watch analytic unit show. Thus, the total value of own houses in district cities of Bulgaria amounts to 73 billion Euro. According to data from the study, growth of credits for households is 50 percent, yet at the same time the share of hous-ing credits stays relatively low – 40 percent.

According to data submitted by Scala sociological agency, 57 percent of the Bulgarians have no savings and those that have such, keep them in term and saving deposits. Seventy-one percent of the Bulgarians declared incomes from abroad in the last three years.

Regarding the submitted data, Open Society Institute senior economist Georgi Angelov commented that it is impossible for Bulgarians to declare officially low incomes and have such a big financial wealth. As an example he pointed out that about 200,000 workers in the con-struction field declare a monthly salary of 400 Leva, while they actually receive 1,000. In this way, the total sum of income in the construction business amounts to about 1.5 billion Leva.

According to other calculations, about half a billion Leva is hidden in tourism. This could be explained easily with the high taxes and social security contribu-tions in Bulgaria.

Out of Control?

In the beginning of October, the basic interest rate in Bulgaria grew to its high-est level since April 1998. Basic interest rate for October registered an increase of 15 base points up to a level of 5.38 percent, the Bulgarian National Bank said. The increase of BIR on annual basis amounts to 1.14 points. The basic interest rate for September was 5.23 percent and for August it 5.25 percent. From the beginning of this year BIR has grown with 70 base points.

The basic interest rate in the country is calculated on the basis of the average arithmetic value of the values of the index LEONIA (Lev OverNight Index Average) for the previous month. LEONIA is a reference index of deals contracted and performed of overnight deposits in Leva of a representative group of banks.

Until the mid 2009, the situation with the bank interest rates will not be pleasant, but after that we will have even less reasons for optimism, financiers said.

How did it happen?

Before the “black” Sep.14, when Wall Street went practically bankrupt, every-thing seemed to be so calm and it seemed that it just started running smoothly. For the first time since a year, interest rates on the inter-bank market were at stable levels of about 5.25 per-cent. On Sep. 15, a new sky-rocketing process started. Within a day interest rates became 5.37 percent. On the next day, 5.44 percent, and a week later they were over 5.50 percent. Thus, on October 2, BNB will announce a higher interest rate for October - either 5.36 percent or 5.37 percent.

On year-on-year basis it has grown 1.23 percentage points. This is automatically transferred to consumers, as they have concluded agreements with a floating interest rate… Not that they have ever had another choice but this is how it is. At each move of the basic interest rate they will receive a diligently folded letter

by the bank, containing a new “improved” payment schedule. Well, the question is how far will the interest rates grow? Will they always move upwards? Will they ever go back to the levels of five years ago, the time a bank loan was a luxu-ry?

The answer to this question is in the hands of the finance gods but as we see it these days they have gone mad for sure. One thing is clear – banks have a serious shortage of money. There is a great pressure from people demanding loans and the banks do not have the needed resources. They cannot take any from their mother banks, as the mother banks are in the same situation. The only way to have it is to attract deposits. The last year an extremely exhausting deposit war was perpetrated. The free money of the population is sucked dry and then a hectic movement of money from one bank into another in pursuit of higher interest rates starts. In the long run, people withdrew their money from the capital market and invested it in banks.

But this was not enough, either. Very soon we will see ads for 10 percent annual interest rate, a real one, without any asterisks, any inverted commas, any small size fonts. These high interest rates will almost immediately be applied also to credits that will get more expen-sive at the same rate. n

Chairman of the Management Board and Chief Executive Officer of Bulbank Levon Hampartzoumian says their institution will come up with a corre-sponding decision about the loan interests.

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The governing council of the central bank approved amend-ments to the reserve requirements regulation for commercial banks (Regulation 21) aimed at supporting the inter-bank money market and retail lending. The change was announced on Oct 21 and had immediate effects on the interbank interest rates and the stock of reserves held at the central bank. The threshold of mandatory reserves remains unchanged at 12% of the commercial banks’ deposit base but 50% of their cash holdings are recognised as reserves. Before the amendment, the threshold has referred only to funds deposited at the cen-tral bank. The lenders also receive easer access to deposits at the central bank. The change has allowed commercial banks to withdraw significant amounts from the central bank as the aggregated cash position in the sector is seen at nearly EUR 500mn but the overall effect on the credit market has turned to be much higher. Just a few days after the cen-tral bank decision, the stock of international reserves fell by EUR 819mn (5.4%) in a week, including commercial bank drawings for about EUR 700mn. This is the most dramatic plunge in the stock of foreign reserves since the setup of the currency board in 1997 showing that the central bank has suc-ceeded in boosting the bank’s lending capacities but risks of capital flights are raising serious doubts on the country’s exter-nal position.

Interbank interest rates

The global financial crisis has forced many banks to trim their credit exposure and boost cash holdings in order to offset liquidity and market risks. The price of interbank lending has increased significantly prompting policy makers in Europe to undertake a series of measures to support the credit markets on fears that financial restraints, especially in the field of small and medium-sized enterprises, would further weaken the eco-nomic activity. The EU finance ministers have thus raised the threshold of bank deposit guarantees to EUR 50,000 from EUR 20,000 and some member states have even enforced a much bigger protection level. The Union also has encouraged mon-etary authorities and governments in member states to support interbank lending through various measures such as state guarantees on new loans and looser reserve requirements. The interbank interest rates in Bulgaria, as measured by the benchmark average index LEONIA (LЕv OverNight Index Average), have increased to 6.34% before the loosening of the reserve requirements on Oct 21 from a monthly average of 5.38% in September. After the central bank amendment to the

reserve regulation, the interbank interest rate index LEONIA has dropped by about 1 percentage point from the record highs but remains well above the levels from previous years. The same index has gradually increased from about 2% in 2005 to 4.68% in December 2007 due mainly to upward changes in the reference rates of the European Central Bank.

International reserves

Large withdrawals of commercial bank reserves held with the central bank have reduced the stock of international reserves by 5.4% (EUR 819mn) in a week to EUR 14.3bn as of Oct 24. The central bank liabilities to commercial banks fell by 21.5% in the week to EUR 2.6bn and accounted for roughly 90% of the total decrease. Although based on one-off regulatory effects, the steep downward correction in the international reserves of the central bank significantly weakens the coun-try’s external position in view of the large foreign trade imbal-ances that have sent the CA deficit in the balance of payments to nearly 25% of GDP in annualised terms. Moreover, the stock of foreign reserves is just covering the short-term external debt that makes the country’s external liquidity quite vulnerable to speculative attacks against the exchange rate peg to the euro. The current rates of deterioration in the external balance as well as unfavourable seasonal effects in the last quarter of the year suggest that the ratio of foreign reserves to short-term

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

Central Bank Loosens Reser ve Requirements in Effor ts to Boost Interbank Lending

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external debt will fall to less than 100% by the end of the year that will almost certainly trigger downgrades by the major credit rating agencies. It should be also noted that the short-term debt statistics of the central bank do not include any inter-company liabilities, although many of them may have short repayment periods. Inter-company loans account for about a third of the country’s external debt. They normally bear little risks to the country’s external liquidity but this view may not be valid at present, as the global financial crisis could urge foreign companies to withdraw funds from local subsidiar-

ies. The big decrease in the foreign reserves is thus raising tough questions on the timing of the central bank’s decision to relax reserve regulations. The EU recommendations for sup-porting the credit markets have been driven by recession fears and tight lending in more developed member states while the stocks of credits in emerging markets such as Bulgaria are still growing at fast rates in annualised terms.

Credit market

The stock of bank credits to the non-government sector increased by 47.8% y/y to BGN 47.8bn (EUR 24.4bn) as of the end of September, according to the monetary survey of the central bank. The annual growth has decelerated from 48.3% y/y in August but remains quite high and should be considered one of the main sources for boosting import demand and fuelling external balance gaps. These indicators suggest that the central bank decision to loosen reserve requirements might have come too early, as the main policy targets should be focused on averting external balance risks rather than keeping high growth rates through cheaper credits. On the other hand, the local bank sector is boasting high profit rates and high-quality credit portfolios that could hardly be blamed for any default risks in the country. Separately, the stock of credits relative to GDP is still relatively low (82% of the projected full-year GDP as of the end of September 2008) compared to developed economies although growing at very fast rates in the past years. But in the view of the country’s large external imbalances and global uncertainty, monetary policies aimed at growth promotion could be very costly. n

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Finally, America revealed itself to the world, and it happened in Bulgaria, too. The highly emotional day-night of the U.S. presidential elections, rightfully dubbed as “historic,” had its moving morning in Sofia on Nov. 5th , when U.S. Ambassador Nancy McEldowney shared feelings and views with AmCham business representatives, government officials and journalists during a cham-ber’s business breakfast.

“I am particularly proud to welcome you to what is a new day for the United States, a new day for our friends and partners around the world,” said McEldowney.

In her words, the vote for the 44th U.S. president brings a fundamental change to the United States as these were the most unprecedented elections in

American history. Adding a lot of emotion to her speech, the ambassador shared with the audience what those words of change meant to her and to America,

what this election said about America and its future, what it revealed about how America perceives itself and its role in the world of today and tomorrow.

U.S. Ambassador to Bulgaria: Americans Voted As War time NationH.E. Nancy McEldowney meets AmCham members, government officials, and journalists a day after the elections

U.S. Ambassador to Bulgaria Nancy McEldowney talks with Georgi Pirinski, Speaker of the Bulgarian Parliament.

From Left: Anthony Hassiotis, CEO of Postbank, Borislav Boyanov, President of the American Chamber, Kamelia Kassabova, deputy speaker of the Bulgarian Parliament are welcomed at the breakfast by Valentin Georgiev, AmCham executive director.

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“For me the key fact is that 150 years after the abolition of slavery in the United States and 54 years after Martin Luther King spoke about his dream, we have the first African-American presi-dent, which is something amazing,” McEldowney said.

The world saw it on the news how Americans turned out in record numbers to cast their votes. The ambassador said, “Americans went to the ballot as a nation at war.” The fact that most impressed the Sofia envoy during the elections was that the Americans clear-ly believed in the value of their vote and in the strength of the democratic sys-tem. She also stressed the fact that America has had superb candidates who represented the country’s diversity.

This year elections turned out to be the longest and the most expensive ones in the history of the United States. Commenting on the two years of presi-dential candidates’ campaigning and spending over a billion dollars, Ambassador McEldowney referred again to the feelings of Americans who faced an unprecedented economic crisis, but still contributed to the political process financially. In addition, the cost of the Congressional races is expected to reach almost $3 billion.

“There is a lot of wisdom about it for every nation. The individual voters believed they could have an impact instead of looking with apathy. Too, the transparency of financing was of a fun-damental importance,” McEldowney said on the reasons why voters donated so profusely. She pointed out that the inter-net has played a profound role in con-necting the candidates and their con-stituents and changed the way issues were debated. When asking critical questions, the candidates were able to respond at once to the voters.

During the breakfast, Bulgarian journal-ists inquired on what the president-elect had already advised the U.S. envoy to Bulgaria to take a stance on the corrup-tion and crime in our country. “I intend to proceed as always: to work as a friend and a partner of Bulgaria, strengthen our partnership on the things where we work together, and be honest privately and publicly about the areas where we see problems. We are working now on some practical programs from

Uliana Pramova, Director of Bulgarian National Television meets with Anthony Hassiotis, CEO of Postbank and Bernard Moscheni, CEO of BTC.

More than 100 guests came to hear the US Ambassador, among them Rossen Plevneliev, General Manager of Lindner Immobilien Management (in the middle), Assen Grigorov, executive director of Re:tv (first right), Ivo Prokopiev, chair of CEIBG, Silva Zurleva, Manager of Nova TV.

From Left: David Hampson, Grenville Bulgaria, Stefan Dimitrov, Allied Pickfords, and Ivo Indzhev, journal-ist met with Elena Poptodorova, former Ambassador of Bulgaria to US.

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different aspects with the Bulgarian gov-ernment. The measures are meant to put criminals behind bars, root out cor-rupt officials, and punish them for illegal actions. That was my intention to do and for what senator Obama had asked me for; I believe the Bulgarian government and Bulgarian people want us to do that together,” Ambassador McEldowney said.

Answering the question on what advice she might give to Bulgaria about its own elections in a few months, the U.S. envoy said that one of the unresolved problems is the financing of political parties, because of the lack of transpar-ency how money flows into the coffers of political candidates.

According to Nancy McEldowney, America’s population will continue to grapple with three internal issues: the economy, social identity, and definition of party politics. It is important how Americans understand the impact of this election – not just for the issue of race but also gender and ethnicity, she said. The ambassador further elaborat-ed on what does it mean today to be a liberal Republican or a conservative Democrat. She talked about the expec-tations that the new administration and Congress will work to bridge the parti-san divide.

McEldowney had this to say about the U.S. attitudes toward the rest of the world: “Americans from every part of

the country have been very clear about their desire for strong partnerships with other countries and strong friendships with other people. Those two reasons taken together are why I believe the superb, really unprecedented partner-ship between the United States and

Bulgaria, which President George W. Bush has been so passionately commit-ted to and has been so successful in pursuing and building over the course of his administration, will not simply endure – I believe it will expand, it will grow, and it will get stronger.” n

U.S. Ambassador to Bulgaria Nancy McEldowney

Journalists prompted a discussion when enquiring about measures against crime and corruption in Bulgaria, forthcoming parliamentary elections in Bulgaria and the “lessons” from US elections.

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AmCham Bulgaria organized a business breakfast on Oct. 21 with six fellows of the Marshall Memorial Fellowship Program of the German Marshall Fund of the United States. Sevdalina Voynova, AmCham government affairs director, Dana Leff, CEO AbCRO and co-chair of the AmCham CSR Committee, Chris Thompson, consultant, member of the AmCham board, participated in the meeting.

Traditionally, American fellows visit five or six cities per trip. They meet formally and informally with a range of policy-makers and prominent members of the business, government, political, NGO, and media communities. Along the way, each fellow has the opportunity to explore his or her own professional interests beyond the group programs, which focus on a range of domestic and international policy areas.

During their October visit in Bulgaria five U.S. fellows of the 2008 program were willing to find more about Bulgarian politics, business, economy and lifestyle. They came from various professional backgrounds:

Claire Carlin is a director of special events, Downtown D.C. Business Improvement District. Carlin produces several high-profile public events for the downtown community including the fall arts festival, Arts on Foot, and the Downtown Holiday Market located adja-cent to the National Portrait Gallery.

Lesil McGuire is state senator, Alaska State Legislature. Sen. McGuire grew up with those that she now represents in the Legislature. With this life-long per-spective, she truly understands the concerns of the people in the District N in Southwest Anchorage, Alaska.

Mark Meder is vice president for statis-tics, analysis and credit risk manage-ment, Federal Reserve Bank of Cleveland. Meder joined the bank’s Supervision and Regulation Department in 1993 and held positions of increasing responsibility, including serving as a bank examiner, banking supervisor, and strategic management coordinator.

Christine Nelson is program manager, National Conference of State Legislatures. Nelson advises legislators from across

the country on public policy issues that affect children and families.

Kathryn Ransdell is minister of urban life, First United Methodist Church. Earning her license to preach at the age of 19, she is thought to be the youngest female licensed preacher in The North Texas Annual Conference.

In Sofia, the U.S. fellows inquired about establishing businesses in Bulgaria, how companies cope with the financial crisis and what the prospects for the Bulgarian economy are. Dana Leff and Chris Thompson elaborated on their experi-ence of doing business in Bulgaria. They mentioned the main issues that the government has to deal with: crime and corruption. The guests enquired about the peculiarities of the political system, and how effective is the judicial system.

Thompson said that AmCham Bulgaria has played an important role of the improvement of the judicial system, and he has referred to the commercial law reform program that he was largely involved. Leff told the American fellows how she established the company AbCRO back in 2000, which specialized in clinical trials for pharmaceutical com-panies. Leff praised the well educated labor force in Bulgaria, good conditions for doing business in the country, and leading pretty natural lifestyle with healthy foods in the country. n

AmCham Meets with Marshall Memorial Fellows

A family photo of Marshall Fellows delegation, and AmCham board members Chris Thompson, Consultant and Dana Leff, CEO AbCRO.

From Left: Rev. Kathryn Ransdell, Minister of UrbanLife, First United Methodist Church, Ms. Claire Carlin, Director of Special Events Downtown D.C. Business Improvement District, and Ms. Lesil McGuire, State Senator, Alaska State Legislature.

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More than 200 representatives from the government, business, NGOs, academic and media sectors from eight countries in CEE met in Budapest on Oct. 7-8 for the Second Regional Energy Forum. The forum was hosted by AmChams in Bulgaria, Czech Republic, Poland, Romania, Slovak Republic, Ukraine, Hungary and AmCham EU. AmCham Bulgaria was represented by Valentin Georgiev, executive director, and Kenneth Lefkowitz, vice-president of the cham-ber.

“This is the largest active co-operation of AmChams in Europe taking place in Budapest over these two days,” said Dr. Gustav Bienerth, president of AmCham Hungary. His opening speech set the tone for the Forum, which has been organized for the second time following last year’s successful debut. During his welcoming remarks, Bienerth also for-mulated the main message of the forum, the need for a common strategy to tackle the region’s energy issues.

According to Bienerth, the Budapest Summit is unique, as it facilitates a multi-stakeholder dialogue between poli-ticians, energy experts, private compa-nies and NGOs.

Leslaw Kuzaj, regional executive for Central Europe for GE, the forum’s initi-ating partner and a major global investor in the region, also urged co-operation between countries throughout the region to solve the emerging problems of energy shortage and efficiency, as well as environmental issues.

During his address, György Mosonyi, CEO of MOL (Hungarian Oil and Gas Company) highlighted an existing suc-cessful example of regional co-opera-tion: NETS (“New Europe Transmission System”). The initiative is a cooperation between leading gas transportation busi-nesses in Romania, Croatia and Hungary. “This is based on the strength of the joint market that results from creating a strong regional pipeline system, which

will become a genuine regional gas transmission “champion,” he said. “This is the best way to create a large enough integrated platform that can attract sig-nificant further investments and related development of a competitive gas sector in the CEE.”

Laszlo Puch, state secretary of the Ministry of Transport and Energy addressed the forum, stressing that regional cooperation is a must not only because of growing energy needs, but also to reach a critical mass relating to market size. “The Hungarian govern-ment supports all the efforts towards sustainable and environmentally friendly energy,” he said, proposing a common platform for the countries in the region.

Business transparency was also a key issue emphasized during the forum. Péter Kiss, partner of KPMG Energy and Utilities Services, said the right decisions should be taken without delay in order to create transparency in the

AmChams: Europe Needs Common Energy Strategy

Valentin Georgiev, AmCham Bulgaria executive director (on left) with his colleagues from the other co-organizing AmChams at the Second Regional Energy Forum in Budapest, Hungary on 7 - 8 October 2008.

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field of energy trading. “This should enforce the competitiveness of the region,” he said.

Kevin T. Connor, Global Partner, Erõs Ügyvédi Iroda/Squire Sanders and Dempsey, analyzed the regulatory aspects of the regional energy market. He underlined the need for coordination in the field of legislation, which he described as one of the main criteria of an efficient regional energy system.

After the plenary session, the Forum split into three panel discussions. The first, moderated by Edit Herczog, Hungarian member of the European Parliament, was dedicated to the 20-20-20 European regulations. The second session, led by Markus Becker, European Energy Policy executive, GE Energy, focused on Supply Sustainability. The third, moderated by Krisztián Orbán, managing director Oriens Investment management, dealt with Network Interconnectivity in natural gas and electricity transmission.

The second day of the forum started out with multi-stakeholder perspectives from John G. Rice, vice chairman, GE and president & CEO, GE Technology Infrastructure (business); Dr. Gabor Szorenyi, chairman, European Regulators Regional Association (ERRA) (regulato-ry); Marta Bonifert Szigeti, executive director, Regional Environmental Center (REC) (civil) and Gunnar Boye Olesen, European coordinator, International Network for Sustainable Energy (INFORSE) (NGO). The panel was fol-lowed by summary of the key takeaways

from the strategic breakout sessions held on the previous day.

Session A on “Meeting EU’s 20-20-20 Regulatory Requirements”, i.e., the reduction of EU greenhouse gas emis-sions by 20 percent by the year 2020, saw participants urge the liberalization of energy markets. They also identified the stepping up of regional cooperation as well as the need to identify new technologies by 2020 as priorities to address.

Session B on “Supply Sustainability: Solutions in Sources and Technologies” concluded that investments and risk sharing in new technologies are the most important areas of regional coop-eration and states should support Research & Development in the fields of carbon capture and storage and

clean coal technologies.

Session C on “Network Interconnectivity in Natural Gas and Electricity Transmission” highlighted the role played by the corporate sector, focusing on MOL’s NETS project which aims to inter-connect gas grids in CEE and SEE, and the joint initiative between MOL and CEZ to set up two new power plants, each with 800 MW installed capacity.

As financing is one of the key topics of the Forum, a separate panel was devot-ed to this issue. Recognized interna-tional experts discussed the opportuni-ties and potential sources of financing. The main outcome of the discussion was that Central and Eastern European countries have to utilize local and EU funds to the maximum effect, and attract international investors into the region.

Finally, a government round table com-pleted the forum, giving representatives of governments in the region the oppor-tunity to respond to the main message of the forum. Among the major announcements, Dimitar Ikonomov, Bulgarian ambassador to Hungary, revealed that Bulgaria will join NETS (New Europe Transmission System). Oleg Bugayov, first deputy minister of Ukraine’s Ministry of Fuel and Energy, declared that Ukraine is ready to take the lead in regional cooperation in energy issues. He said that his country has already started modernizing the energy sector with the help of EU experts. Ukraine’s final goal is to meet EU standards in the near future. n

Leslaw Kuzaj, Regional Executive for Central Europe, GE at the Second Regional Energy Forum in Budapest, Hungary on 7 - 8 October 2008

Dimiter Ikonomov, Ambassador of Bulgaria to Hungary at the Second Regional Energy Forum in Budapest, Hungary on 7 - 8 October 2008

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Vice President of AmCham Bulgaria Kenneth Lefkowitz opened on Oct. 14 a training workshop with 100 participants on the new regulations affecting the management of certain common types of waste. The event was organized jointly with Ecopack at the Balkan Sheraton Hotel in Sofia.

“I am glad we have gathered here in order to clarify issues and problems prior to these escalating into conflicts. This sets a precedent in the relationship between the business community and the Ministry of Environment and Water (MEW). I hope this will develop into common practice,” Lefkowitz said in his opening remarks.

Deputy Minister for the Environment Chavdar Georgiev noted that over the past years the Bulgarian government has made considerable efforts to intro-duce all commonly applicable EU direc-tives, decisions and regulations in national legislation and that the process of integrating all relevant requirements has now been completed in full.

“We are currently at the stage of

approval of the requirements for the practical implementation of the direc-tives so the chosen topic of the work-shop is, indeed, highly relevant,” Georgiev added. In his opinion the most feasible solution for the construction of the new Hazardous Waste Treatment Centre will be to establish a public-pri-vate partnership and not use funding

from the Environment Operational Program.

The National Waste Treatment Program 2009-2013 envisages the introduction of a new regulation on the collection and treatment of spent batteries. These will be collected separately and disposed of in special-purpose waste containers to

AmCham, Ecopack Discuss Recycling, Waste Management

From Left: Mrs. Maria Ninova, Director of Waste Management Directorate at MEW, Mr. Chavdar Georgiev, Deputy Minister for the Environment, Mr. Kenneth Lefkowitz , Vice President of the American Chamber of Commerce in Bulgaria and Sevdalina Voynova, AmCham Government Affairs Director.

Experts with the MEW were approached by the seminar participants to provide more information on the regulations of waste collection.

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be most likely colored in red. Until the end of the year the planned amend-ments to the Waste Management Act (WMA) have to be finalized. These will introduce a waste disposal fee to be collected by municipalities.

Currently, municipalities only cover the costs for the transportation of household waste. The changes will create incen-tives for the reduction of the volume of waste disposed of at landfills. The pro-gram envisages the construction of 55 regional landfills. Twenty-seven of these have already been commissioned. The internal allocation of the program bud-get foresees 300 million Leva for the construction of preliminary treatment installations, 70 million Leva for reload stations, and 10 million Leva for the decontamination of unregulated land-fills.

The construction of seven regional con-struction waste treatment facilities has also been planned. The total cost of the construction of these facilities is expect-ed to be 1.058 billion Leva, and MEW strongly relies on investor support for these projects.

Clarifications were provided on certain specific requirements with regard to the applications of environmental legislation in the area of waste treatment by Maria Ninova, director of Waste Management Directorate at MEW. The Waste Management Act introduces the require-ments laid down in the Framework Directive on Waste (Directive 2006/12) and EU Directive 91/689 on Hazardous Waste. The Waste Management Act provides for four main types of waste – household, construction, industrial and hazardous.

According to waste utilization and recycling companies the tax incen-tives envisaged in the amended Waste Treatment Act will enhance the appeal of separate waste collection and dis-posal to citizens. Ideas have been voiced to double the waste fees in the case of violations. The involve-ment of municipalities should also be enhanced and quantitative indicators introduced to measure separate waste collection.

Anna Mutafova, a MEW expert clarified the structure of the audit reports men-tioned in Article 56 of the Regulation on

the requirements for marketing of elec-trical and electronic equipment and treatment and transportation of waste from electric and electronic equipment.

These legislative changes and require-ments with respect to the audit reports aim to facilitate businesses, Georgiev said. The requirement to submit exten-sive information is regarded as a burden but is still necessary in order to ensure activities are subject to appropriate supervision. On the basis of a proposal of the business community this informa-tion can now also be submitted elec-tronically.

The National Waste Management

Activities Program 2009-2013 should be submitted to the Council of Ministers not later than mid December. The quan-tity of separately collected waste is increasing on an ongoing basis, said Cyril Zdravkov, Ecopack’s CEO. The volume of separately collected waste treated by Ecopack until the end of April this year stood at 3 thousand tons, more than the entire volume collected in 2007. Current expectations are that until the end of the year there will be a threefold increase of this volume in comparison to 2007.

A full transcript of proceedings is avail-able at www.amcham.bg (Recent Events section). n

Maria Pankova, Kraft Bulgaria enquired whether it is possible for the administration to arrange a single format of the monthly reference declaration that every company files to Ekopack, NSI and NRA.

A threefold increase of the volume of packaging waste collected separately this year was announced by Mr. Cyril Zdravkov, Ecopack CEO.

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The Second Volunteering Day, organized by the Bulgarian Charities Aid Foundation and the AmCham Bulgaria, united 38 companies and organizations with near-ly 600 participants. The activities were divided into 18 projects in five cities: Sofia, Pleven, Rousse, Svishtov and Stara Zagora. The companies were free to choose among different projects, varying between cleaning activities to visits in children homes and day care centers in Sofia and in the country-side.

The first AmCham Volunteering Day held on May 17, 2008, united 30 com-panies and organizations with more then 500 participants. The activities were divided into nine projects with environ-mental cause and with disabled children or children from orphanage homes. n

Businesses Deliver Two Days of Volunteer Projects

The activities in the area of Aleko where representatives of denkstatt worked.

ISI volunteers spent the day with children within the Project Protected Apartments for Orphans.

Worley Parsons employees painted, cleaned and did some gardening within the project “We Exist” Association for children with disabilities.

Postbank employees took part in the South park project.

Technologika did some gardening within the project Borisova Gradina.

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SOFIA PROjECTSProject Vitosha

The activities were in the area of Aleko:

Removal of paint and painting, cleaning,

repairs

Companies: Neochimiki Bulgaria,

Denkstatt, BCD Travel, Siemens Bulgaria,

Zagorka, BTC, Ernst&Young

Project South ParkMain activities: Cleaning and garden-

ing.

Companies: Oracle, Telelink, SEE, Leo

Club, Postbank, Microsoft, Carlsberg,

The American College of Sofia, AIMS

Human Capital

Project Borissova Gradina Main activities: Cleaning and gardening.

Companies: Microsoft Bulgaria, CMS

Cameron McKenna, Internet Securities,

TeleLink, Alexander Hughes Bulgaria,

PricewaterhouseCoopers, NECA,

TechnoLogica

Project “We Exist” Association for Children with Disabilities.

Main activities: Painting, cleaning and

gardening.

Companies: Worley Parsons

Project Daily Center for Children with Disabilities “St. Mina”

Main activities: Painting and cleaning

Companies: AbCRO

Project Center for Temporary Accommodation of Children “Vjara,

Nadezhda i Ljubov” Main activities: Gardening and cleaning

Companies: Johnson Controls

Project Pediatric Clinic, Alexandrovska Hospital

Main activities: Gardening and cleaning

Companies: Siemens Bulgaria

Project Neonatal Ward, University Hospital

Main activities: Gardening and cleaning

Companies: Carlsberg

Project Protected Apartments for Orphans

Main activities: Spending time with chil-

dren

Companies: Internet Securities

Project “St. Paraskeva” Main activity: Painting

Companies: PWC, BTC, Microsoft,

Ernst&Young

Project “Nadezhda” Main activity: Painting

Companies: Ericsson, Carlsberg

Project Community Center “Vazrazhdane”

Main activities: Gardening and cleaning

Companies: Johnson Controls Electronic

Bulgaria

Project Caritas Center Main activity: Helping the drug addicted

Companies: Siemens Bulgaria

PLEVEN PROjECTProject “Detelina”

Main activity: Painting

Companies: BTC, Vaptsarov Holding,

Carlsberg

ROUSSE PROjECTSProject “Nadezhda”

Main activity: Painting

Companies: Orgachim

Project “Milosardie” Main activities: Gardening and cleaning

Companies: BTC

SVISHTOV PROjECTProject Home for elder people “Maria

Louisa” Main activity: Painting

Companies: BTC, Carlsberg Bulgaria,

Svilosa

STARA ZAGORA PROjECTProject “Belia Kamak” Area

Main activities: Tree planting

Companies: Holding Zagora (250 par-

ticipants)

The European Council of American

Chambers of Commerce (ECACC) held

its fall conference on Oct. 12-15 in

Istanbul, Turkey. More than 40 delegates

from 28 AmChams met to discuss the

direction of ECACC Strategy in a series

of Best Practice and training sessions

focussing on "Relevance, Engagement

and Value to Members".

The conference was organized in coop-

eration with the Turkish-American

Business Association (TABA). Some of

the topics discussed included “AmChams

2025: Challenges & Vision for the future

of associations,” “The Future of Digital

Communication,” and “AmChams

Leading Change.”

Several prominent Turkish governmental

officials addressed the ECACC dele-

gates during the conference including

Kursad Tuzmen, minister of foreign

trade; Egemen Bagis, senior advisor to

the prime minister; Zafer Caglayan, min-

ister of trade and industry; and Binali

Yildirim, minister of transport.

At a reception hosted by the US General

Consul Sharon Wiener and organized by

the American Business Forum in Turkey

(ABFT) the delegates met with the US

Ambassador Ross Wilson and the mem-

bers of TABA and ABFT. nThe Turkish minister of foreign trade Kursad Tuzmen made a speech at the forum

ECACC Meets to Discuss Engagement and Value to Members

The participating companies and organizations in the projects were:

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

m e m b e r n e w s

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ING New York City Marathon on

November 2 2008 turned out to be one

of the world’s great road races, drawing

more than 100,000 applicants. The race

attracted many athletes who excelled

before two million cheering spectators

and 315 million worldwide television

viewers.

This year over 40,000 athletes went on

a celebratory journey through the world’s

most vibrant city, of which over 1,000 in

the team of ING. Entirely at his own

expense in this year’s marathon a

Bulgarian run with the ING Team - Mr.

Elenko Elenkov, Online research and

development at Economedia. Elenko is

in the top 10 Bulgarian bloggers and

has been a marathon runner since

2003. n

The campaign of Kamenitza AD and the brand Kamenitza 0% organized a special test-drive event with a car simulator

„Alcohol is a Bad driver” is the name of the national campaign of safety driving launched from the beginning of October by Kamenitza AD and its non-alcoholic brand Kamenitza 0%. Traffic Police, the Union of Bulgarian Motorists and Ministry of Transport are partnering organiza-tions.

The kick-off was announced at the official press-conference on October 13- the European day for Road Safety. Like the name shows the campaign aims to dem-onstrate in intelligible manner the negative and disastrous way alcohol influences the conduct on the road and thus to contrib-ute to the efforts for decrease heavy car accidents caused by drink-driving. Outdoor billboards with visuals which present in non-standard way the negative effect from drink-driving attract the attention of the drivers in six of the biggest cities in Bulgaria. In all petrol stations from the chain Rompetrol around the country post-ers with the messages of the campaign appeal for wise driving. The call of the campaign “Alcohol is a Bad driver” is popularized also by 100 000 stickers, which will be distributed by the partners from Traffic Police and Union of Bulgarian Motorists in 2008/2009 година.

Within the scope of “Alcohol is a Bad driver” at Batenberg square in Sofia, on October 19th a special test drive with car-simulators was held. More than 150 journalists and citizens had the opportu-nity to test a specially equipped vehicle

which simulates drink-driving and imitates deteriorated driver’s perceptions at blood alcohol content of at least 1,1 promile.

The organizers developed a supporting website of the campaign www.alcohol-baddriver.bg. It features useful informa-tion, important advices and facts related to drink-driving. An important part of the site is the BAC calculator, accessible also through most mobile phone models which allows every driver to calculate alcohol promile before sitting behind the steering wheel. The organizers from Kamenitza AD are convinced that the information delivered with this campaign and the site could save human lives.

We know how to brew beer since 1881 and we are the experts in responsible and moderate consumption. Thus we feel responsible to call: Dear drivers, even when alcohol content in blood is below legal limits, behind the wheel is not You, but the alcohol consumed- stated Anatoliy Popov, General Manager of the beer company- And Alcohol as memorials on roads show is a BAD driver.

In 2007 Kamenitza AD responded to the appeal of the Ministry of Transport and EU Commission and together with other socially responsible companies officially joined the principles of the European Road Safety Charter and the initiative under the auspices of the EU Commission “To save 25 000 human lives by 2010”. In November 2008 the campaign “Alcohol is a Bad driver” has been recognized by European DG of Transport and invited to represent Bulgaria at the European Excellence in Road Safety Awards to be held in Brussels. n

ING New York City Marathon

National Campaign оf Kamenitza Ad “Alcohol Is а Bad Driver” Appeals Not To Drink-Drive

Mr. Anatoliy Popov, General Manager of Kamenitza AD

Elenko Elenkov, Economedia

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n e w m e m b e r s

We are the Bulgarian repre-

sentatives of Reed Personnel Services PLC,

one of the largest UK

recruitment agencies with a

history dating back to 1960,

an annual turnover of over EUR 1 billion, over 300 offices and

over 3,000 employees in the UK alone. In addition to its UK

home market, Reed has international operations in Europe

(Poland, Hungary, Czech Republic, Bulgaria, and Malta), Middle

East (Qatar, UAE), Far East (Singapore, Hong Kong), and

Australia. This broad international network allows us to source

professionals and opportunities from numerous countries. We

specialise in the professional fields of IT, Engineering, Finance

& Banking, Scientific, Technology & Comms. Our mission is to

offer our Bulgarian clients a simple and cost-effective solution

to their Human Resource Management needs, allowing them to

focus on their core business. We bring to Bulgaria Reed’s

unique professional experience, high ethical standards, and

desire to work for a better business environment.

Contacts:

Marin Dimitrov

Country manager

Tel.: +359 2 954 9980

E-mail: m.dimitrov@btconnect.com

Address: 8, Adriana Budevska Str., Fl. 1

1463 Sofia

Construction Management Group (CMG) is a full ser-vice project management

company, combining

Bulgarian market awareness

with international know-how.

We operate vacation, residential, office, commercial, industrial

& logistics, and other real estate projects. Our core team has

over 120 man-years cumulative construction management

experience. The company is founded by Bulgarian expatriates

with international industry background /Europe, Africa, America/.

Our clients are recognized international and Bulgarian real

estate developers, as well as private investors.

Our services include: Construction Project Controls - Scheduling,

Cost, Scope, and Quality Control; Permitting Support;

Engineering and Architecture Support; Bulgarian Construction

Law Support; Management Consulting; Risk Management;

Dispute Resolution; Development Management Assistance:

Investment consulting, Project/opportunity identification, Liaise

between and manage legal, accounting, construction, supervi-

sion, authorities, sales units of a project; Strategy, financial

modeling, and profit optimization.

Contacts:

Darina Varbanova

Partner

Tel: +359 2 971 4971

E-mail: office@cmgbg.com

Address: 53, Vulcho Atanasov Str., Reduta Area

PM Group Bulgaria is a

subsidiary of PM Group,

one of the largest interna-

tional multidiscipline

Engineering & Project

Management Consultancy

Groups. PM Group was

founded in 1973 and is headquartered in Ireland with offices in

the UK, Poland, Romania, Russia, the USA, China, and

Singapore. Devereux Architects (London) are also part of the

PM Group. PM has been operating in Bulgaria since 2000, with

its main design office in Sofia providing multinational clients

with full EPCM services (Engineering Design, Procurement and

Construction Management Services). PM Group Bulgaria deliv-

ers a wide range of projects to leading Bulgarian and

International clients in all business sectors including Automotive,

Food, Beverage, Manufacturing, Technology, Pharmaceutical,

Infrastructural and Commercial sectors.

With over 1800 employees world-wide we provide our clients

with the following services:

Multidiscipline design capability (site search, conceptual

design, building permit, tender, and detailed design);

Preparing and following through the procurement process;

Professional construction management and investment supervi-

sion services

Contacts:

Petar Mandjukov

Chairman

Tel: 9170201; 9170211; 9170250

Address: 15-17 Belovodski put St., Boyana Area

1616 Sofia

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s p o r t s

American football officially came to Bulgaria with a first game played on Oct. 19 at the city stadium in Razlog. The event was dedicated to the official city day, traditionally celebrated on Oct. 24.

The players of Team Sofia (Bulgaria) and Istanbul Cavaliers (Turkey) met in a friendly match with full body armor and accord-ing to all rules applicable to this popular American sport. The two teams offered a spectacular fight and attractive show for the fans, which ended, as expected with the victory of the more experi-enced Turkish team, 28-0.

This was the second game with the boys from the Turkish team – the first game was played last year, only six months after the Bulgarian team was formed, Team Sofia senior Christo Gyurkovski told a Bulgarian New Agency (BTA) reporter. Turkey has a serious American football league, which was launched nine years ago, while Bulgaria is still a toddler in this sport.

Gyurkovski added that the first training session of the team he is coaching in May 2007 were attended by some 120 players, while there are about 30 still in the game. “We organize very serious training camps, at which many of the players are eliminated,” he said. Currently, there is an American football team only in Sofia, but there have been queries from many other cities in this coun-try. Some boys from Pleven have joined the Sofia team, who are at the same time trying to launch a team of their own in their home city.

“We are starting active training with the easier version of American football – without body armor,” the coach said. “Learning the proper schemes of action – attacks, body checks etc. – takes a lot of time, as this is a very demanding sport. We hope that next year we shall have a national team. But the best

opportunity for the most talented players is to be invited to play abroad.”

American football is attracting more and more fans in Europe, including in the Balkans. There are already lots of comments about the qualities of some top Serbian players, Gyurkovski went on to say. His colleagues have visited Sofia and expressed their willingness to invite five or six Bulgarian players to some of the best teams in France. Virtually every municipality in France has its own artificial-grass playing field for American football as well as for other sports popular among young people and university students, he said. According to Gyurkovski, the level of sports at the universities in France, Austria and Germany is very high.

“Thanks to municipalities like Razlog, which aim to develop sports, we are able to make our own specific sport more popular,” Gyurkovski said. “We were invited by Mayor Lyuben Tatarski; we were provided with accommodation and with conditions to train and organize this match. Our friends from Turkey were impressed by the existing conditions and by the region as a whole.”

Gyurkovski added that his boys will be able to ask for a replay for their loss in winter, when their Turkish friends are expected to come again here; the replay, however, will take place on the snowboard and ski tracks of the Pirin mountain. n

American Football in Razlog