amcham body 59v4 - american chamber of commerce in bulgaria … · 2016-06-06 · domaine boyar ad....

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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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10 years AmCham Bulgaria

The

EUIssue

Inter views:Minister Meglena Kuneva

Ambassador Rockwell Schnabel

Ambassador James W. Pardew

John Fogarassi

Elaine Cruikshanks

Ruud van Enk

Inter views:Minister Meglena Kuneva

Ambassador Rockwell Schnabel

Ambassador James W. Pardew

John Fogarassi

Elaine Cruikshanks

Ruud van Enk

Analyses:Nineteen and a half months

T wo faces of the membership

U.S.-Bulgaria:

End to double taxation, finally?

Analyses:Nineteen and a half months

T wo faces of the membership

U.S.-Bulgaria:

End to double taxation, finally?

10 years AmCham Bulgaria

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Dear Members,

When I first visited Bulgaria in late 1994, one of my networking stops was

with John Fogarassi, who was the US Commercial attache here at the

time. John played a key role in founding the Chamber, and he was kind

enough to introduce me to Todd Madden, Ray Manzarek, and Ginny

Rollins, a few of the original board members. It was the first time I had

ever heard of AmChams, but I ended up applying for a job as executive

director. I didn't get the job, but I have taken an interest in the Chamber

ever since then.

It's been a momentous 10 years, both for AmCham and for Bulgaria. In

1994 the people I talked with were primarily concerned with protecting not

only their assets, but also their own personal security. It was a wild and

dangerous time, when "insurance" was the big business here and the

Yugo-embargo was in full swing. Who would have believed then that in

just 10 years we would join both NATO and the EU?

In the early years, AmCham Bulgaria was primarily a networking organi-

zation, focused on the monthly luncheons and Business After Hours cock-

tails. Networking remains a very important part of what we do, but the

scope of the Chamber's activity has expanded significantly to include

publications, committees, international conferences, lobbying (both in the

US and in Bulgaria), and whistle-blowing. We have joined not only the

international and European AmCham umbrella organizations, but also a

very active network of Southeast European chambers. We have gone

from a dozen founding members to more than 210 today, and I daresay

we are recognized as one of the leading business organizations in

Bulgaria today.

We didn't get there overnight, of course - there was a lot of history and

a lot of ups and downs along the way. I hope that the next ten years will

bring the Chamber and its members many more memorable occasions

such as the ones recorded here. Above all, I wish you and all of our mem-

bers another successful decade of business in Bulgaria.

Yours truly,

Kenneth M. Lefkowitz

President of the Board of Directors

AmCham Bulgaria

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Dear Members and Friends,

AmCham 10th anniversary celebrations were a major success for the

organization. They have generated great interest from the business and

political elite and substantial attention from the public in general.

And this is quite natural: the high profile that the Chamber has developed

leads to high expectations as well. Just in the eve of the remarkable

moment of Bulgaria's joining the EU Accession Treaty that opens the road

for the country to the unified Europe the AmCham commemorative con-

ference was the natural platform to discuss the issues of Bulgaria's mem-

bership in the European Union in line with the dynamic partnership with

U.S. Undoubtedly both EU and United States being the two largest

economies in the world will provide tremendous opportunities for the busi-

nesses. At the same time companies, entrepreneurs, government institu-

tions will need lots of expertise and assistance how to operate in this

remarkable international market and complex business environment. Here

is where the strong network of the Chamber within the membership of the

European Council of American Chambers of Commerce and U.S.

Chamber of Commerce will take advantage and bring knowledge and

experience to the business community.

In the days ahead the Chamber will certainly play a major role in the U.S.

- Bulgarian commercial relations and in the development of a strong bilat-

eral business network. The Chamber's initiatives and projects to name

only the launch of the negotiations for U.S. - Bulgaria treaty on avoidance

of double taxation will inevitably bring new opportunities for both American

and Bulgarian businesses. The strong contacts with both governments will

contribute to another important role of the organization: a reliable bridge

in transatlantic relations.

Thus we look ahead in the next decade with optimism as we did in the

preceding one.

So happy 10th anniversary, AmCham Bulgaria!

Best Regards,

Valentin Georgiev

Executive Director

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Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1715, Bulgaria

e-mail: [email protected]

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

Layout, Design & Printing:

Milen Marchev

Writers:

Boyko Vassilev, Marina Tzvetkova,

Mina Georgieva, Panayot Angarev,

Yuliana Boncheva

Advertising

AmCham Bulgaria:

Nadejda Vakareeva, [email protected]

AmCham Bulgaria Magazine:

Milen Marchev, [email protected]

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.

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

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

Chamber of Commerce in Bulgaria.

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

3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . AbC.R.O. - Bulgaria EAD .Abrotea Bulgaria AD . Accor Services Bulgaria . Acsior . ACT Soft Ltd. . AddressBulgaria Holding JSCo.- A real estate company . ADIS Ltd. . AES Corporation . AFAOOD . AIG Bulgaria . AIG Life Bulgaria . AIMS Human Capital . Alexandrov Ltd.. Allan Collautt Associates, Inc. . Allied Pickfords Bulgaria . American College of Sofia. American Construction Products JSC . American English Academy . AmericanUniversity in Bulgaria (AUBG) . Amylum Bulgaria EAD . Anglo-American School of Sofia. Anton Preslavski, Liebert Hiross . APIS - BULGARIA Ltd. . APOLO Ltd. . AriesCommerce . ARGENTO Human Resource Solutions . Association of BulgarianBroadcasters - ABBRO . AT Engineering 2000 Ltd. . AUDITING COMPANY VERSI &PARTNERS OOD . Avendi Ltd. . AVON Cosmetics Bulgaria Ltd. . BALKAN ES TEAMLtd. . Balkan News Corporation Plc. . Balkan Star . BalkanData / Lefkowitz & Co. .Banque Internationale pour le Commerce et le Developpement (BICD) . Baxter AG .Bayer Bulgaria . BearingPoint Inc. . BG Radio . Bodyguard-Fire-K Ltd. . BorislavBoyanov & Co. . Braykov's Legal Office . Bristol-Myers Squibb . Brown FormanBeverages Worldwide Sofia Branch LLC . BTC-NET Ltd. . Bulbank . BulgarianAmerican Enterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian PostBank . Bulgarian Telecommunications Company EAD . Business Media Group .Business Park Sofia EOOD . Business to Business . CA IB Bulinvest . CableTel .Car Rental Bulgaria Ltd. . Cefin Bulgaria EOOD IVECO . Chelopech Mining EAD .Center for the Study of Democracy . Cisco Systems Bulgaria . Citibank, N.A.- SofiaBranch . City University . Coca Cola H.B.C Bulgaria SA . Coca-Cola Bulgaria EOOD. COLLIERS International . Commercial Bank Investbank Plc. . ConsulTeam Recruitmentand Selection Ltd. . Contex Drouzhba Ltd. . Corsa Logistics Ltd. . Corstjens WorlwideMovers Group . CPM International Ltd. . Curtis / Balkan Ltd. . David Hampson,Grenville . DeConi M&A . Deloitte & Touche . DHL International (Bulgaria) Ltd. .Diageo Bulgaria Ltd . Dimitrov, Petrov and Co. . DIMON Bulgaria . Djingov, Gouginski,Kyuchukov, & Velichkov . Domaine Boyar AD . Dow Europe GmbH Representation Office. Dr. Emil Benatov & Partners . DynCorp International LLC . Effekten Und Finanz -Bulgaria EAD . Electron Progress AD . Eli Lilly and Company . Elido (Lamel Ltd.) .Ellen Ruth Greenberg, Ph.D., Dr. I.S. Greenberg Medical Center . Elta consult AD associ-ated partner of CB Richard Ellis for Bulgaria . Emerson Process Management AG .Encouragement Bank AD . Engineeringservice Sofia Ltd. . EQUEST EAD . ERATOHOLDING PLC . Ernst & Young Bulgaria . EURO RSCG New Europe Sofia . Expo TeamLtd. . First Global Health Corporation . Flying Cargo Bulgaria Ltd. - Licensee of FedEx. Force Delta Ltd. . Forem Consulting Bulgaria . General Electric International .Genmark Automation Bulgaria . GEO - CAR Ltd. . Glaxo SmithKline . Goleminov &Goleminov . Grand Hotel Sofia . Group 4 Securitas (Bulgaria) Ltd. . Hayhurst Robinson. HEBROS Bank AD . Hewlett-Packard Bulgaria EOOD . Hilton Sofia . HoneywellEOOD . Horizon . IBM Bulgaria . Ideal Standard Bulgaria . In Time Ltd. . Infoguard- Stefan Nedkov . ING Bank Sofia Branch . Intel Czech Tradings Inc. . InterbrandsMarketing & Distribution Inc. EOOD . Interdean.Interconex . IP Consulting Ltd. . ISIEmerging Markets (Internet Securities, Inc.) . Janssen-Cilag (division of Johnson &Johnson) . Junior Achievement Bulgaria . Kaliakra AD . Kamenitza AD . KamorAuto Ltd. . Kolbis International Transfer Corporation . KPMG Bulgaria . Kraft FoodsBulgaria . LANDMARK . Lexim Sofia Ltd. . Lindner Bulgaria OOD . Lirex BG Ltd.. Lowe Swing Communications . M & M Air Cargo Service BG Ltd . M3Communications Group, Inc. A Hil & Knowlton Associate . Maersk Bulgaria Ltd. .Magnetic Head Technologies . Management Systems International . Maritza East IIIPower Company AD . Marsh EOOD . McDonald's Bulgaria Ltd. . Merck Sharp &Dohme IDEA Inc. . Microsoft Bulgaria . Miltech Ltd. . MobilTel AD . Monbat PLC. Moten Sport . Moto Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS. NATO Defense College (NDC) . NDT Equipment Supplies LTD . NeterraCommunications . Net Is Ltd. . NET IS SAT Ltd. . Neumann International AG . NewEurope Corporate Advisory Ltd . Nexcom Bulgaria EAD . Opet Aygaz Bulgaria EAD .Oracle East Central Europe Limited - Branch Bulgaria . Orbit Ltd. . ORKIKEM Ltd .Pain D'or Ltd. . Pfizer H.C.P. Corporation, Representation Office Bulgaria . PioneerSemena Bulgaria EOOD . Popov Legal Office . PricewaterhouseCoopers . Prima SoftLtd. . Procter & Gamble Bulgaria . ProSoft . PSG Payroll Services Ltd. . RadissonSAS Grand Hotel . Rising Force Co., Ltd. . Rockwell/Intelpack . S&D ChemicalsBulgaria . S&T Bulgaria . Sante International OOD . Schering - Plough Central East- Bulgaria . Sciant . SEAF Management Bulgaria EOOD . Seplex Law Offices .Sheraton Sofia Hotel Balkan . Sherita M Ltd. . Sienit Ltd. . SigmaBleyzer InvestmentGroup LLC . Sofia Echo Media Ltd. . Soravia Bulgaria . Stefan Dimitrov, NormanManagement Co. Ltd. . TechnoLogica . TeleLink AD . Tero Halmari, EBRD . TheAtlantic Club of Bulgaria . The Executive Centre . Tissue Bank Osteocenter BulgariaEAD . TM Auto Ltd. . TMF . Tumbleweed Communications EOOD . UnimastersLogistics Group AD . Unisys Bulgaria Branch . Urban 3000 Ltd. . Via Expo Ltd. .Videolux Ltd. . VOCA Consult Ltd. . VSK Kentavar Ltd. . Westinghouse Energy SystemsBulgaria Branch . WizCom Ltd. . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd. .Zlati Dinev Studio .

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Kenneth M. Lefkowitz NECA/Balkan Data, Inc.

Vice President Mr. Stefan Dimitrov Allied Pickfords Bulgaria

Treasurer Mr. Dennis Fiehler Bulgarian American EnterpriseFund

Members Mrs. Olga Borissova AUBG

Mr. Borislav Boyanov Borislav Boyanov & Co

Mr. Nick Davies Ernst & Young Bulgaria

Mr. David Hampson Grenville Financial

Mr. Anthony Hassiotis Bulgarian Postbank

Mr. Friedrich W. Niemann Hilton Sofia

Mr. George Randelov IBM Bulgaria

Mrs. Elitsa Tsaneva Ideal Standard Bulgaria

Maria Vranovska Eli Lilly and Company

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

Executive Director: Valentin Georgiev

Contentsa n n i v e r s a r y

Ten years AmCham in Bulgaria . . . . . . . . . . . . . .6

By Marina Georgieva

e u a c c e s s i o n

Two faces of EU membership . . . . . . . . . . . . . .12

By Marina Tsvetkova

Nineteen and a half months . . . . . . . . . . . . . . .19

By Yuliana Boncheva

Meglena Kuneva:

European Union waits for nobody . . . . . . . . . . . .24

By Marina Tzvetkova

The world is wide open - but Bulgaria

must work out its legal quirks and

prepare for a fiercely competitive

market , top U.S. diplomats say . . . . . . . . . . . . .27

John Fogarassi: Bulgaria strikes a sound

balance between the United States and EU . . . . . .32

Your Agenda 2007 Series . . . . . . . . . . . . . . . . .34

By Tania Pavlova, Senior Manager

PricewaterhouseCoopers Bulgaria

U.S. asks companies for more

financial reporting, Europe to follow suit . . . . . . . .36

By Irina Bacheva

Time is Money . . . . . . . . . . . . . . . . . . . . . . . .38

By Irina Bacheva

U.S.-Bulgaria:

End to double taxation, finally? . . . . . . . . . . . . .40

By Marina Tsvetkova

p r o j e c t s

Mediating Change in Bulgarian Business . . . . . . .42

By Kenneth Volandes, Legal Advisor, CLRP

m e m b e r s n e w s

Yoshka Fischer opens

Jewish exhibition at Radisson . . . . . . . . . . . . . .44

Tumbleweed challenges

Bulgarian programmers . . . . . . . . . . . . . . . . . .45

Cefin Bulgaria Delivers

11 IVECO Vehicles . . . . . . . . . . . . . . . . . . . . .46

American College of Sofia

Receives U.S. Accreditation . . . . . . . . . . . . . . . .46

Kamenitza launches

first white beer on the Balkans . . . . . . . . . . . . .47

h u m o r . . . . . . . . . . . . . . . . . . . . . . . . . . .48

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The American Chamber of Commercein Bulgaria marked its 10th anniversaryin April with a series of events thatbrought together Bulgarian, Europeanand U.S. politicians, diplomats, currentand former ministers, representatives ofthe business elite, guests from otherAmerican chambers of commerce. Thepresence of such high-level guestsshowed again that AmCham Bulgaria isone of the most influential organizationsin the country. Bulgaria's PresidentGeorgi Parvanov addressed the recep-tion at Sheraton Sofia, recognizingchamber's importance.

Minister Solomon Passi:

Bulgaria, United States

and EU

The road of Bulgaria's EU accession is"well paved," said Foreign MinisterSolomon Passi during the conference

"Bulgaria's Role in Enlarged Europe: AConstructive EU Member, A DynamicU.S. Partner," which was organized byAmCham. Minister Passi added thatBulgaria will contribute financial, eco-nomic and ethnic stability to the orderlyEuropean family.

He said that the past two years hadseen an exceptional increase in thetrade relations between Bulgaria and theUnited States, with U.S. direct foreigninvestment in 2001-2004 exceeding $270million. This makes the United Statessixth largest investor in Bulgaria, Passiadded.

Since 2001 unemployment has declinedby one-third and if the current rate ofdecrease in unemployment in Bulgaria ispreserved, in four years unemploymentwill be zero, Minister Passi said. "It iscrucial, however, to maintain the eco-

nomic growth rate of the past fewyears," he said.

Passy added that Bulgaria had movedfrom 75th to 67th position in terms of"business environment improvement."

Milko Kovachev: Record investment

Economic Minister Milko Kovachev toldthe forum that in 2004 the Bulgarianeconomy attracted a record amount offoreign investment, more than 2 billionEuro. This makes up 10 percent of thetotal foreign investment in Central andEastern Europe. The next two years willbe the best time to invest in Bulgaria,Minister Kovachev said, inviting particu-larly U.S. businesses.

Bulgaria's trade turnover reached arecord high $763 million in 2004, with

The EU-U.S. common responsibilities in the global economic agenda were discussed at the first panel of the forum. From right: Assen Agov, Vice President, Bulgarian

Parliament, Irina Bokova, Member of Parliament, H.E. Rockwell Schnabel, U.S. Ambassador to the EU, Solomon Passy, Bulgarian Minister of Foreign Affairs, H.E.

James Pardew, U.S. Ambassador to Bulgaria, H.E. Henriette van Lynden, Ambassador of the Netherlands to Bulgaria and David Hampson, AmCham Board Member.

Ten years AmCham inUS investment in the bulgarian economy amounts to 531 million dollars. The

American Chamber of Commerce is a powerful engine and supporter of the

relations between the two countries, US Ambassador to Bulgaria, James

Pardew, said. By Marina Georgieva

Bulgaria

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exports to the United States surging bymore than 20 percent, Kovachev added."This fact shows that interest inBulgarian trade is increasing; it is also agood sign for the U.S. business to paymore attention to Bulgaria in future," theeconomic minister said.

The growth in Bulgaria's GDP by 6 per-cent last year is the best achievementof this country for the past 15 years,Kovachev told the assembled businessrepresentatives. "The private sectoralready provides more than 70 percentof the economy growth, the share of themiddle class is rising and Bulgarianentrepreneurs are boosting their activity,"Kovachev said. He added that roadinfrastructure, environment, energy, hightechnologies, logistics and transport arethe sectors of the Bulgarian economywhere the biggest growth should beexpected in the next few years.

As a result of improved economic rela-tionship, U.S. investments in theBulgarian economy are now valued atsome $531 million, said MinisterKovachev. He highlighted Socotab'sinvestment in the tobacco processingsector and AES's project in coal miningas the two largest capital investments inrecent years.

James Pardew:

US investment brought

$400 million in 2004

The American Chamber of Commerceis a powerful engine and supporter ofthe relations between the United Statesand Bulgaria, U.S. Ambassador JamesPardew said. In 2004 alone, U.S. invest-ment in Bulgaria brought in around $400million, which is more than the amountinvested during the past 10 years,

Ambassador Pardew said.

In his words, the economic businessenvironment in Bulgaria has improved asa whole, which will likely lead to newinvestment records by U.S. companiesin Bulgaria very soon. The ambassadoradded that Bulgaria's accession to theEuropean Union would not affect thebilateral relations; just the opposite,Bulgaria had become a key player in theregion. He said that Bulgaria's future willsee even stronger ties with theEuropean Union and the United States.

The three leading areas to which over-seas companies direct their investmentinclude energy, information technologiesand finance, Ambassador Pardew said,adding that the list can be continuedwith import of construction materials,tourism, real estate, technical equipmentfor the environment, aviation equipment

Guest speakers at the second panel conferred over the EU enlargement and the new opportunities for transatlantic partnership: (from left to right) Kenneth M. Lefkowitz

AmCham Bulgaria President, Jay Burgess, Director for Central and Eastern Europe, US Department of Commerce, Ellaine Cruickshanks, Member of AmCham EU

Board of Directors, Milko Kovachev, Bulgarian Minister of Economy, John Fogarassi, Minister Counselor, US Embassy to Germany, Les Nemethy, AmCham Hungary

President and Stamen Tassev, Deputy Minister of Finance.


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and services.

Valentin Georgiev:The data

of FDI needs interpreting

and U.S. investments

should be ranked in a

higher position

AmCham's Executive Director ValentinGeorgiev said that the 6th placeassigned to the United States in termsof foreign investment is not quite correct.This ranking does not take into accoutthe investment made by the U.S. com-pany Advent, which participated in theprivatization of the BulgarianTelecommunications Company andacquired the telecom through anAustrian subsidiary, Viva Ventures.Georgiev said that this investment isconsidered Austrian, though the capitalsare actually American. He added that ifthe telecom deal is taken into account,the United States will move to the thirdposition of foreign investment here.

The issues with which the Chamber willdeal in the future include the legislationconcerning intellectual property, Georgievtold the audience. The stumbling block toa yet bigger trade volume with the UnitedStates is the need to improve the protec-tion of intellectual property (such as soft-ware, entertainment products) and othermass consumption products that nowmay be faked.

Rockwell Schnabel: USA

supports EU enlargement

The U.S. Representative to the EuropeanUnion, Ambassador Rockwell AnthonySchnabel, said that the United Statessupported Europe's further enlargementand a stronger European partner.

Jay Burgess of the U.S. Department ofCommerce recalled that Americabacked up the enlargement of theEuropean Union and Bulgaria's mem-bership. This will not reduce the numberof American companies here, he said.Burgess added that Bulgaria has tosolve a few problems that hamperinvestment and trade, which include theprotection of intellectual property rights,tariff regime, corruption and an unre-formed judicial system. AmCham, whichrepresents U.S. business interests, has acrucial role in this process, Burgesssaid. ■

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From Left: David Hampson, AmCham Board Member, H.E. James Pardew, U.S. Ambassador to Bulgaria, H. E. Rockwell Schnabel, U.S. Ambassador to the EU,

Valentin Georgiev, AmCham Executive Director and Kenneth Lefkowitz , AmCham Bulgaria President at the commemorative AmCham conference

The Bulgarian and for-

eign business elite, distin-

guished diplomats, gov-

ernment representatives

and the media gathered

on April 19th in Sofia's

Sheraton to commemorate

AmCham Bulgaria 10th

anniversary.


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Art posters at the Sofia Sheraton lobby show AmCham Bulgaria history through the last 10 years.

Forewords and congratulations on the AmCham Bulgaria's 10th anniversary were followed by fireworks and music.

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More than 500 guests participate at the celebration reception.

Multimedia screens

show important

moments from the

AmCham Bulgaria 10

years history.


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ay 2005 "T

he European Union (EU) should not be presentedas a panacea for all economic and social prob-lems. I think we managed to avoid this," Polish

president Alexander Kwasniewski said two years ago, addingthere was no recipe for wise behavior of the candidate coun-tries in the accession process.

Taking a direct cue from this statement - and Kwasniewskiis a person who must be listened to, Bulgarian media shoulddispel the illusions of the public that the EU membership isa cornucopia. Citizens and business should be prepared toapply the European law in practice, to achieve competitive-ness and higher living standards.

Sociological surveys show that many people in Bulgaria

expect that EU membership will automatically improve theireconomic status. The reality, however, is different. In fact theEU just offers new opportunities and if they are taken, thiswill lead to better economic results. EU means better accessto markets, capitals and partners. Utilizing these opportuni-ties depends on the government, which creates the businessenvironment, and on the enterprise of Bulgarian citizens.

Nevertheless, enlargement should not be met with skepti-cism, anxiety and doubt.

Give-and-take

Even the most cursory financial analysis shows that Bulgariawill contribute between 250 million and 300 million Euro a

T wo faces of EU membershipBulgarians must lower their expectations and prepare

to work hard to make their joining the European Union

worthwhile. Risks and problems remain, analysts warn

By Marina Tsvetkova

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year to the European Union in the first three years of mem-bership. Currently every member state pays 1.24 percent ofits gross domestic product (GDP).

The exact amount Bulgaria will pay is not yet clear, becausethe European Commission is considering a reduction in theinstallment to 1.1 percent of each member's GDP.

In the period 2007-2013 Bulgaria has to pay another 14.8million Euro to the European Investment Bank: the financialinstitution of the community, which provides relieved creditsmainly for infrastructure projects. As much as 11.95 millionEuro will go to the European Fund for Coal and Steel.

Under the EU PHARE program Bulgaria will receive 10.4 mil-lion Euro in 2005. The amount is intended to raise the com-petitiveness of local enterprises.

The funding will be allocated through grant schemes. Asmuch as 1 million Euro of the total amount will be used forimproving the business environment. Projects worth between5,000 and 25,000 Euro will be able to apply for financingunder this program from June 2005.

Some 2 million Euro will be provided for consultations to 500small and medium enterprises. The value of each projectshould not exceed 50,000 Euro, PHARE will finance 60 per-cent of the total costs. The funding can be used for assess-ment of the condition or business strategy of an enterpriseor for its mandatory certification.

The largest amount, 7.4 million Euro, is allocated to enhanc-ing the competitiveness of companies on the singleEuropean market. Businesses can apply for 10,000 to50,000 Euro. The program funds 65 percent of the projectvalue.

As much as 3.28 million Euro will be provided under PHAREfor development of the civil society in 2005. Eligible candi-dates for funding include non-government organizations withproposals worth up to 30,000 Euro.

Associations and municipalities can participate in the distri-bution of 2.27 million Euro. The money will be spent onbuilding centers for the disabled. The value of each projectcan be up to 500,000 Euro.

After accession, Bulgaria will receive 4.6 billion Euro fromthe EU for structural activities, agriculture, measures underthe Schengen agreement and in support of the balance ofpayments.

First results

The Romanian and Bulgarian stock markets have bothtripled over the past two years in anticipation of an imminentEU membership, but analysts insist there is still plenty ofmoney to be made in the "tiger" economies of the forgottenBalkans, reads Telegraph's electronic edition. With per-capi-ta incomes less than 30 percent of the EU average, thesetwo ex-communist basket cases have turned their countriesinside out in a frantic effort to comply with the Acquis

Communautaire, the 90,000-page EU rule book. Both havenow been granted EU's status of "free market economy"able to withstand the full rigors of Europe's single market.They have a granted entry date of Jan. 1, 2007.

The vision of EU accession is a very powerful stability fac-tor. The Maastricht criteria for joining the Eurozone haveforced the government to bring its budget under control.

Last year, car sales in Bulgaria rose by 46 percent and prop-erty prices by 31 percent: one of the highest rates in theworld. GDP growth this year is expected to rise to 5.7 per-cent. However, the IMF has warned against the risk of econ-omy overheating. Even so, the equity and property marketsstill have potential for growth. Property prices are still verylow compared to areas of similar beauty and geography.Bulgaria is a country where you can ski six months of theyear, yet there are lovely beaches not far away.

The risks

Analysts, however, say that the main risk comes from thefact that the Bulgarian economy is bound with that of theEuropean Union. The reason for this is that besides advan-tages, the pegged Lev-Euro exchange rate also concealsconsiderable risks. If the rate of the Euro (respectively theLev) continues rising, compared to the other main curren-cies, and if the economic crisis in West Europe continuesaggravating, the rate of increase in Bulgarian exports willslow down. This will result in lower economic growth inBulgaria and more expensive foreign financing for Bulgarianenterprises.


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Another weakness of the Bulgarian economy is the unfin-ished structural reform. In the context of EU accession,Bulgaria still has tasks to fulfill, such as finalization of pri-vatization and liberalization of some monopoly sectors.

Yet another weakness is the demographic factor: thedecrease in Bulgarian population (according to different fore-casts population will decline from some 7.8 million people in2002 to about 6.6 million in 2025 and 5.3 million or so in2050) and the aging population will shrink the labor marketin this country. This trend may see a boost after 2007, asEU membership is expected to encourage quite manyBulgarians to try and find jobs in the Union.

The opportunities for more and more Bulgarians to work inthe EU countries will also have a considerable effect on theBulgarian economy and this will be felt mainly through cur-rent transfers or the so-called emigrant money. The size ofthese transfers in the past quarter of 2004 was 276 millionEuro and is expected to reach 1.048 billion Euro for thewhole year, up by 37.6 percent on 2003. The expectationsare that this indicator will increase.

For the time being the benefits of the opening of theEuropean labor market for Bulgarians can hardly be mea-sured in another way, although there are opinions that theprocess will also result in gradual improvement of the quali-fication of the domestic workforce.

Other obstacles to the country's economic development arethe outdated and inefficient health, social-security and edu-

Frankfurter Allgemeine Zeitung: "The contrast can hard-

ly be sharper. The signing of the accession treaty caused

merriment among people in Bulgaria and Romania, while

the old West is seized by indifference and overt disap-

proval of the 2007 date set for entry. No doubt the old

European Union has not yet forgotten the political and

economic consequences of last year's enlargement, the

stiff price of which is just beginning to take shape. Above

all, it is the fear of the exorbitant enlargement of the EU

and the competition on the labor market at a time when

Germany is actively saving that make people skeptic. We

can only hope that the renovating power of the EU is big

enough to prevent its disintegration."

Tagesspiegel: "Will the EU really be able to cope with

more countries, given the fact that the Union admits that

the administration of the enormous enlargement of a year

ago is quite a tough task. The entry of the "shadow

Balkan plants" comes at quite a bad time: on the one

hand they are less prepared than Hungary and Poland a

year and a half before accession and, on the other, the

countries in the Union cannot explain to their citizens what

exactly the advantages of admitting the two countries are."

Deutsche Welle focused on the "list of outstanding

issues" Bulgaria has to solve, namely the commitments for

judicial reform and the fight against organized crime.

Luxembourg's Grand Duke Henri (4th R, front) and Grand Duchess Maria Teresa (C, front) pose amongst European Union foreign ministers, Romania's President

Traian Basescu (2nd R, front) and his Bulgarian counterpart Georgi Parvanov (4th L, front) during a group photo after signing the accession treaty to the European

Union in Luxembourg April 25, 2005. The EU signed an accession treaty with Bulgaria and Romania, embarking on its second wave of enlargement into former com-

munist eastern Europe despite lingering misgivings.

European media on the accessionof Bulgaria and Romania

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cation systems. Their restructuring requires not only politicalwill but also time, so the process should begin now, analystssay. The lack of reforms in these sectors that take intoaccount the population aging trend may turn out fatal for theBulgarian economy. The most flagrant weaknesses ofBulgaria from the viewpoint of the business are the regula-tory and bureaucratic obstacles. Probably the key toBulgaria's success as a EU member lies in the possibilitiesfor enhancing the administrative capacity that the Union pro-vides.

Successes of the domestic economy

in Bulgaria are impressive, event though some major prob-lems remain.

The main problem of the so-called dirty industries is con-nected with the EU environmental requirements. As a whole,in the area of environmental regulation Bulgaria has to ful-fill a series of commitments in two years' time and the mainburden will be carried by the municipalities and the busi-ness. According to the environment strategy more than 8 bil-lion Euro has to be invested in green projects by 2011. Halfof the amount will be used for sewerage, water supply andconstruction of water treatment plants.

In the food and beverage industry there is no sector wheremore than 50 percent of the companies are already certifiedas compliant with the European standards. For the timebeing only 19 enterprises in the meat processing business

According to the radio, many Europeans are skeptic that

Bulgaria will manage to observe the deadlines and believe

that the safeguard clause which may delay membership

by a year will be triggered. Critics say that the Bulgarian

economy is not prepared for the big EU market and may

be crushed, Deutsche Welle pointed out.

Austrian Die Presse: "Why such a hurry? Everyone

knows that Bulgaria and especially Romania are not ready

for membership. If the Union keeps on enlarging like this,

the enormous efforts made so far will be wasted as a

result of exorbitant enlargement, and that even before the

EU becomes a superpower."

Dernieres Nouvelles d'Alsace (Strasbourg): "The acces-

sion of Bulgaria and Romania is an act of solidarity, rather

than an act prompted by economic interests. The average

wage in Bulgaria is 160 Euro, while the Carpathians

resemble Anatolia in development. The new projects are

enormous, while the cashboxes are empty. The countries

that were accepted last May and those that will become

members in 2007 or later should have no illusions. The EU

will not finance their development, as it did for Spain,

Portugal and Greece."

Spanish daily El Pais: "Europe will become larger and

cheaper. By signing the treaty with the two countries the

EU continued the unification of the Old Continent but in a

irresponsible way. The Union opened its doors but not its

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have right to export their products to European Union coun-tries: five are slaughterhouses for red meat, nine for whitemeat and five are meat packing enterprises.

The energy sector is the main problem. The closure of units3 and 4 of the Kozloduy nuclear power plant (NPP) willmake Bulgaria's leading position as electricity exporter inthe region uncertain. The construction of a second nuclearpower plant, which is still too distant in time, is a controver-sial project, especially its price. Various analysts predict thatthe electricity of the Belene NPP will be too expensive. Atthe same time, though slowly, the Bulgarian economy isgradually improving its energy efficiency.

Agriculture has never been removed from the list of priori-ties of Bulgaria's economic policy. Data for the past twoyears, however, confirm that the sector is in a crisis, whichcan be solved by the European funds (at least 1.5 billionEuro) for agriculture. The main problems in the sector arethe poor efficiency, the lack of a cadaster and the difficul-ties in proving land as arable, which may obstruct theabsorption of EU subsidies, as well as the insufficient admin-istrative capacity for receiving and utilizing these funds.

EU membership can certainly make the sector a cash cow forthose who have invested in it. After 2007 the prices of farmingproduction will most probably stabilize, experts say. It shouldalso be taken into account that Bulgaria's accession into theEU in 2007 will give Bulgarian farmers access to the richestmarket in the world, which has 550 million consumers. ■

cashboxes. As things are now, Spain will have to pay for

enlargement more than the biggest EU countries. The 25

members should take a rest of enlargement and recon-

sider their future actions."

The Financial Times: "The event as evidence of how far

Bulgaria has reached under the leadership of Simeon

Saxe-Coburg-Gotha. The government's success in eco-

nomic and foreign-policy relation, however, does not apply

to fight against crime and corruption."

Slovenian daily Dnevnik: "The lack of a special signing

ceremony is a sign that from now on the European Union

will enlarge only for practical reasons: political and econom-

ic interests. The unsettled situation in the Balkans and

Turkey's application for membership are probably also a rea-

son that explains why the treaty with Romania and Bulgaria

was not signed under the flourish of trumpets but just at the

background of a meeting of EU's foreign ministers."

Le Figaro: "The signing ceremony passed at a particular-

ly sinister background. The rain never stopped falling on

Neumunster Abbey, which could not be cheered by a few

Bulgarian songs. The huge WELLKOMM sign at the back

of the stage, written in Luxembourgian dialect, sounded

false in the light of the serious faces and the content of

the speeches. The surging no in France, the main sup-

porter of Romania and Bulgaria's candidacy, contributed a

lot to the failure of the celebration." ■

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The European Union is about to set foot on the Black Sea,Reuters news agency commented on April 25, 2005. On thisday, Bulgaria and Romania signed their agreements for EUaccession.

The actual expansion to the Black Sea, however, will takeplace 19 1/2 months from the time of this writing (mid May2005). If everything goes according to schedule, Bulgaria andRomania will join the united Europe on Jan. 1, 2007.Meanwhile, these two states will have to spend the test peri-od at the Euro-club's waiting room. Brussels will monitorclosely whether both countries deliver on the commitmentsfor reforms they have assumed.

For the time being, Bulgaria's rapid approach towards theEuropean Union is apparent mainly in the sky-rocketing realestate prices. Some deals for commercial space in downtownSofia have already closed at the staggering price of 10,000Euro per square meter! The prices of new hotels, residentialproperties and villas in the large cities and in seaside andmountain resorts are going up, too. Magnificent natural land-scapes, coupled with Bulgaria's EU future, has infectedEnglish, Irish, Russians and Japanese buyers with a real-

estate-buying fever.

Still, when Bulgaria and Romania join the EU in 2007, theywill be the Union's two poorest member states. The twostates had lagged in their reforms after 1989 and fell out ofthe "big bang" in 2004, when eight ex-communist states, plusMalta and Cyprus, joined the united Europe.

The Balkan candidates have made substantial efforts to off-set their slow economic development, and the breakthroughsare already a fact. Bulgaria reported a 5.6-percent GDPgrowth for 2004, and Romania set a record with an 8.3-per-cent growth rate for the same year. The contribution of theprivate sector in the GDP of the two Balkan states exceeds70 percent. This fact alone makes the two countries'economies seemingly more "market-oriented" than that ofGreat Britain, for instance, where the share of the privatecompanies is estimated at some 60 percent.

Jan. 1, 2007, if…

The EU accession date - Jan. 1, 2007, is still not fully guar-anteed and depends on many "ifs." Bulgaria and Romania will

Nineteen and a half monthsUnreformed Bulgarian courts and domestic-minded German politicians may cre-

ate obstacles to Euro-integration. If all goes well, Bulgarians will be writing let-

ters in their own language to bureaucrats in Brussels after Jan. 1, 2007. Here is

what to expect on the road to the European Union

By Yuliana Boncheva

Bulgaria's Prime Minister Simeon Saxe-Coburg (C) delivers a speech after signing the accession treaty to the European Union in Luxembourg, April 25, 2005. The

EU signed an accession treaty with Bulgaria and Romania, embarking on its second wave of enlargement into former communist eastern Europe despite lingering mis-

givings. The two Balkan states will join the EU on January 1, 2007, provided they implement tough reforms to root out corruption, beef up border controls, strength-

en judicial and administrative systems and upgrade rules on state aid to industry.

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be granted the cherished membership if they manage to mas-ter the radical reforms required to eliminate corruption, reducecrime, tighten border control, improve government administra-tion, strengthen the rule of law and increase the efficiency oftheir judicial systems, etc.

"Signing the agreement in itself still does not mean accessionand there should be no illusions about that. The freedomsgranted to European Union member states - the freedom ofmovement of people, of goods and of services and so on willbe granted to Bulgaria as well only after the accession," saidDimitris Kourkoulas, head of the European Commission dele-gation to Bulgaria.

The German remarks

Barely a week after the formal signing ceremony in Luxemburg,the German opposition asked for a revision of the agreementswith Bulgaria and Romania. Leading politicians of theChristian-Democratic Union (CDS) accused the government ofGerchard Schroder of opening the doors of Germany to cheaplabour from the East. According to their claims, the admissionof the two poor Balkan states will further aggravate the prob-lems of the German labour market.

Currently, there are some five million unemployed in Germany.This makes the unrest among German politicians understand-able.

CDS leader Angela Merkel claimed that due to the carelessapproach of Berlin to the negotiations, a large number of work-ers willing to accept lower wages have flooded Germany, bring-ing down the level of the overall domestic market. Bavaria'sPrime Minister Edmund Steuber insisted in a letter toChancellor Schroder on a revision of the agreements and onthe inclusion of additional restrictions. Saarland Prime MinisterPeter Muller stressed that Bulgaria and Romania are not readyfor membership and that the EU expansion is rather prema-ture.

"The agreement was signed and there could be no re-negoti-ation - neither by us or by you," German Foreign MinisterJoshka Fischer said while on a recent visit to Sofia. ElmarBrok, European People's Party representative to the EuropeanParliament, was also optimistic. He said: "The issue of revisingthe accession agreements with Bulgaria and Romania is noton the agenda. From a purely legal point of view this is impos-sible and stupid. The negotiation process is over. Now, Bulgariaand Romania must deliver on the commitments they made."

Attitudes to the contrary in Germany, however, should not beunderestimated. Ratification of the agreements with the twostates requires a two thirds majority in the Bundestag. Thatmakes the opposition votes count. CDS/CSS may also blockthe approval of the instruments in the upper chamber - theBundesrat.

The "judicial system" issue

In reality, if it falters on its way to Europe, Bulgaria would haveto blame the deficiencies of its judicial system rather than for-eign politicians. The АмCham Bulgaria Magazine wrote in its

previous issues about the obstacles to Euro-integration that thelack of reform in the judicial system may present.

It became clear as early as last fall that the major challengesfor this country will be improving the judicial system and thefight against corruption. These issues were the target of themost critical statements in the European Commission report ofOctober 2004. The capability of Bulgaria to prosecute orga-nized crime and corruption is seriously affected by the slowpretrial investigation of suspects, the Commissioners wrote inthe report:

"There are serious problems in terms of the independencefrom external pressure on Bulgarian investigative judges, andof duplication of activities and of the complexity of the cur-rently effective Penal Code. Substantial delays, caused by fre-quent remitting of cases for additional investigation affectBulgaria's capability to prosecute organized crime and corrup-tion. Some of the recent rulings of the European Human RightsCourt indicate that multiple transfers of cases between variousinstances makes it difficult to comply with reasonable timerequirements of the Convention on the protection of humanrights."

The "transparency and corruption" issue is especially pertinenttoday, in view of the looming parliamentary elections inBulgaria.

"There is still a limited transparency concerning the personalinterests of persons at elected posts and in terms of politicalparties and election campaign financing... The law that wouldintroduce a Code of Ethics for members of parliament was notadopted. As a whole, the approach by Bulgarian authorities tocorruptions remains beyond the necessity to initiate specificmeasures to combat corruption at the highest tiers of political,local and business circles."

The problem is that the picture painted in the October reportof the European Commission has not changed much sincethen. This holds true for another point of vulnerability forBulgaria - the inefficient government administration. It is not abig secret that many government institutions are staffed withmany unqualified and corrupt officials who make the life of cit-izens and companies much more complicated, and at thesame time endanger Bulgaria's access to the huge funds,which will become available to it only after its accession to theEU.

Even now the deficiencies in the performance of the myriadgovernment officials are obvious. The utilization of the millionsreleased as grants to Sofia is getting nowhere. The problemsare attributed to the inability of government officials to draftgood projects and observe the strict procedures for allocatingand spending European funds. Suspicions of "informationleaks," and of the pre-arranging and "purchasing" of competi-tive tenders, also result in Brussels's refusal to finance pro-jects, in the repetition of tender procedures, and in millions ofEuro in losses due to missed deadlines.

Because Bulgaria has failed to make the best use of the timeit had until now to initiate radical changes in its judicial systemand to embark on a decisive offensive against corruption and


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crime, it is questionable how much it will be able to accom-plish during the hot summer months. This is especially truegiven the events ahead - the election of a new parliament andthe appointment of a new cabinet. It is obvious that the nextgovernment will have to do a lot of work in this sphere whileit will barely have the time to do it as the EuropeanCommission will come up with a new assessment in November2005.

What lies ahead

The European Commission will closely monitor the perfor-mance of the two candidate states during the next severalmonths. The Commission will include in its new annual reportin November the results of this monitoring and its conclusions.Then, the European Parliament will vote on a separate resolu-tion.

Monitoring will continue until the spring of 2006, when theCommission will give its recommendations for approval ordenial of the accession of Bulgaria and Romania to the EU onJan. 1, 2007 - depending on the two countries' performancein view of the commitments they have undertaken. The Councilof Ministers is expected to discuss the same issue in June2006.

The accession agreement must come into force on Jan. 1,2007 - unless the protective clause, which implies a delay ofthe accession for one year, is triggered.

Before that, the instrument will have to be ratified by all mem-ber states. The 10 states that joined the EU in 2004, were ableto have their agreements ratified within five months after theformal signing of the document in April 2003. The procedurefor the approval of the accession documents of the 10 "new-comers" by the then-current 15 EU members took eightmonths.

What is in the agreement

The bulky instrument contains protocols, declarations, letters,annexes, lists and the Final Act. The measures that the can-didate state must initiate, in order to tune up its internal rulesto the EU legislation, are set out on hundreds of pages.

The special protective clauses and the conditions for theirapplication are also included in the agreement. These provi-sions allow delaying accession by a year in case the givenstate is judged to be "obviously unprepared" in "a number ofimportant spheres." The protective clauses may be activatedupon a recommendation by the European Commission andafter the unanimous approval of all member states. Were thisto happen, Bulgaria will lose the financial support it is sched-uled to receive in 2007. At the same time it will have to raceagainst deadlines in order to deliver on assumed commitments.

A general economic clause may be applied for three yearsafter accession. It is linked to developments in sensitive indi-vidual sectors that may affect the overall economy. A secondspecial clause refers to the domestic market and may also beactivated if problems emerge during the first three years. Thelast protective clause is linked to justice and internal order.This is the sphere that draws the bulk of Brussels's criticismof Bulgaria.

The current 25 EU member states will be able to restrict theaccess of Bulgarian labor to their labor markets for a periodof no more than seven years. Each country may relax theregime at its own discretion after the second or after the fifthyear.

There are two transitional periods specified for the acquisitionof land by foreigners. Bulgaria will have the right to preservefor up to seven years the restriction on acquisition of land byEU nationals and companies. These provisions may be revisedafter the third year of membership. At that time (2010), the banmay be lifted if the Council of Ministers approves such a moveunanimously. By that time Bulgaria will be an EU member andthe amendment may be passed only with its approval.

Bulgaria will simplify its customs regime after joining the EUand will introduce the customs rates applicable within theUnion. The lowest rate on industrial products will be set at 14percent (down from the current 27 percent). The protectiverate on dairy products will be increased from the current 110percent to the "European" rate of 209.9 percent.

Annex VI dealing with the "nuclear sacrifice" Bulgaria will haveto make to the EU altar. Sofia has undertaken to decommis-sion two power units (Reactors 3 and 4) at its Kozlodui nuclearpower plant in 2006 - a long time before the expiry of theiruseful life. As an offset for the early decommissioning of ener-gy assets, Bulgaria will receive 210 million Euro between 2007and 2009. Together with the money dedicated to agriculture,to the support for rural regions, to structural programs, to bor-der security and to budget compensations, Bulgaria will beallocated a total of 4.6 Euro billion for the first three years ofEU membership.

The agreement also includes a "linguistic" declaration byBulgaria concerning the Cyrillic alphabet. The Bulgarian lan-guage is recognized as an official EU language, and theCyrillic letters will become the third official alphabet togetherwith the Latin and Greek alphabets. This declaration has a verypractical aspect. It means that every Bulgarian will be able tosend to European institutions complaints and queries written inBulgarian, and receive answers in Bulgarian as well. ■

Romania's President Traian Basescu delivers a speech after signing the accession

treaty to the European Union in Luxembourg April 25, 2005.

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- Ms. Kuneva, what are the main

tasks Bulgaria has to do after the

signing of the EU accession treaty on

April 25 until the accession in 2007?

Do you share the opinion that the

most difficult part is yet to come

after Bulgaria joins the Union?

- It is my deep conviction that afterApril 25 and until Jan. 1, 2007, andeven after that a lot of work has to bedone every day. With persistence, mindand purpose. Actually, that is what thenot so easy process of negotiationshas taught us: to work every day. It isimportant not to lose time, not to be

constantly in a situation of having tocatch up. The European Union has itsagenda and will wait for nobody, norwill it accept it indifferently if we decid-ed to stop and have some rest andthen continue again.

I have said it many times: our way tothe Community has been somethinglike searching for the lost time. Nowwe have a chance to adopt theEuropean rhythm of work. Every day.To finish what we have started. Tocontinue the reforms: in the judicialsystem and in the administration, toadopt all the statutory documents that

will prepare and make us confident atthe threshold of the EU.

This is what we have to do! Is the dif-ficult yet to come after 2007? Let meanswer with a question: is it not diffi-cult now? And would it be easier for usif we didn't have the prospect of mem-bership?

The good news is that if we observeour commitments, there will be noproblems. By fulfilling our commit-ments every day, we prepare ourselvesto be a stable member of theEuropean Union.

Meglena Kuneva:European Union waitsfor nobodyBulgaria has been searching for the lost time on its way to the Union. It must

make up for a lot - and quickly, says Bulgaria's chief negotiator and minister of

European affairsBy Marina Tzvetkova

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- On Feb. 15, 2005 we marked five

years of the official opening of

Bulgaria's membership negotiations

with the EU. It is already clear that

the accession treaty will be signed

on April 25 and that on Jan. 1, 2007

Bulgaria will join the organization.

Which were the key dates in the past

few years? What were the successes

and mistakes along the way?

- I'd rather not talk about the mistakes,every step along the way is difficult.But I will make a confession: I was trulysorry that we did not make it together

with the first ten new entrants. Welagged behind. But we are catching upnow. The experts of all ministries thatcarried the burden of negotiating thechapters have become real Europeanexperts, in style and speed, and havedeveloped their competence. I like say-ing that they do not only speak foreignlanguages but also speak the Europeanlanguage of communication and suc-cess.

Closing each of the negotiation chap-ters was a success. The biggest suc-cess is that we managed to finish thetalks in June 2004. Time does matter,because it is important to move ahead

without having the rules changed.When we completed the negotiationssome politicians had the face to criti-cize: that we had closed the chapterstoo fast, that we should have negotiat-ed more… Look at Romania! It finishedthe talks just a month after us, but therules were already changed. The mem-bers of the European Commission andEuropean Parliament have changed.The constitution contract found itscommunity shape. As a result Romaniacompleted the negotiations with muchtougher clauses than Bulgaria. Timedoes give an advantage, because theEarth turns for everybody. It is impor-tant to be able to keep up the speed.

I am positive that success is everythingthat changes our lives because of thenegotiations. The development of bank-ing services and lending, the strongand free media, the Access toInformation Act, the amendments to theConstitution, the improved border con-trol, the programs for fight against cor-ruption, the liberalization of trade, thelabels on goods… We have adoptedthese changes in our daily lives soquickly that we cannot even think todayhow we have lived without them; andthis is progress.

- Is the justice system reform still the

number one challenge to Bulgaria's

EU membership that may trigger the

so-called safeguard clause?

- Definitely yes! It is true that the judi-ciary is a conservative system wherechanges do not happen quickly, but thisshould be an argument mainly for ourinternal use. The fact that the EU doesnot give us a prescription how toreform our justice is not a sleeping pill!Bulgarian citizens want the justice sys-tem to become efficient, effective andfair: this is the most important argu-ment. As a future member of the EUwe should have a judiciary that is inharmony with the existing order andstyle of justice in the community. Fromthe moment we become members,every Bulgarian will be able toapproach a court in any other memberstate to defend his/her rights. Ourcountry needs a modernized judicialsystem; it is an indispensable elementof the overall modernization of our life.

We have had time enough to conductin-house debates about that; now is the

time for resolve and action. How couldwe rely on increasing foreign invest-ment if the owners of capitals couldnot rely on justice in Bulgaria?! It is notincidental that Chapter 24 is titledJustice and Home Affairs: the quality ofthe one guarantees the standard of theother. As a matter of fact, the reformefforts have begun to yield results,though slowly. The government haspromised to submit a new penal proce-dure bill to parliament by the middle ofMay. We hope it will be one of the firstitems on the agenda of the nextNational Assembly. I have not changedmy opinion that a joint declaration ofthe political powers on this priority willbe an important sign: not only and notmainly to Brussels but to the Bulgariancitizens.

- Do you think that the civil society

in Bulgaria, i.e. the people, the busi-

nesses, etc., are familiar with the

changes that will occur after Bulgaria

joins the EU? What would you tell

the evil prophets who say that

Bulgaria will always remain on the

periphery of the common European

home?

- The more than 50 meetings my teamand experts have had as part of thevolunteer information campaign"Europe: Pass on!" in seven Bulgariancities have convinced me that there isno unequivocal answer to this question.Those who have their professional andpersonal plans until and after 2007are familiar and prepared for thechanges. They will gain fromBulgaria's membership. There will alsobe small dividends for those who wavetheir hand and say: "I'll go on like thisuntil 2007 and if I cannot manageafter that I'll close down." I say smalldividends, because these people willnot invest in modernization of the pro-duction environment, equipment andtechnology. But 2007 is tomorrow!

The fear of the competition of theEuropean market will gradually giveway to the realization of the chal-lenges of this 450-million market. Asfor the evil prophets, as you call them,they will probably always exist. Ifsomebody fears that we will be"Europe's backyard", let him/heranswer this question: Where are wenow? Where will we be if we are notpart of the EU?

Meglena Kuneva was born on June

22, 1957. She graduated from St.

Kliment Ohridski University in Sofia,

majoring in law. In 1984 she earned a

doctoral degree in environmental law.

She specialized at Georgetown

University in Washington, DC.

She began her professional career as

assistant professor at St. Kliment

Ohridski University. She hosted a legal

discussion program of the Bulgarian

National Radio and was a lecturer in

environmental law at the Free

University of Bourgas. Between 1991

and 2001 she was senior legal advis-

er at the Council of Ministers.

Ms. Kuneva entered the parliament

with the Simeon II National Movement.

In August 2001 she was appointed

chief negotiator with the European

Union and deputy minister of foreign

affairs. On May 29, 2002, at the pro-

posal of the prime minister, the

National Assembly adopted a resolu-

tion, electing her the minister of

European affairs.


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To answer this question I will use thewords of European commissioner Figel,who was recently on a visit to Bulgaria:Nobody has lost from the accessionbut not everybody achieves the highestresults. What Bulgaria will be afteraccession, it really depends only uponus.

- There were concerns that the first

year of membership will be burden-

some for the budget and Bulgaria will

almost become a donor to Europe,

due to the contributions to the EU

and the suspension of pre-accession

funds. Is the budget likely to experi-

ence any difficulties?

- As a community, the European Unionhas always been based on the princi-ple of solidarity, i.e. the rich alwayssupport the less wealthy, to keep thebalance. This ensures that there are nocollapses and that the living standardsrise. Moreover, it is an established prin-ciple that accession should be securedwith additional resources to preventrapid transitions. I do not believe youare serious when asking this question!

In not even one of the 10 new mem-bers the prices have jumped rapidly, sowhy should they rise in Bulgaria?

- It is true that the pre-accession fundswill be suspended but only to give wayto the structural European funds, theso-called cohesion fund. Good moneyfor good projects. This is what weshould prepare for. If you look at thepublic opinion polls in the 10 new mem-bers, you will see that the support formembership has not abated butincreased and that different sectorgroups report a sensible increase inincomes.

- Do you expect that foreign

investors and the large Western

economies will look on Bulgaria with

a different another eye after it

becomes full member of the EU?

- The short answer is 'yes.' The longeranswer is again 'yes,' but it has beenvalid ever since Bulgaria was invited tobegin negotiations. That was the firstsign to foreign investors that Bulgariawas a promising investment destination.

Ask observers and they will tell youthat every successful stage of thenegotiations was taken into account byforeign investors. As was the very final-ization of the talks and the setting ofan entry date. The country's credit rat-ing has been increased several times.Bulgaria has considerably improved itsposition on the lists of preferred placesfor investment. Add to that the qualifiedstaff in Bulgaria, the geographical loca-tion, the climate. We do not have to putrose-colored glasses to see that thiscountry has in its "portfolio" all thequalities to attract investors. It is veryimportant that the improvement of thebusiness climate will favor the develop-ment of Bulgarian investors, too. Asconcerns the big economies, it is anold and unchanging rule for them thateach market is important and eachnew market is a challenge. As a matterof fact, a survey conducted among theGerman business circles was pub-lished earlier this month, according towhich 72 percent of the Germaninvestors believe that the EU entry willhave a positive effect on Bulgaria'seconomy. ■

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AmCham Magazine: Ambassador

Schnabel, would you share some of

your experience with developments in

Central and Eastern Europe after the

first wave of expansion of the

European Union?

Ambassador Schnabel: Actually, I havevisited all the 10 new EU member states.I was told by the business community inthose different countries that, in the peri-od leading up to the actual accessiondate, business improved, more and morepeople started doing business in antici-pation of joining. You could say that thevery date of accession marked a trendtowards a persistent increase of busi-ness. The reaction to accession hasbeen pretty much, across the board, very

positive, both before and after.

AmCham Magazine: What about the

expectation of the U.S. business in

view of Bulgaria's pending accession

to the European Union?

Ambassador Schnabel: It is generallyperceived, both by U.S. companiesalready operating here and by thosewho are primed for future expansion oftheir business, that Bulgaria is quiteattractive for foreign direct investment.And having Bulgaria join the EU in 2007will increase the level of interest in com-panies on the outside. Besides, thebusiness climate here appears to bevery attractive, and I expect that therewill be an increase of investments with-

in a short period of time. That is ofcourse subject to certain things thatpeople are concerned about. Forinstance, the rule of law must be raisedto a new level. American companiesthat have already invested here, had tolive up to the general standards. I meanby that the recognized legal standards,by which those companies operate.These companies operate under verystrict rules. These same rules have toapply to companies here, which meansno corruption, nothing that is not com-pliant with international standards.

AmCham Magazine: Still, there are

problems here that could not simply

vanish overnight due to the very fact

of accession...

The world is wide open - but Bulgariamust work out its legal quirks and prepare for a fiercely competitive market , top U.S. diplomats sayExclusive interview with Ambassador Rockwell Anthony Schnabel, U.S.

Representative to the European Union and Ambassador James W. Pardew, U.S.

Ambassador to Bulgaria

H. E. Rockwell Schnabel, U.S. Ambassador to the EU (right) talking at the AmCham Bulgaria 10th anniversary conference in Sofia.


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Ambassador Schnabel: These problemsmay not vanish overnight, I understandthis. But the business community maynot operate unless generally acceptedaccounting rules are applied, unless thelegal system performs… You cannot dowithout these. If companies want to besuccessful, they must come into confor-mity with standards.

AmCham Magazine: Do you expect

any changes in the U.S. policies

toward Bulgaria after its EU acces-

sion?

Ambassador Pardew: When Bulgariabecomes a member of the EU in 2007,the U.S. SEED (South-Eastern EuropeDemocracy) assistance programs will

stop. Our logic is that the United Statescannot provide assistance to a EUmember state. Still, our assistance andcooperation will continue in many areas,as Bulgaria is treated as a normal coun-try with a normal economy. Maybe thelevel of assistance would not be thesame as in the past. We are looking forthe EU to pick up from us on thoseareas. As a matter of fact, we shall nolonger deal with Bulgaria only on a bilat-eral basis; we shall deal with this coun-try also through the European Union.This is a genuine two-prongedapproach, so you could expect thatU.S.-Bulgarian cooperation will evenexpand.

AmCham Magazine: Bulgaria is

expected to be a "constructive part-

ner" within the EU, and a "dynamic

partner" of the United States. What is

the "constructiveness" and what are

the "dynamics" of Bulgaria's role in

Euro-Atlantic partnership?

Ambassador Schnabel: Bulgaria is pur-suing open markets and assuring theprosperity of its people by free trade. Itis exporting its experience to the neigh-bouring countries, as it is exerting a verypositive influence, especially on coun-tries in its immediate neighbourhood.From that aspect, Bulgaria's role withinthe EU will be very positive. At the sametime, our relationship with Bulgaria hasbeen very good for quite a long time.The United States believes in and sup-ports the expansion of the EU. So, wethink it is very positive for Bulgaria to bein the EU. We are involved in a veryintensive relationship with the EU, andthis relationship will be enhanced by thefact that Bulgaria will be a member ofthe EU. Bulgaria, and in fact the othercountries that have joined the EU, havea very positive effect on the Union. Theybring in a new competition, they bring ina new blood, they bring in hard work.These are the people who are interest-ed in improving their own lives. Theybecome competitive with the rest ofEurope, which makes Europe itself morecompetitive.

So, I think that the 10 new countries inthe EU, soon to be 12, includingBulgaria, actually have a very strongcompetitiveness-boosting effect on theEU in general. This will be healthy forthe EU, for Bulgaria, and ultimately forthe United States. That's because wehave a sound partnership with the EU,we do a lot together in the world. Thereis a tremendous amount of trade andinvestment between the United Statesand the EU.

AmCham Magazine: What are

Bulgaria's challenges - the challenges

Bulgaria is facing, and the challenges

the U.S. business, and foreign busi-

ness in general, is facing? Another

U.S. diplomat, Mr. John Fogarassi,

said before our magazine that some-

times Bulgarians' ingenuity is a little

bit too much to accept.

Ambassador Schnabel: I am sure thereare a number of different answers tothat. But one of the main challenges

„Both Bulgaria and U.S. will experience significant economic growth in the next 10 years, and I look fore-

word to the accomplishments of the Chamber in the course in the next decade“, US Ambassador James Pardew:

.said at his address to AmCham Bulgaria for the anniversary.


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for Bulgaria is the fact that you will beoperating within a marketplace calledthe European Union, which is highlycompetitive and bound by the rule oflaw. Besides, through the EU you willbe dealing with the United States on amuch wider basis, because of theagreements between the United Statesand the EU. Dealing within such anenormous market would be a chal-lenge even to your ingenuity, as youwill have to find ways to effectivelyexport it to the EU and the UnitedStates. But mind that "bad" ingenuitywill work against you. Still, those peo-ple that are willing to operate withinthe environment existing between theEU and the United States could, overtime, be very successful, in thoseareas, in which they are competitive.

We spoke this morning about softwaredevelopment for instance. There areother industries, in which Bulgaria maybe particularly good and particularlycompetitive. You suddenly find your-selves to a market of 500 million peo-ple. You find yourselves suddenly deal-ing with some $23 trillion economies.That fact leads also to responsibilities.You have to be compatible, becauseyou will be competing with the best.But that would work good for you,because if you are really ingenious,you would know how to match that.You have a highly educated workforcein Bulgaria, you have some advantagesin terms of wage scale at the moment,the corporate taxes here are lowerthan almost everywhere else in Europe,and lower than in the United states -by all means. Actually, you have anumber of advantages that the govern-ment has put in place to allow you tocompete.

At the bottom line, you are about tojoin a huge market, you have educat-ed people and an environment thatworks for you, and I would think that issufficient to make Bulgaria attractivefor outside investors.

AmCham Magazine: In other words,

you expect that the EU accession

will have a disciplining effect on

business, on the administration,

actually on all aspects of life?

Ambassador Schnabel: Yes, definitely.As I said, you will have to deal with atotally different environment. Bulgaria

has been preparing for this for sometime, of course.

AmCham Magazine: Speaking about

the rule of law, a number of reports

recently criticized Bulgaria for being

slow in reforming its judiciary sys-

tem. Do you think, that Bulgaria

would be capable of solving these

problems in the year and a half it

has until the formal EU accession?

Ambassador Pardew: It is in Bulgaria'sinterest to be capable to do so. It is upto the government, the parliament andthe judiciary to do it. I am sure thiscountry could do virtually everything itsets its mind on doing, and it hasproven that in the past. For me thisissue is a matter of public and politi-cal will to make these changes.

Ambassador Schnabel: This countryhas been given an opportunity. And itsleadership saw this opportunity, joiningthe EU, as an advantage. And thisleadership has created an environmentthat is highly competitive. So peoplehave to understand that there must besome changes made in order to takeadvantage of this opportunity. So the"old ways" would simply not work withthe new system.

AmCham Magazine: If we get back

to your experience with other Central

and Eastern European states that

had joined the EU, can you elaborate

on the impact of accession on small

businesses, which are generally seen

as being not competitive in the new

environment? And for Bulgaria, the

fate of small businesses seems to be

somewhat more important than else-

where.

Ambassador Schnabel: Small busi-nesses are extremely important,because frequently it is the small busi-nesses that create the new jobs. Thatis true for the United States, too, bythe way. Jobs growth comes with smallbusinesses, rather than with largeones. So the environment that I sensehas been created here in Bulgaria, isvery conducive for small business.Most of the other countries are makingsimilar efforts, or prime for that. Youcan be competitive in areas where youhave some expertise to sell. And itdoes not have to be a large companyto be able to do that. So I would say

that generally small businesses every-where manage to find their own nicheto operate from. Small businesses arevery flexible and can more easilyadapt to the market place and offerproducts that will meet the existingdemand.

AmCham Magazine: Do U.S. busi-

nesses have any strategic priorities

mapped for Bulgaria?

Ambassador Pardew: If you look backover the last couple of years, U.S.businesses have been concentratingon telecommunications and energy.U.S. businesses participated in the pri-vatization of the BulgarianTelecommunications Company; AESand Entergy focus on energy; andParsons is involved in nuclear develop-ment. But there is a broad variety ofcompanies interested in tourism, soft-ware and IT as well. IT services seemto be an especially appealing area fordoing business. U.S. companies arecoming here to look around and findwhat the opportunities for investing inagriculture are. The U.S. governmentdoes not intervene in these develop-ments, because - as a free marketeconomy - we expect businessesthemselves to pick up the winners andthe losers.

AmCham Magazine: What would be

your message to our readers?

Ambassador Schnabel: Bulgaria is inthe enviable position to be able tomake the best advantage of its acces-sion to the EU. And that means thatyour people must spare no effort tobecome competitive and operate bythe law. And if this is the case, that Iam certain that after five years, whenwe might again be sitting here, aroundthis table, we will look back and takescore of the genuine gains frompreparing for membership and from theaccession itself. The experience ofsome of the countries in the EU - fromIreland, to Portugal, to Spain, Greece,you name it - they all were able to per-form and grow into something quite dif-ferent from the relatively poor countriesthey had been before that. But all thesestates had governments that managedto create the environment that allowedpeople, businesses take every advan-tage of the opening opportunities. Theworld is wide opened to you. ■


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I was in Bulgaria at the beginning when Iestablished the first Commercial Officewith the U.S. Embassy in Sofia, andhelped found the American Chamber ofCommerce. I came here again, almost at"the end," right when Bulgaria is on thefinal stretch to its EU accession. It hasalways been a pleasure to be here andto come here again and again.

After 10 years, what I see now is not somuch the visible changes, but thechanges in the mentality. That meansthat people here have the mentality toaddress all issues, to understand that itall takes a lot of hard work.

Besides, I see that the balance betweenthe United States and the EuropeanUnion is subject to a sound and diversi-fied strategy. The change of mentality,and the capability to strike that balancewill help Bulgaria. Bulgaria is entering aglobal environment, which will not dealany more with bilateral or regional tradingrelationships.

Bulgaria will progress and strengthenitself by diversifying its trading relation-ships, its industry, and playing its stronghands like tourism, for instance. I thinktourism is going to be a tremendousopportunity for Bulgaria - it already is.

I have seen that Bulgarians always dowhatever they have to do. I have seenwhat Bulgarian ingenuity really means. Iremember a Bulgarian carpenter, whomwe called in to fix a warped door in oneof our offices. The guy promptly startedtaking measures of the door frame. Wewere all flabbergasted, when he said hewould fix the frame rather then fixing thedoor. That may sound funny, but I wouldsay that we should use creativity andingenuity in any aspect, at any time. Thatis the way to negotiate a problem. Simplesurviving, actually, required a lot of cre-ativity and ingenuity. You need to channelthis ingenuity now into more constructiveareas, into areas with more potential.

Every country is forced to go its ownway. That is what Hungary, for instance,had to do, that is what you, Bulgarianshad to do and have to do. That helps toadapt to different situations and circum-stances. The European Union provides ahuge potential, and this goes back tothe very fundamentals of what theUnion is about. This group of 25, soonto be 27 states, has greater prospectswhen working together then when split,no question about that. There are goingto be times when you will have to dealwith Brussels bureaucracy and othercountries, which may be your competi-tors. But that should not be overshad-owed by the fundamentals. The EU is awonderful, fabulous market.

I must confess that I am somewhatignorant of the political processes thathave been taking place in Bulgaria inthe recent years. But the very factthat this country has come to thepoint to be admitted to the EuropeanUnion within a token year and a halfmeans that Bulgaria is committed.This commitment is coming from thehighest levels across all politicalreaches, and that is what Bulgarianeeds. It means there is a consensusin Bulgaria on its EU membership,even though there might be differ-ences between political factions. Butagain - the fundamentals are there -this is the commitment to join, and tomake something of it. ■

John Fogarassi:

Bulgaria strikes a sound balancebetween the United States and EUMr. John Fogarassi is a Minister Counselor for Commercial Affairs with the American

Embassy to Germany and a former head of the embassy's commercial office in Sofia


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After the signing of the EU AccessionTreaty on April 25, 2005, Bulgaria isexpected to become a full EU memberon Jan. 1, 2007. The EU AccessionTreaty, together with the Protocol, theAct and the Appendices is an enormousdocument consisting of almost 900pages. The EU legislation, to be appliedby Bulgaria after EU Accession,includes approximately 80,000 pages. Inaddition, more than 50 years of caselaw of the European Court of Justice willbecome relevant for Bulgarian compa-nies. Although a considerable part ofBulgarian legislation is already har-monised with the EU rules, there is stilla long way to go to meet all EU stan-dards.

EU accession will impact a broad rangeof businesses, tax and legal issues.Businesses will have to analyse theiroperations, identify potential risks andopportunities arising from the complexEU rules and prepare for the challengesof EU accession. Multinational compa-nies operating in EU Member States that

joined the EU in 2004 will probably havea lead on others, benefiting from theexperience of previous enlargement.Most likely they will adapt existing EUbusiness models to their Bulgarian oper-ations. Nevertheless, the Bulgariancountry-specific regulatory requirementswill need to be considered.

On one hand, companies in Bulgaria willface the threat of increased competition,over-regulation, especially in certainareas (e.g. environmental protection,agricultural policy, industrial standards,etc.), and uncertainty in relation to thepractical implications of joining the sin-gle European market. On the otherhand, the EU membership is expectedto improve economic stability, toincrease legal certainty and give morebusiness opportunities, such as accessto the "the big money" (the structuralfunds), free access to new Europeanmarkets and clients. Below are someexamples of the challenges of EUaccession for which businesses shouldprepare in advance.

Removal of customs and

trade barriers and adoption

of EU Customs Tariff

No customs border controls will existbetween Bulgaria and the other 26member states. The physical movementof goods across borders will becomeeasier. The removal of customs barrierswill give opportunities for quicker trans-portation of goods, new logistics plan-ning and cash flow savings.

Some companies will benefit from theexpected reduction of customs dutiesfor import from non-EU countries as aresult of adopting the EU Customs Tariff(currently the average customs dutiesapplied by Bulgaria are about two timeshigher than the average customs dutiesin EU). On the other hand, importers ofagricultural goods from non-EU coun-tries will face additional burdens onimport of such products (such as licens-ing requirements and specific duties).

Increased reporting and

compliance requirements

Customs barriers will be replaced byadditional administrative barriers, mainlyin the field of compliance with indirecttaxes which are most harmonisedacross EU (VAT, customs and excise). Inparticular, VAT treatment of supplies ofgoods and services between differentmember states will change significantly.

Companies in Bulgaria will have to makesignificant changes in their IT andaccounting systems in order to complywith EU rules and new invoicing require-ments. Extra processing will be requiredand new tax and statistical documentswill have to be generated (Intrastatreports and EC Sales Listing).

What else can be

expected?

The EU has implemented rules that pro-hibit state aid and harmful tax competi-

Your Agenda 2007 SeriesBulgaria's EU accession - What changes to expect?

By Tania Pavlova,

Senior Manager

PricewaterhouseCoopers Bulgaria

From left to right: James Rigassio, US Senior Commercial Officer, Olga Borissova, Chair of AmCham EU

Affairs Committee and Kenneth Lefkowitz , President AmCham confer on the developments in the newly

launched EU Affairs Committee.

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tion. As a result, Bulgaria will abolish orchange any tax incentives that qualifyas illegal state aid or harmful tax com-petition.

Expected amendments to the competi-

tion law, consumer protection legislation,environmental laws, intellectual propertyrights, social security and labor laws inview of the EU accession will alsodirectly affect businesses. Some ofthese changes will be considerable and

will require review of existing structuresand contracts and planning for neces-sary changes.

Special EU rules will apply to certainregulated industries, such as telecom-munications, chemical and pharmaceu-tical industries, financial services andothers. Non-compliance with such rulesmay result in a company losing itslicence, or reputation. In contrast, com-panies providing financial services willbe able to benefit from the "SingleLicence" rule for easier access to mar-kets of other member states.

What budget must be

planned for the accession

preparation?

Businesses will have to include thecosts of the accession process into theirbudget planning, e.g., costs for training,professional advice and assistance,adjustment and upgrading of computersystems, necessary changes of contrac-tual arrangements, the growth of admin-istrative requirements and many otherissues. ■

The representatives of 3M, AUBG, Unisys and VSK Kentavar discuss the agenda of the new committee.


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- In what ways AmCham EU helps EU

new members and candidate coun-

tries in regard with EU regulations?

- As a member of the board of direc-tors at AmCham EU, I participate invisits to the European Union membercountries as well as to the EasternEuropean countries and meet withtheir ministries to find out what theissues are and what the appreciationof the business towards these issuesis. We make surveys of what businessthinks regarding EU regulations. Someof the discussed topics are lack oftransparency in terms of state aidcoming from the governments to thelocal businesses which could be a bar-rier to external players to enter themarket, tariffs especially on agricultur-al issues. In terms of the other regula-tory issues, one of the main thingsAmCham EU is concerned about isthat the countries that access the EUshould be able to implement andenforce the existing legislation. That isa big job because of the legislationvolume. As both European and globalplayers, AmCham EU companies are atthe forefront of the regulatory discus-sion, just as we are at the forefront ofthe digital marketplace. As a point ofcaution, industry harbors concernsabout both over-regulation and imple-mentation of existing regulation affect-ing the digital economy. Additionally,we underline the importance of marketdrive standards, the need for break-through technologies, a proper andsafe environment for digital content,and the need to foster customer con-fidence as to bring the digital economycloser to more EU citizens.

- Why AmCham EU considers very

important strengthening of the dia-

logue on regulatory mechanisms

between the United States and EU?

- The consultations between theUnited States and EU regarding traderelations are very important. In the firstplace, this is because now the capitalgoes very quickly around the worldelectronically. Also, there is a substan-tial need to prevent further financialscandals like those with the U.S. com-panies Enron, MCI or WorldCom. All ofthe latter made the United Statescome up with more legislative mea-sures to avert similar cases in thefuture and tighten up the financialreporting of the companies. The latestU.S. legislative measures are aimed atincreasing of the volume of financialreporting from the businesses. Thereshould be much more consultationsbetween both sides of the Atlanticbefore the legislative measures takeeffect because they apply also for theEU companies willing to establish bilat-

eral businesses with the U.S. one.

- Who is authorized to convey the

consultations?

- Financial services dialogue and con-sultations happens between theEuropean Commission, on one side,and the Securities and ExchangeCommission and the U.S. TreasuryDepartment, on the other. Businessesare also involved in the processthrough the AmCham EU. For the lastthree or four years delegations visitedWashington to talk to various U.S.agencies on issues like internationalaccounting standards, corporate law,how to convey convergence betweenthe European and U.S. laws to make itsimpler for the international compa-nies.

- What is the topic now in the bilat-

eral discussions?

- For example, the U.S. lawmakers arefocused very much on the gamblingissue. It concerns also the EU and thatis why consultations between bothsides occur. We are trying to find abalance between the negative side ofthe law and the effect on the busi-nesses. So the ultimate aim is to helpnational governments when implement-ing legislation that converges wellenough with other countries' legislationwhich at the end concerns the busi-nesses. The last thing we want in thisvery important area are impedimentson the road to a greater integration ofthe legislation and more free trade inthe area of financial services. Bulgariais becoming quite a financial center inSouth East Europe, so better conver-gence is of great importance. ■

U.S. asks companies formore financial repor ting,Europe to follow suitBulgaria is becoming a business center in South East Europe and the

convergence with EU regulations is of great importance, says Elaine

Cruikshanks, Chairman, Global Public Affairs of Hill & Knowlton International

Belgium and a member of the board of directors of AmCham EU.

By Irina Bacheva

Elaine Cruikshanks


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- Mr. van Enk, how do you estimate

the skills of the Bulgarian applicants

when applying for financial support

from EU pre-accession funds two

years before Bulgarian actual mem-

bership?

- Good question, as it provides me withan opportunity to correct some misun-derstandings that have started to leada life of their own. Projects financedwith the help of the two main pre-accession instruments Phare and ISPAaim to help the Bulgarian publicauthorities in their preparations for EUaccession. Projects are programmedunder the auspices of the EuropeanCommission in Brussels and theBulgarian Ministry of Finance in Sofia,which means that with some excep-tions, there are no private applicantsfor financial support; rather, publicauthorities prepare projects thataddress accession priorities. As forproject procurement and implementa-tion, these are the responsibility ofImplementing Agencies operatingunder the auspices of relevantMinistries, under the supervision of theEuropean Commission Delegation inSofia. In practice, this means thateach step of the tendering and con-tracting process needs prior approvalfrom the Delegation before it can takeplace, from the launch of a tenderthrough evaluation to the eventual sign-ing of a contract. The reason for thisis that the Commission remains ulti-mately responsible for the use of fund-ing under Phare and ISPA.

With the help of Phare and ISPA, awide variety of works, supplies andservices are procured, with the type ofprocedure essentially dictated by thesize of the relevant budget; the higherthe budget, the more sophisticated theprocedure. These procedures are laiddown in the Practical Guide, whichcontains the rules to be respected.These procedures work pretty well,

given the 250 million EUR worth ofprojects that are being contracted peryear on average. Over all, theImplementing Agencies manage tocontract close to 96% of the totalamounts available each year, whichcompares quite well with other EUcandidate and former candidate coun-tries. Therefore, if success is mea-

sured by total amounts contracted, theBulgarian authorities do quite well.

An issue of concern, however, is thelength of time it takes to procure aproject. Under any given programme,we have two years to contract and anadditional year to make payments. Toooften still, beneficiary institutions and

Time is MoneyBulgaria needs to prepare projects now if it is to make the best use of EU

Structural Funds, says Ruud van Enk, Councellor, Head of Phare/ISPA Section

of the Delegation of the European Commission in Bulgaria

By Irina Bacheva

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Implementing Agencies do not takesufficient account of the time that isrequired to ensure proper procurement,and this is a shame since time lost onprocurement is by definition taken offthe time required for implementation.For example, during programming it isoften assumed that one year is need-ed for procurement, allowing for twoyears for implementation; in reality it isvery often the reverse, which meansthat the activities foreseen cannotalways be carried out as programmed,which inevitably affects project results.Therefore, if we have problems it is notso much the capacity of the relevantauthorities to procure projects by thebook. It is more fundamental. Thereare difficulties in identifying needs andtranslating these into procurable andimplementable projects in a shortspace of time. I have to stress thatBulgaria is far from being alone in this;all Phare and ISPA beneficiary coun-tries experience similar difficulties.

- Are the Bulgarian managers familiar

enough with the relevant rules when

procuring and implementing pro-

jects?

- On average they are. In terms of pro-cedure, one service, works or suppliescontract is much like another, but as Istressed earlier, the technical detailsof particular projects can be very dif-ferent, and these details can have avery considerable effect on procure-ment and implementation. The relevantauthorities should therefore not onlycontinue with their efforts to familiarizethemselves with the proceduralaspects of things, but recruit and retaintechnical experts (engineers, IT spe-cialists, etc.) to further boost theircapacity.

For both Phare and ISPA a gradualtransfer of responsibilities for Phareand ISPA is ongoing as preparation forthe situation that will exist after acces-sion, when the Bulgarian authoritieswill have to be ready to bear the fullresponsibility for all EU funding in thiscountry. This transfer should takeplace in the course of next year, whenit should culminate in so-calledaccreditation of the relevant Bulgarianauthorities, providing formal confirma-tion that they are 'fit for duty'.

- As long as the Bulgarian managers

get more experience with the pre-

accession funds they would be more

flexible with the Structural Funds

after the country enters the EU?

- It would certainly help, but it is slight-ly more complicated than this, as theStructural Funds work differently fromPhare and ISPA. Pre-accession moneyserves to prepare for accession. TheStructural Funds serve a different pur-pose: they aim to foster economic andsocial cohesion, add to economicgrowth, to increase competitivenessand reduce unemployment. Phare isabout making sure that the relevantEU rules for - let's say - the environ-ment, transport and finance areapplied in Bulgaria as they are inGermany or Ireland. Obviously, underboth Phare/ISPA and the StructuralFunds the basic principles of procure-ment and implementation in terms ofsound financial management, and fairand transparent competition applyequally. The rules, however, differ, asdo the financial volumes concerned.Where the Practical Guide appliesexclusively to Phare and ISPA, for theStructural Funds the Bulgarian author-ities will have to work with nationalprocurement legislation, which in turnneeds to be compatible with EU pro-curement legislation. Whereas forPhare and ISPA the Commission cur-rently maintains ultimate responsibilityfor their use, under the StructuralFunds this responsibility lies squarelywith the Bulgarian authorities, andwhereas Phare and ISPA funding isconsiderable and measured in millions,funding under the Structural Funds willamount to billions. In short, the differ-ence is one of scale and responsibili-ty, rather than principle.

- What kind of problems Bulgaria

faces with ISPA projects at this

level?

- ISPA financing tends to be morecomplicated than funding under Phare,as the projects concerned - majortransport and environment infrastruc-ture works - tend to be much biggerfinancially and technically complex.The run-up time for ISPA projects ismuch longer than for Phare projects,as they often require complicatedpreparations, permits, planning permis-sions, environmental impact assess-ment, expropriation, etc. This has an

inevitable effect on their preparation,design and therefore their procurementand implementation. Again, Bulgariadoes not stand alone in having difficul-ties in this respect.

- Does the Bulgarian administration

need special training when dealing

with the structural funds after 2007?

- It does, since by definition the admin-istration has no experience with theStructural Funds. As such, its positionis not different to that of the CzechRepublic or Hungary some two yearsbefore they joined. Where it is slightlydifferent, however, is in the fact thatBulgaria can draw from the lessonslearnt by countries such as the CzechRepublic or Hungary, and by copyingwhat works in these countries and byavoiding what does not. Bulgariashould make the best use of this con-siderable advantage. Incidentally, in itspreparations, the country benefits fromsubstantial sums of Phare assistance,which is notably mobilized by meansof twinning, which is the long-termsecondment of Member States' expertofficials that help their Bulgarian col-leagues prepare for their new respon-sibilities.

Given the above, I am not so muchworried about the administrativecapacity for Structural Funds imple-mentation, but rather about the avail-ability of good projects to be financedwith their help, because withoutenough good projects, there will be nomoney, and without money, the admin-istrative capacity will not need to beused. As a matter of fact, we are cur-rently racing against the clock as wehave some 20 months left beforeaccession during which time the peo-ple that should benefit most from pro-jects aimed to help their regions, boostthe performance of their companies,find them new jobs and repair andupgrade their roads and bridges, needto be made aware of what shouldbecome available, how they can pre-pare projects, and how and where theyshould apply. At this moment in time, Iam not so sure that the people in theregions actually know all that muchabout the Structural Funds, and therelevant Bulgarian authorities shouldreally make an all out effort to informthem. In this particular case, time real-ly will mean money. ■


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U.S. and Bulgarian finance ministry experts began drafting anagreement for the avoidance of double taxation between thetwo countries. The first in-depth examination of this text isscheduled for the fall of 2005. This development was madepossible as a results of a meeting of Bulgaria's Minister ofFinance Milen Velchev and Randal Quarles, U.S. assistantsecretary of the Treasury in charge of international affairs.

Minister Velchev was invited in April to make an official visit tothe United States, where he took part in the spring session ofthe IMF and the World Bank. Velchev also met with U.S. busi-ness representatives, Bulgarians living in the United States, andthe leadership of two economic institutes, CATO and Heritage.

The idea of an agreement for the avoidance of double taxa-tion has been discussed by the U.S. and Bulgarian officials forsome 10 years now. Talks on the issue have begun andstopped many times.

Bulgarian government experts claim that the elimination ofdouble taxation will ease the tax burden on Bulgarians work-ing in the United States within the framework of bilateral agree-ments or individual contracts. The agreement will also helpbusinessmen engaged in various investment operations in theUnited States. Similar considerations apply to U.S. citizens andcompanies in Bulgaria.

The foreseeable end of double taxation between Bulgaria andthe United States should bring, as one analyst put it, "a thrust

forward in U.S.-Bulgarian relations." The reason for this upbeatassessment is that more than 500,000 Bulgarians, living in theUnited States, as well as many Americans residing in Bulgariawill be given the opportunity to choose where to pay their taxeswithout the risk of paying twice on the same income or profit.

The agreement will stipulate who, how and under what condi-tions will be eligible to avoiding double taxation. Tax expertsclaim that Bulgarians living in the United States will profit ifthey decide to pay taxes in Bulgaria. Personal income taxes inthe United States are as high as 35 percent, while the highesttax rate in Bulgaria is 24 percent.

Milen Velchev presented to the managements of the CATOand Heritage institutes the concept of Bulgaria's ruling NationalMovement Simeon II (NMSII) for a reform of the retirementpension system in Bulgaria. The NMSII election program spellsa gradual reduction of pension installments by 3 to 5 percent-age points to 24-26 percent, down from the current 29 per-cent. Besides, pensions will be redistributed in order to allo-cate a bigger portion to private insurance funds and reducethe portion of the National Insurance Institute. It is also pro-posed to establish a supplementary "silver" pension fund withmoney credited to it from privatization proceeds and from EUfunds, earmarked for offsetting pension system deficits.

Milen Velchev met also with the elected President of the WorldBank Paul Wolfowitz. Such a meeting was seen as an excep-tion in Wolfowitz's agenda, as he is expected to assume hispost in June. The future top World Bank executive expressedhis gratitude for Bulgaria's support of his election to the top

U.S.-Bulgaria: End todouble taxation, finally? Finance minister's U.S. shuttle brings new developments, promises, opportunities

An agreement on the avoidance of double taxation (AADT)

is signed as a bilateral international agreement, which,

according to the provisions of the effective Bulgarian con-

stitution, supersedes the provisions of domestic legislation.

The AADT distributes taxation prerogatives between two

states, thus alleviating the tax burden on nationals of one

of the states related to income and profits received in the

other state. The AADT is seen as boosting economic

cooperation between the signatories in all aspects, and -

due to the stipulated tax-relieve options - stimulates the

investments exchanged by the two states. The AADT pro-

vides guarantees to taxpayers in both states that their

income and profits made in the other state shall not be

separately taxed by both states, as the AADT establishes

mechanisms for distributing taxation of the different kinds

of income, as well as methods for avoiding double taxa-

tion. For instance, the AADT stipulates that each of the

states recognizes tax credits related to, and provides its

nationals with an option to avoid taxes on income or prof-

it, which have been taxed by the other state.

By Marina Tsvetkova

Minister Milen Velchev on a meeting in Washington with Paul Wolfowitz -

Deputy Defense Secretary currently, elected Governor of the World Bank

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post. Minister Velchev used the meeting to make a detailedpresentation of the current status of the relations betweenBulgaria and the World Bank.

Special attention was paid to the trial against Bulgarian medicsin Libya. Paul Wolfowitz expressed his concern and reiteratedthat the United States is ready to assist in finding a fair solu-tion of this matter.

The finance minister met in Washington with Michael Deppler,head of the First European Department of the fund; JeromeKremers, IMF executive director for Bulgaria; Anand Singh,World Bank director for Bulgaria; and Ad Melkert, executivedirector of the Dutch group of countries in the World Bank.Velchev announced after this series of meetings that Bulgariareceived an unconditional support for its accession to the EU.Bulgaria was granted also a $150 million loan. The sum will beused toward the EU membership payment, which amounts to$400-500 million Leva. Within three years, however, Bulgaria willreceive from the European Union some 4.6 billion Leva per year.

Minister Velchev discussed also issues related to Bulgaria'sforeign debt, which stood at $18 billion in 2001. Bulgaria's cur-rent foreign debt is estimated at $13 billion. This reduction ofthe foreign debt is a tremendous achievement, Bulgaria'sfinance minister said.

At the same time, some 30 countries worldwide are financial-ly indebted to Bulgaria. Government experts have negotiatedthe payment of the due amounts by six of Bulgaria's debtorcountries at the best possible terms, Velchev stressed.

During the spring session of the IMF and World Bank gover-nors, Milen Velchev met also with World Bank ManagingDirector Shengman Zheng. Velchev and Zheng discussed cur-rent and future cooperation between Bulgaria and the World

Bank. Shengman Zheng informed Bulgaria's finance ministerthat the economic memorandum for Bulgaria is expected to beready in the nearest future. It will be officially released in lateMay or early June. After that, the document will be submittedto economic experts in Brussels. The economic memorandumrepresents an analysis and an assessment of the economicsituation in Bulgaria.

Milen Velchev discussed cooperation issues within the DutchGroup of countries, which includes Bulgaria, with his Dutchcounterpart Gerrit Zalm. The two ministers discussed alsobilateral cooperation and the support of the Netherlands forBulgaria's accession to the EU.

Milen Velchev had a working meeting with the World BankDirector for Bulgaria Anand Singh, as well as with former andacting World Bank managers and analysts. These talksmapped future cooperation between Bulgaria and the WorldBank during the next several years. Bulgarian experts insistthat this cooperation must be focused predominantly on tech-nical and expert assistance for reforms in several budgetspheres, including healthcare, education and pension insur-ance. It was agreed during this meeting that the preparation forthe next adjustment loan, PAL IV, will start after the ratificationand retirement of PAL III. The new program adjustment loan willmost probably be tied to reforms in the budget spheres listedabove. World Bank financing will be provided most probably asco-financing of projects within the framework of EU StructuralFunds launched from 2007 onwards.

The U.S. shuttle of Minister Velchev ended with an interviewfor CNN International. Velchev commented on issues related tothe vote in the European Parliament on Bulgaria's pendingaccession to the EU in 2007. He also addressed the taskBulgaria must accomplish in order to assure a problem-freestart to its EU membership. ■

Minister Velchev talking with Michael Deppler - Director of the IMF's EU Departament .

p r o j e c t s

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An exciting phenomenon is taking the Bulgarian business com-munity by storm. It is a more effective and cost-efficient methodfor resolving business disputes, called commercial mediation. Athree-day intensive training took place in Sofia from April 9 to11, 2005. The program's organizers, the Commercial LawReform Project (CLRP) of the U.S. Agency for InternationalDevelopment (USAID), used the training to present basic com-mercial mediation techniques to Bulgarian professionals andconvince them of the many advantages this method offers tothe Bulgarian business and legal communities.

Mediation is a confidential and voluntary settlement process inwhich an impartial third person, the mediator, works with theparties to a dispute to help them find an acceptable resolu-tion. Mediation is less expensive and faster than litigation. Theprocedure provides all parties with a role in fashioning thesolution to their problem rather than having a decision imposedon them by a court. Mediation is particularly appropriate forbusiness-related disputes because, unlike litigation, it enablesthe parties to preserve existing business relationships, andoften results in strengthened business arrangements.

Over the past few years, programs in Bulgaria have startedoffering mediation services in a variety of contexts. Still, the

adoption of the Mediation Act by the Bulgarian parliament atthe end of 2005 gave a fresh impetus to this activity and busi-ness associations embraced the idea of providing the serviceto their members. Commercial mediation centers have recent-ly opened in Stara Zagora and Sofia; the American Chamberof Commerce in Bulgaria is preparing to form a commercialmediation center of its own. By passing legislation to supportmediation and opening local mediation centers Bulgaria joinsa worldwide community of nations that promote mediation tosettle disputes effectively and economically.

The CLRP training program invited attorneys and non-attorneysfrom a wide range of Bulgarian industries, including account-ing companies, law firms, insurance companies, financial insti-tutions, and other business organizations. The participantscame from Sofia, Plovdiv, Stara Zagora and Varna. Althoughthey were from different regions and had different professionalbackgrounds, all the participants in the program had one com-mon goal: learning how to use basic commercial mediationtechniques to resolve their disputes.

The program's instructors used numerous teaching strategiesto introduce the techniques of commercial mediation. In addi-tion to multi-media presentations and discussions, the instruc-tors performed animated mediation demonstrations and askedthe participants to engage in role-playing exercises. Duringthe many role-play simulations, each participant applied theirnewly acquired mediation skills. The teaching method of'learning by doing' added a vital practical component to thetraining and made the three days of training educational, pro-ductive, and enjoyable.

At the end of the three-day program, all the participantsreceived a certificate acknowledging their expertise in basiccommercial mediation techniques. In June, the participants willalso take part in an advanced mediation program andpracticum designed by CLRP. These training programs, as wellas the legislative and community mediation initiatives, will pro-vide the new phenomenon of commercial mediation with asolid foundation to grow and prosper. ■

Mediating Change inBulgarian Business

By Kenneth Volandes, Legal Advisor, CLRP


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German Foreign Minister Yoshka Fischer visited Bulgaria for arather serious reason. On April 27, just days after Bulgariasigned the EU Accession Treaty, the minister and his delegationcame to show their support and trust in the Bulgarian foreign

policy, into our development and the right progress Bulgaria hasbeen doing in perusing its full membership in EU.

The official reason of the German top diplomat's visit was theopening of a photographic exhibition, called "I remember… -Pictures of the Jewish Families in Bulgaria," opened inAlexander's Ballroom of Radisson SAS. Minister Fischer washosting the event together with the Bulgaria's Foreign MinisterSolomon Passi and Ambassador to Germany MeglenaPlugchieva.

Minister Fischer arrived on time for the opening of the exhibi-tion. Members of the Bulgarian Jewish community Shalom,some of whom were featured on the photographs, attended, too.Their faces betrayed how proud they were to be a part of theexhibition and be appreciated by Yoshka Fischer personally.Former Bulgarian President Zhelyu Zhelev was also invited,along with many politicians and friends of the Bulgarian Jewishcommunity.

Emil Kalo chaired the ceremony. He presented both foreign min-isters in attendance with the most ancient musical instrumentknown, called Golden Shofar. Jews worldwide have been usingit to call for prayers and unity with God.

Minister Solomon Passi said: "I regret that there were no pictures1,000 years ago, so we could show that Jews lived peacefullyand happily on their land. Bulgaria has hosted various national-ities and religions, but we have never witnessed religious warsor ethnical bloodshed."

After the end of the official ceremony, Minister Fischer sparedtime not only to pose for the photographs, but also to meet withsome Jews who despite their apparent old age got on their feetto greet the special guest. He also had a few words with formerPresident Zhelev. ■

Yoshka Fischer opens Jewishexhibition at Radisson

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Tumbleweed Bulgaria has launched a programming contest for

Bulgarian programmers in two categories - Beyond the Frame (chal-

lenging pattern recognition) and On the Edge (optimization of net-

working data transfer). The contest has begun on April 20 and will

close on May 20, 2005. The first prize, in partnership with Dell Intelinet

Bulgaria will be:

- Beyond the Frame category: Dell OptiPlex GX280 Pentium® IV

2.8Ghz with 15" TFT screen;

- On the Edge category: Dell Inspiron 1000.

"The research-and-development sector is a fast-growing area of the

Bulgarian economy, and it is necessary to encourage the creativity of

developers through engaging, challenging contests," said Eric Dumas,

Tumbleweed's country manager.

The jury evaluating the candidates is formed by key representatives of

the Bulgarian scientific community and by an international panel of

Tumbleweed staff: Eugene Nikolov, a professor with the Bulgarian

Academy of Sciences; Professor Stoycho Stoytchev of Technical

University, Sofia; Associate Professor Krassimir Manev of Sofia

University; Eric Dumas, Tumbleweed's vice-president; Graham

Finlayson, Tumbleweed's software architect; Bojidar Ivanov, a

Tumbleweed senior software development manager. ■

Tumbleweed challengesBulgarian programmers


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The authorized dealer for Iveco vehi-cles, Cefin Bulgaria, staged on April22 a delivery ceremony for 11 vehi-cles in front of St. Alexander NevskiCathedral in Sofia. The vehicles wereleased by two of the major distribu-tion and logistics companies - LimexEOOD and K-I Logistics EOOD.

The trucks are brand new, from therenewed light range of Iveco, whichwas officially launched last fall. The

model is Daily 65C15, with 6,500 кgGVW, 3,500 kg payload, and an EURO3 engine with maximum output 146horse powers. Six of the vehicles arefor Limex company, and are equippedwith original Italian refrigerated bodiescomplying with the European require-ments for transport of cooled andrefrigerated foods. The other fivevehicles, ordered by K-I logistics, areequipped with aluminum bodies fordry goods transportation.

The ceremony was preceded by apress conference in Radisson Hotel,attended by Daniel Marin, managingdirector of Cefin Bulgaria; StefanoChiozzotto, regional manager of Iveco;Vladimir Knezevic, market manager ofIveco for Bulgaria; Claudia Vilcu,executive director of Afin BulgariaEAD; Mikhail Kozhuharov, managingdirector of Limex EOOD; and BorisEnev, regional director of K-ILogistics. ■

Cefin Bulgaria Delivers 11 IVECO Vehicles

After more than three years of work, countless meetings, theproduction of over 4000 pages of documents, the staff, par-ents, and students of The American College of Sofia (ACS)received the word on April 19, 2005, that it has received anofficial accreditation from the Middle States Association ofColleges and Schools (MSA).

MSA was established in 1887 and is a non-governmental,non-profit organization which provides leadership in schoolimprovement for its member schools in the United Statesand throughout the world. Accreditation relies on the dualconcepts of self-regulation and quality improvement. Expertsdefine standards of acceptable operation and performancefor the institutions which have or are in the process of seek-ing accreditation. MSA has been accrediting U.S. highschools since 1926.

Dr. Susan Nicklas, MSA's executive director, said: "The com-mission acted on Saturday morning to grant full accredita-tion to ACS with no stipulations. They were completely sat-isfied with the updates you provided and were impressed

with the progress you have made and how seriously you tookthe team's recommendations."

The College plans to introduce the InternationalBaccalaureate Program (IB) for international students begin-ning in the Fall of 2005. The College will hold a meetingexplaining the IB Program to interested parents by the endof May. ■

American College of Sofia Receives U.S. Accreditation

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Kamenitza launches first white beer onthe Balkans

Kamenitza AD, owned by InBev, theworld's largest beer producer, toppedBulgaria's market for the first quarterof 2005 after selling 202,500 hecto-liters. The announcement was made byAndreas Seemuller, InBev general man-ager for Bulgaria, who quoted datareleased by the Union of Beer Brewers.

Zagorka-Heineken came up secondwith 174,400 hectoliters.

As a whole, however, January-Marchbeer sales were by 82,000 hectolitersdown from the same period of lastyear. Seemuller attributed this reduc-tion to a persistent cold weather inJanuary and February and to the 50-percent increase of excise duties as ofJan. 1, 2005, which resulted in con-sumers paying more for their of beer.

AC Nielsen agency released marketdata showing the InBev Bulgaria'soperation has a 32.7-percent marketshare, followed by Zagorka with 28.2percent and Carlsberg with 20.5 per-cent.

The sales of Kamenitza AD rose by 7

percent during the first quarter of2005, compared to the same period of2004. Beer sales overall dropped by 12percent.

"For a second year, Kamenitza AD ispersistently growing at a higher ratethan the market," Seemuller said. Hestressed that the success of KamenitzaAD can be explained by the rapidgrowth at the segment of international-license brands, where, for instance,

InBev has another brand, Beck's. Thelow-price segment, where two moreKamenitza AD brands, Pleven andSlavena, are placed, is also developingrapidly. Kamenitza remains the majorbrand in the company's Bulgarian port-folio.

The new products, launched in a rapidsuccession by Kamenitza AD, are onemore reason for the persistent goodperformance of the brewery, said thecompany's brand manager LazarMalakov. Kamenitza AD has gained itsniche within the dark beer segment,and at the same time it is the onlyproducer of alcohol-free beer inBulgaria. The brewery launched earli-er this month Kamenitza White, whichis the first malt unfiltered beer brandon the Balkans. It has a specific,slightly opaque colour, and at 5 per-cent alcohol content it is more thantwice less bitter than the traditionallight varieties.

Kamenitza White will be positioned inthe medium-price segment. It will besold at the price of Kamenitza Light -0.52 Leva per 0.5 liter. The new prod-uct sales will be boosted by TV com-mercials and by promotional materialsdisplayed at trade outlets. ■

Top models Elena and Veneta form Visages model agency show Kamenitza White bottle and label to the

reporters.

Andreas Seemuller, InBev Bulgaria general manager (right) and brand manager Lazar Malakov at a press

conference presenting Kamenitza White beer - the InBev Bulgaria new product.

The InBev company

dominates the market in

the first quarter despite

lagging sales overall

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■ I can't reach my license unless you hold my beer.

■ Sorry officer, I didn't realize my radar detector wasn'tplugged in.

■ Aren't you the guy from the village people?

■ Hey, you must have been doing 125 to keep up with me,good job.

■ I thought you had to be in relatively good physical shapeto be a police officer.

■ I was going to be a cop, but I decided to finish high schoolinstead.

■ You're not going to check the trunk, are you?

■ Gee, that gut sure doesn't inspire confidence.

■ Didn't I see you get your butt kicked on COPS?

■ Wow, you look just like the guy in the picture on my girl-friend's night stand.

■ Is it true that people become cops because they are toodumb to work at McDonalds?

■ I pay your salary.

■ So uh, you on the take or what?

■ Do you know why you pulled me over? Okay, just so oneof us does.

■ I was trying to keep up with traffic. Yes, I know there areno other cars around, that's how far they are ahead of me.

■ What do you mean have I been drinking? You are thetrained specialist.

■ Hey, is that a 9mm? That's nothing compared to this 44magnum.

■ Hey, can you give me another one of those full cavitysearches?

■ Well, when I reached down to pick up my bag of crack, mygun fell off of my lap and got lodged between the brake andthe gas pedal, forcing me to speed out of control. Search

What NOT to say to the Police

Alabama:

1. It is illegal for a driver to be blind-

folded while operating a vehicle.

California:

1. Community leaders passed an

ordinance that makes it illegal for

anyone to try and stop a child from

playfully jumping over puddles of

water.

Connecticut:

1. You can be stopped by the police

for biking over 65 miles per hour.

2. You are not allowed to walk across

a street on your hands.

Florida:

1. Women may be fined for falling

asleep under a hair dryer, as can the

salon owner.

2. A special law prohibits unmarried

women from parachuting on Sunday

or she shall risk arrest, fine, and/or

jailing.

3. If an elephant is left tied to a

parking meter, the parking fee has to

be paid just as it would for a vehicle.

4. Men may not be seen publicly in

any kind of strapless gown.

Illinois:

1. It is illegal for anyone to give light-

ed cigars to dogs, cats, and other

domesticated animal kept as pets.

Indiana:

1. Bathing is prohibited during the

winter.

2. Citizens are not allowed to attend

a movie house or theater nor ride in

a public streetcar within at least four

hours after eating garlic.

Iowa:

1. Kisses may last for as much as,

but no more than, five minutes.

Kentucky:

1. By law, anyone who has been

drinking is "sober" until he or she

"cannot hold onto the ground."

2. It is illegal to transport an ice

cream cone in your pocket.

Louisiana:

1. It is illegal to rob a bank and thenshoot at the bank teller with a waterpistol.

2. Biting someone with your naturalteeth is "simple assault," while bitingsomeone with your false teeth is"aggravated assault."

Massachusetts:

1. Mourners at a wake may not eatmore than three sandwiches.

2. Snoring is prohibited unless allbedroom windows are closed andsecurely locked.

3. An old ordinance declares goateesillegal unless you first pay a speciallicense fee for the privilege of wear-ing one in public. ■

Real LawsThese are real standing laws fromaround the United States of America.Hope you enjoy them and remember,Law Enforcement is no joke!

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