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

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

Te l . : ( 3 5 9 2 ) 97 4 2 7 4 3 Fax : ( 3 5 9 2 ) 97 4 2 7 41

i s s u e 8 1j u l y 2 0 0 7

AmCham Events: General Assembly, Ambassadors Confirm Bulgaria's New Standing, TennisTournament 2007; Analysis: Carrots and Sticks in EC Report on Bulgaria, Budgeting Out of theVAT Trap, Squaring with Europe; Member News: ADIS, Postbank, DZI Bank, Stanton Chase, Telelink

This is a really thick summer issue of AmCham Bulgaria

Magazine, and I have no intention of imposing on you any

more information about impending government shuffles,

teachers and doctors' strikes. Instead, I want to prepare you

for a relaxing summer break.

Forecasts are good. The

European Commission did not

impose sanctions on Bulgaria

(see the story on Page 10); the

state budget is balanced (Marina

Tsvetkova dissects the fiscal

health of the state on Page 14);

the international climate on the

Old Continent is one of stability,

even though Poland signaled an

intention to shake up some EU

arrangements (read Boyko

Vassilev's analysis on Page 18).

Add to these news the impressive lineup of summer con-

certs in Bulgaria (alas, Sting's reconstituted band Police is

not coming!) - and you can expect a great vacation season.

AmCham Bulgaria Magazine has always strived to be help-

ful to its readers by serving as a guide to news, events and

places. So, here is our advice: Stay away from the Bulgaria's

Black Sea coast this summer! My own exploration of places

from Balchik to Sinemorets have convinced me that relax-

ing by the sea has become problematic in Bulgaria. I

respect the entrepreneurial spirit of my compatriots, but the

immense numbers of newly constructed hotels and other

real estate developments have made things worse for the

vacationers.

Instead of sunny sandy beaches and quiet, relaxed atmos-

phere, you will encounter overcrowded resorts, pollution and

roaring construction equipment (less of it this year than in

2006, but still unnerving).

If you really want to unwind by the sea in July and August,

I advise you to take this issue as a summer reading and

head for Greece or Turkey's more relaxed beach resorts.

That is what I am going to do anyway. See you there.

Sincerely,

Milen Marchev

Editor-in-Chief

1p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

e d i t o r i a l

Dear Reader,

Dear Members and Friends,

I was very glad to see so manyfriends and happy faces at thisyear's AmCham IndependenceDay party. The people wereenjoying the bands - Late NightMessiah and BTR; the JackDaniels barbeque competitionwas a great show as usual; kidswere having lots of fun withMoten kids' corner; the food andbeer stands were under constantsiege, and the dancing floor was

crowded.

We all know, however, that the great part of the high spiritat the party comes from the beautiful park of LozenetzResidence with its impressive old trees and wonderful flowergardens. The residence management does a fantastic job ofkeeping the park and its beauty a really unique place forpleasure. And while I was enjoying the time together withour AmCham friends and guests, I was thinking of a con-troversy that we face virtually daily: we are proud of theextraordinary beauty of our country - yet we do so little topreserve it!

A sad example of how business interests may sometimestrump public good comes from the constant scandals withconstruction zoning violations at the seaside and in themountains. The most recent case became the court deci-sion nullifying the statute of Strandzha Nature Park as anational park, which removed the last barriers before yetanother seaside concrete monster. Strandzha region iswhere the first natural reserve in Bulgaria was established in1933, and it has been on the priority list of conservationareas in Central and Eastern Europe.

It is worth remembering that long-term economic growth andprosperity will not come through ill-conceived businessexploitation. It is worth knowing that preserving and protect-ing the natural beauty of our lands will help us define our-selves as a people and a country.

Happy summer holidays!

Best regards,

Valentin Georgiev

Executive Director

c o n t e n t s

2

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Publisher

American Chamber of Commerce in Bulgaria

Business Park Sofia, Mladost 4 Area

Building 2, Floor 6, Sofia 1715, Bulgaria

Tel.: +359 (2) 9742 743

Fax: +359 (2) 9742 741

e-mail: amcham@amcham.bg

www.amcham.bg

Editor-in-Chief

Milen Marchev

Deputy Editor-in-Chief:

Christopher Karadjov

Senior Editor:

Irina Bacheva

ISSN 1312-935X

Writers:

Boyko Vassilev, Marina Tzvetkova,

Mina Georgieva, Panayot Angarev,

Yuliana Boncheva

Advertising

AmCham Bulgaria:

Nadejda Vakareeva, nadia@amcham.bg

AmCham Bulgaria Magazine:

Milen Marchev, milen@milenmarchev.com

The AmCham Bulgaria Magazine reaches a broad audience

of AmCham members, leading US, Bulgarian and internation-

al companies, US and Bulgarian decision-makers, all

AmChams around the world.

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

to AmCham Bulgaria publications, please contact the

AmCham Bulgaria office.

i s s u e 8 1j u l y 2 0 0 7

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.

3p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

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

3M (East) AG . AA KRES EOOD . ABB Bulgaria Ltd. . Abbott Laboratories S.A. . AbCRO -Bulgaria . Accor Services Bulgaria . ACSIOR . ADIS Ltd. . Advance International Transport(Balkan) EAD . AES Corporation . AFA OOD . AIG Bulgaria Insurance & Reinsurance CompanyEAD . AIG Life Bulgaria . AIMS Human Capital . Alcoa Packaging Bulgaria . Alexander HughesBulgaria OOD . ALEXANDROV GROUP CORPORATION . Alfred C.Toepfer International . AllianceOne Tobacco Bulgaria . Allied Pickfords Bulgaria . Alter Ego Company OOD . American Collegeof Sofia . American English Academy . American Resarch Center in Sofia . American Universityin Bulgaria (AUBG) . Anglo-American School of Sofia . Anton Preslavski, Liebert Hiross . APIS -BULGARIA Ltd. . APOLO Ltd. . Argento Human Resource Solutions . Aries Commerce . AssociationIntegra-BDS . Association of Bulgarian Broadcasters - ABBRO . Astral Holidays AD . Astra ZenecaUK Ltd. . AT Engineering 2000 Ltd. . Auditing Company Versi and Partners Ltd. . Avendi Ltd. .AVON Cosmetics Bulgaria Ltd. . BAE Systems International Ltd. . Balkan Accession Fund . BalkanNews Corporation Plc. . Balkan Star Automotive EOOD . Baxter AG . Bayer Bulgaria EOOD . BCSerdon . BearingPoint, Inc. . Berlitz Schools of Languages . BG Radio . BMG Ltd. . Bodyguard-Fire-K Ltd. . Borislav Boyanov & Co. . Braykov's Legal Office . Brown Forman Beverages WorldwideSofia Branch LLC . British American Tobacco . Bulgaria Platinum Group . Bulgarian AmericanEnterprise Fund . Bulgarian Charities Aid Foundation (BCAF) . Bulgarian Land Development EAD .Bulgarian PostBank . Bulgarian Telecommunications Company EAD . Business Media Group .Business Park Sofia EOOD . CallCenterBulgaria . Car Rental Bulgaria Ltd. . Carlsberg Bulgaria AD. Cefin Bulgaria EOOD (IVECO dealer) . Center for the Study of Democracy . Central Hali AD .CENTURY 21 Bulgaria . Chelopech Mining EAD . Cisco Systems Bulgaria . Citibank N.A.- SofiaBranch . City University . Clockwork Ltd. . CMS Cameron McKenna EOOD . Coca-Cola BulgariaEOOD . Coca-Cola HBC Bulgaria AD . Coface Bulgaria Credit Management Services EOOD .Colgate-Palmolive Adria . COLLIERS International . ConsulTeam Recruitment and Selection Ltd. .Cook Communications . Corstjens Worlwide Movers Group . CPM Consultancy Sllc . Curtis / BalkanLtd. . Data and Information Consult . DeConi International . Deloitte Bulgaria EOOD . DENIMARLtd. . DHL Express Bulgaria Ltd. . Diageo Bulgaria Ltd . Diamed Ltd. . Dimitrov, Petrov & Co. .Djingov, Gouginski, Kyutchukov, & Velichkov . DLA Piper Weiss-Tessbach Branch Sofia . Dobrev, Kinkin& Lyutskanov Law Firm . Domaine Boyar AD . Dr. Emil Benatov & Partners . Dr. I.S. GreenbergMedical Center, Ellen Ruth Greenberg, Ph.D. . DynCorp International LLC . Effekten Und Finanz - SofiaAD . Ekotoi - Service Ltd. . Electron Progress AD . Eli Lilly and Company . Elido (Lamel Ltd.). Elmec Sport Bulgaria Ltd. . Elta consult AD associated partner of CB Richard Ellis for Bulgaria .Emerson Process Management AG . Encouragement Bank AD . Enel Maritza East 3 AD . EnemonaSA . Engineeringservice Sofia Ltd. . Environmental Quality Management, Inc. . Epsilon InteractiveInternational . Equest EAD . ERATO HOLDING PLC . Ernst & Young Bulgaria . European Bankfor Reconstruction and Development (EBRD) . Flying Cargo Bulgaria Ltd. - Licensee of FedEx . ForceDelta Ltd. . Forem Consulting Bulgaria . Forton International JSCo . G4S Security Services BulgariaJSC . General Electric International . Genmark Automation Bulgaria Plc. . GiTy Bulgaria ltd. .GlaxoSmithKline . Global Benefits Group GBGI CEE LLC Representrative Office . Goodyear DunlopTires Romania . Grand Hotel Sofia . Grenville Bulgaria . Grey Worldwide Bulgaria EOOD . Hewlett-Packard Bulgaria Ltd. . Hilton Sofia . Holiday Inn Sofia . Honeywell EOOD . IBM Bulgaria .IBS Bulgaria Ltd. . Ideal Standard Bulgaria . In Time Ltd. . Industrial Holding Bulgaria . ING BankSofia Branch . Interbrands Marketing & Distribution Inc. OOD . Interdean . International University. Investbank Plc. . IP Consulting Ltd. . ISI Emerging Markets (Internet Securities, Inc.) . Johnson& Johnson Doo. . Johnson Controls Electronics Bulgaria . Junior Achievement Bulgaria . KaliakraAD . Kamenitza AD . Kamor Auto EOOD . Katilin Popov Enforcement Officers . KempinskiHotel Grand Arena Bansko . Kolbis International Transfer Corporation . KPMG Bulgaria . Kraft FoodsBulgaria . LANDMARK Property Bulgaria . Lexim Sofia Ltd. . LIC Penkov, Markov & Partners OOD. Lindner Bulgaria EOOD . Lirex BG Ltd. . Lowe Swing Communications . M & M Air Cargo ServiceBG OOD . M3 Communications Group, Inc. A Hil & Knowlton Associate . Maersk Bulgaria Ltd. .Magnetic Head Technologies . Maria Vranovska, MO, MBA . Marsh EOOD . MARTERN EOOD .Mathnasium Rossimat . McDonald's Bulgaria Ltd. . Mellon Bulgaria EAD . Merck Sharp & DohmeIDEA Inc. . Microsoft Bulgaria . Miltech Ltd. . Mmd, Corporate, Public Affairs & Public RelationsConsultants . Mobiltel EAD . Monbat Plc. . Moody International Ltd. . Moten Sport . Moto-Pfohe Ltd. . Motorola Bulgaria EAD . National DISTRIBUTORS . NATO Defense College Anciens'Association . NDT Equipment Supplies LTD . Neochimiki Bulgaria S.A. . Net Is Ltd. . NeterraCommunications . Neumann International AG . New Europe Corporate Advisory . New EuropeDirectories Bulgaria . Nexcom Bulgaria EAD . Nu Image Bulgaria . Opet Aygaz Bulgaria EAD .Oracle East Central Europe Limited - Branch Bulgaria . Orbit Ltd. . Orkikem Ltd. . OSG RecordsManagement . Outsource Partners International . Ozone Laboratories Bulgaria . PANDA - IP Ltd.. Parsons E&C Bulgaria . Penev & Partners Law Offices . Pfizer Luxembourg SARL, RepresentationOffice Bulgaria . Philip Morris Bulgaria EOOD . Piraeus Bank Bulgaria AD . Pioneer Semena BulgariaEOOD . Plesio Computers Jsc . Popov Legal Office . PostPath . Praktiker EOOD . Pratt &Whitney . PricewaterhouseCoopers . Procter & Gamble Bulgaria . ProSoft . PSG Payroll ServicesLtd. . Radisson SAS Grand Hotel . Reader's Digest EOOD . Regus Bulgaria Ltd. . Rising ForceCo., Ltd. . Rockwell/Intelpack . S&T Bulgaria . Schenker EOOD . Schering - Plough Central East- Bulgaria . Scandinavia Motors Ltd. . SEAF Management Bulgaria EOOD . Sheraton Sofia HotelBalkan . Sherita M Ltd. . Siemens AG . Sienit Ltd. . SigmaBleyzer Investment Group LLC -Representative Office . Soravia Bulgaria Ltd. . Stanton Chase International Bulgaria . Stefan Dimitrov,Norman Realestate Co. Ltd. . Stoeva, Kuyumdjieva & Vitliemov Law Firm . Symix Bulgaria OOD .TechnoLogica EOOD . TeleLink AD . The Atlantic Club of Bulgaria . Tishman Management CompanyLtd. . Tissue Bank Osteocenter Bulgaria EAD . TMF . Totema Engineering . TravelStoreMaker.com. Tumbleweed Communications EOOD . UniCredit Bulbank . Unimasters Logistics Plc . UniqueEstates . Unisys Bulgaria Branch . United Consulting Ltd. . United Healthcare Bulgaria Group ofCompanies . United Medical Communications . Urban 2000 Ltd. . Vaptsarov Joint Stock Company. Vector Management Bulgaria EOOD . Videolux Holding / Technopolis . VIP Security Ltd. . VISAInternational Service Association . VSK Kentavar Ltd. . Welcome to Bulgaria . Westinghouse EnergySystems Bulgaria Branch . World Courier Bulgaria . Wrigley Bulgaria EOOD . Xerox Bulgaria Ltd.. Yavlena Ltd. . Zlati Dinev Studio in partnership with Outerbridge/Morgan .

Board of Directors of the American Chamber of Commerce in Bulgaria

President Mr. Borislav Boyanov Borislav Boyanov & Co.

First Vice President Mr. Anthony Hassiotis Bulgarian PostBank

Second Vice President Mr. George Randelov IBM Bulgaria

Treasurer Tanya Kosseva-Boshova Landmark Property Bulgaria

Members Ms. Olga Borissova Ellief Center, AUBG

Mr. Thomas Higgins Balkan Accession Fund

Mr. Andon Ichev General Electric

Mr. Stefan Ivanov Citibank N.A.

Mr. Kenneth M. Lefkowitz New Europe Corporate Advisory

Ms. Evgenia Stoichkova Coca-Cola Bulgaria

Mr. Chris Thompson Bearing Point, CLRP

Ms. Elitsa Tsaneva Ideal Standard Bulgaria

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

Executive Director Valentin Georgiev

Contentsc o v e r s t o r y

AmCham Independence Day:

Families and Friends Celebration . . . . . . . . . . . . .4

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

Ambassadors Confirm Bulgaria's New Standing at

AmCham Luncheon . . . . . . . . . . . . . . . . . . . .10

p o l i t i c s

Carrots and Sticks in EC Report on Bulgaria . . . . .12

By Yuliana Boncheva

e c o n o m y

Budgeting Out of the VAT Trap . . . . . . . . . . . . .16

By Marina Georgieva

a n a l y s i s

Squaring with Europe . . . . . . . . . . . . . . . . . . .24

By Boyko Vassilev

Production of Biofuels

Supports Energy Diversification . . . . . . . . . . . . .26

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

GA Re-Elects Tanya Kosseva,

Welcomes Stefan Ivanov to board . . . . . . . . . . .28

i n t e r v i e w

Evolving Financial Services Market in Bulgaria . . .30

By Irina Bacheva

m e m b e r n e w s

CEO of ADIS Joins Board of FIABCI-Bulgaria . . . .33

105 Bulgarians Graduate

from City University of Seattle . . . . . . . . . . . . .33

Postbank, DZI Bank Merge

as Eurobank EFG Bulgaria . . . . . . . . . . . . . . . .34

Stanton Chase Shares Best Business

Practices in e-marketing . . . . . . . . . . . . . . . . .37

s k y h i g h

U.S. and Bulgarian Air Forces Celebrate Together .39

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

Orkikem Wins AmCham Tennis Tournament . . . . .40

m e m b e r n e w s

Telelink Completes DWDM Network Project . . . . .42

n e w m e m b e r s . . . . . . . . . . . . . . . . . . . .42

Katilin Popov Enforcement Officers

Siemens AG

m u s i c

To Be Played During Massive

Worldwide Police Reunion Tour... . . . . . . . . . . . .43

c o v e r s t o r y

4

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Fourth of July is a familyevent for the Americans, cel-ebrated spectacularly inevery state. In the nation'scapital this is an all-day hap-pening, beginning with aparade and ending with animpressive display of fire-works. In the United States,Fourth of July celebrationsare among the most attendedevents and many peoplearrive early to stake out aseat on the lawn.

Already establishing a tradi-tion of open air celebrations,as some of the guests com-mented for the AmChamparty, the Independence Daygathering (which this year fellon July 8) in fact proved itspopularity once more. Morethan 2,500 people arrived forthe party in the hot Sundayafternoon at the LozenetsResidence. This site hasbecome quite familiar to theAmerican community inBulgaria - AmCham mem-bers, U.S. embassy employ-ees and families, U.S. citi-zens in Bulgaria, celebritiesand businesspersons invitedfor the occasion. TheAmCham party again meantfun, music, special moments,presents, ruffle prizes, deli-cious meals, beer and softdrinks.

By tradition, the special guestat the AmCham celebrationwas H.E. John Beyrle, U.S.ambassador to Bulgaria. Hewelcomed in Bulgarian lan-guage all the guests andfriends.

we a re c om ing

AmCham IndependenceDay: Families andFriends Celebration

5p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

c o v e r s t o r y

t h e p a r t y s t a r t s

th e k i d s c o r n e r

t h e c a r

c o v e r s t o r y

6

Am

Cham

B

ulg

aria

M

agazin

e July

2007 t h e ch e f s

"July Fourth is not only anAmerican holiday but a onefor every nation that trea-sures the ideal of freedom,democracy and responsibili-ty," the U.S. envoy said. "It isalready a 200-year old idealthat proved its value and thatis why Bulgarians could alsocelebrate this special day inthe American history."

Borislav Boyanov, AmChampresident, welcomed theguests, too. He outlined therecent political and econom-ic achievements in the U.S.-Bulgarian relations andthanked the AmCham mem-bers, currently 270, for mak-ing the business climate inthe country better.

American and Bulgariananthems were performed liveby Georgi Robev ChoirSociety.

The American style tradition-al family party this year wasgenerously supported byScandinavia Motors - gener-al representative of SAABautomobiles for Bulgaria,Jack Daniel's, BTC, Vivatel,Bulgarian Land Development,Dundee Precious Metals,UniCredit Bulbank andMotorola. Lots of food, beerand drinks were provided byMcDonald's, Hilton Sofia,Radisson SAS, Pain D'Or,Popwestern, Coca Cola,Kamenitza, Stella Artois,Tuborg, Shumensko, Zagorka,Jack Daniel's TennesseeWhiskey.

Saab automobiles displayedin the Lozenets residence,Saab mini-golf corner, Golfsimulator by St. Sofia GolfClub at the entrance of theresidence, and BTC's Wi-Fizone were among the numer-ous attractions at the party.

Even in the hot summerafternoon, adults and kidsdid not spare efforts todance. Chris Thompson's

f am i l i e s a nd f r i e nd s

7p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

c o v e r s t o r y

t h e ru f f l e s

che e rs a nd bon appe t i t

c o v e r s t o r y

8

Am

Cham

B

ulg

aria

M

agazin

e July

2007

band Late Night Messiah and- later on - BTR, the famousBulgarian rock band, enter-tained the guests.

Everybody found a place torelax and have fun - at thetables, on the lawn,

or talking with friends. Kidswere among the happiestguests, because they hadseveral corners to play. Aline formed at the tow-ropecorner where children exer-cised their muscles descend-ing on a rope. The cornerwas designed by MotenSport.

David Hampson, master ofthe ceremony, announcedthe winners of the fundrais-ing raffles meant to servevarious charity purposes.The main contributors for theraffles were Astral Holidays,Hilton Sofia, Radisson SASGrand Hotel Sofia,Yastrebets Wellness & SPAHotel, Borovets, TravelStoreMaker.com, Allied Pickfords,Centralni Hali, Motorola,Sheraton Sofia Hotel Balkan,BTC, Vivatel, Grand HotelSofia, Interbrands Marketing& Distribution Inc.

A colorful barbeque contestwas carried on under theprofessional guidance ofPetar Bachvarov-Uti, the topBulgarian chief, presiding thejury. Mitko Karnev from D2received the overall award.Ivaylo Kraychovski from thefamous FSB band took theaward for most innovativeusage of Jack Daniel'swhiskey in preparation ofmeal.

At 9:30 p.m. the fireworkswent off and the guestswere entirely attracted to thepicturesque scene. The day-long party ended near mid-night with the cutting ofhuge cake, which broughtextra delight to the audi-ence. ■■

chee rs - h appy in dependence d ay !

th e b ands a nd th e f a n s

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

10

Am

Cham

B

ulg

aria

M

agazin

e July

2007

In an outgoing and occasionally movingmanner, ambassadors ElenaPoptodorova and John Beyrle sharedthoughts and views on Bulgaria-U.S.relations during a luncheon with theAmCham business community on June14.

Both diplomats informed the audienceon the weeklong business road show inMay, which covered five cities acrossthe United States. AmCham membersand distinguished guests attended theluncheon, such as Solomon Passy,chairman of the parliamentary ForeignAffairs Committee, Nikola Kolev,President Parvanov's chief of staff, andPetar Kunev, deputy chairman of theparliamentary Economic Committee.

As a NATO and EU member, Bulgariahas a new standing in transatlanticrelations, said Ambassador

Poptodorova. Ambassador Beyrleadded that Bulgaria is an importantparty in the transatlantic dialogue. U.S.companies' investment interests are

mainly focused on telecommunications,information technologies, energy andpharmacy, Ambassador Beyrle alsosaid.

Ambassadors ConfirmBulgaria's New Standingat AmCham Luncheon

The luncheon with the two ambassadors drew strong media interest.

11p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

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

The creation of America for BulgariaFoundation will be endowed with $200million from the Bulgarian AmericanEnterprise Fund (BAEF) over the com-ing years, Beyrle said, reiterating whatPresident Bush had said during hisvisit to Bulgaria. The foundation willassist in the development and growthof a vibrant private sector. Support willbe provided to private organizationsand NGOs that focus on entrepreneur-ship, business education, leadershipdevelopment and support for privatesector philanthropy, and to key busi-ness sectors such as tourism andtechnology. The foundation will beguided by a volunteer board of direc-tors comprising Americans andBulgarians, and will be registered as anon-profit entity in the United Statesand Bulgaria.

"What does the European Union meanfor Bulgaria? I have formulated it thisway: More European Union meansmore United States," said AmbassadorPoptodorova. One of the messages shebrought from the road show was theadmiration of the Bulgarian talent in theUnited States. She thanked foreigncompanies operating in the countrywho participated in the road show "forbeing out there for Bulgaria."Elaborating on the possibilities forfuture contacts between U.S. andBulgarian businesses, Poptodorovarevealed that the "middle of America"and especially SME companies areeager for exposure and willing toexpand their businesses overseas.

In a rather moving manner, Poptodorovasaid that "the show must go on." Sheadded: "It has started thousands milesaway from here, but I am very happywe have a follow up in Bulgaria, whereI belong. It is nice to see the AmChamcompanies ready to share their experi-ence to the new coming U.S. investorsto help them start their business suc-cessfully in the country."

Ambassador Poptodorova also said thatPresident Bush's visit to Bulgaria wasthe friendliest, most relaxed and mean-ingful exchange between the two coun-tries.

"It was a meeting between people, part-ners and allies who are committed toidentical goals: the European and theglobal security." ■■

From Left: David Hampson, Manager of Grenville, George Randelov, General Manager of IBM and

AmCham Vice President, James Rigassio, US Commercial Attache in Bulgaria and Ambassador Elena

Poptodorova met prior to the luncheon.

Solomon Passy (right), chairman of the parliamentary Foreign Affairs Committee, Nikola Kolev (center),

President Parvanov's chief of staff, Stefan Ivanov, Citi Country Officer, and Peter Valert, Managing Partner,

DLA Piper Sofia.

US Embassy Deputy Chief of Mission Alexander Karagiannis (second right) share thoughts with Ambassador

Poptodorova, AmCham President Borislav Boyanov and Venislav Iotov, General Manager of AIG Bulgaria.

p o l i t i c s

12

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Bulgaria received both good and badnews from Brussels on June 27. Therewill be no red flags and safeguardclauses - at least for now, it emergedfrom the anxiously awaited report of theEuropean Commission (EC) onBulgaria's first months as a EuropeanUnion (EU) member. That is the goodnews. The bad one is that the closemonitoring will continue and the threatof sanctions will remain, because Sofiahas not demonstrated much progress inthree key areas.

According to the report, the judicial sys-tem remains insufficiently effective, thereare no tangible results in the fight againstorganized crime, nor decisive measureshave been taken against high-level cor-ruption.

"Contract killings" continue to be of greatconcern, and in particular most recentkillings of local politicians. To date, noprosecution and conviction has takenplace, the world agencies announced.

Though since Jan. 1, 2007 Bulgaria andRomania have been part of the EU, theyare subject to unprecedented strict moni-toring in certain areas where they still failto meet the European requirements: thejudicial system, the management ofEuropean funds, food safety and, inBulgaria's case, aviation safety. That con-trol may entail sanctions. For instance,other member states may refuse to rec-ognize judgments of the Bulgarian andRomanian judiciary. There is also a threatof financial penalties - withholding EUaids, more specifically in agriculture.

While presenting the report, the vice pres-ident of the European Commission,Franco Frattini, who is also the commis-sioner responsible for justice and securi-ty, pointed out that progress had beenmade in fighting small corruption andimproving order at the borders, and thatthe constitutional amendment adopted byBulgaria in February guaranteed indepen-dence and accountability of the judiciary.He underlined, however, that high-levelcorruption remained a serious problem.

The long legal procedures are a majorweakness of the Bulgarian judiciary.When a prosecutor brings a case to thecourt, it takes two, three or even fouryears before the court passes a finaljudgment - that is inadmissible, commis-sioner Frattini commented.

Carrots and Sticks in ECRepor t on BulgariaBrussels did not impose sanctions on Sofia, but the threat of notorious 'safe-

guard clauses' remains

By Yuliana Boncheva

There is no place for self-satisfaction; thejudicial reform and the fight against cor-ruption and organized crime have to con-tinue. This is the message the EC sendsin its June 27 report. It is addressed toboth Balkan states. The main criticismagainst Bucharest, however, concernsonly one area: the fight against corruption.The report on Bulgaria pinpoints threeAchilles' heels: corruption, organizedcrime and judicial reform.

The June 2007 report focuses on theadministering of justice and only toucheson the other problematic areas: agricul-tural reform, aviation safety, veterinarymeasures and food safety, as they will bethe subject of separate assessments. Inlate June a mission of EU experts cameto Sofia to check Bulgaria's readiness forabsorption of the European agriculturalfunds and see if the newly set-upPayment Agency operates properly. It isthis mission that will decide whether asafeguard clause will be invoked in thisarea and whether Bulgaria will be pun-ished with the withholding of aids.

For the time being, Sofia and Bucharesthave avoided the safeguard clauses, asthe EC has decided that they are makingefforts for reforms. Besides, only sixmonths have passed since the two coun-tries joined the EU, so they have not hadenough time to show convincing results inthe key areas. But Brussels will continuethe strict monitoring for three years - untilthe end of 2009 - as is set forth in theaccession treaties. During this time it willhave the right to trigger safeguard claus-es and impose sanctions if the problemsin a given area turn out to be chronic.

Commissioner Franco Frattini said hehoped that by this time next year the ECwould be able to report that Bulgaria andRomania have met all the benchmarks.Then Brussels would be able to lift themonitoring, without having to wait for threeyears, and the threat of safeguard claus-es would be removed.

Frattini also said that none of his col-leagues in the EU demanded the trigger-ing of safeguard clauses in the Junereport. Moreover, all commissioners unan-imously agreed that the final report wouldbe softer and more encouraging than theworking version. Our aim is to helpBulgaria and Romania achieve results, itis not a blaming and shaming exercise,the commissioner said.

Anyway, for the time being Brussels willcontinue to discipline the EU novices bypursuing a carrot-and-stick policy.

What has been

Bulgaria's progress since

the previous report

of the European Commission ofSeptember 2006? Following are thehighlights from this year's report:

Bulgaria already organizes competitionsfor the recruitment of judges.

The authorities have instituted criminalproceedings against eight magistrates forobstruction of justice. Several officials

have been accused, too.

The recommended constitutional amend-ments intended to remove any ambiguityregarding the independence and account-ability of the judiciary were approved inFebruary.

The parliament is discussing two impor-tant new bills: on the judicial system anda new civil procedure code, which willimprove the efficiency of the judicial sys-tem.

The authorities are investigating the originof the property of 62 customs officers.Four have been discharged and ten pre-trial procedures have been launched con-cerning documentary frauds and graft at

UnanimityThe assessments contained in the EC report coincide completely with the opin-

ion of the ordinary Bulgarians. According to the corruption perception index,

which Transparency International announces on an annual basis, Bulgaria has

not made substantial progress in the fight against graft. The non-government

organization cites recent data presented by the Ministry of Justice about the peo-

ple convicted of bribe-taking and criminal breach of trust. In 2006 accusations

were brought against 107 people in Bulgaria, 16 of them were acquitted, 88 were

sentenced to prison and 38 received suspended sentences. Of 50 people with

prison sentences for bribery, 38 were issued suspended sentences and only 12

were sentenced to up to three years in prison.

According to the deputy chairman of Transparency International-Bulgaria, Dimitar

Kyumyurdjiev, there are no high-profile corruption charges and convictions of high-

ranking officials. That creates the impression in the public that these people enjoy

partisan or other type of protections and are actually untouchable. There is no

political will in Bulgaria to fight corruption, Kyumyurdjiev said.

13p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

p o l i t i c s

Michael Humphreys, Head of European Commission Representation in the country commented before media

the EU monitoring report, together with Gergana Grancharova, EU Affairs Minister.

p o l i t i c s

14

Am

Cham

B

ulg

aria

M

agazin

e July

2007

the borders.

Video-cameras have been installed at theborders to monitor employees.

A rotation principle has been implement-ed for employees at border checkpointsas a measure against corruption.

In the area of organized crime andmoney laundering, a total of 222 investi-gations concerning 99 crime groupshave been launched in Bulgaria sinceOctober and 95 people have been sentto prison. But Bulgaria has only onecriminal boss convicted.

Judicial process

Overall, Bulgaria has achieved someprogress in improving the transparencyof the judicial process but more time isneeded to be able to assess whether thenew laws will have their intendedimpacts, the report reads. It is too earlyto assess the efficiency of the constitu-tional amendments. The inspectoratethat will monitor the integrity of the judi-ciary has not been established yet.

Corruption

According to the EC the progressachieved in eradicating high-level corrup-tion in Bulgaria is still insufficient. Thejudicial system is expected to conductand report on professional and non-par-tisan investigations into allegations ofhigh-level corruption.

Several anti-corruption commissionshave been set up - at the NationalAssembly, the Council of Ministers, theSupreme Judiciary Council, etc. - butthere is no efficient coordination mecha-nism, nor clear lines of responsibilities.According to the report, it is not clearwhether issues concerning the fightagainst crime should be addressed tothe prime minister, the interior minister,the prosecutor general or to somebodyelse.

The document does not forget to men-tion that a system to verify asset decla-rations of high public officials and politi-cians was set up in January 2007 butthere is little evidence of judicial follow-up on allegations of high-level corruption.

Financial investigations into inexplicablewealth are not yet common practice, the

document points out.

Organized crime

Brussels is not satisfied with the results inthis area, nor with the quality of the infor-mation presented. Bulgaria reports adecrease in crimes against the person butthe statistical information provided fails toclearly define the types of crimes perpe-trated. For example, in relation to murders,the figures provided mix up domestic mur-ders with contract killings of businessmen,politicians and criminal bosses.

Recent scandals involving high-rankingofficials in the executive and judiciary inBulgaria will be a key test of the effi-

ciency of the mechanisms put in place toinvestigate and effectively punish relatedgrand-corruption/organized crimes, EC'sreport reads. This concerns the recentresignation of outgoing economy ministerRumen Ovcharov and the ex director ofthe National Investigative Service, AngelAlexandrov, who exchanged accusationsof corruption and abuse of power.

The EC will prepare a new detailedreport on Bulgaria this time next year.Before that - by March 31, 2008 - Sofiahas to report to the EU on its progressin problematic areas. Meanwhile, byOctober 2007 Bulgaria has to draft anaction plan on the fight against corrup-tion and crime. ■■

Responses from the Bulgarian parliamentAntonia Parvanova: EC's reports have always contained criticism in relation to

justice and home affairs. It should be noted, though, that organized crime and

corruption do not depend on the ministers and the government only but some-

times on institutions that operate independently. A government cannot cope with

all problems by itself. Citizens are also responsible for the failure. We, as a soci-

ety, are tolerant to corruption. We partake in corruption on all levels: from break-

ing the traffic rules to the highest levels of government. If the public is not intol-

erant to corruption, it will not decrease.

Evgeni Kirilov, MEP, BSP: EC's conclusion in the report is that no miracles can

be expected in such a short time. The report cannot be viewed as a sensation.

I think the report is objective.

Eleonora Nikolova, independent MP: It is obvious that we have not managed

to cope with corruption on any level, nor with the scandals that broke in the judi-

cial system and the Council of Ministers. The resignation of minister of econo-

my and energy Rumen Ovcharov was accepted but it never became clear which

party circles had siphoned off the state.

Dimitar Abadjiev, independent MP: Although progress is reported, in practice

the document repeats the criticism contained in the report of December 2006,

which is a failure. No safeguard clause has been invoked only because the

European Commission has decided not to make use of this measure.

Martin Dimitrov (UDF): The EC report is an objective analysis but Brussels has

again made a gesture giving Bulgaria another six months to make progress at

least in the area of agricultural subsidies. A quarter of the subsidies may be lost

if at the end of the year it turns out that the Payment Agency has no capacity

to administer and control the absorption of the European aids.

Volen Siderov (Ataka): The European structures are bureaucratic: they criticize

corruption and the judicial system but do not take efficient measures to sanc-

tion the respective state. I do not think corruption in Bulgaria is more widespread

than in France or any other European country. Bulgaria should use the fact that

the EU does not apply real sanctions and do its best to re-open units 3 and 4

of the Kozloduy nuclear power plant.

Stefan Sofianski (BNU): I am not so concerned about the criticism in the EU

report in the area of justice and home affairs as in the area of economy. Bulgaria

is not absorbing the European funds.

e c o n o m y

16

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Budgeting Out of the VAT Trap Bulgarian government has overcome an expected revenue slump

as a result of the EU accessionBy Marina Georgieva

In the middle of the first year ofBulgaria's EU membership, the govern-ment's financiers can afford a sigh ofrelief. The "evil" prophesies about adecrease in the revenue from the bud-get's most powerful source, the valueadded tax (VAT), have not come true. Atleast for now, statistical data show thatthe budget health of the republic is notat stake because of lower VAT collec-tions. For the first five months of theyear the revenue from the indirect taxamounts to nearly 1.1 billion Leva, or39.3 percent of the annual target, theNational Revenue Agency (NRA) said.

To analysts, this is a sign that the criti-cal results for January and Februaryhave already been overcome. In thebeginning of the year the tax authoritiesreported a negative trend for two budgetparameters. They admitted that the VATrevenue was just 640 million Leva, com-pared with 858 million Leva for the firsttwo months of 2006, while customs dutycollections had declined from 56 million

Leva to 23 million Leva.

The losses have been projected, saidPetar Dimitrov, chairman of the parlia-mentary Budget Committee. They aredue mainly to the

removal of borders with

the EU

and the related liberalization of the cus-toms regime.

It was clear even before the end of2006 that value added tax will be themain problem of the fiscal year 2007. Ina report on the 2007 draft budget,Finance Minister Plamen Oresharskisaid that a revenue slump could beexpected because of VAT siphoning.The document said that "VAT losses inBulgaria may reach 1 billion Leva, i.e.,550 million Leva above the plan for2007." An additional concern is the sen-sible likelihood that the big Europeantax-siphoning players will focus on

Bulgaria, taking the line of least resis-tance.

The certain losses from VAT as a resultof Bulgaria's EU accession stand at 450million Leva, Oresharski told the mediain late 2006. The figures show that thelosses from the tax in the 10 countriesthat joined the EU in 2004 rangedbetween 0 percent in the CzechRepublic and 30 percent in Poland inthe first year of their membership.

Currently, VAT accounts for about aquarter of the budget revenue. Some 85percent of the tax is levied on imports,i.e. the bulk of the tax is collected at thecustoms. The revenue from VATcharged on business within the countryis only 15 percent.

The total revenue from VAT on importsamounts to some 3 billion Leva a year.Half of the imports in Bulgaria comefrom EU countries, i.e. approximately 1.5billion Leva of the budget revenue from

The Bulgarian Government recently asked Ministry of Finance, the National Revenues Agency and the Bulgarian Customs Agency to come up with a plan for improv-

ing the budget revenue.

VAT is due to imports from the EU. Thatmakes up a touch above 10 percent ofthe total budget revenue.

It turns out that the main VAT trap isconnected with the

changed technology

of tax collection. Since January 1 thetax on imports is no longer levied at theborder but inside the country, just theway local manufacturers are charged.Besides, the import of used cars fromthe EU is not imposed VAT, because thetax has been already paid in anothermember state, from which the budgetwill lose roughly 300 million Leva.

So, to a certain extent it depends on thetax administration (the NRA, in which alot of money and efforts have beeninvested) whether or not the Bulgarianbudget will be affected by the risks ofthe new VAT regime.

Nevertheless, economists from the non-government sector said that the FinanceMinistry was concealing a series of fac-tors that

reduced the risks

of VAT traps in the budget. For the pastfew years imports in Bulgaria have beengrowing rapidly and the budget revenuefrom VAT has always exceeded by muchthe Finance Ministry's forecasts. In 2005for instance, the VAT revenue overshotthe budgeted target by 560 million Leva.

Besides, the economic growth is alsoabove the expected, which additionallyraises the VAT revenue, while the budget

surplus increases every year, providing asubstantial buffer that can offset evenhuge as a size and unlikely as occur-rence risks.

The year 2007 saw higher excise dutieson fuels and VAT on goods and servicespreviously exempt from the tax, whichwill increase the budget revenue and willbe supplemented by certain EU funds.Thus the risks for the 2007 budget exist,but they are sufficiently well covered to

cause concerns.

For the past 10 years or so VAT hasremained the "most repressive tax,"commented Martin Dimitrov from theoppositional United Democratic Forces.If we look at the structure of the statebudget, we will see that VAT and exciseduty collections account for the bulk ofthe revenue - over 70 percent. Giventhat share, it is natural for the state totry and ardently defend and encourage

17p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

e c o n o m y

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

The cross-border VAT frauds within the EU make up between 2 and 2.5 percent

of the Community's gross value added, i.e. some 200-250 billion Euro a year. In

the United Kingdom alone the losses from the indirect tax are assessed at over

50 billion pounds a year. The potential losses from VAT are the biggest concern

related to Bulgaria's 2007 budget performance. According to the preliminary cal-

culations of the government's financiers, which were announced during the adop-

tion of the budget, the losses will range between 500 million Leva and 1 billion

Leva.

As concerns the VAT rates in the EU, they range between 15 percent

(Luxembourg and Cyprus) and 18 to 25 percent (Hungary, Sweden, Denmark).

But comparing the standard VAT rates alone is not enough to estimate the level

of the tax burden. There are possibilities in the EU for levying lower rates on cer-

tain goods and services. Reduced tax rates are applied in most EU countries.

They are connected with the taxation of basic foods, children's clothes, medi-

cines, newspapers, magazines, books, passenger transport, theater tickets etc.

The size of the tax abatement and the scope of goods and services to which

the lower rates apply vary from country to country. Unlike the system of per-

sonal and corporate income taxation, where the differences between the old and

the new members are clearly definable, no such big differences can be found in

relation to VAT. That can be attributed to the fact that EU's interference in the

harmonization of VAT is substantial and no individual taxation experiments are

admitted.

As concerns VAT, Bulgaria is among the countries with relatively high tax rates.

Moreover, unlike most member states, Bulgaria has never applied reduced rates

since VAT was introduced in 2004.

the collection of the tax with repressiveinstruments. Naturally, it is the small andmedium businesses that suffers fromthat, Dimitrov added.

Remodeling the VAT law

A month ago the NRA submitted specialdraft amendments to the VAT Act,proposing to extend the term of taxaudits to six plus two months. That isjustified with the fact that the Bulgariantax authorities have to synchronize theiractivity with the terms for internationalexchange of information. The problem isthat when the NRA sends an inquiry toa foreign revenue administration, it takesthree to six months to receive a reply.Since the current law sets an audit termof three plus one month, that may resultin refunding illegally declared VAT,because there is no information aboutthe actual deliveries, the NRA warns.

Since the beginning of 2007 the NRAhas been a part of the European systemfor automated exchange of VAT infor-mation, VIES. The system allows identi-fying persons who have not declareddeals within the EU, or have notdeclared their full size, or have illegallydeclared them. In addition, there areprocedures for cooperation with theother EU countries in exchangingdetailed information, conducting multilat-eral audits etc.

As another means to prevent tax frauds,Bulgaria introduced the so-called

joint liability of the suppli-

er and receiver

of a delivery or service, when the buyeris proven to have been aware of theseller's fraud. Suspicions arise when thedeal is fictitious or closed at a pricequite different from the market one.

Rough calculations show that the exten-sion of tax audits to eight months mayblock approximately eight-twelfths of acompany's turnover, or 66 percent of itstotal financial resource. This absurditymay happen if the tax authorities decideto start audits at a given company everymonth. As a matter of fact, the audits atsuch a company may continue for an

indefinite period of time. But what iseven more absurd is that the law doesnot rule such a possibility out.

Another amendment to the harmonizedVAT law that entered into force onJanuary 1, 2007 provides for a jump inthe fines for companies that have notsubmitted their VAT returns. The sanc-tion now ranges between 500 and10,000 Leva, compared with 250 to2,500 Leva before. The same penaltiesare envisaged for companies that havenot submitted information from theirreport registers or have submitted untruedata.

The fight against VAT frauds alsoinvolves refusing VAT registration tocompanies that have not presented aone-year bank guarantee. The samefate awaits companies where the own-ers or shareholders have outstandingVAT liabilities exceeding 5,000 Leva.The sanctions for taxpayers have beenincreased up to 20-fold. But curiouslyenough, the draft law does not providefor a reciprocal penalty for the state, norfor the payment of punitive interest onpast-due tax credit. Nor for tax officialswho have exceeded their authority.

Tax authorities, however, are ready toshow some generosity towards busi-nesses. That consists in the new mech-anism for refunding the tax before theaudit has finished. But for the purposecompanies have to present a bank guar-antee and thus voluntarily block part oftheir resources, because banks willneed a security for the guarantees. If

e c o n o m y

18

Am

Cham

B

ulg

aria

M

agazin

e July

2007

r e s u l t s

Nearly 6,000 companies have registered under the VAT Act for the first five

months of the year in Sofia alone, the NRA said. Since Jan. 1, 2007 all compa-

nies can obtain VAT registration, even if their turnover is below 50,000 Leva. That

has encouraged businesses to pay the tax and use their right to draw tax cred-

it. In order to prevent frauds, the tax authorities have tightened the control over

VAT registered companies. For the past two months the NRA has initiated the

termination of the VAT registration of 529 companies in Sofia, another 254 are

in a deregistration procedure. These are companies that cannot be found at the

stated address, systematically default on their VAT obligations or have tax liabil-

ities exceeding the value of their assets.

For the first five months of the year the NRA in Sofia has submitted 47 tip-offs

about tax frauds to the total amount of 60 million Leva to the prosecuting author-

ities. One of the cases alone concerns a fraud for 15 million Leva. Despite the

difficulties in VAT collection that are connected with Bulgaria's EU membership,

the revenue from the tax in Sofia for January-May amounts to 574.5 million, or

56 percent of the annual plan.

Regional Policy European Commissioner Danuta Huebner and Bulgaria's Finance Minister Plamen

Oresharski signed Friday the National Strategic Reference Framework (NSRF) for the period from 2007

to 2013 in Sofia at an official ceremony. More than 150 people attended the event. The ambassadors of

the EU member states to Bulgaria, ministers and deputy ministers, members of the parliament, regional

governors, mayors, representatives of government and non-government organizations and the media were

among the guests.

21p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

e c o n o m y

that is available, the NRA will refund thetax immediately. Or, to use the words ofthe proposers, the revenue agency "willfree the financial resource of compa-nies," provided that the state's receiv-ables have been secured. The possibili-ty will be available to all companiesunder audit which want their tax refund-ed before the audit is completed.

"Andreshko's tricks will not

work in Europe,"

Minister Plamen Oresharski said latelast year, referring to the somewhatheroic Bulgarian literary character of aboy who strands a tax-collector in themiddle of a bog. Bulgaria's top financierswore that a new era was coming forthe native tax authorities and that theywould monitor closely all VAT registeredtraders. It seems that the main weaponsin the fight against potential fraudstersare the extended audit terms, whichallow the state to block the money of abusiness.

That, however, sounds in discord withthe arguments employed to revoke the

hateful VAT-account system from thebeginning of 2007. Oresharski'sfinanciers slammed the accounts asblocking some 560 million Leva of com-panies. They said that about 70 percentof the accounts were of small firms andthat every month businesses paid 1.3million Leva to commercial banks forservicing them. But, thanks to theaccounts, companies received a taxrefund in 45 days. After the VAT law isremodeled again, that will take muchlonger, especially for the companiesoccupied by tax auditors.

Businesses in Bulgaria recently resumedtheir calls for a

VAT reduction

with a new proposal coming from theBulgarian Industrial Association, whosemembers believe that the lower tax willhelp curb the grey economy in thiscountry. Cutting the VAT rate from 20 to18 percent and then to 15 or 16 percentif collection improves is one of the pro-posed mechanisms for encouragingmore companies into the official econo-

my. The other fiscal measures proposedby the Association are as follows:dynamically reducing the tax and social-security burden; raising the social-secu-rity thresholds and making them market-oriented; introducing a 10-percent flattax and mandatory VAT registration forall economic agents.

Remember that the VAT abatement from20 to 18 percent was a promise madeby all candidate parties during the elec-tion campaign in the summer of 2005.But as soon as the governing coalitionof the Bulgarian Socialist Party, theSimeon II National Movement and theMovement for Rights and Freedoms wasformed it emerged that the measurewould not be fulfilled.

Today, however, the tripartite coalitionis in the middle of its term and thereare quite many differences among theparties concerning the economic andfinancial government of the state. Sothe VAT issue is very likely to turnfrom a budget trap into a trump cardfor some of the parties in the govern-ment. ■■

iF YOUR ADWERE pLACED HERE,

• WOULD BE CONVEYED TO THE LEADING US, INTERNATIONAL AND

BULGARIAN COMPANIES OPERATING WITHIN BULGARIA;

• WOULD REACH THE DESKS OF SENIOR EXECUTIVES AND DECISION-MAKERS

WHO DEMAND HIGH QUALITY PRODUCTS AND SERVICES;

• WOULD TRAVEL ACROSS THE EUROPEAN CONTINENT AS WELL AS THE

UNITED STATES, TAKING FULL ADVANTAGE OF THE INTERNATIONAL NET-WORK OF AMERICAN CHAMBERS OF COMMERCE;

• WOULD SERVE AS AN IDEAL NETWORKING OPPORTUNITY FOR POTENTIAL

FOREIGN INVESTORS AND BUSINESSMEN VISITING BULGARIA.

AMCHAMADVERTISING RATES

BACK COVER . . . . . . . . . . . . . . . . . . . . 1330 BGN

SECOND COVER . . . . . . . . . . . . . . . . 1220 BGN

THIRD COVER . . . . . . . . . . . . . . . . . . 1180 BGN

TWO PAGES SPREAD . . . . . . . . . . . . 1440 BGN

FULL PAGE . . . . . . . . . . . . . . . . . . . . . . . . 960 BGN

HALF PAGE . . . . . . . . . . . . . . . . . . . . . . . . 780 BGN

QUARTER PAGE . . . . . . . . . . . . . . . . . . . . 580 BGN

LOGO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 BGN

INSERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840 BGN

DISCOUNTS:

AMCHAM MEMBERS . . . . . . . . . . . . . . . . . . 20%ADVERTISING AGENCIES . . . . . . . . . . . . . . 15%MAX VOLUME DISCOUNT . . . . . . . . . . . . 10%

For more details please contact:

AmCham Bulgaria Office – Nadia Vakareeva, phone: 974 2743/4, e-mail: nadia@amcham.bg AmCham Bulgaria Magazine – Milen Marchev, phone: 846 88 32, e-mail: magazine@amcham.bg

YOUR MESSAGE

THE RIGHT MESSAGE TO THE RIGHT AUDIENCE.

a n a l y s i s

24

Am

Cham

B

ulg

aria

M

agazin

e July

2007

He fights on, he does not surrender - one against 26.

President Lech Kaczynski, at the European Council summit inBrussels on June 21-22, stood in the typical pose known fromPoland's heroic past: one against many, cavalry against tanks.Except that he does not stand against enemies but allies. Andthe stake is not Warsaw, Krakow or Gdansk, but a complex vot-ing system called "double majority".

"Square root or death," that is how the battle began for theKaczynski twins - Jaroslaw the prime minister and Lech the pres-ident. They demanded that the voting weight of each EU stateshould be equal to the square root of its population - and thatthat should replace the current double-majority system (whereby

decisions are taken by 55 percent of the member states, repre-senting 65 percent of the EU population). You got it? Come on,read it again…The scared West used to say once, "Why die forDanzig (Gdansk)?" That of course was a mean question to ask.But isn't it ridiculous now to ask "Why die for a square root?"

Apart from that, the opposition of the new EU countries against"Europe" is symptomatic of a crisis. You can see the crisis every-where in Central and Eastern Europe: the Czech president hasa genuine dislike for Brussels; in spite of the European publicopinion, the Slovaks co-opted nationalists and populists into thecabinet; in Bulgaria, the anti-European grumble is becomingfashion.

OK, but why oppose Europe?

Was it not a dream until yesterday? Take your time, the answeris not simple.

"Old Europe" did what it could to make the accession of the EastEuropeans look like a forced marriage. The moment of euphoriaof 1989-1990 was gone, and feelings were soon replaced bybureaucracy and petty interests. Enthusiastic in the beginning, theEast Europeans were learning, with growing uneasiness, thelessons of how to wage a war for wine and fish; how to relocateolive trees at night in order to get more subsidies; and how, withall this horse-trading, everybody laughs when hearing the word"values."

Bad lessons are easy to learn, especially when you have missedthe good ones. As a relative pauper among the rich, Central andEastern Europe substituted the Communist Manifesto for con-spiracy theories. Millions of people in Warsaw, Budapest, Sofiaand Bucharest believed that they had been fooled by history andwere still being fooled.

By whom?

This much is clear: the Western elite in alliance with domestictraitors - politicians, NGOs, champions of globalization, liberal-ization and market economy, former dissidents and new mil-lionaires.

Squaring with EuropeBenefits and losses from Poland's "twins" rebellion

By Boyko Vassilev

Archive photo of the Polish President Lech Kaczynski (L) handed the nomination act to the new Prime Minister Jaroslaw Kaczynski (R) during swearing-in ceremo-

ny in Presidential Palace in Warsaw in 2006.

25p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

a n a l y s i s

The antidote?

This is clear, too: nationalism, populism, radical leftism, anti-glob-alism, but that is another topic. The important thing is that theWest is now the bad guy, or at least the suspicious one. And ifyou attack it, you win the affections of your own people.

Such a pattern of behavior was chosen by the Polish politicians.We all remember how Poland bargained for more subsidies untilthe very last moment before its EU entry. And then… then camethe twins. When they were children, Jaroslaw and Lech wantedto steal the moon in a popular children's movie; now they haveset themselves a tougher task:

to make the world reckon with Poland,

without their caring so much about the world. Conservative,deeply religious, not speaking foreign languages, rarely smiling,critical to Germany and Russia, suspicious of the external worldand the liberals in their own country, the twins can be liked main-ly by those lost in transition.

During the latest European summit, the Kaczynski brotherssurpassed themselves. Just when Europe had to solve its mostsensitive issue and the German presidency had to keep itsvow to recover the European constitution, the Polish-born"square root" got stuck in Brussels' throat. Why do you insiston that, the others in the EU asked and received an astound-ing answer. According to Prime Minister Jaroslaw Kaczynski,what Poland suggested had to compensate it for its losses dur-ing World War II - had it not been for the war, Poland's popu-lation would have been 66 million (!) today.

Wprost magazine carried a cover featuring German ChancellorAngela Merkel as "the stepmother of Europe," breastfeeding thetwins. The German tabloids replied pouring oil on the fire. Eventhe president of the Commission, Jose Barroso, admitted theCouncil could be put off.

Here again Merkel, the "summit queen," demonstrated her incred-ible businesslike manner. The EU leaders stopped the clock andat 5 in the morning on June 23 they came out, red-eyed, with adecent compromise, which gives a second chance to the draftEuropean constitution.

Did the twins win? At first sight it seems they did: the compro-mise on a new qualified-majority voting system is close to theirproposal. But in the eyes of the other leaders, that is a Pyrrhicvictory.

The right to veto in the EU is akin to a nuclear weapon: it is pow-erful because you have it, not because you use it. Vary rarely isthe will of one imposed on all the rest. That is not because theEU is a gentlemen's club, but because the unwritten code of theUnion has it that if you want something, you have to have at leastone ally. The twins' fight for the square root not only did not winthe hearts of the other 26, but even triggered unprecedented crit-icism: from Italy's Premier Romano Prodi to Bulgaria's ForeignMinister Ivaylo Kalfin. As a result, Poland's incumbents risk beingleft alone on other issues they find important in future.

Slightly annoyed after the summit, Kalfin remembered that in

Bulgaria, too, there were people

recommending that we snarl at Brussels.

There really are such people. If they are clever enough to readthe lesson of June 21-22, they will see that when you snarl atsomebody you usually lose money. But there are three morelessons for Bulgaria to learn from the whole story about the EUand the twins:

1. The disintegration of the right. One of the ways for its reani-mation is the project of the Kaczynski brothers. By usingSolidarity's bricks, they have built a conservative, religious andnationalistic party that is suspicious of the outside world. OnBulgarian soil, that card has been tried by Democrats for StrongBulgaria, and the new "professors" Movement for NationalDemocracy is playing it openly. But nobody can beat Ataka in thisgame; too, the Twins' Project is not applauded in Europe; thirdly,the project is disliked even by the native liberals, and withoutthem, the urban population, the right remains a boutique productwith a 5-percent weight.

2. The historical arguments. The actions of the Kaczynski broth-ers show that Central and Eastern Europe continues having toomuch history and playing on demographics. According to thelocals, every event that happened in the past 1,000 years isimportant. The West wants to know about the past 60 years -something the East is unwilling to talk about. And vice versa, theEast wants to talk about the Middle Ages - but the West doesnot want to listen. Given this communication breakdown, histori-ans had better be more careful about politics.

3. Smile! The fewer things depend on politicians today, the moreimportance appearance gains over content. It is better for one tobe flighty but smiling than serious but gloomy. The best case ofcourse is to have both smile on the face and content. One thingis certain: a gloomy appearance is the worst advertisement foryour country.

But let us go back to the twins now. They said: "We defendedthe national interest of Poland." But did they do it in the rightway? And are those Poland's national interests indeed? We start-ed with one funny question and finished with two. In my view, asquare root does not make big politics. ■■

German Chancellor Angela Merkel speaks at the closing press conference to the

G8 Summit in Heiligendamm, Germany, 08 June 2007. Merkel drew a positive

balance stating 'I say it has been a successful summit for far-reaching resolutions

were made'.

a n a l y s i s

26

Am

Cham

B

ulg

aria

M

agazin

e July

2007

The country's dependence on Russianenergy sources is often referred to as amain weakness of the local energy sec-tor. However, rapid developments in thefield of biofuels and renewable electric-ity production offer great opportunitiesfor diversification. As regards biofuels,private projects for more than EUR 1bnhave been announced since the start of2006, lured by fundamental strengthssuch as cheap land, access to EU farmsubsidies, favourable legislation in viewof the ongoing harmonisation with theCommunity regulations in support ofclean energy, as well as large biomassresources for production of more effi-cient second-generation biofuels.

The country's big potential in the field ofbiomass energy is based on abundanceof forests and low utilisation of wastematerials in the relatively large sector ofwood processing and furniture enter-prises. Additional benefits could besecured through schemes for trade withharmful gas emissions. Lack of domes-tic oil resources and convenient trans-port links for export to Central Europeworks also in favour of biofuel investors.As a result, the state energy efficiencyagency estimates on the back of offi-cially announced projects that the totalproduction of biofuels would reachsome 650,000 tonnes in 2008, including594,000 tonnes of biodiesel and 55,000tonnes of bioethanol. In 2006, produc-tion volumes are estimated at 61,000tonnes for biodiesel and 15,000 tonesfor bioethanol. Biofuels are expected tocover nearly 6% of local fuel demand by2010 and a large share of the domesticproduction will be directed to exports.

Most of the biofuel projects in the

country rely on first generation tech-nologies where energy inputs comefrom agricultural crops such as rape-seed, sunflower, and maize. First gener-ation biofuels are considered less effi-cient in economic terms as comparedto second-generation and most recentlythird-generation biofuels but they arestill a very important renewable alterna-tive to fossil fuels. Most of the localinvestments are concentrated onbiodiesel production as a substitute forconventional diesel but there are alsolarge undertakings in the field ofbioethanol used by benzene-poweredcar engines. Sales to car drivers arehowever still restrained by regulationsthat do not allow fuel stations to useexcise tax preferences for distribution ofmixed products in the proportion corre-sponding to the share of clean energy.The tax regime is quite unfavorable forproducers of bioethanol, which cannotbe used in pure forms by most of the

cars. The government has prepared adraft law promoting investments indevelopment of renewables that is alsoexpected to resolve the problem withdistribution of biofuels. However, the taxregime is not compatible yet with theEU directives in the area which is themain reason for the weak retail distrib-ution of biofuels in the country, despitethe rapidly increasing investor interest.

First generation fuels --

Main projects

The German consortium ICSInternational Consulting SP has securedEUR 320mn financing for building 6plants for production of biodiesel in theBulgarian districts of Shumen, Pernik,Silistra, Yambol, Chirpan and Mezdra.The project is in a more advanced stagein Shumen where the company willinstall capacities for annual productionof 60,000 to 80,000 tonnes of fuel. Thefuel production technology relies onagricultural crops and utilisation of vari-ous waste materials.

The local fuel distributor EcoPetroleumis running a EUR 60mn project for build-ing a biodiesel refinery in the north-western city of Vidin, located on theDanube River. The project includesinvestments in own river port facilitiesfor transport of inputs and refined prod-ucts. The company will supply biodieselto local and foreign markets usingcheap river shipments to CentralEurope. The refinery will rely on agricul-tural crops, mainly rapeseed. The plantwill have an annual production capacityof 200,000 tonnes of biodisel. First sup-plies are expected in the beginning of2008.

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

Production of BiofuelsSuppor ts EnergyDiversification

27p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

a n a l y s i s

Slanchevi Lachi, which is part of thecountry's largest holding Chimimport, isplanning a EUR 50mn investment inbuilding a bioethanol refinery near theBlack Sea city of Varna. The companyis running a separate EUR 15mn projectfor production of biodiesel in the nearbytown of Provadia.

Spain's Green Fuels Corporacion isworking on a project named Green FuelBulgaria for commissioning a biofuelsplant near the northern city of Pleven.The company may invest EUR 70mn inthe project aimed at annual productioncapacities of 45,000 tonnes of biodieseland 60,000 tonnes of bioethanol. Themunicipality also holds talks withSwedish businessmen for production ofbioethanol. The Swedes are reportedlyready to invest EUR 70mn in abioethanol refinery with annual produc-tion capacity of 150,000 cubic metres.

In addition to Bulgaria-based invest-ments, the local company Kristal Himiawill start production of biodiesel nearthe Macedonian town of Tetovo. Thecompany plans to produce 40,000tonnes of fuel annually in the south-western neighbour country. It has arefinery with similar production capacity

in the Bulgarian town of Velingrad whichis already operational. Kristal Himiaexports biodiesel to Albania and Serbiaat present and hopes to launch sales inRomania in near terms. It is also plan-ning to start production of bioethanolwith annual capacity of 10,000 tonnes.

Second generation biofuels

Second generation biofuels are pro-duced from ligno-cellulosic (wood) bio-mass. They are considered much moreefficient than first generation biofuels.The country has significant competitiveadvantages in the area of biomass fuelsgiven that a large share of the territoryis covered by forests. Moreover, the rel-atively large wood processing sectorprovides significant amounts of wastematerials that could be used for produc-tion of biofuels. Biomass fuels will sep-arately tend to expand the country'sland utilisation and improve forest pro-tection and forest management policies,as investors are interested in maintainingstable input resources and planting ofnew trees. A good example in thisregard is provided by Spain's FerryGroup, which has received a first-classcertificate from the state investmentagency for a EUR 500mn project for

production of biomass fuels in theregion of Tran near the border withSerbia. The company will build a biofu-el power generation plant with installedcapacity of 150MW and will plant fast-growing trees to provide a long-termsource of biomass inputs.

Another big project in the area of sec-ond-generation biofuels is run by thelocal hardwood pulp manufacturer andsynthetic fibre producer Sviloza. Thecompany has received a first-class cer-tificate by the state investment agencyfor ongoing paper production upgradesand construction of a power generationplant that will utilise residual wood mate-rials. The project is valued in the rangeof EUR 160mn to EUR 200mn.

The heating utility in the country's thirdlargest city of Varna, recently acquiredby Dalkia International, will also exploreopportunities for using biomass fuelsthat could cut costs and boost energyefficiencies through trade with harmfulgas emissions. As most of the otherCEE companies owned by the Frenchenergy company Dalkia use differentkinds of fuels including biomass, thecompany will try to accommodate bestpractices in Varna. ■■

Producing of bio-fuels goes together with modern technology installations.

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

28

Am

Cham

B

ulg

aria

M

agazin

e July

2007

AmCham General Assembly elected on June 19 TanyaKosseva-Boshova, Landmark Property executive director,and Stefan Ivanov, Citi country officer, to the two vacantseats at the directors board. Kosseva is beginning her sec-ond term on the AmCham board. Currently she serves as atreasurer of AmCham and chairwoman of the Real EstateCommittee.

Stefan Ivanov has spent 12 years abroad, working for Citigroupin Brazil, the United Kingdom, South Korea, and Tunisia. SinceFebruary 2007, when he returned to Bulgaria, Ivanov managedto involve actively Citi in the activities of the Chamber - fromthe EU-U.S. conference to the New York part of the ambas-sadors road show to promote more American business inBulgaria.

AmCham thanks the other two candidates who submitted theirapplications and presented ideas for increasing the influenceof AmCham: Borislav Stratev, Deloitte managing partner andKirko Kirkov, CEO of United Healthcare Bulgaria.

AmCham appreciates the continuous support of Dr. MariaVranovska, chair of AmCham Healthcare Committee.

Vranovska served on the board from January 2004 to June2007, and decided not to run again.

The General Assembly examined and approved the financialstatements of the auditor of AmCham Bulgaria Ernst&Young

GA Re-Elects TanyaKosseva, WelcomesStefan Ivanov to board

Rolf Epple General Manager Balkan Star Automotive (center) and Philip Kitoff,

Marketing and PR Manager (left) share views with James Rigassio prior to the vote.

29p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

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

Tanya Kosseva-

Boshova is

Executive Director of

Landmark Property

Bulgaria since

January 2005. It is a

property investment

and management

company, formed by

a group of interna-

tional institutional

investors. The com-

pany has already

built-up a portfolio of

assets worth more

than Eur 100 million.

Ms Kosseva is a member of the Board of Directors of

AmCham Bulgaria, Chair of the Real Estate and Construction

Committee at the Chamber, author of many real estate relat-

ed publications, speaker at real estate forums and confer-

ences. Previously acted as Managing Director of Colliers

International in Bulgaria, the largest provider of real estate ser-

vices in the country, with offices in 238 countries worldwide.

Ms Kosseva studied in AUBG, Blagoevgrad and in London.

Ms Kosseva has been an active promoter of Bulgaria-

American relations, both professionally and socially. She stat-

ed that the AmCham has grown in size, relevance and impact

over the last few years and she would be proud to continue

to be a strong supporter of the role of AmCham as business

organization that serves the needs of its members and the

society. Ms Kosseva's personal interest in seeking a second

term as a member of the Board of Directors is to help

AmCham increase that impact in critical areas - completing

the legislative initiative of AmCham to abolish the ban on long

term leases in Bulgaria, promote transparency in the real

estate sector that would affect positively every member com-

pany and expanding services that AmCham can provide to its

members.

Stefan Ivanov has

been appointed as

Citi Country Officer in

Bulgaria in February

2007. He spent 12

years abroad, working

for Citigroup in Brazil,

the UK, South Korea,

and Tunisia and

studying in the US.

Stefan Ivanov studied

in AUBG in

Blagoevgrad, in

Cornell University in

Ithaca, and in Harvard

University in Boston.

He intends to help raise Bulgaria's profile by:

● Building the case and spreading the word about Bulgaria as

an attractive market for investments

● Identifying potential interested investors and facilitating their

entry in the Bulgarian market, from within the network of

multinational clients of Citigroup and beyond

● Supporting the launch and development of new ventures

with international investors from a wide array of industries and

segments - infrastructure, manufacturing, and services.

● Generating ideas and mustering support for further

enhancements to the local legal and regulatory framework in

the country.

for 2006. Borislav Boyanov, president of AmCham Bulgaria,made an assessment of Chamber's activities from the begin-ning of 2007. The AmCham events were marked with EUtheme since January. From the first joint U.S. CommercialSection - AmCham study tour in Brussels through the

Chamber’s business luncheons, the remarkable AmCham-German Chamber Joint Conference on U.S.-EU relations to themost recent Ambassadors' Business Roadshow that has beenconducted under the head topic "Bulgaria's EU membership -New Opportunities for U.S. Businesses." ■■

From Left: Vladimir Penkov, Lega Inter Consult, Maxim Behar, M3

Communications, Borislav Stratev, Deloitte and Assen Sirakov, NATO Defense

College.

The majority of votes for board members were given to Tanya Kosseva,

Landmark Properties and Stefan Ivanov, Citibank N.A.

i n t e r v i e w

30

Am

Cham

B

ulg

aria

M

agazin

e July

2007

- Mr. Ivanov, have you identified your challenges in the

country, since your appointment in Feb. this year and after

working in renowned institutions for the past 12 years?

- The main challenge for Citi in Bulgaria is to maintain our fastgrowth, provided the intensifying competition in the financialservices industry. Although the Bulgarian market is gettingmore and more sophisticated, we are facilitated by the vastresources of Citi internationally, on which we can tap for ideas,expertise, products, systems, distribution capabilities, etc. inour efforts to develop further our business in Bulgaria. By facil-itating the day-to-day operations of our clients and helpingthem grow, we can also help accelerate the economic growthof the country. Another important challenge for us is tobecome more visible in the local market, not necessarily byadvertising campaigns, but by expanding our client base andbecoming more embedded in the business community.

- Citi is focused only on the Corporate & Investment bank-

ing market in Bulgaria. Provided that the local banking mar-

ket is developing in many different segments, do you have

plans for launching new products of Citi, and if yes, in

which fields you are going to expand?

- It's true that since the launch of our operations in Bulgariain the year 2000, we have been focused on Corporate &Investment Banking. At this stage we do not have plans foropening Retail operations in the country. We might do it, butnot immediately. We are still a young franchise and I trust wehave a lot more to offer in the future. The Bulgarian markethas certain gaps of spaces that are not fully serviced by thefinancial institutions. For example, utility companies still per-form themselves to a large extent the collection of paymentsfrom their individual customers. Most Bulgarians still pay cashat the collection points of the utility companies. This processcould be handled by the financial institutions much more effi-ciently. Thus, we are working on enhancing our collectionsand cash management product offering.

Another area in which we are working on launching new prod-ucts is that of investment products for the pension funds,insurance companies and corporate clients. With the growth ofthe voluntary pension schemes in Bulgaria, investment fundswould need to diversify their portfolios. Citi is working on pro-viding them with new ideas and instruments in which to invest.We are also expanding our product offering in terms of thetypes of financing we provide for clients - from pure loans,

through structures solutions, to private equity, both on the localmarket as well as tapping on international investors.

- You are also engaged in community and social programs?

- Citi is committed to making the places we do business bet-ter places by giving back to the community. We support oursocial and community programs through the Citi Foundationwhich has 3 main areas of focus - financial education, edu-cating the next generation and community development pro-grams. In 2004, Citi announced its commitment to invest 200million US dollars in financial education programs globally overthe next 10 years. Locally, we are developing financial educa-tion programs with partner institutions like Junior AchievementBulgaria and the National Trade and Banking High School. Wealso have a scholarship program with the American Universityin Blagoevgrad. We are working with Integra Association aswell, supporting a micro-enterprise development program forwomen. It targets women in socially disadvantaged situationsand is aimed at improving their standard of living. Apart fromfunding, Citi also provides support through volunteer engage-ments of our staff.

Evolving FinancialSer vices Market inBulgaria Citi continues launching new Corporate & Investment Banking products Says

Stefan Ivanov, Citi Country Officer

By Irina Bacheva

31p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

i n t e r v i e w

- Do you think the lack of good infrastructure could ham-

per the businesses of foreign investors coming to the coun-

try? Are you going to take part in infrastructure projects?

- Given that Citi is the global leader in terms of the volume ofinfrastructure projects which it has advised and/or financedover the past 5 years, we are very keen on exploring adviso-ry/financing roles in the large infrastructure projects inBulgaria. I trust many such projects will be launched over thenext three years - especially in the energy and road infra-structure sectors, and if we judge by the experience of the EUmembers from the previous accession waves, those projectswill not be funded 100% by the EU - financial institutions likeCiti will also play a role in their financing.

- How do you appreciate the regulatory and business envi-

ronment in the country through the eyes of investors and

based on your personal experience of working abroad? Is

there a need for more radical changes in the tax environ-

ment, for example adoption of the flat rate tax?

- Based on the conversations I have had with clients of Citiin Bulgaria from different industries, I could say that the busi-ness climate in Bulgaria has improved substantially. Most ofthem actually see upside from future regulatory changesrather than significant risks. Personally, I am a big proponentof the flat tax and also of a low flat tax. When Slovakia flat-tened its tax to 19%, this helped attract investors and Slovakiabecame the number one country in terms of production ofautomobiles per capita. Bulgaria has already lowered the cor-

porate income tax to 10% (and actually boosted the collectionof this tax as a result), but we still need to work on the VAT,personal income and other taxes, that are way above thatlevel. Lowering taxes increases the incentives for paying them.Companies are seeing that the cost of paying taxes is actu-ally outweighed by the benefits that come with the trackrecord of a being a profitable growing company that is payingits taxes - i.e. raising cheaper debt and equity, and ultimatelybeing able to sell parts of or the entire company at a highervalue.

- How do you see the role of AmCham in comparison to

the other NGO-s and business communities, and in the

dynamic business environment in the country?

- I think the AmCham has achieved spectacular results inBulgaria, having about 270 members at present. It is extreme-ly proactive and is delivering very well vis-a-vis its mission ofenhancing the economic ties between the U.S. and Bulgariaand facilitating the operations of U.S. investors in Bulgaria. Itspotential contribution to the business environment in Bulgariais immense, since the U.S. is the largest economy in the worldand since U.S. investors can do much more in Bulgaria goingforward than in the past.

- What are your hobbies?

- Experimenting different things is what I like very much:exploring new places, trying different foods, immersing myselfin different cultures through music, films, etc. ■■

The campus in Pravetz, where the bachelor's programs of theCity University of Seattle are hosted, held the 2007 com-mencement on June 24. Lee Gorsuch, CityU president, gavehis personal congratulations to the 55 graduates from the sec-ond graduating class of the Bachelor of Science in BusinessAdministration and 50 MBA graduates from the seventh gradu-ating class.

Almost half of the BSBA students have already started work-ing full time taking their first steps up the professional ladderwith companies such as P&G, Philip Morris, Johnson &Johnson, Deloitte. On this very special day, many of the grad-uates reflected that the practice-oriented business educationand insights they received from CityU's international andBulgarian faculty proved to be a great advantage when search-ing for a job. Additionally, because all courses at CityU areconducted in English, the graduates can operate effectively inmulticultural environments. Some of the graduates had takenadvantage of the university's student mobility program andstudied at other CityU campuses worldwide including Slovakia,Greece and the United States. Most of the graduates had cho-sen marketing or general management as their areas ofemphasis.

The 50 MBA graduates shared their excitement after success-fully completing the challenging two-year program while bal-ancing the demands of their profession and personal lives.Graduates, primarily middle- to top-managers and self-employed entrepreneurs, represented over 15 industries includ-ing pharmaceuticals and health care, financial services, IT,engineering, distribution and retail.

Family members, employers and friends of the graduating stu-dents made up the over 400-guests audience at the officialgraduation event. Representatives of the Bulgarian govern-ment, non-governmental organizations and educational institu-tions honored the ceremony. Alexander Karagiannis, deputychief of the U.S. mission, addressed the graduates. He said:"You are the future, indeed. But the future is what you makeand create, not something you find. It takes vision, courage,

and hard work to make a future that will benefit the many andnot the privileged few."

A business breakfast between the City University of Seattledelegation and representatives of the AmCham businesscommunity followed on June 25th. City University of Seattlein the United States has an established practice to updatethe educational curriculum following recommendations ofworking professionals in specific areas. One notable out-come from this event was an initiative to introduce more ITfocused programs at the undergraduate level, either as a newemphasis area within the existing BSBA curriculum or anentirely new degree program, tentatively to be introduced byFall 2008.

City University of Seattle in Bulgaria is committed to providingaccessible and relevant education to motivated students withthe desire to learn and achieve. With this end in view andresponding to the needs of the local market, the universitystarted the first American-style MBA program in Bulgaria in1999, and three years later welcomed its first class of bache-lor's degree candidates. ■■

33p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

m e m b e r n e w s

Assen Makedonov, CEO of ADIS Real

Estate, officially joined the manage-

ment board of the Bulgarian chapter of

the oldest real estate federation in the

world - FIABCI. By decision of the

Management board of FIABCI-Bulgaria

a General Assembly of the organiza-

tion was initiated. The Management

board welcomed also Irena Perfanova

(President, Agency for International

Investments and Consultancy Ltd.)

FIABCI-Bulgaria is a non-profit associ-

ation, the legitimate chapter in

Bulgaria of FIABCI - The International

Real Estate Federation, the oldest in its

kind in the world.

FIABCI - Bulgaria was founded on

Dec. 20, 2002, by real estate profes-

sionals willing to become part of the

big FIABCI family. At present, the

Bulgarian chapter includes 43 of the

leading companies, operating in the

real estate area. The main aim of the

association is to assist real estate pro-

fessionals in Bulgaria to upgrade their

performance and competitiveness by

sharing knowledge, information and

business opportunities on a local,

national and international scale. ■■

CEO of ADIS Joins Board of FIABCI-Bulgaria

105 Bulgarians Graduate from CityUniversity of Seattle

m e m b e r n e w s

34

Am

Cham

B

ulg

aria

M

agazin

e July

2007

- The merger process between

Postbank and DZI Bank is developing

very fast. What are the goals targeted

after the process is completed?

- The merger process is really goingfast and this was our primary targetwhen we devised the initial plan. Wehave always emphasized that for us it isof absolute importance to have asmooth process that would not causeany disruption to our daily activities andwill not be a reason for any loss of mar-ket share. Our expectations were ful-filled and we have managed not only toretain our customers and market sharebut quite the opposite - we are gainingmarket share and developing across theboard.

As for the goals after the merger, wehave never hidden our ambitions to rankamong the top three banks on theBulgarian market and in some seg-ments, consumer and mortgage loansfor example, we have already achievedthis.

- When do you plan to complete the

merger process?

- As I have already mentioned, there isa very ambitious merger plan in place. Itcontains two important milestones - theoperational merger and the legal merg-er. The operational merger requires thetwo banks to align their IT systems, pro-cedures, internal structure and productrange - in essence to work as one. Thispart of the process has already beencompleted with some final fine tunings.

The second milestone is the legalmerger. The law requires the two banksto remain separate entities with sepa-rate IT databases until all the permis-sions have been obtained and all legalprocedures have been complied with.When all these details are settled, thanthe two banks will be allowed to mergeand will create one new single entity.We are also well advanced with thisstage and our expectations are thatuntil the end of September 2007 it will

be completed successfully.

- Is there a new name for the merged

bank?

- Yes, there will be a new name for themerged bank. The final decision wasthat the bank should adopt the name ofthe parent company to show to the pub-lic, that we are part of one of thefastest developing institutions in South-East and Central Europe. The newname will be Eurobank EFG Bulgariaand we hope that the change will be afact until the end of the year.

- What is the place of Eurobank EFG

Group in Europe?

- Eurobank EFG, part of the Swissbased EFG Group, is the second largestbanking group in Greece and a marketleader in a number of segments.Eurobank EFG has long seen its futurein the region of South-East and CentralEurope and is investing in these coun-tries where there is a high potential forgrowth and development. It is alreadyactive in six countries in the region -Bulgaria, Romania, Serbia, Turkey,Poland and Ukraine - and has the ambi-tion to be a market leader in all mar-kets it operates. EFG has created avery successful business model inGreece and is applying it in the other

countries as well. It emphasizes on thelocal knowledge and experience but inthe same time the local franchisesclosely cooperate and are supported bythe mother company which enhancestheir potential. EFG's strategy is to bethe bank of first choice for its cus-tomers and is putting a lot of efforts inmaking it happen. In my opinion that iswhat defines the Group and makes it sosuccessful.

- How many branches will the merged

bank have in Bulgaria?

- The merged institution will be presentin more than 280 points of salethroughout the country which will beone of the largest branch networkamong the Bulgarian banks. Our aim isto be close to the customers so havingan extensive branch network is a vitalpart of our strategy.

- Do you expect other consolidations

on the Bulgarian market?

- The consolidation is an inevitableprocess not only in Bulgaria, but alsoon a global scale. We are witnessing awave of mergers and acquisitions notonly in the banking but also in othersectors. In any case, the consolidationis a positive trend as the bigger insti-tutions have better financial capabili-ties and are better suited to offer alarge variety of product and financialsolutions to their customers. They areable to standardize their productranges yet to take into considerationthe individual needs. On the otherhand the larger scale also allows themto concentrate on different sectors ofthe economy.

- Is the new bank going to have a cer-

tain profile? Do you target the retail

sector or the corporate one?

- Since the establishment of the Bank,Postbank has always developed itselfas a universal banks focusing on abroad range of products and services.In the last three years we have upgrad-

Postbank, DZI Bank Merge as EurobankEFG Bulgaria New financial institution will be cautious with credit, says procurator Petya

Dimitrova

m e m b e r n e w s

36

Am

Cham

B

ulg

aria

M

agazin

e July

2007

ed this strategy and introduced a dedi-cated distribution network for each typeof clients. Trained professionals in thebranches are serving the retail cus-tomers, including small companies. Inaddition, the five business centers inmajor Bulgarian cities, aided by theHead Office Corporate Banking Divisionare taking care of the needs of thelarger companies.

In the last year we have started to intro-duce new services and products tryingto expand our customer base andincrease the cross-selling to the existingclients. Every customer for us is impor-tant and we want that all of themreceive the same kind of attention andquality of service.

- Recently Postbank and DZI Bank

released many joint products on the

Bulgarian financial market. Would you

please tell us something more about

the products?

- The alignment of the product offers ofPostbank and DZI bank started in thebeginning of the year and the firstresults materialized in a very short time.The first common product was a mort-gage loan, launched in the middle ofMarch. The loan is interest-only for thefirst year and is suitable for those whoneed to refurbish or to furnish their newhome. It also has other attractive fea-tures such as extremely long tenor - 35

years, 50-percent reduction of initialfees and highest loan-to-value ratio onthe market - up to 100 percent.

In the following months, ConsumerLending, SBB and Corporate LendingDivisions followed their example. In theend of May the IT systems of Postbankand DZI Bank were unified, so present-ly we are capable of offering all prod-ucts through the branch network ofboth banks.

- Postbank has established traditions

regarding special offers for its credit

card holders. Do you plan on contin-

uing this practice?

- Very early we have identified thepotential of the credit card market inthe country. Back in 2005 Postbank hasacquired the credit card portfolio of oursister company - BRS, thus becoming aleading credit card issuer. In the sameyear Postbank has become an exclu-sive issuer of American Express creditcards for Bulgaria. Presently, we areoffering three types of cards - AmericanExpress, Euroline and VISA, each ofthem with its own unique characteris-tics.

The credit cards market in Bulgaria isstill underdeveloped. The penetrationand the usage is low, and Bulgarianhave yet to discover the advantages ofthe credit cards. Postbank is stimulating

this process, regularly launching specialoffers together with selected mer-chants. Our cardholders can learnabout these offers when visiting themerchant's store, or can find the cur-rent offers with their monthly statementsthat they receive each month. We havea very positive respond to our specialoffers and promotions.

- Is there a certain credit policy fol-

lowed by Postbank and DZI Bank?

- As a part of Eurobank EFG Group,Postbank is conducting a cautious cred-it policy, compliant with the national leg-islation and the group requirements. Weare using various approaches for evalu-ating risks. In retail lending we havedeveloped elaborate scoring modelsaimed at capturing and recognising var-ious risk factors. In corporate lendingwe are assigning different levels ofapproval depending on the size and thecomplexity of the deals.

One of the things we did as we startedthe merger process was to align DZIBank's credit approval process with thatof Postbank and that of the Group. Inthis way we are ensuring that all therisks are monitored respectively andthat both banks are following the sameprinciples and not taking any excessrisks. After all, that is the essence ofthe banking business and this is some-thing we are good at. ■■

From Left: Postbank's leadership - Anthony Hassiotis CEO and Chairman of MB, Assen Yagodin Executive Director and Petya Dimitrova, Postbank's Procurator.

Stanton Chase International Bulgaria launched a global initiativeon June 21 to share best practices by organizing businessbreakfast in partnership with the American Chamber ofCommerce in Bulgaria and the American University in Bulgaria.

Stanton Chase International Bulgaria, one of the leading exec-utive search companies and an AmCham member, had invitedas a special guest speaker Srivatsa Seshadri, professor at theUniversity of Nebraska at Kearney, and a visiting professor at theAmerican University in Bulgaria. He shared his 12 years of man-agement and marketing experience in various aspects of e-commerce and e-marketing. His researches and thoughts onthe topic were summarized in a presentation titled "Web 2.x:Marketers' Dream comes true." The event was attended byabout 40 top executives from multinational and big internationalcompanies from different business sectors.

As General Manager of Stanton Chase International BulgariaDarina Peneva mentioned during the opening of the event, itis essential to attract customers and keep them alert andinterested by using and applying innovative and constantlydeveloping methods and approaches. Borislav Boyanov, chair-man of the AmCham Bulgaria, and Michael Easten, presidentof the American University in Bulgaria, welcomed the audi-ence, expressing their appreciation to the initiative of StantonChase International and hope that it will become a recurringevent.

Seshadri's presentation was focused on the possibilities thatWeb 2.x could give to users. The crucial factor for success isto provide what the customers are searching for, therefore cre-ating great experiences, Seshadari said. Marketers must findways to make their customer more of a participant in the mar-keting process than just a receiver of goods and services. Web2.x technologies engage, entertain and delight the customers intheir consumption process resulting in some great experiences.Getting the consumers to be immersed in the consumptionprocess means that they are becoming engaged, letting themhaving fun in the immersion comes for an entertainment andwowing them in their experience brings delight as well.

Customers could be constantly challenged and provoked whenreviewing the opportunities various websites provide to theusers, Seshadari said. The most successful ones are thesethat organize the information as the customers like, controlinformation they want to see it, keeping them up-to-date andavoiding receiving spam.

He added that the most challenging and crucial in the newestapproaches in Internet surfing is to succeed in decreasing theoverall search cost for customers, to have websites easily madeand to make customers spend more time playing. Creating per-sonal search engines, using its searchrolls and sharing themwith others would keep customer engaged and committed.

The unlimited possibilities that customers face using the Web2.x technologies let customers save white papers, manuals, oreven create their own product manuals and share them with oth-ers, creating personalized roadmaps, using the unique combina-tion between GIS (Geographic Information System) and webtechnology. These are only part of the enormous opportunitiesthe Web 2.x is giving the customer, thus being very useful forthe business development.

The topic generated a discussion, during which the participantsshared their positive feedback regarding the organization of suchevents. Audience members said they were looking forward toattending the next AmCham business breakfast. ■■

37p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

m e m b e r n e w s

Stanton Chase Shares Best BusinessPractices in e-marketing

Mr. Borislav

Boyanov, President of

AmCham Bulgaria

opened the event and

welcomed the global

initiative of Stanton

Chase International

Bulgaria to organize

Business Breakfasts,

designed to share best

business practices.

39p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

s k y h i g h

The U.S. Air Force Thunderbirds - aworld-renowned air demonstration unit -and the U.S. Air Force Band were partof the Bulgarian - American Days of theAir Force, commemorating the 60thanniversary of the U.S. Air Force andthe 95th anniversary of the Bulgarian AirForce. The Thunderbirds performed atGraf Ignatievo Air Force Base on July 1,2007. Thunderbirds aerial demonstrationwas a mix of formation flying and soloroutines. The pilots performed approxi-mately 40 maneuvers in each demon-stration.

Started in 1953, the Thunderbirds havebecome synonymous with cutting-edgepiloting. Their four-aircraft diamond for-mation demonstrates the training andprecision of Air Force pilots, while thesolo routines highlight the maximumcapabilities of the F-16 aircraft.Including the appearance at GrafIgnatievo, the Thunderbirds are sched-uled to perform in 68 shows in theUnited States and nine European coun-tries in 2007. ■■

U.S. andBulgarianAir ForcesCelebrateTogether

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

40

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Proving its popularity among AmCham members and guestcompanies, 45 players in 15 teams participated at the SixthAnnual AmCham Tennis Tournament. The event was onceagain hosted by Gloria Palace Club in Gorna Banya on June9-10. Orkikem and Gloria Palace Club became the team final-ists, with Orkikem team coming on top in a head-to-head bat-tle on June 10th. Gloria Palace team placed second.

Orkikem team of Nikolay Naydenov, Plamen Dimitrov, IvanZapryanov, and Georgi Ginev showed high level of perfor-mance at the semi-finals, defeating Erato Holding, who sharedthe third place with the Embassy of France players. TheFrench Embassy in Sofia, namely, Fabien Barthez, DanielaBarthez and Yannick Ehrlich, played for the first time at thetournament. Also for the first time participated the team ofBulgarian American Enterprise Fund with Stoyan Dinchiiski,Docho Karadochev and Konstantin Najdenov. Another new-comer, Siemens, was represented by Doichin Cholakov, GeorgiPetrov and Vesselin Genadiev. Even though it only had a sin-gle player, Hilton Sofia (with Dessislav Gospodinov) contributedto the Siemens team.

The rest of the traditional participating teams and newcomerswere: 3M, AES Sofia, Avendi, Capital Weekly, Coca Cola HBC,Forem Consulting Bulgaria, Marsh Bulgaria, Motorola Bulgariaand the feminine proven team of Schenker.

Teams of French Embassy, Gloria Palace, Orkikem and EratoHolding reached the final-four stage, and Gloria Palace facedOrkikem in the final. No wonder why Orkikem Ltd got the

AmCham cup at the tournament - the firm is specialized inimports and sales of high-quality insulating and special mate-rials for the construction industry, including special surfacematerials for the tennis courts.

Tanya Kosseva, manager of Landmark Properties Bulgaria andAmCham board member, together with Moni Monov, GloriaPalace referee at the tournament, awarded the finalists. Prizeswere provided by Grand Hotel Sofia, Radisson SAS Hotel andSport Shops Chain SLS. AmCham is grateful to all sponsorsand supporters who made the contest possible: Gloria PalaceClub, Sport Shops Chain SLS and Dunlop Sport, AlliedPickfords, Bankia and Pain D'or. ■■

Orkikem Wins AmCham

Family photo: AmCham Tennis Tournament came out with 45 players organized in 15 teams

Tanya Kosseva, Manager of Landmark Properties Bulgaria and AmCham

Treasurer, together with Moni Monov, Gloria Palace referee at the tournament,

awarded the finalists. First place was taken by the team of Orkikem.

41p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

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

Tennis Tournament

Erato team proved again to be a tough player at the tournament.

"Stuci" from Gloria Palace team did a fantastic show on the court.

Game is a game, you can not make angry…

For the first time this year French Embassy team participated, placing third in

the tournament.

Oops! The ball is coming...

Schenker's Elena Paunova and Vania Paunova won over Siemens team Georgi

Petrov and Vesselin Genadiev.

m e m b e r n e w s

42

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Telelink Bulgaria successfully completed the DWDM project

assigned by the Ministry of Finance and financed by the PHARE

programme at the cost of 1,5 million Euro. The purpose of the

project was to assist the Bulgarian public administration in imple-

menting a strategy for electronic government. Telelink's engage-

ment consisted of building the state administration network. The

project started in November 2006 and finished on May 29, 2007.

Thus, Telelink managed to fit into the time period, envisaged in

the contract and constructed the SDH network based on DWDM

transfer in six months. The network is entirely built with Cisco

Systems equipment, which guarantees its functionality and relia-

bility.

The SDH network provides interurban connectivity for NAMDA in

six cuties - Sofia, Plovdiv, Haskovo, Stara Zagora, Sliven and

Yambol. The optical rout which was implemented between five of

the cities, excluding Sofia, is 300 kilometers long. The DWDM

network has a maximum install capacity of 32 channels each of

them with a speed of 10 gigabits. The SDH ring' speed, based

on DWDM transfer, is STM16 and a topology of double reserved

ring is in place. In each of the six cities the following services

could be provided: STM1, STM4, STM16, STM64, Gigabit

Ethernet, 10G Ethernet. Each of the constructed centers could

work on independent power supply for more than 10 hours.

A central monitoring node has been built in the Council of

Ministers Building which can manage and monitor all installed

systems - powering, synchronizing, DWDM and SDH. ■■

Telelink Completes DWDM NetworkProject

n e w m e m b e r s

Katilin Popov

Enforcement Officers

is focused mainly on

working with corpo-

rate clients who have unsatisfied judgments against debtors

in Bulgaria or abroad by providing judgment enforcement

services.

Our practice is built upon the following principles:

- professionalism

- search for positive solutions

- transparency and accountability that promotes customer

satisfaction

- speed and efficiency

- offering services that go beyond clients' expectations.

We provide complex and customer shaped judgment

enforcement services in compliance with the best practices

in the field. Our approach is to investigate a variety of

options (including mediation) while choosing the most effec-

tive tool in order to save client's time and money. The pro-

fessional due care we are investing in each and every case

speeds up the enforcement with us. We also offer guardian-

ship and management of collaterals service along with legal

advice on avoiding competing creditors claims on collaterals.

Contacts:

Katilin Popov

Enforcement Officer

Tel: 851 7636

E-mail: k.popov@ppofficers.com

Address:

2, Skobelev Blvd., Fl. 2, apt. 10

1463 Sofia

Bulgaria

Siemens AG (Berlin

and Munich) is a

global powerhouse in

electrical engineering and electronics. The company has

around 475,000 employees (including in its discontinued

operations) working to develop and manufacture products,

design and install complex systems and projects, and tailor

a wide range of services for individual requirements.

Siemens provides innovative technologies and comprehen-

sive know-how to benefit customers in over 190 countries.

Founded more than 155 years ago, the company focuses on

the areas of Information and Communications, Automation

and Control, Power, Transportation, Medical, and Lighting. For

the fiscal 2006 (which ended Sep. 30), Siemens reported

sales of 87.3 billion Euro and net income of 3.033 billion

Euro, according to U.S. GAAP.

Contacts:

Stoyan Neshev, CEO

Phone: 811 5611

Fax: 811 5660

2 Kukush Str.

1309 Sofia

Web: www.siemens.bg

43p a g e

Am

Cham

B

ulg

aria

M

agazin

e July

2007

m u s i c

Through his ground-breaking, hit-making work in the

Police, Andy Summers influenced a generation of guitarists

with a highly creative and seemingly endless sonic palette

of everything from straight, searing rock 'n' roll to jazzy,

even avant-garde atmospheric textures. And when a gui-

tarist can incorporate such musically diverse elements into

so many songs that become enduring hits, believe us,

that's no accident-Andy Summers knew exactly what he

was doing.

And he knew what guitar to do it on. The battered and

unusual '61 Fender Telecaster guitar that Summers worked

his magic on with the Police had been by his side long

before the famously blonde trio startled the pop world in

1978 with its reggae-tinged, infectiously minimalist first hit,

an ode to a Parisian working girl named "Roxanne."

Summers, born Andrew James Summers in Poulton-le-

Fylde, Lancashire, England, on Dec. 31, 1942, was smitten

by the guitar as a young boy in Bournemouth, England. He

was immediately attracted to jazz music, but as a young

man found himself draw more and more into London's fer-

tile blues, rock and pop scene. A nimble and inventive gui-

tarist, Summers eschewed the prevailing pentatonic

blueswailing (although he could do that, too) in favor of a

more eclectic approach that drew on jazz, classical and

eastern influences.

His '60s recording career started with Zoot Money's Big

Roll Band, which soon morphed into the summer-of-love

psychedelia of Dantalion's Chariot (which scored a psy-

chedelic classic with "Madman Running Through the

Fields"). The late '60s brought stints with jazz-fusion out-

fit Soft Machine and Eric Burdon and the New Animals,

and Summers' first trip to the United States. In the early

and mid-1970s, Summers did extensive touring, session

and concert work with Kevin Coyne, Kevin Ayers, Tim

Rose, Neil Sedaka and others, and, while living in

California, earned a bachelor's degree in music from

California State University, Northridge.

Having returned to England, Summers was invited in May

1977 by musician Mike Howlett to form Strontium 90 along

with another of Howlett's friends, a singer/bassist nick-

named "Sting," who in turn brought along an American

drummer named Stewart Copeland. Sting and Copeland,

with guitarist Henry Padovani, had released a single, "Fall

Out" in February 1977 as the Police. After a couple lineup

changes, a trio of Sting, Copeland and Summers was per-

forming as the Police by fall of that year.

The rest is history. The Police would raid the charts for

better part of the next decade, charting hit after hit with

an innovative, rhythmically ferocious and melodically

atmospheric sound heavily reliant on Summers' slashing,

swelling, singing Telecaster prowess-"Roxanne," "Message

In a Bottle," "Don't Stand So Close to Me," "Every Little

Thing She Does Is Magic," and the musical juggernaut that

was 1983's Synchronicity, with hits "Every Breath You

Take," "Wrapped Around Your Finger," "Synchronicity II"

and "King of Pain." They became the biggest band in the

world, ruling the charts, the airwaves and the newly pop-

ular MTV.

Then, with little or no fanfare, the Police called it quits

while still at the top-the very top-of their game. No farewell

album or tour; they simply stopped. They had lived in

each other's pockets for seven years, from CBGB to Shea

Stadium, alternately affectionate and combative brothers

who delivered hit after hit and concert after concert with

an exhausting, non-stop work ethic that simply could not

last indefinitely.

Introducing the Fender Custom Shop Andy Summers Tribute Telecaster® Guitar

To Be Played DuringMassive WorldwidePolice Reunion Tour. . .

Andy Summers

m u s i c

44

Am

Cham

B

ulg

aria

M

agazin

e July

2007

Summers went on to many diverse musical projects,

including film scoring (1986's Down and Out in Beverly

Hills; 1989's Weekend at Bernie's), late-night television

(musical director, 1992's The Dennis Miller Show) and a

string of acclaimed solo recordings, collaborations and

guest appearances with artists including Robert Fripp,

John Etheridge, Victor Biglione and Benjamin Verdery.

Summers has also participated in various solo projects by

Sting and Copeland, and the Police reunited briefly in

March 2003, performing three songs at their induction into

the Rock and Roll Hall of Fame.

A talented and avid photographer, Summers released his

first book of photographs, Throb, in 1983; Light Strings:

Impressions of the Guitar, with Ralph Gibson, was

released in 2004. His 2006 memoir One Train Later tells his

life story from boyhood through the mid-80s demise of the

Police. In spring 2007, Taschen books will release I'll Be

Watching You, a photographic journal of his years with the

Police

Also in 2006, Summers worked with Fender Musical

Instruments Corporation on the development of the Fender

Custom Shop Andy Summers Tribute Telecaster, a limited-

Custom Shop Andy Summers Tribute Telecaster, a limited-

edition (250 instruments) note-perfect replica of his bat-

tered and beloved 1961 Telecaster, to be released in 2007.

Summers delighted a crowd at the Fender booth at the

January 2007 NAMM show in Anaheim, Calif., performing

tunes by one of his idols, Wes Montgomery, and a rous-

ing rendition of "Message In a Bottle" on a prototype of

the replica that was all but indistinguishable from the orig-

inal.

Mere days after Summers' performance for Fender at the

NAMM show, the Police reunited to open the 49th annual

Grammy Awards ceremony in Los Angeles on Feb. 11.

Even better, the group then electrified the music world

once again by announcing their 2007 worldwide 30th

anniversary reunion tour, a momentous musical event that

Summers has long made no secret of his desire for.

Andy Summers has more than earned a lofty spot in the

pantheon of guitar greats, and his fans and guitar afi-

cionados worldwide know that they should always stay

tuned for whatever he does next. ■■

The Police 2007 world tour began in May in Vancouver. The band celebrates its 30th anniversary with an arena tour that takes them through North America and

Europe and keep them busy through the end of the year. With over 1,770,000 tickets sold to date and more concerts to be announced, The Police tour is definitely one

of the hottest tickets of the year. North American tour highlights include headline performances at this year's Bonnaroo Music & Arts Festival and the Virgin Festival

on August 4th as well as additional appearances at Boston's historic Fenway Park, Chicago's Wrigley Field and Churchill Downs -- home of the Kentucky Derby. The

Police will also play three Los Angeles area performances at Staples Center, Dodger Stadium and the Honda Center in Anaheim and multiple dates in New York,

including Madison Square Garden and Giants Stadium. Following the North American tour, The Police will kick off Europe on August 29th in Stockholm, Sweden

with additional concert dates throughout the UK and Europe including London, Holland, Germany, Italy, Spain, France, Austria, Ireland, Belgium and the newly

announced Lisbon performance September 25th at National Stadium.