Wikipedia: Bulgaria/Transnational issues

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Bulgaria's economy contracted dramatically after 1989 with the collapse of the COMECON system and the loss of the Soviet market, to which the Bulgarian economy had been closely tied. The standard of living fell by about 40%. In addition, UN sanctions against Serbia (1992-95) and Iraq took a heavy toll on the Bulgarian economy. First signs of recovery emerged when GDP grew 1.4% in 1994 for the first time since 1988, and 2.5% in 1995. Inflation, which surged in 1994 to 122%, fell to 32.9% in 1995. During 1996, however, the economy collapsed due to the BSP's go-slow, mismanaged economic reforms, its disastrous agricultural policy, and an unstable and decapitalized banking system, which led to inflation of 311% and the collapse of the lev. When pro-reform forces come into power in spring 1997, an ambitious economic reform package, including introduction of a currency board regime, was agreed with the IMF and the World Bank, and the economy began to stabilize.

Bulgaria has generally good relations with its neighbors and has proved to be a constructive force in the region under socialist and democratic governments alike. Promoting regional stability, Bulgaria hosted a Southeast European Foreign Ministers meeting in July 1996 and an OSCE conference on Black Sea cooperation in November 1995. Bulgaria also participated in the 1996 South Balkan Defense Ministerial in Albania and is active in the Southeast European Cooperative Initiative.

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Since 1990, the bulk of Bulgarian trade has shifted from former COMECON countries primarily to the European Union, although Russian oil exports to Bulgaria make it Bulgaria's largest single trading partner. In December 1996, Bulgaria joined the World Trade Organization. Bulgaria's slow pace of cash privatization, contradictory government tax and investment policies, and bureaucratic red tape have kept foreign investment among the lowest in the region. Total direct foreign investment from 1991 through 1996 was $831 million. Germany was the largest investor.

With their close historical, cultural, and economic ties, Bulgaria seeks a mutually beneficial relationship with Russia, on which it is largely dependent for energy supplies. Sporadic negotiations are underway among Greece, Bulgaria, and Russia for construction of a gas pipeline from Burgas on the Black Sea to Alexandropolis to transport Caspian Sea oil.

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The BSP promised to move forward on cash and mass privatization upon taking office in January 1995 but was slow to act. The first round of mass privatization finally began in January 1996, and auctions began toward the end of that year. The second and third rounds were conducted in spring 1997 under a new government. In July 1998, the UDF-led government and the IMF reached agreement on a 3-year loan worth about $800 million, which replaced the 14-month stand-by agreement that expired in June 1998. The loan will be used to develop financial markets, improve social safety net programs, strengthen the tax system, reform agricultural and energy sectors, and further liberalize trade.

Bulgaria's EU Association Agreement came into effect in 1994, and Bulgaria formally applied for full EU membership in December 1995. In 1996, Bulgaria acceded to the Wassenaar Arrangement controlling exports of weapons and sensitive technology to countries of concern and also was admitted to the World Trade Organization. Bulgaria is a member of the Zangger Committee and the Nuclear Suppliers Group. After a period of equivocation under a socialist government, in March 1997 a UDF-led caretaker cabinet applied for full NATO membership, which the current government is pursuing as a priority.

Bulgaria joined NATO's Partnership for Peace in 1994 and applied for NATO membership in 1997. It is working toward NATO compatibility in communications and training, and has established a Peacekeeping Training Center. The military continues to rely on Russia for much of its equipment needs and spare parts.

Bulgaria joined NATO's Partnership for Peace in 1994 and applied for NATO membership in 1997. It is working toward NATO compatibility in communications and training, and has established a Peacekeeping Training Center. The military continues to rely on Russia for much of its equipment needs and spare parts.

Illicit drugs: major European transshipment point for Southwest Asian heroin and, to a lesser degree, South American cocaine for the European market; limited producer of precursor chemicals