Bulgaria's painful crash landing Depression: Bulgaria's delay in adopting economic reforms has left its children malnourished, its hospitals without medicines and its workers without work.

Sun Journal

March 05, 1997|By Susan Milligan | Susan Milligan,SPECIAL TO THE SUN

SOFIA, Bulgaria -- In the hospitals, doctors have stopped performing all but emergency surgery because they don't have anesthesia or the money to buy it.

" 'Urgency' becomes a very relative term," says Dr. Slavyan Nikolov, a surgeon whose salary at First City Hospital is $10 a month. "There is no medicine. People without money have no options."

The same diagnosis applies to all of Bulgaria, where a critical economic situation and political unrest have almost paralyzed the country. There is hyper-inflation, which means that Bulgarians without hard currency can barely afford to eat. The banking system has collapsed. Corruption is rampant, with business people frequently shaken down for "insurance" money by organized crime figures.

An estimated 50 percent of Bulgarian children are malnourished. Children in the country's 330 orphanages sometimes wear cardboard in lieu of shoes.

Bulgaria once again looks like a cold warrior's image of Communist Eastern Europe. People once again spend hours a day waiting in line -- first to change a precious bit of hard currency into lev, the local currency, and then to buy the limited goods in the stores.

The economic crisis brought hundreds of thousands of Bulgarians into the streets in January and February, finally forcing the ruling Socialists to agree to hold elections in April.

People have directed their anger at the Socialist Party.

"They are criminals. They stole from the country," says 46-year-old Petar Peters, standing in a long line to buy tobacco because, he says, "the price will be double tomorrow."

"We thought they were Socialists," he says to explain why the voters elected them. "But they were Stalinist Communists. They are not democratic."

Everywhere in Sofia are signs depicting a left-hand turn sign inside a circle with a line across it -- that is, don't turn Socialist. Physicians pin a piece of blue cloth to their medical smocks, blue being the color of the opposition Union of Democratic Forces. Even children wear pins decorated with a friendly-looking cartoon lion, an emblem of the opposition.

People assume the Socialists will lose their majority in Parliament in the April elections, but it may be unfair to blame the party for all the country's problems. Economists say the crisis has been seven years in the making, because fundamental economic and legal reforms were never made.

None of the seven governments since 1989 closed down poorly performing industries, reformed the banking system, or made other changes toward a Western-style economy. "There was a general consensus that political change was OK, but as for the economy -- let's go slower," says Krassen Stanchev, executive director of the Institute for Market Economics in Sofia.

Looking at the former East Bloc, Westerners sometimes lump countries and cultures together -- Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia, Yugoslavia and points in between. But each culture had a unique relationship with its Communist regime.

In Bulgaria, you do not encounter the vitriolic hatred toward Russia that is apparent in the Czech Republic and Hungary.

Most Hungarians, for example, know Russian since they were required to learn it in school. But they refuse to speak it.

Not so in Bulgaria, where Russians are viewed as quasi-brothers, and old Soviet monuments still stand in Sofia, the capital.

Unlike Hungary, Czechoslovakia and Poland, Bulgaria never had a defining moment to rally opposition against the Soviet Union.

Older Bulgarians will tell you that life under communism was not so bad. At least they had bread, more than they have now. There was no visible dissident movement in Bulgaria. Or whenever jTC there was the hint of one, authorities crushed it. So it is not totally surprising that after the fall of communism, Bulgarians still elected Communists-turned-Socialists.

What they may not have understood was their loss of Soviet economic and social guarantees. Bulgaria would have to play by Western rules if it wanted Western loans, aid and investment. And reforms were slow in coming.

Having run up a $1.3 billion foreign debt, Western banks and aid agencies are reluctant to invest more, unless Bulgaria makes a serious effort to reform its economy.

"Bulgaria needs money for investment if it's not going to be relegated to a Third World country, which it is now," says Philip Bay, the American owner of a private restaurant club in Sofia. But would Bay, in business in Sofia since 1994, recommend investing in Bulgaria just now?

"Absolutely not," he says.

"I would wait and see who is going to run the country, and how committed they will be."

Hungary, Poland and the Czech Republic all have impressive rates of economic growth and are being considered for membership in the North Atlantic Treaty Organization and eventually the European Union.

Yugoslavia, Albania and Bulgaria are associated with problems and protests.

Bulgaria runs the risk that the West may simply write off the country as a failure. It has no bargaining chips to woo investors, no oil reserves, no large market, no profit-making opportunity to dangle in front of investors. The economic and political chaos also creates opportunities for organized crime and the well-connected to buy the most valuable assets.

"When everybody is distracted by the crisis, what better time to bribe your local parliamentarian and get a company?" says Kenneth Lefkowitz, editor of the Bulgarian Analyst, an investment newsletter.

"It was an explosive cocktail," Sofia University Professor Vassil Atanasov says of the recent street protests. "And it will continue to be an explosive cocktail, because the root causes have not been addressed."

Pub Date: 3/05/97

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