Area: 110,910 sq km, slightly larger than Tennessee
Population: 7,537,929 (July 2003 est.)
Annual Inflation: 5.9% (2002 est.)
Population Growth Rate: -1.9 % (2003 est.)
Gross Domestic Product (GDP): $49.23 billion (purchasing power parity, 2002 est.)
Life Expectancy: male 68.26 years; female 75.56 years (2003 est.)
GDP Per Capita: $6,500 (purchasing power parity, 2002 est.)
Infant Mortality: 13.7deaths/1,000 live births (2003 est.)
Real Annual GDP Growth: 4.8% (2002 est.)
U.S. STRATEGIC INTERESTS
Bulgaria sits at a strategic crossroad between Europe and Asia Minor. It borders on two NATO allies, and its NATO accession is scheduled for May 2004. The country has already been acting as a de facto ally on most issues and demonstrated repeatedly that it is a staunch friend of the U.S., a strong supporter of the war on terrorism, and a reliable partner in a volatile region. Bulgaria contributes troops to multinational peacekeeping efforts (such as SFOR, KFOR, and international forces in Afghanistan and Iraq) and has closely cooperated with U.S. forces in Operations Enduring Freedom and Iraqi Freedom. The USG's highest priorities in Bulgaria are continuing support for the war on terrorism and enhanced regional stability. In this context, the overarching goals are to ensure that Bulgaria remains a dependable ally and continues to play a stabilizing role in the region.
OVERVIEW OF U.S. GOVERNMENT ASSISTANCE
In FY 2003, the U.S. Government (USG) provided an estimated $52.42 million in assistance to Bulgaria:
In FY 2003, a total of 320 Bulgarians traveled to the U.S. on USG-funded exchange programs.
U.S. ASSISTANCE PRIORITIES
After 13 years of sustained U.S. assistance to Bulgaria, FY 2003 marked the beginning of a five-year period leading to the phase-out of such assistance. A strategic document is in place to guide USG activities during the 2003-2007 timeframe and laid the groundwork for a post-phase-out relationship between the two countries that serves as a strategic partnership in the region and strengthens the worldwide anti-terrorist alliance. By the time USG non-military programs end in 2007, Bulgaria will be securely grounded on a sustainable path toward democratic governance at all levels, with its market economy better integrated in the international markets. The strategy identifies three areas as top priorities for USG assistance: enhanced rule of law; economic growth and increased prosperity, with focus on job creation; and strengthened local governance. Assistance efforts will increasingly concentrate on building self-sustaining local capacity. Given the limited timeframe and diminishing resources, the USG will maximize linkages among sectors in order to increase prospects for synergy and cooperation. In addition, the USG increasingly conditions support to key reform milestones that the Government of Bulgaria (GOB) must meet. Initial implementation steps in moving the country toward graduation and EU accession are encouraging.
Democratic Reform Programs: In FY 2003, the main priorities for U.S. democratic reform assistance in Bulgaria were the rule of law, strengthening local governance, and supporting civil society by building the capacity of independent media and non-governmental organizations (NGOs). The rule of law serves as the centerpiece of USG assistance to Bulgaria and consists of three major components: justice sector reform, anti-corruption efforts, and strengthened law enforcement and criminal justice institutions. The justice sector reform program was composed of enhancement of the institutional capacity to apply the law equally and expeditiously through training of legal professionals; formulation of codes of ethics for judges, prosecutors, and attorneys; and technical assistance in the administration of justice. The anti-corruption activities aimed to strengthen the GOB's institutional capacity to prevent corruption and enhance transparency and accountability, especially in the government audit, internal controls, and public procurement areas. In the local governance field, USG assistance focused on fiscal decentralization, building the capacity of municipalities to cope with increased responsibilities, and supporting NGOs that advocate on behalf of local governments. This effort was complemented by community-level activities that provided increased opportunities for ethnic minorities and encouraged greater ethnic and religious tolerance.
Building stronger civil society organizations, strengthening parliamentary practices, and improving the advocacy of the independent media further supported Bulgaria's transition to a strong democratic society. USG-funded exchange programs sought to familiarize Bulgaria's next generation of leaders with the day-to-day functioning of a democratic, market-based system, thereby helping to build a cadre of young leaders who can spearhead reform in the public and private sectors.
Economic and Social Sector Reform Programs: Despite the impressive reforms undertaken over the last five-to-six years, Bulgaria remains among the poorest EU applicants and lags behind other Central and Eastern Europe (CEE) countries on key economic indicators. Therefore, economic growth and increased prosperity through job creation continued as the overarching goal of USG economic assistance programs in FY 2003. By the time U.S. assistance phases out in Bulgaria, the private sector share of GDP is expected to reach 80 percent, GDP per capita (as a percentage of the EU level) will be at 46 percent, and unemployment will drop to 10 percent. In order to achieve these ambitious targets, USG economic assistance focuses on streamlining the enabling environment for business development, job creation, private sector growth, improved access to credit, and agriculture. More than 6,000 private companies receive support, and over 3,000 new jobs are created annually as a result of USG technical assistance and micro-lending programs. Support to energy regulation, bank privatization, and capital markets development were among the priorities in FY 2003. Social sector activities focused on consolidation of the pension reform; health care reform, with emphasis on hospital restructuring; and efficiency of the labor market. U.S. environmental programs promoted the sustainability of biodiversity conservation and ecotourism, and supported wastewater management.
Security, Regional Stability, and Law Enforcement Programs: In FY 2003, U.S. security-related assistance promoted civilian oversight of the Bulgarian armed forces and their modernization and professionalization. The USG continued to promote regional stability by helping Bulgaria enhance its interoperability with NATO forces. To this end, the USG provided the GOB with $19 million in Foreign Military Financing (FMF) and $1.35 million in International Military Education and Training (IMET). In the law enforcement arena, the USG worked on modernizing criminal justice institutions and strengthening Bulgaria's capacity to investigate and prosecute complex and trans-national cases, particularly those involving trafficking in persons, cyber and financial crime, organized criminal activity, public corruption, and trafficking in narcotics and other contraband. Nuclear safety assistance targeted the upgrading the simulator at Units 5 and 6 of Kozloduy Nuclear Power Plant.
SECTORAL ASSESSMENTS
Democratic Reform
In FY 2003, Bulgaria continued to strengthen institutions responsible for democracy, the rule of law, human rights, and the respect for, and protection of, minorities. Toward improving the rule of law, Bulgaria enacted significant constitutional amendments, which govern the accountability of magistrates. However, further constitutional and legislative reforms are necessary to ensure that the justice system functions effectively and transparently. Major legislative changes further boosted the fiscal decentralization process, but work must continue to consolidate achievements and successfully implement reform. Despite the favorable legal environment and increased number of active NGOs, the sustainability of the civil society sector remains fragile. Media, while generally free, face pressure from the government and economic power groupings. The new implementation plan for the program for integration of Roma into society is a positive step. Determined and sustained efforts are needed to overcome discriminatory attitudes and behavior and to address the social disadvantages affecting the Roma minority. Corruption remains a serious problem. Furthermore, the decline of public confidence in Bulgaria's public institutions and growing public apathy to political life are alarming trends.
After years of inaction, the GOB demonstrated increased focus on rule-of-law issues in FY 2003. The role of assistance from the USG and other donors has been crucial in promoting justice sector reform, although progress has been uneven. The most significant achievements in FY 2003 were constitutional amendments involving accountability of magistrates and the establishment of the National Justice Institute (NJI) to train magistrates. U.S. and Western European constitutional lawyers provided a comparative law perspective for the constitutional amendments. In addition, the USG played a pivotal role in bringing the political parties into the dialogue. Prior USG assistance established the Magistrate Training Center, a private NGO, which will now be transformed into the NJI. When that process stalled in early 2003, the USG conditioned future training assistance on a series of milestones, all of which were met by November 2003. The modernization and expansion of court administration/case management practices continued, with major USG involvement.
Corruption continues to pervade Bulgaria at all levels and impedes economic growth and democratic development. Bulgaria's score deteriorated in Transparency International's Corruption Perception index in 2003. Increased corruption complaints by the business sector were the major reason for the lower mark. Despite this reversal, the country remains near the average for the EU candidates. In FY 2003, a significant part of USG democratization support focused on fighting corruption through technical assistance to the GOB and grants to civil society organizations. Two GOB ministries received help to streamline their internal control units (similar to Inspectors General) by work with their staffs to develop and adopt procedures that will ensure orderly performance of operations and guarantee adherence to effective management policies for fraud prevention and detection. The USG also assisted with drafting the new Public Procurement Law and related secondary legislation. Four pilot municipalities received support to develop a standardized documentation package for public procurement. On the civil society side, lobbying efforts resulted in passage of ombudsman legislation in FY 2003. USG grants enabled NGOs in pursuing initiatives addressing anti-corruption public awareness, advocacy, monitoring, and investigations of corruption. The investigations uncovered problems with public procurement, government concession contracts, and municipal property management, and have subsequently been turned into a "Sixty Minutes" type of nationally broadcast TV program.
In FY 2003, the USG democracy portfolio also focused on good governance at the municipal level and fiscal decentralization. Dominated by the municipal elections in October 2003, the year witnessed major legislative actions that have provided the basis for more effective, accountable governance at the local level. USG assistance was the driving force behind these developments. Important changes to fight corruption allow for the establishment of a municipal ombudsman, prohibit councilors from serving on municipal company management boards, and provide for greater access by citizens to council meetings. The Municipal Budget Act adds significant transparency and predictability to intergovernmental fiscal relations, differentiates between centrally mandated services and local services, requires public hearings in the budget process, and provides for municipal borrowing. At the local level, municipalities continued to demonstrate their willingness to introduce new, more effective, and participatory practices. With a broader funding base, the number of Citizen Information and Service Centers continued to expand, to a total of 76.
Municipalities introduced new practices in local economic development and municipal marketing, with many revising local fee schedules to cover service costs. As a result, their own source revenues grew significantly faster than in previous years. All these successes are the direct outcome of long-term USG assistance. The October 2003 local elections demonstrated the improved capacity of local governments to provide better services and be more responsive to constituents, with the re-election of 54 percent of the incumbent mayors. The university linkage programs established with three American universities further supported the good governance and the decentralization efforts.
The USG provided assistance to the municipal elections by supporting a get-out-the-vote campaign by indigenous NGOs. All parties represented in Parliament also benefited from USG-funded training on outreach and articulating their platforms. The Embassy Democracy Commission small grants program supported NGOs that promote civic involvement and action. Assistance to the NGO sector continued at the community level and addressed issues of fundraising; insufficient service offerings, particularly in the social sphere; and low citizen participation. USG programs fostered public-private alliances by engaging the private sector, local government, and average citizens in resolving community issues. Community Funds were established in five cities. Ethnic integration efforts created models for addressing social, economic, and educational problems in towns having large Roma populations. The GOB developed its program for the social integration of Roma, with major USG assistance, and Peace Corps volunteers supported community-level efforts.
In FY 2004, establishing the rule of law and local governance issues will remain USG democracy priorities, complemented by community-level activities concerning ethnic integration and public-private partnerships. Through a new approach developed in FY 2003, improved coordination and collaboration among different entities delivering rule-of-law and law enforcement assistance will be refined and expanded. USG assistance will continue to address the ineffectiveness of the justice system by focusing on court administration reform, institutional strengthening of the Supreme Judicial Council, improved capacity of legal professionals through on-going training by the National Justice Institute, and policy assistance. Technical assistance to targeted professional/stakeholder organizations will be a new element. This will be complemented by an initiative targeting attorneys' professional development through strengthening the bar, continuing legal education, the setting up of legal clinics, and applying alternative dispute resolution. Anti-corruption activities will expand to additional ministries and will continue to enhance the GOB's transparency and accountability. The civil society aspect of these efforts will support investigative journalists and watchdog NGOs, as well as the advocacy building and public awareness endeavors of Coalition 2000.
In the local governance area, the USG will launch the final phase of its Local Government Initiative, in order to consolidate its achievements. Assistance will support ongoing GOB decentralization reform. The outcomes of the municipal elections in October 2003 will drive a significant part of the USG assistance. The more liberal election law defining lower thresholds for party registration allowed many local parties and a greater number of independents to compete successfully. Consequently, newly elected councils have a much broader base of representation. By supporting the National Association of Municipalities in Bulgaria and the Foundation for Local Government reform, the USG will help the new councils to organize themselves for more efficient and productive functioning and building the capacity of local government practitioners to apply new, devolved management and fiscal responsibilities.
Economic and Social Sector Reform
In FY 2003, Bulgaria managed to sustain good macroeconomic performance and sound fiscal policies. Real GDP growth has exceeded 4 percent a year since 1998, with an estimated 5 percent in 2003. New foreign direct investment (FDI), which had fallen to $458 million in 2002, is projected to recover in 2003 to over $1 billion, mainly from bank privatizations and the expansion of existing investments. Macroeconomic stability continued, with moderate inflation projected at slightly over 3 percent at year-end. Despite the weak global market environment, the Bulgarian economy registered a 12.6 percent increase in exports in the first half of the year. A sound fiscal policy and prudent revenue management have supported this strong performance. The GOB remained committed to key structural reforms and private sector development.
The EU recognized Bulgaria as a functioning market economy but warned that reforms must continue for it to cope with competitive pressures and market forces within the EU in the near term. Bulgaria's further economic progress is hindered by an inefficient judicial system; low-level corruption and organized crime; political interference and delay in privatizing state telecommunications and tobacco monopolies; persisting administrative barriers for businesses and foreign investments; and a high trade deficit. The IMF warned Bulgaria about its ballooning current account deficit (4.4 percent of GDP in 2002), stoked by its chronic trade deficit (projected at 9.5 percent of GDP for 2003, versus 10.4 percent of GDP in 2002) and by rapid growth in consumer credit and imports.
Persistently high unemployment (although declining recently to 13 percent from 17 percent officially) and low incomes continued to exacerbate popular dissatisfaction in FY 2003. With a minimum wage of $68, average salary of $175, and average pension of $67 monthly, Bulgaria maintains the lowest compensation levels in its region. Structural weaknesses of the labor market are long-term unemployment, high youth unemployment among those with lower education and skill levels, and wide regional variations. Though there has been some progress in increasing the scope of active labor market measures, these issues require further attention. Health care reform continues at an uneven pace and often is cited as a reason for public discontent. The population's health status is well below the EU average. Although HIV/AIDS infection rates remained be low, a recent World Bank report warns about the possibility of a pandemic increase in the region.
In compliance with the phase-out strategy, the USG focused its economic assistance on key areas, such as an improved business climate that will lead to economic growth and continue to attract investments; job creation through a strengthened private sector; improved access to financial resources; and a more competitive agricultural sector. FY 2003 marked the successful completion of U.S.-backed bank privatization in Bulgaria and the end of USG support to the capital markets. It leaves Bulgaria with stable institutions and a regulated market, though still operating with limited volumes. The USG continued to provide technical assistance to the financial sector, including work with the Central Bank to strengthen its oversight role and training to commercial banks through the International Banking Institute.
A significant portion of USG resources in FY 2003 was directed to enterprise development and investment, through improving the business climate, streamlining the tax collection system, and restructuring the energy sector. The USG provided substantive assistance in drafting key laws focusing on revamping and strengthening the GOB agencies charged with attracting investments and expanding the SME sector. The USG guided the development of a national Information and Communication Technology (ICT) Strategy that will make Bulgaria a center of ICT investment in the region and will add numerous jobs in the SME sector. The U.S. tax program aims to strengthen the capacity of the General Tax Directorate, as well as support the establishment and smooth transition of the National Revenue Agency to facilitate improved revenue collection.
With sector subsidies in place, Bulgaria is the least energy-efficient country in CEE, with the highest intensity of energy input per GDP and very limited incentives for conservation. The lack of a clear legal and regulatory framework and an autonomous, competent energy regulator are serious deficiencies that limit FDI. Through a new program launched in FY 2003, the USG provided technical and legislative assistance to the GOB that focused on the creation of an independent regulator; supported the preparatory stage for the privatization of the electric distribution companies, and worked on the draft tariff framework ordinance for the electric power sector.
Over 56 percent of Bulgaria's land is agricultural, and since 1991, the country has undergone a complex and disruptive process of land restitution. The resulting fragmented structure of land ownership has adversely effected farm production. In 2003, the World Bank, together with the Ministry of Agriculture and Forests, began a long-term effort to facilitate land market transactions and increase the amount of land available for leasing for agricultural purposes. In FY 2003, agriculture's contribution to GDP was positive for the first time in 10 years, at 0.6 percent, and value added agricultural growth registered 5.1 percent.
The USG's agricultural programs target SMEs, increasing farm credit, supporting trade and investment, and Bulgaria's integration into the world economy. The USG's first agricultural sector trade and investment mission resulted in over $2 million in immediate sales and investment, mainly in the area of traditional agricultural products. Late in FY 2003, two new loan guarantee schemes were launched to stimulate agriculture sector lending. The USG also supported the sector's increased productivity and efficiency by providing assistance to the food processing and post-harvest food storage industry. Finally, in an effort to improve consumer health and the quality of local animal products, the USG supported four Bulgarian professors in an exchange program with U.S. universities.
With 99 percent of all registered companies, 62 percent of employment, and 20 percent of total export value, SMEs are now the main source of economic activity in Bulgaria. The SME sector continued to grow more rapidly and create more jobs and incomes than the state-owned enterprises during FY 2003. USG assistance contributed to that effect. In FY 2003 alone, over 2,600 private businesses were assisted through various business consultancy projects that resulted in 1,036 new jobs and retained another 614 jobs. USG assistance resulted in increased exports, the establishment of new business linkages among companies in the region and with counterparts overseas, and the introduction of key quality management and industry standards and international business practices. To increase opportunities for private sector growth, the USG continued to expand two micro-finance programs in the existing and new program centers, targeting the smallest, most disadvantaged micro-entrepreneurs. By September 2003, active clients had increased to more than 5,400 (71 percent to women), 32 percent more than in FY 2002. The micro-lending programs helped create more than 2,900 new jobs and sustain close to 16,000 jobs in the country. To improve access to credit further, the USG continued to implement three loan-guarantee schemes by covering half of the risk. The three facilities implemented by two Bulgarian banks placed 163 loans exceeding $15 million in FY 2003.
In FY 2003, the USG continued to support Bulgaria's pension reform efforts, thus helping the country to preserve its position as a regional leader in the area. USG assistance was instrumental in improving the system's transparency and in ensuring a higher level of protection for people's savings. With USG support, the GOB continued to address labor market efficiency, at both the national and municipal levels. Results of the assessments of local labor markets completed in four pilot municipalities will serve as a basis for introducing employment promotion measures. The USG continued to support Bulgaria's health reform by focusing on financing and hospital restructuring issues. It funded a large-scale education program to inform the public about new opportunities for both workers and employers for retraining and job creation. The USG Social Partnership Program focused on school-to-work and youth employment initiatives, combating gray market activities through joint efforts with labor inspectorates. A new youth initiative targeting underserved, disadvantaged, or at-risk groups started in FY 2003. In an attempt to build the capacity of Bulgarian business leaders, the American University in Bulgaria successfully launched its executive MBA program.
Bulgaria's rich biodiversity (third in Europe) has high economic value and is important to sustainable economic growth and the preservation of its heritage. In FY 2003, the USG supported the establishment of a Protected Areas Fund, the first conservation trust fund in Eastern Europe. The World Bank Global Environment Facility has pledged a $2 million grant to the fund, and the GOB has promised matching contributions. Tourism (particularly ecotourism) is an important priority for Bulgaria. To this end, the USG helped in the development of the national eco-tourism strategy and action plan that will serve as a business promotion tool, fostering job creation and economic growth. In FY 2003, the USG launched a new initiative to support the establishment of Bulgaria's first training center for water and wastewater operators. In the long run, this will lead to the increased professionalism of water and wastewater operators, as well as improved quality of services and environmental protection.
Security, Regional Stability, and Law Enforcement
The focus of U.S. security assistance to Bulgaria in FY 2003 was preparation for its NATO membership, and upgrading forces for engaging in the international war on terrorism. To this end, the USG provided the GOB $19 million in Foreign Military Financing (FMF) and $1.35 million in International Military Education and Training (IMET). FMF facilitated Bulgaria's acquisition of up-to-date, NATO-compatible Communication Information System equipment. IMET ensured Bulgaria's continued exposure to Western models of force structure, tactical doctrine, resource management, and the professional military education (PME) of military and civilian personnel expected to occupy key positions in a defense-reformed environment. A total of 154 Bulgarian officials participated in different training courses under IMET. The Ministry of Defense continued to take advantage of the $1.1 million grant that the U.S. provided for Enhanced International Peacekeeping Capabilities (EIPC) in 1999, toward train-the-trainer types of instruction with the Center for Civil-Military Relations (CCMR) in Monterey, CA. In FY 2003, three Bulgarian students completed the Phase II Instructor course, and a CCMR team visited the country to conduct a site survey with the purpose of finalizing the Bulgarian peacekeeping concept/Country Action Plan. A new program targeting the safety of Kozloduy Nuclear Power Plant was launched in 2003. The simulator at Units 5 and 6 will be upgraded with $2 million in regional SEED funds.
Bulgaria's criminal justice sector remains weak, corruption is pervasive, and organized criminal activity threatens the country's long-term stability. U.S. criminal justice assistance in FY 2003 was designed to strengthen justice sector institutions to permit better investigation and prosecution of complex and transnational cases, particularly those involving trafficking in persons, cyber and financial crime, organized criminal activity, public corruption, and trafficking in narcotics and other contraband. To date, few such cases have gone to trial. With USG assistance, Bulgaria strengthened its ability to combat trafficking in persons by amending its penal code to penalize explicitly such trafficking. It also passed a comprehensive anti-trafficking act, which requires the development of national, regional, and local strategies to combat trafficking, and mandates extensive assistance to victims.
Bulgaria also took substantial steps toward institutionalizing a system of probation, as an alternative to incarceration for non-violent offenders, and toward developing a comprehensive witness protection program. Further, the Bulgarian Specialized Investigative Service and the Bulgarian Association for Informational Technology opened a Computer Crimes Training Center to teach computer literacy and forensics to police and magistrates. In addition, a unit was established within the Ministry of Interior to handle international requests for assistance with computer and digital evidence. The Department of State/Bureau of International Narcotics and Law Enforcement Affairs (INL) administered SEED funding in support of five projects in Bulgaria: Department of Justice, Office of Overseas Prosecutorial Development, Assistance and Training (DOJ/OPDAT) Resident Legal Advisor (RLA); CEELI Criminal Law Liaison; Department of Justice, International Criminal Investigative Training Assistance Program (DOJ/ICITAP) Forensics Lab Development; ICITAP and CEELI-implemented Regional Criminal Justice Initiative; and ICITAP Establishing the Analytical Unit.
Working with Bulgarian counterparts, U.S. advisors established a task force to investigate and prosecute financial crimes, particularly those with a Bulgaria-U.S. nexus. Task force cases to date have involved fraud, embezzlement, illegal exporting, and counterfeiting, including large amounts of U.S. currency. A similar multi-institutional approach is being applied to improve the Bulgarian tax enforcement regime. The USG also provided assistance for the development of a Bulgarian law on money laundering, terrorist financing, and asset forfeiture, and currently is promoting criminal procedure, counterfeiting, and tax-related reforms. In addition, a comprehensive financial investigation techniques training program enhanced the professionalism of various counterparts: the financial intelligence unit, economic and organized crimes police, prosecutors, investigators, tax and customs authorities, as well as commercial banks. Through the SECI Center in Bucharest, the USG also supported cooperation between Bulgarian police forces and their counterparts in the region.
Through the International Visitors Program, key figures from the GOB, NGOs, and the media visited the U.S. for programs on combating international crime, probation and sentencing, and U.S.-European security issues. The Embassy Democracy Commission's small grants program supported NGO projects to build public awareness on NATO membership and foreign policy issues, anti-trafficking, and anti-corruption.
In 2004, U.S. security assistance will further support the reform efforts of the Ministry of Defense, in line with NATO requirements. The final stage of that reform continues through 2004, with a major equipment modernization effort. U.S. security assistance (through FMF and IMET) will provide the necessary support for a long-term force modernization plan. Security assistance objectives for FY 2004 will also foster greater mutual understanding and trust and doctrinal interoperability through: 1) the IMET program; 2) acquisition of up-to-date and NATO-compatible equipment through the FMF program or through the use of national funds in the Foreign Military Sales program; 3) support for Bulgarian efforts to aid the most disadvantaged citizens through Humanitarian Assistance Program-Excess Property (HAP-EP) and Humanitarian Assistance Program-Other (HAP-Other) projects; and 4) providing Excess Defense Articles (EDA), when possible, to help bridge equipment requirements until the reforms have been completely implemented.
Assistance to strengthen Bulgarian criminal justice institutions will continue in FY 2004, as an integral part of the rule of law program and with particular emphasis on increasing capacity to investigate and prosecute complex and transnational crime, and on modernizing criminal and criminal procedure codes. One indicator of strengthened criminal justice institutions will be more complex and transnational crime cases going to trial.
Humanitarian Assistance
The long-term commitment of Humanitarian Assistance Programs (HAP) aimed at cooperative efforts with the GOB to improve the quality of life and health care services for the population continued throughout FY 2003. In March, the USG coordinated the donation of excess property of about $0.13 million in medical supplies and equipment, furnishings, vehicles, and other property. A grant of $.30 million enabled the extensive renovation of the multi-profile wing of Haskovo United Regional Hospital. Twenty large patient wards and dilapidated structures were replaced with 120 up-to-date, single-patient rooms, fully integrated inpatient sections with spacious and functional waiting areas, and consulting stations. In addition, structural components (heating, plumbing, sanitation, lighting, etc.) of the cardiology, orthopedic, surgery and maternity wards were upgraded.
COUNTRY PERFORMANCE MEASURES
Bulgaria's macroeconomic policy performance was strong in FY 2003; the justice sector reform made progress; and civic organizations and media played a stronger role in creating checks and balances against the government. Corruption and organized crime, however, continue as major problems for the country.
Ratings based on a 1 to 5 scale, with 5 representing the most advanced.
The Human Development Index (HDI) is based on three indicators: longevity, as measured by life expectancy; educational attainment, as measured by a combination of adult literacy and combined primary, secondary and tertiary enrollment ratios; and standard of living, as measured by real per capita GDP ($PPP). The HDI ranges from 0 to 1, with higher values representing greater human development. UNDP, Human Development Report 2003 (July 2003), and previous editions; EBRD, Transition Report 2003 (November 2003), and previous editions.
MEASURES OF PROGRAM EFFECTIVENESS IN FY 2003
DEMOCRATIC REFORM
Performance Indicator: Freedom House Nations in Transit Rule of Law Rating: Constitutional, Legislative, and Judicial Framework (1 = highest; 7 = lowest)
|
FY 2002 Baseline |
FY 2003 Target |
FY 2003 Actual |
|
3.50 (based on events in CY 2001) |
N/A |
3.50 (based on events in CY 2002) |
FY 2003 Results: With substantially broadened political support, judicial reform in Bulgaria made progress in FY 2003. The constitutional amendments pertaining to the judiciary, the establishment of the National Justice Institute, and the adoption of an electronic case management system constitute significant achievements. While these positive developments are not captured by the FY 2003 Rule of law rating, the Judicial Performance Index (JPI), developed in country, determines progress for the sector. On a scale from 2 to 6 where 2 is the lowest, the JPI score in FY 2003 was 3.7, compared to 3.5 in FY 2002. Nevertheless, Bulgaria still needs to address major deficiencies such as serious delays in the judicial system; legal professionals with inadequate legal expertise and experience; and the politicization of the judiciary.
Performance Indicator: Freedom House Nations in Transit Corruption Rating (1 = highest; 7 = lowest)
|
FY 2002 Baseline |
FY 2003 Target |
FY 2003 Actual |
|
4.50 (based on events in CY 2001) |
N/A |
4.25 (based on events in CY 2002) |
FY 2003 Results: Despite the establishment of a GOB's Anti-Corruption Commission, amendments to existing legislation, and the adoption of new laws (including the Ombudsman Law) with the explicit objective of improving transparency and accountability, pervasive corruption continues at all levels. Lack of transparency and accountability and waste, fraud, and abuse in government procurement, and poor audit capacity remain major issues.
Performance Indicator: Freedom House Nations in Transit Civil Society Rating (1 = highest; 7 = lowest)
|
FY 2002 Baseline |
FY 2003 Target |
FY 2003 Actual |
|
3.25 (based on events in CY 2001) |
N/A |
3.25 (based on events in CY 2002) |
FY 2003 Results: The sustainability of the civil society remains fragile,in spite of the increased number of active NGOs and a favorable legal environment. While the NGO sustainability ratings for organizational capacity, infrastructure, and public image have improved, financial viability, advocacy, and the provision of services remain issues.
ECONOMIC AND SOCIAL REFORM
Performance Indicator: Private-sector share of GDP (Source: National Statistics)
|
FY 2002 Baseline |
FY 2003 Target |
FY 2003 Actual |
|
65% |
70% |
70% (projected) |
FY 2003 Results: The GOB's privatization program advanced more slowly than expected, due to many procedural problems and political interference. Trends are positive, nevertheless. The private sector continues to grow, with SMEs as the main source of economic activity in Bulgaria.
Performance Indicator: Unemployment Rate (Source: National Statistics)
|
FY 2002 Baseline |
FY 2003 Target |
FY 2003 Actual |
|
16.5% |
16% |
13% (Jan-Oct) |
FY 2003 Results: Unemployment decreased in FY 2003, with the growth of new jobs in both the private sector and government entities. Due to the importance of active labor market policies, the large informal economy, and the difficulty in defining agricultural employment in structures of predominantly small-scale farming, the real situation in the labor markets remains difficult to assess. The ongoing reduction in unemployment should be supported further by correcting the rigidities of the labor market and improving the education system.
SECURITY, REGIONAL STABILITY, AND LAW ENFORCEMENT
Performance Indicator: TIP Ranking (Source: State Department)
|
FY 2002 Baseline |
FY 2003 Target |
FY 2003 Actual |
|
Tier ll |
N/A |
Tier ll |
FY 2003 Results: The GOB still does not fully comply with the minimum standards for the elimination of trafficking in persons; however, it is making significant efforts to do so. The GOB passed anti-trafficking legislation in 2003, and showed some improvements in international law enforcement cooperation. Overall improvements from the previous year were, however, limited.
FY 2003 Support For East European Democracy (SEED)
Funds Budgeted for Assistance To:
Bulgaria (In millions $, as of 12/31/03)
USAID - Democratic Reform $8.47
USAID - Economic Prosperity & Security $5.46
USAID - Private Sector $8.75
USAID Total: $22.68
State - Criminal Justice System $0.36
State - ECA Exchange Programs $1.38
State - EUR Public Diplomacy $0.40
State - IIP Public Diplomacy $0.15
State - INL Law Enforcement Activities $1.05
U.S. Department of State Total: $3.33
Broadcasting Board of Governors - Public Diplomacy $0.08
DHS/Customs - Law Enforcement Activities $0.28
U.S. Department of Treasury - Advisors $1.00
U.S. Department of Agriculture - Technical Advisors $0.65
Other Agencies Total: $2.00
GRAND TOTAL: $28.00
