Balkanalysis.com

Balkanalysis on Twitter

Greek Energy Diplomacy and Future Balkan Oil Pipelines

By John Demopoulos*

Energy diplomacy has come to dominate the foreign policy agenda for countries on Europe’s periphery and the Balkans is no exception. As the West seeks to strengthen and diversify its energy supplies, the region has become awash with proposals for new transit routes to ease the flow of resources from the Caspian. Since the mid-1990s, successive Greek governments have sought to carve out a role for the country as an ‘energy hub’ in this most lucrative of sectors, investing millions in new infrastructure. But how do countries like Greece expect to benefit from the array of pipelines under consideration? And how can they exploit the opportunities provided by the energy needs of the West in order to further their own strategic interests?

Of course, location alone cannot transform a small Balkan country into a major European power. Greece is a long way downstream from Russia and the Caspian, and the country’s influence in Brussels – where it remains on the periphery – will benefit little from the prospect of energy diversification. Nevertheless, the geopolitical benefits of securing a position on the oil route are real enough, and it is this that seems to provide the rationale for the country’s new energy policy.

The clearest illustration of Greek thinking is the recent re-prioritisation of a proposed oil link, the B-A pipeline. B-A would bypass the overcrowded Bosporus Straits by transporting up to 35 million tons/year of Russian crude from the Bulgarian port of Burgas to Alexandroupoli on Greece’s Aegean coast. Designed to serve West European markets, the project has been on the cards since as early as 1993, but it was only in 2004 – some 11 years after the project’s conception – that it rose to the top of the Greek foreign policy agenda. So why the decade-long lag?

Greece’s recent push to see B-A in operation is the result of a series of developments in the region spanning the course of the last decade. In the mid-1990s – the height of the infamous dispute between Athens and Skopje over the Macedonian name issue – a similar pipeline (AMBO) came under discussion. Running from Burgas to Albania’s Adriatic port of Vlore, AMBO would supply crude oil to Bulgaria, the Republic of Macedonia, and Albania. Like B-A, its chief objective was to provide a Bosporus bypass for Caspian crude en route to Western markets. Despite American support for the US-registered AMBO corporation, the project – and with it the diversification of Skopje’s oil supplies – soon floundered. Instead of looking to the Balkans for new oil routes, the West had diverted its attention to the BCT pipeline, a route which could bypass Russia altogether on the way from the energy-rich Caspian.

With AMBO and B-A both grounded, Greece’s state-controlled Hellenic Petroleum took the opportunity to construct its own pipeline to Skopje, one which continues to serve as Macedonia’s only large-scale supplier of crude. The oil company’s subsequent acquisition of Skopje’s sole refinery meant that by the turn of the century, Hellenic Petroleum had established almost complete control over Macedonian oil consumption. Seen in the context of mass Greek investment in the former Yugoslav republic – the bulk coming from Greece’s large public sector – Athens’s influence over Skopje had grown immeasurably.

With BCT now operational, production levels in the Caspian are widely considered insufficient to justify two Balkan oil routes to the West. The construction of AMBO would offer Skopje the chance to diversify its oil supplies away from Greece, while Athens will hope that progress on B-A can forestall this eventuality and consolidate the status quo. Inevitably then, heightened interest in AMBO has seen Greek lobbyists redouble their efforts to promote the rival B-A pipeline. In the past two years a flurry of summits have been organised between leaders and foreign ministers of B-A countries Greece, Bulgaria and Russia, and high-profile visits have been exchanged by Putin, Greek PM Karamanlis, and Gazprom chief Alexei Miller.

While both projects can offer the Kremlin reduced export costs and a consolidated market share, Moscow may expect an endorsement of B-A over AMBO to benefit Russia’s other chief export, natural gas. Recent discussions on B-A have been paralleled by Russian approaches for access to the new Turkey-Greece gas link – billed for completion by end 2007 – and the possibility of concessions here will look attractive to Russian energy companies deciding which Balkan oil route to back.

Conversely, US energy companies active in the region may look to court BA in order to achieve the opposite effect. Europe’s demand for gas is growing faster than that for oil, and US concerns over the continent’s dependency on Russia means that keeping companies like Gazprom out of new gas links is a top priority. While Mr. Miller’s overtures on the subject provoked a stern warning to Athens and Ankara earlier this year, the State Department appears to have warmed to BA, recently billing the pipeline as a €šÃ„òpositive’s development for the region.

Nevertheless, developments in the Middle East and Caucasus, as well as basic market forces – Vlore is better equipped for large tankers while B-A is shorter – will also have an impact. Whatever happens, Greek forays into the regional energy sector look set to continue. Hellenic Petroleum hopes to extend the Thessaloniki-Skopje oil pipeline to Belgrade (and perhaps further afield), while the Greece-Turkey link will be extended across the Adriatic to Italy. In keeping with its Balkan preoccupation, the Greek government is pressing for a second extension to the gas pipeline, which will run north through Macedonia and the Western Balkans, eventually terminating in Austria.

In setting itself up as a gateway for the flow of energy and investment into emerging Balkan markets, Greece has been able to exploit its regional expertise to develop real political clout in the region. Much of the finance for the country’s economic expansion northwards has come through strategic partnerships with Western corporations, or indirectly from EU cohesion funds.

Likewise, the oil being funnelled from Greece to Skopje is anything but Greek in origin. The result is that in the case of bilateral disputes with its northern neighbors – as and when they arise – the country is likely to find itself in an advantageous negotiating position. Nevertheless, with an increasingly unpredictable Turkey upstream, as well as rising interest over oil deposits in the Republic of Macedonia, Greek policymakers will not have much time to rest on their laurels.

………………………

*Greek economics specialist John Demopoulos has written extensively for Platts’ EU Energy, as well as a number of other trade publications. He is currently a postgraduate of the London School of Economics and is based in Athens and London. He can be contacted at: j.a.demopoulos@lse.ac.uk

Sofia Readies for Pivotal AMBO Oil Pipeline Meeting

(Balkanalysis.com Research Service)- A tri-country expert meeting that could determine the future of Balkan oil transit is set to take place tomorrow in the Bulgarian capital.

The meeting, which brings together representatives of Bulgaria, Macedonia and Albania as well as the chief executive of the AMBO oil pipeline project, Ted Ferguson, had been delayed by one month because of a conflicting event- a lawsuit against Macedonia in the Paris Court, related to the privatization of the Greek-owned OKTA oil refinery. The lawsuit, scheduled for the same date as the original date of the planned AMBO meeting (June 26), has resulted in an order to Macedonia to pay over 60 million euros to OKTA.

At the Sofia meeting, it is expected that a treaty for the project will be finalized, and then sent to each Council of Ministers for approval. The document in question is the Intergovernmental Treaty, which would make a previously signed memorandum of cooperation between the three countries involved legally binding. Such a document must precede the finalization of any such transnational oil pipeline project.

The AMBO pipeline project, which would bring Caspian oil to the West, linking the Black Sea and the Adriatic, was inaugurated in 1994. However, owing to the political instability and war that characterized the region through 2001, and Western oil companies’ strategic interests elsewhere, in the BTC (Baku-Tbilisi-Ceyhan) oil pipeline, AMBO was put on the back burner. And a competing pipeline idea, from the Bulgarian port of Burgas to the Greek port of Alezandropoulis, has also been championed by Greek lobbyists adamantly opposed to AMBO.

However, AMBO supporters are now more confident that the project will go ahead. While funders from oil majors have now allegedly begun to step forward, the company says it cannot disclose further information for at least the next few months. Nevertheless, it is believed that AMBO has received assurances of first-round financing, and that the relevant legal documents are now being drawn up.

A short report published on July 22 by Skopje newspaper Vecer on tomorrow’s meeting has been criticized by AMBO Vice President for Media Relations Gligor Tashkovich. In a public response, Tashkovich sought to correct certain assertions made by the article. He denied that outgoing Minister of Economy Fatmir Besimi will participate, because “the meeting will be of the Interstate Commission at the expert-level in Sofia on July 26th for the principal purpose of finalizing the Tripartite Treaty documentation. Because this meeting is taking place at the expert level, it is highly unlikely that Minister Besimi will attend and we are not expecting him to do so.”

Tashkovich also noted that contrary to the report, “there is no new document regarding “route negotiation’ that will be presented. Actually, at the Macedonian government’s request, AMBO prepared a bilateral protocol document regarding the specific border crossing points between Macedonia/Albania and Macedonia/Bulgaria.”

Most significantly, the AMBO vice-president refuted the newspaper’s claim that the Bulgarian and Albanian governments had wanted advance payments from AMBO.

A critical but now forgotten moment in the history of AMBO occurred way back on December 28, 2004, when the prime ministers of Macedonia, Albania and Bulgaria (Vlado Buckovski, Fatos Nano and Simeon Saxe-Coburg-Gotha) met in Sofia and signed a political declaration showing their support for the pipeline project. At the same time, the Macedonian Minister of Economy Fatmir Besimi, Bulgarian Minister of Regional Development and Public Works Valentin Cerovski and Albanian Minister of Industry and Energy Viktor Doda signed a memorandum of understanding with AMBO’s Ferguson.

With these signings, AMBO officially entered the FEED (Front-End Engineering and Design) stage of development. Pipeline projects that survive to this stage of the game generally have a 90-95 percent chance of being built.

Now, therefore, it seems to be a question of not if but when the AMBO pipeline will be built. A recurring concern remains Macedonia’s political stability. Recent veiled threats by Albanian leader Ali Ahmeti that inter-ethnic relations have been “gravely” affected and could worsen due to his party’s likely exclusion from the future government were criticized by the international community and the winning Macedonian party, VMRO-DPMNE. Yet considering that it was Ahmeti himself who started an unprovoked war against the country in 2001, the bullying today is being taken seriously.

There seem to be other promising angles in the country, however. Foreign oil companies are also considering exploring for oil in Macedonia. In May, the Canadian company Bankers Petroleum signed a memorandum of co-operation with the Macedonian government According to a report in economics weekly Kapital, the oil is believed to be in Ovce Pole, a mostly flat and accessible plain near Sveti Nikole in peaceful eastern Macedonia.

Greek-Bulgarian Relations, 1912-2006: A Historical Synopsis

By Ioannis Michaletos in Athens

Editor’s note: in this detailed synopsis, Greek researcher Ioannis Michaletos outlines the key moments and trends in the history of Greek-Bulgarian relations from the Balkan Wars of 1912-1913 through the Cold War, concluding with the unprecedented excellent relations enjoyed by the two countries today.

Introduction

Greece and Bulgaria have a long and colorful history of rivalry. The hostility between the two nations started in the 7th century and thus has been the longest, chronologically speaking, at least so far as the Western world goes. By comparison, the world famous rivalry between the Germans and French (1870-1962) covers only some 8 percent of this timeline. It thus seems that the Balkan terrain is a perfect ground for testing human endurance.The comparison holds if we consider that the German nation was fully constructed under the Second Reich. Even if previous German-French quarrels are to be counted, they don’st go back further than the 17th century, and the 30 Years’s War.

Another famous and long-running European conflict is that between the English and the Irish; it dates back to the 12th century, and is still to some extent unresolved. Although the Greeks and Bulgars have of late cemented a new and apparently enduring friendship, their history of former conflict still outstrips in lengthiness that of the English and Irish.

The most famous examples of Greek-Bulgar enmity date from the Middle Ages, when the national consciousness of both peoples’s were not developed or construed as they are today. Nevertheless, seminal events like the victory of Byzantine Emperor Basil II (Voulgaroktonos, €šÃ„òthe Bulgar-Slayer’s in Greek) over the Bulgars at Mt. Belasica in 1014 made their way into the collective memories of both nations. As political rulership changed over time, the direct military conflicts ceased and new forms of infighting – chiefly religious, under the Ottomans – came to the fore. However, at the dawn of the 20th century, a precipitous rise in ethnic nationalism bought the two great Balkan nations back to the battlefield – first as allies, and soon after as enemies.

1912: The Decisive Year

In the months leading up to the First Balkan War in 1912, the Greek and Bulgarian government were still undecided as to whether to form a coalition along with Serbia and Montenegro in the fight against the decaying Ottoman Empire.

There were many obstacles for further negotiations, and opposing views on crucial issues. Bulgaria at that time was the Balkans’s prime military force, as far as infantry strength was concerned, with a total mobilized troop number of 300,000. The Bulgarians were known as the “Prussians of the East,” having a very disciplined army that mainly followed traditional Prussian military technique and methodology.

The Greeks, for their part, had a much smaller infantry (130,000 men), though their formidable navy constituted a great strategic advantage. It would be decisive in the outcome of the Balkan Wars, blocking Turkish troop and logistic supply maritime movements from Egypt.

The clear aim of Bulgaria was expansion towards the Aegean Sea, thus enhancing their power by connecting an Aegean port presence with their existing Black Sea one. Bulgaria was a continental power, but was eager to obtain Thrace and Macedonia in order to expand its territory and at the same time become the major Balkan power by controlling the strategic inland and coastal areas of the peninsula.

However, these goals conflicted with Greece’s own ambitions. The latter wanted to secure its northern borders, and the nation was also captivated by the vision of the “Great Idea” (Megali Idea), which envisioned the inclusion of all Hellenes within a single state, including those of Ottoman-controlled Asia Minor. In a sense, this dream would be an attempt to revitalize the lost Byzantine Empire, encompassing an area stretching from Cyprus in the south to Istanbul (Constantinople) in the north. The imminent years of warfare between the Bulgarian and Greek states helped ensure that neither of their ambitions would ever be achieved.

British Intrigue

At a time in which no agreement or consensus was to be found among the regional powers, the almighty British Empire found a solution, and actively pressed for its implementation. In spring of 1912, a London Times journalist residing in Sofia, one J.D. Bourchier, met with Greek Prime Minister Eleftherios Venizelos in Pylio. The secluded scenery of this mountainous area, close to the important Aegean port town of Volos, provided the ideal cover for discreet and high-stakes conversations that would help shape the course of Balkan events for decades to come.

For Bourchier was not just an ordinary foreign affairs columnist; many believe that he was also a key figure in the British intelligence services, commissioned at that time to forge an alliance between the two nations. Bourchier was both popular (the Bulgarian government went so far as to issue a Bourchier postage stamp in his honor) and instrumental in getting the Balkan League against the Ottomans created.

What was the British interest in such tacit intervention? Britain was pulling for Greece’s entry into the war because it assumed that this junior naval ally power would act as a frontal force for the larger one – Britain – and so help make this important peninsula free of either Russian or German control. In exchange, Venizelos unofficially agreed to strictly follow the UK’s policy in any potential Europe-wide conflict, and to never make engagements of any sort with Germany, then reasserting itself as a world power.

After finishing his meeting with Venizelos, J.D. Bourchier rushed to Sofia where after cajoling, pressing and persuading the generals he finally got the affirmative answer he had been asking for. However, he didn’t mention to the Bulgarian authorities that Britain would be more pleased if Greece took hold of Thessaloniki – the most important city in the southern Balkans – instead implying that most likely the stronger Bulgarian army would be the first to reach the city in the dawning war.

The First Balkan War and a Mysterious Assassination

The first war started in October 1912 with fierce battles conducted on all fronts in Macedonia. In only a matter of days the Balkan coalition had captured most of Macedonia and Thrace from the crumbling Ottoman forces. As dawn broke on the 26th of October, the Greek army marched through Thessaloniki’s main thoroughfares just a few hours before the disappointed main Bulgarian army division. They captured the city, symbolically enough, on the day of Thessaloniki’s patron saint, Dimitrios. In an agreement made afterwards, the dejected Bulgarian regiment was allowed to camp in the outskirts of the city.

While the victorious Greek capture of Thessaloniki sparked animosities that helped to lead to the Second Balkan War, in which the allies would become antagonists, until March 1913 Greek-Bulgarian relations could be described as relatively calm. Still locked in their fight against the Ottomans, the two nations didn’st have time to address their outstanding differences. But turbulence was looming in the heavy Balkan air.

The mysterious assassination of King George the First on March 18, 1913, thought by some to be an act of the Bulgarian secret services, ignited strong sentiments of national revenge from the Greek side. Some supported the view that either German or Austrian services were behind this act.

In Greece, from 1913 up to the present it has been widely assumed that it was a plot carried out by Bulgarians, Austrians or Germans. The king was a staunch supporter of Anglo-Greek dominance in the Balkans, and had significant influence in various circles in Europe. His assassin, a man called Shinas, “committed suicide” by falling from the balcony of Thessaloniki’s police station the day after the attack.

The king’s successor, son Constantine, was fiercely pro-German and anti-British. That fact would have great significance the following year (1914) when Greece refused to side with the Entente, and a pro-German stance became prominent in Greek politics. Constantine also ousted Prime Minister Venizelos. Thus is it is likely that the Allied forces in WWI would have won the war faster had King George lived. In any case, the royal residence located in Chania, Crete, right next door to Venizelos’ historic home, nowadays stands neglected, while the latter’s has been maintained well and turned into a museum; the Cretans’ respect for their favorite son and disdain for his supplanter, deriving from these turbulent days of almost a century ago, can still thus be seen.

Following the impressive gains of the Balkan Alliance against the Turks, Bulgaria was unsatisfied with its lot. Although it had achieved its goal of extending its borders to the Aegean, it felt that it had been short-changed in Macedonia, in comparison to its heavy infantry losses. Although hubris is more commonly associated with the Greeks, who coined the term in the first place, the Bulgars at that moment displayed the fatal syndrome and started a disastrous and crippling conflict with their erstwhile allies.

In May 1913, Serbia, Greece and now, Romania, were forced to declare war on Bulgaria in what became known as the Second Balkan War. The exhausted, demoralized Turks wisely sat out the conflict but did make incremental recoveries due to the Bulgarian over-extension of forces. Bulgaria was bitterly defeated and lost any hopes, for the moment at least, of securing the most precious maritime stretches of the Balkan Peninsula.

The Great War and the Inter-bellum Period: Treaties, Skirmishes, Population Exchange

When World War I broke out a year later, Bulgaria sided with the Central Powers and its troops fought on the Macedonian front against Greece, France, Britain and Serbia.

For this epic struggle, the Bulgarian armed forces mobilized 750,000 men, whilst the Greeks, who arrived late on the scene due to political infighting between supporters of the Royalists and of Venizelos, mustered only 350,000. But the two countries never saw much direct combat, owing to the general stalemate prevailing along the Macedonian front through much of the war. So while the Bulgarians invaded Macedonia and remained entrenched there for much of the war, buttressed by German and Austrian support, they were eventually dislodged by the Allies in 1918, when a Serb-French breakthrough crossed up the central Vardar corridor and broke the back of the occupying forces.

The collapse of the Second German Reich was devastating for the Bulgarians, and a triumph for the Greeks. To the former, it seemed that once again they were suffering in the extreme, in comparison to their losses, while the latter were once again being rewarded with more than they deserved. Bulgaria was completely stripped of its armed forces and had to pay severe reparations to the allies, and once again its longstanding ambitions in Macedonia had come to naught.

Greece, on the other hand, briefly managed to expand its control in Minor Asia, following the lead of the Italians, very nearly securing the vision of the Megali Idea. The Ottoman Empire was officially dead and it appeared that the substantial Greek population in Anatolia could somehow be liberated and returned to Greek Christian rule for the first time since the age of Byzantium.

But first there was the Bulgarian question to be taken care of. All though it is rarely mentioned, the treaty between the Allies and Bulgaria signed at Neuilly-sur-Seine on 27 November 1919 was the first in modern experience to formally regulate the exchange of populations – orderly, codified ethnic cleansing, you could call it – so that the Greek population living on Bulgaria’s Black Sea coast was exchanged for the Bulgarian one in Thrace and Macedonia. This operation involved roughly 50,000 people on each side. For the first time in history, such population movements were made in an official manner and set a precedent for others that would unfortunately soon be executed in the region.

While Bulgaria was left to lick its wounds, it was still treated with suspicion by the Greeks, themselves fired up for more gains. In 1923, during the Lausanne Treaty negotiations, Greece was prepared to invade the eastern Thracian territories in order to achieve concessions from the Turkish side. Yet it didn’st, despite its local firepower superiority, out of fears that Bulgaria might suddenly sweep down from the North. Out of uncharacteristic timidity, the Greeks missed what was perhaps their best chance to pressure the Turkish side- though it also could have just as well ended in disaster, too.

In any case, at the Lausanne summit the French and the British delegations skilfully overplayed the Bulgarian threat in order to secure the neutrality of the Bosporus Straits; this condition would become threatened in the case of any Greek occupation. They were especially wary considering that the Greek government at that time was a military one, born of a revolution, and highly unfavorable to Western political calculations.

Despite the rapid series of definitive wars between the two nations, enmity still continued to simmer. In 1925, Greek troops invaded the border town of Petric in Southern Bulgaria as a form of retribution for Bulgarian commando-style excursions into Northern Greece.

Repercussions of the Second World War and the Greek Civil War

World War II pulled the Bulgarian and Greek states in opposite directions once again. Bulgaria for the second time sided with Germany, and Greece with its traditional British allies. Together with the Nazi forces, Bulgaria invaded Greece and occupied part of its territory. It was one of the worst pages in the history of the two nations. Thousands of Greeks were killed in the fighting and by execution, while the Bulgarian authorities imposed their language in all official documents, even in Greek names written on graveyard plaques. In World War II, an estimated 60,000 Greeks, mostly civilians, lost their lives due to Bulgarian hostile action.

The Bulgarians and their German allies were also responsible for the deportations of thousands of Jews in areas of Thrace and Macedonia under their control, leaving an irremediable scar on the region. Cities such as Thessaloniki, which had always had a lively and economically vital Jewish population, were changed forever. However, a popular outcry at home forced the government in Sofia to defer its final “shipment,” consisting of Jews from Bulgaria itself, for as long as possible.

To this day it is not known whether the authorities would have gone through with their signed obligations to the Nazis, because the Bulgarian capitulation on September 9, 1944 occurred one month before the scheduled deportations, which were thus cancelled.

The situation became rapidly complicated with the liberation of Yugoslavia by Tito’s Partisan forces. In 1944, the whole of Greece was also liberated, as Bulgaria fell under the Soviet sphere of influence. The reconstituted Bulgarian government quickly switched sides, joining the Allies for the final stretch of the war, thus ensuring that its pre-war borders would be respected.

While the Yalta Agreements cemented the division of influences between West and East, the ideological battle raged on in Greece for three years after the end of World War II, with the Greek Civil War causing widespread destruction. During the Greek Civil War of 1946-1949, Bulgaria supported the Communist rebels by providing money and weapons and, it is believed, small partisan fighter groups. Also during the civil war period, new Yugoslav ruler Josip Broz Tito briefly dreamed of creating a Balkan Communist federation that would include the modern Bulgaria, Albania, the Yugoslavia federation and the would-be communist state of northern Greece.

The Bulgarians agreed, and was even considering giving the Pirin Macedonia sector of southwestern Bulgaria to the Yugoslav republic of Macedonia; but after 1948, when Tito decided to break with Stalin and no longer support the outside rebellion, Bulgaria reduced its assistance to the Communists and the dreams of a grand Communist alliance fell apart. Had the plan succeeded, and had it survived until the fall of the Soviet Union, the Balkan wars of the 1990’s could have been spectacular and widespread, perhaps even provoking a much larger conflict.

At the same time as the new Communist administrations were fomenting unrest in northern Greece, American and Great Britain were supporting the Greek anti-Partisan forces, expediting a decisive victory for the latter and the end of the Communist threat to Greece in 1949.

In the aftermath of the war, around 15,000 Greek Communists escaped to Bulgaria and were given political asylum there. Most of them returned to Greece in the period 1974-1989, and granted pardons by the Greek governments of that era.

The conflict resulted in the almost total displacement of the Slavic populations from Greek Macedonia. Most were sent to Yugoslav Macedonia and became known as the begaltsi (refugees, those who fled), thereby in a way eliminating the traditional excuse that Bulgaria had always used to justify its westward expansion – just as the elimination of the Greek population of Anatolia and forced migration to Macedonia three decades earlier had ended once and for all Greece’s traditional justification for expansion to the east. Thus one outcome of the Greek Civil War was thus that it ensured Bulgarian territorial aspirations, should they recur at any point in the future, would most likely by fixed on Yugoslavia, not on Greece. An important and historical point of pressure was thus lifted for the Greeks.

This has indeed turned out to be the case today, where after the end of Communism Bulgaria has taken a strong interest in the former Yugoslav Macedonian state, nowadays staking its influence not through war but through displays of “soft power” such as offering passports to Macedonian citizens who will declare themselves Bulgarian.

The Iron Curtain that existed until the independence of Bulgaria from the USSR would define the relations between the Balkan states for almost 50 years. With the Slavic issue settled by the Greek Civil War, and Greece firmly a part of NATO and Western interests, there was until the mid-1970’s no real interaction between Bulgarians and Greeks, and the borders were effectively closed. Ironically, it would take a resurgence of an old animosity between hypothetical allies to bring the two towards a thaw in relations.

Greece and Bulgaria: From Cyprus 1974 to Modern-Day Friendship

The 1970’s were of paramount importance for the Balkans, and many decisions made back then still preoccupy Balkan politics. Apart from the Greek-Bulgarian rapprochement, the contours of Yugoslav disintegration started to emerge. In 1971, the first grievances appeared in Kosovo, while nationalist forces in other parts of the federation began to regroup for the first time since their suppression in World War II. In 1978 under Enver Hoxha, Albania shut itself off from the world completely by abandoning the Chinese model, after it had previously broken with the Soviet one.

However, of most importance for the region was the fracture in relations between Greece and Turkey, which almost resulted in the unthinkable – an armed conflict between two NATO states. The crisis erupted in 1974, over the Turkish invasion and occupation of northern Cyprus.

For all of its negative repercussions, this action had the immediate effect of bringing the two Balkan neighbors – and one-time allies against the Turks – a step closer. The then-Greek prime minister, Constantine Karamanlis, was faced with the worrying reality that a fellow NATO member state like Turkey could prove even more hostile to Greek stability than a Warsaw Pact one. The indisputable, almost scandalous support of NATO leader America for the Turks inspired Karamanlis to make the unorthodox decision to reach out to the Soviet bloc. He thus proceeded to form a liaison with the Bulgarian Politburo.

The middlemen in this deal were members of the Hellenic Communist Party, which had been recently legalized; the group helped Karamanlis in his venture by exchanging their services for political favors in the domestic political arena. The Americans, of course, were not pleased by this turn of events. Yet after their indirect but effective support for the short-lived Greek Junta of the Colonels and Turkey’s subsequent invasion, their foreign policy had been discredited in the minds of Greeks.

The best side effect, the silver lining as it were of the Cyprus catastrophe, was that Greek-Bulgarian relations became more normalized over the next 15 years than they had been at any time since the 7th century. In developing its relations with Bulgaria, Greece had been in a way prepared by the events of 1974 for those of 1989. The former had been, as it were, a trial run, meaning that when the final collapse of the Soviet bloc came, Greece was in a favorable and prepared position to welcome its old rival to the world of the free market. Tens of thousands of Bulgarians were also eager to taste the fruits of capitalism, many illegally, by working in Greece.

The Bulgaria that emerged in 1989 was thus one with great economic and social worries, but with none of the old hostilities towards Greece. The relationship between both nations was further bolstered by their mutual wariness of Turkey (a substantial Turkish minority with unknown aspirations remained in Bulgaria), and more so by the existence of the fledgling Macedonian state – a classic example of a buffer state that absorbed the tensions of its neighbors and brought about excellent relations between, especially, Greece and Serbia.

Thus while Greece placed on embargo on the government in Skopje over the name issue in the early 1990’s, and the Bulgarians hovered both protectively and predatorially in the wings, Greek investment poured in to Bulgaria. At first, the industrial sector was especially targeted. Even joint military exercises, something that would have been unimaginable since at least 1912, began to be held. The borders were opened, transit regulated, and the free flow of goods and people began.

The spirit of good cooperation continues today, and it appears that this will be permanent – an anomaly given the 1,300-year legacy of mistrust and war, but one that nevertheless seems to have little possibility of evaporating now. By 2005, approximately 1,800 Greek corporations were in operation in Bulgaria, and the bilateral commercial relations amount to 1.3 billion euros.

Today, 130,000 Bulgarian citizens live and work in Greece, and 10,000 Greeks study in Bulgarian universities. Around 300,000 Greeks visit Bulgaria each year as tourists, and some 400,000 Bulgarians spend a few days each year soaking up the sun on Greek beaches.

From all appearances, large-scale economic cooperation will continue to grow. The Burgas-Alexandroupoli pipeline that is going to transfer Russian oil from the Black Sea to the Aegean was officially signed as a project in October 2005. It is estimated to cost 800 million euros. When the project is completed around 2010, it will facilitate the exporting of Russian oil to the West, bypassing the environmentally sensitive Bosporus Straits, and further consolidate Greek-Bulgarian economic cooperation. Ironically, the same countries that were vying to control those famed waters exclusively are now uniting to exclude themselves from them!

Today, economic cooperation continues on a high level and the two nations have strong relations. The Bulgarian goal of EU entry has been fully supported by Greece, and the territorial pretensions and old, nationalism-fed desires are a forgotten relic from an earlier time. It seems that good relations between states, even if rivers of blood set them apart, can be achieved if both of them have something larger to look forward to – that is, collective security and prosperity.

Further Reading and Information

Greek Nationalism, the €šÃ„òMegale Idea’s and Venizelism to 1923, by Stephen W. Sowards

The Exchange of Minorities: Bulgaria, Greece and Turkey, by Stephen P. Ladas

Red Acropolis, Black Terror: The Greek Civil War and the Origins of Soviet-American Rivalry, 1943-1949, by Andre Gerolymatos

Bulgarian Relations with Yugoslavia, Romania, Greece and Turkey

A Concise History of Greece, by Richard Clogg

“Greek-Bulgarian Defense Cooperation”, MPA (March 20, 2006)

Bulgarian Society for British Studies (BSBS)

Centre for SouthEast European Studies

Institute for Balkan Studies, Thessaloniki

Looking for More Balkanalysis.com Publications?

Find Balkanalysis.com articles in the Central And Eastern European Online Library (CEEOL)

Buy Balkanalysis.com articles and e-books for Amazon Kindle

 

Balkan Defense Overview: Developments and Prospects

By Ioannis Michaletos in Athens

In this comparative analysis of defense procurement in four key Balkan states, Greek consultant Ioannis Michaletos gives an overview of the factors influencing government arms buildups, restructuring and modernization of forces at a key moment for the region.

At this time the Balkans is one of the most heavily armed areas in Europe and it remains one of the crucial regions for geo-strategic analysis, as far as the international balance of power is concerned. It is a peninsula that is sufficiently close to Russia, the Middle East and Western Europe alike to become important in cases of power shifts like the major one that happened after 1989, and the collapse of the Soviet Union. Defense developments in the region are thus of profound interest for everyone involved in forecasting, analysis and policy making. This article considers defense procurement trends in four Balkan countries: Greece, Turkey, Bulgaria and Serbia & Montenegro.

Preliminary: Reasons for Reform

The reason for the reforms in all states being considered is to keep costs down, whilst simultaneously achieving greater mobility, flexibility and quick response capabilities. On numerous occasions NATO defense ministers have stretched the importance of the above features for all modern armies. Three of the Balkan states considered here are NATO members, while the fourth (Serbia & Montenegro) would like to be someday. The reason for structural reforms that are proving unpopular due to the increased number of redundancies is the largely American vision of NATO as a rapid reaction force deployable quickly in non-traditional theaters, such as Afghanistan, as part of the new “war on terror.’ Of course, when countries save money by trimming staff, they also have more money to purchase expensive new weaponry produced by America (and the leading EU countries).

There has been much debate regarding the role and relevance of the new European rapid reaction force that came into effect in 2003, vis-a-vis NATO, and what this might imply for the EU’s plans for future policing of the continent and perhaps, elsewhere. It is composed of units made up of its respective members, which contribute mobile structures, heavy firepower and professional troops. Therefore all countries that would want to contribute to the European force should have the above infrastructure- another reason for reform among the two Balkan newcomers. But first let’s discuss the established regional powers, Greece and Turkey.

1.) Greece

In Greece, a significant trend is currently going on in the defense sector: the reconstruction of the General Staff’s services. This involves the standardization of the operational, logistical, personnel and defense planning structures of the Greek army, navy and air force. For this reason a considerable disbandment of directorates and departments have occurred, and at the same time a new law was passed by parliament in 2003, which eased the seniority-based promotion system for officers, giving more attention to merit-based appointments.

A reduction of the army’s general staff personnel by about one-third has been accomplished, and respectively the top positions from brigadier ranks and above. Furthermore, a new planning format for active combat units has been introduced that rely on smaller, mobile and more actively manned units has been introduced. The navy and air force have also performed operational cost-cutting and consigned older ships, planes and armor to the scrap heap, in order to keep costs down and at the same time allow invest in high technology. All of these reforms are in keeping with NATO strategy for reducing troop sizes throughout the alliance member states and redirecting funds to next generation military technology.

On the procurement side of things, the Hellenic army has invested heavily in the Leopard 2HEL armored tank, a German-made model of Krauss-Maffei Wegmann. The total cost for 170 units was 1.7 billion Euros. The tank is considered the best in the world in terms of battle survival prospects and force projection.

Another notable procurement has been the 20 tactical transport helicopters from the French-German NH industry, at a total cost of 657,500 million Euros. Procurements in the Greek navy include 4 U214 submarines made by the HDW shipyards in Hanover, Germany, at a cost of around 1.5 billion Euros. Also, 5 small corvettes are being constructed in the Elefsis yards in Athens, based on a British design, at a total cost of around 740 million euros.

In the Greek air force, considerable attention has been given to new planes and for this reason, after some debate, 80 F-16’s have been ordered from the American firm Lockheed Martin, as well as 15 Mirage 2000-5 from Dassault, and 12 C-27J Spartan transport planes from the Alenia-Lockheed consortium. Lastly, 4 AWACS of the EMB-145H Erieye type were procured from a consortium of Ericsson and Embraer. Approximately 10 billion euros were spent over the period 2000-2005 for military procurements, with the aim of creating forces that rely more on technology and mobile structures. Another 6.5 billion are planned for increasing armaments between now and 2010. There is also talk of Greece planning to acquire some 60 new fighter planes; for the moment the Eurofighter model seems to be the favorite.

2.) Turkey

Turkey has plans to severely reduce its armed forces and create a semi-professional army in the coming decade. Because the devastating Izmit earthquake in 1999 and the banking crisis in 2001, not all previous defense procurement plans have been realized. But the most important ones have. A major one here involves the 4 Boeing 737 AWACS that are going to be delivered between 2007 and 2008. Another notable Turkish arms purchase is the 1600 Eryx antitank guided missile launchers stipulated in a 485 million Euro agreement with EADS.

The forthcoming plans for the Turkish armed forces include greater attention for sea power, and according to analysts and officers as well, Turkey wants to expand its naval capabilities and construct a navy that would be strong enough to have continuous and parallel activity in the Black Sea, the Aegean and the Eastern Mediterranean. It is notable that for the first time Turkish attention is being directed into the naval strategic sphere.

On the more usual terrain of ground war, Turkey for its part has plans for 1000 new armored tanks. Its main aim is to be able to manufacture them itself domestically, something that few countries can do, with the major military contractor Otokar.

Both of these countries, which are considered to be long-standing adversaries, have bought weaponry worth around 100 billion Euros over the past 20 years, mainly from the USA, France and Germany. The EU is a major player in their armament and will increasingly become one for the other Balkan states. According to European Defence, “the European defence industry is valued at about 30 billion euros and employs 800,000 people both directly and indirectly.”

3.) Bulgaria

At the time, Bulgaria is mainly preoccupied with the reduction of its armed forces, following the mandates of NATO. After its recent inclusion in the alliance, Bulgaria is projecting that the total cut will reach 50% of its active forces. Simultaneously, Western armaments are going to be introduced in order to phase out Bulgaria’s Soviet-era weaponry. This is the first time since the creation of the Bulgarian state in the late 19th century that the country seems to be abandoning the preservation of strong troop numbers, changing its historic role to achieve other strategic goals, namely NATO standards and the forthcoming EU accession.

In May 2004, the government unfolded a plan for the armed forces called “Vision and Development for the Armed Forces-2015.” It ordains the procurements of certain armaments worth 1.5 billion Levas for the period 2005-2007, for ground and air forces as well as new, high-tech electronics systems. The acquisitions show Bulgaria’s strong desire to re-orient its arsenal away from old Soviet-made gear and towards Western production, not surprising in light of Bulgaria’s imminent entry into the EU.

Among the goods were included 12,900 vehicles from the Daimler-Chrysler group, 12 AS-532AL Cougar helicopters and 6 AS 565MB Panther ones from Eurocopter. Another 8 C27j Spartan transport planes produced by Alenia Aeronautica are to be ordered, and the Belgian navy will provide 1 Wielingen-class corvette. The electronic systems will be obtained from various producers.

4.) Serbia & Montenegro

Years after the wars of the 1990’s in the former Yugoslavia, the country still faces relative geopolitical isolation as far as defense procurements are involved. Since Yugoslav times, there has been no notable change in Serbia & Montenegro’s arsenal. It is more than certain that in the coming years there is going to be a significant reduction in its armed forces, for economic reasons as well as because of NATO aspirations. In fact, according to a recent report, by 2007 compulsory military service will be phased out as Serbia & Montenegro moves towards a fully professional army.

However, there hasn’t been much news regarding new procurement, except perhaps for a procurement scandal that shook up the Serbian defense ministry this year. But Serbia, once a great military producer as the major industrial republic of the former Yugoslavia, may well seek to again manufacture what armaments it can domestically. It is assumed that production capacity has been mended following the heavy damage inflicted by NATO in its 1999 bombing campaign. With its existing defense facilities and factories, Serbia & Montenegro is capable of producing a wide range of ammunitions, electronics, anti-armor and anti-aircraft missiles.

The estimated total size of the army of Serbia & Montenegro is 55,000 personnel. This includes non-combat units, paramedics, telecommunication, civil and aircraft defence battalions and units of virtual mobilization, usually situated in the countryside.

Of this total, 28,000 soldiers are on constant active duty. The Serbian army has a unique and quite effective mobilization scheme, in which the armed forces are composed of a three-part force designed for quick mobilization in time of need. The active units are always on call; they are followed by secondary ones, and finally reserves who keep their weaponry and uniforms at home. In a time of total mobilization, they can all appear in the units to which they were originally assigned at the time of their compulsory military service. This is a non-centralized structure very flexible for small states. Similar systems operate in Switzerland and Cyprus.

However whether this system can survive the expected downsizing and phasing out of compulsory service remains to be seen. In geopolitical terms, the country is a purely continental power, and its main preoccupation is to command a considerable and well organized infantry and army in general. It is highly likely that this role will be severely strained in the future and it is more than certain to expect grumbling from army officials as their role is gradually reduced.

Such reductions will also lessen the country’s traditional geo-strategic capabilities, perhaps the most significant regional trend given the possibility that war with Kosovo Albanians, who are now becoming increasingly well armed, could break out again at some point in the not so distant future. Further, should Montenegro break away from Serbia as has been increasingly forwarded, the end result would see Serbia totally landlocked and Montenegro left without any realistic means of defending itself in the case of any potential conflict with its own Albanian secessionist elements. Reducing Serbia’s historic role of military superiority in the Balkans will have far-reaching ramifications for the regional balance of power.

Conclusion

The current article on defense balance in the Balkans covers only in general terms recent developments; there are many other interesting facts that cannot be examined in only one news article. Everyone interested in European security must pay attention to this region, since apart from its greater geopolitical importance it is the only place in continental Europe that has had recent experience with war. With the resolution of Kosovo’s final status still to be decided and various tensions still simmering away, it is still impossible to confidently predict a peaceful future for the Balkans in the 21st century.

Appendix: Breakdown of Military Resources by Country

Greece

Defense Budget: 7.5 billion euros

Troop Numbers, Army: 99,000
Troop Numbers, Navy: 19,850
Troop Numbers, Air Force: 24,705
Tanks: Leopard & M48 types- 1400
Artillery: M270 & RM70 types- 152
Combat Planes: F-16, F-4, A-7 and M-2000 types- 333
Attack Helicopters: AH-64 Apache type- 20
Frigates: MEKO and Kortenaer types- 13
Submarines: U-209 type- 8
SAM’s: 1332 total [Patriot PAC-3 (6 units), S-300 (2 units), Nike Hercules (3 units), Crotale (9 units), TOR M-1 (25 units), OSA-AK (31 units), Hawk (7 units), Sparrow (12 units), Stinger (1237)]

Turkey

Defense Budget: 9.5 billion euros

Troop Numbers, Army: 402,000
Troop Numbers, Navy: 51,000
Troop Numbers, Air Force: 51,000
Tanks: Leopard, M48 & M60 types- 3,432
Artillery: M270&T-122 types- 42
Combat Planes: F-16, F-4 and F-5 types- 443
Attack Helicopters: Cobra and Super Cobra types- 39
Frigates: OHP, KNOX & MEKO types- 20
Submarines: U-209 type- 11
SAM’s: 3739 total [Stinger (3648 units), Rapier (83 units), Nike Hercules (8 units)]

Bulgaria

Defense Budget: 1.0 billion euros

Troop Numbers, Army: 28,280
Troop Numbers, Navy: 4,400
Troop Numbers, Air Force: 15,600
Tanks: T-72 type- 429
Artillery: BM-21 type- 222
Combat Planes: MIG 29, 23, 21& Su 25k types- 206
Attack Helicopters: Mi-17 type- 24
Frigates: 0
Submarines: 0
SAM’s: 661 total [S-300 (2 units), S-75 (22 units), S-125 (34 units), Strela-10 (20 units), Strela-2 (500 units), 2K-12 (32 units), 2K-11(27), Osa-AK (24 units)]

Serbia & Montenegro

Defense Budget: 0.9 billion euros

Troop Numbers, Army: 55,000
Troop Numbers, Navy: 3,500
Troop Numbers, Air Force: 10,000
Tanks: M84, T-72 & T-64 types- 630
Artillery: M77 & M63 types- 72
Combat Planes: MIG-29, 21 & Orao types- 125
Attack Helicopters: Gazelle type- 65
Frigates: 0
Submarines: SAVA type- 1
SAM’s: 994 total [Strela 1 (113 units), Strela 10 (17 units), Igla 1 (200 units), 2K-12 (6 units), S-75 (8 units), S-125 (8 units), Strela 2M (650 units)]

Recommended Links

Some of the sources for this article, as well as other interesting facts, statistics and geo-strategic related information can be found on the following websites:

Research Institute for European & American Studies, Athens

Institute of Defence Analyses, Athens

Geopolitics.gr

Strategy.gr (in Greek)

Armada Publishing, Zurich

International Institute for Strategic Studies (IISS), United Kingdom

International Assessment and Strategy Center (IASC), Washington

Center for Strategic and International Studies (CSIS), Washington

Greek Ministry of Defense (in Greek)

Turkish Ministry of Defense (in Turkish)

Bulgarian Ministry of Defense (in Bulgarian and English)

Serbia & Montenegro Ministry of Defense (in Serbian and English)

Looking for More Balkanalysis.com Publications?

Find Balkanalysis.com articles in the Central And Eastern European Online Library (CEEOL)

Buy Balkanalysis.com articles and e-books for Amazon Kindle

A Difficult Final Year for EU-Bound Bulgaria?

By Jan Buruma*

In this survey, Dutch journalist Jan Buruma focuses on some of the challenges remaining for Bulgaria in its quest for EU accession in 2007.

Will Bulgaria make it to Brussels in 2007? Back in March 1997, when former PM Stefan Sofianski filed his country’s formal EU bid, it seemed almost impossible. The Balkan country had not made any really considerable progress towards developing a market economy and democracy since former dictator Todor Zhivkov’s downfall in November 1989. However, the right-wing Kostov and Saxecoburggotski governments that followed Sofianski’s initiative worked hard from 1997 until the present, and it seemed until the June 2005 parliamentary elections that Bulgaria was on the right track. However, difficulties in forming a cabinet subsequently stalled vital reforms.

Now, a lot of work still needs to be done.The European Commission proved rather critical in its October 2005 report. Citing the report, the Sofia Morning News listed organized crime, corruption, a weak judiciary system and agricultural issues as Bulgaria’s main impediments. The BBC spoke of a “post-election impasse” as partially to blame. However, organized crime was only added to the list relatively recently. Although crime in post-communist Bulgaria has always been an issue, it was never considered a major problem.

However, a number of high-profile killings in September and October of businessmen in Sofia changed that view. It can hardly be a coincidence that the killings happened around the time of the EC-report. The victory of Boyko Borissov as mayor of Sofia in early November over Socialist candidate Tatjana Doncheva (68.2 percent to 32.8 percent) might be considered as a consequence of the killings. Borissov was general secretary of the Interior Ministry during the Saxecoburggotski-government (2001-2005) and became a symbol of the battle against organised crime.

In the October report, Brussels handed out several “yellow cards” in areas such as free movements of goods, persons and capital, freedom to provide services, as well as in agriculture and fishery. And the EU believes that improvements still need to be done in the social sector, for example in the areas of public health, anti-discrimination measures, and integration of the Roma minority. Bigger concerns – what we could consider “red cards” – were slapped down in the areas of freedom to provide services, company law, agriculture, regional policy, justice and internal affairs.

But Brussels warned not only Bulgaria. The other two candidate member states, Romania and Croatia, are also not quite yet ready. Corruption is the main hurdle for Bucharest, while Zagreb has been told to make further administrative and economic reforms, as well as to take all possible efforts to arrest alleged war crime general Ante Gotovina. However, the fact that Croatia was ushered in without the general’s arrest smacked of hypocrisy for some.

Down to the Wire

Nevertheless, Sofia’s situation has seen sudden fluctuations. When the European Commission decided to start formal negotiations back in 1999, Bulgaria was given clear signals that its reform process was on the right track. Like all the other candidate countries, Bulgaria was required to fulfil the so-called acquis communautaire, acquis in short – over 800,000 pages of demands that a country needs to meet in order to be ready for the European Union. Over the past 10 years, Bulgaria has generally kept in front of neighboring Romania on the realization of reforms. But with the final laps to go, the situation has reversed.

Socialist PM Sergej Stanishev has nevertheless tried to generate optimism. But there are doubts as to whether the 39 year-old Ukrainian-born BSP-leader is the right person for the job.

The political stakes are high. President Georgi Parvanov, PM Stanishev and minister for Euro-Integration Milena Kuneva – who started her job in 2001 and is the only who stayed on from the Saxecoburggotski-government after the elections – firmly announced that joining the EU in 2007 is now Bulgaria’s highest priority. Kuneva announced on 8 November that the government will tightly monitor the ministries’ work, to make sure that neither time nor efforts are wasted.

External factors outside of Sofia’s control are also affecting the pace of accession. The crisis in the enlarged EU, caused by the French and Dutch “no” to the EU-constitution in May and June 2005, has acted as a brake against the ambitions of Bulgaria and other aspiring candidate states. The next wave of enlargement may be postponed until 2008, though too much longer than that seems unlikely. During a visit to Romania early November, Bulgarian president Georgi Parvanov and his Romanian counterpart Traian Basescu agreed to closer cooperation to meet the mutual 2007 deadline.

Meanwhile, anti-EU sentiment in Bulgaria is getting slightly stronger, as statistics show. In 1999, around 49 percent of the population was in favour of the EU; by 2003 this number had increased to 73 percent.

However, in the following year support dropped to 65 percent. The closer Brussels looms, the more some Bulgarians fear they might lose their culture, national traditions and heritage by Euro-assimilation. In fairness, however, viewing the situation in the “old” EU – from the retention of Frisian culture in The Netherlands to continuing bullfighting in Spain – that it not very likely to happen. But popular sentiments do have political weight and the Bulgarians are indeed very proud of their culture and history. After all, the nationalist party Ataka won a completely unexpected 8 percent of the vote in the June elections. Party leader and former journalist Volen Siderov has even called for reopening negotiations with Brussels. That is unrealistic, of course. Eurocritics note that Brussels does indeed have the final word on many of its member states’ important matters, from the measurement of bananas to the strong influence the EU Court of Justice has on national courts.

Nuclear and Political Meltdown: Kozloduj

Some of the most intractable negotiations concern the closure of the nuclear reactor in Kozloduj. It was built in 1974 in Soviet-style, glamorously initiated by the Communist Party. It contains 4 so-called VVER-440 megawatt reactors, and resembles the Chernobyl-reactor that caused the horrible nuclear disaster in Ukraine in 1986. For this reason, the EU would like to see it shut down. The International Atom Energy Agency (IAEA) considered the Kozloduj reactor to be one of the most dangerous in Eastern Europe.

However, the Kozloduj plant also produces 45 percent of Bulgaria’s electricity. It also exports energy to Albania, Greece and Turkey. Last but not least, many local people are currently employed because of Kozloduj. Back in 1980, Bulgaria started to built a second nuclear reactor in Belene, but due to financial difficulties and protests from environmental activists it was never finished.

As the Kozloduj reactor was one of the most dangerous in Europe, in 1993 the EBRD provided ECU 24 million for it closure. In 1999 PM Ivan Kostov agreed with the European Commission to close two reactors in 2003 and the last two in 2006. In 2004, the Narodno Subranie, the Bulgarian Parliament decided to close the last blocks when Bulgaria would be EU-member, reported RFE/RL. Bulgarians were aware of the dangers Kozloduj presented (though EU-financed modernizations in the 1990’s had somewhat diminished the threats) but they had no alternative sources for energy.

However, although they were supposed to function until 2012, due to heavy pressure from Brussels two of the VVER-reactors were closed in 2002. The last two are supposed to close next year. According to Focus News, Energy Minister Ruman Ovcharov said on 11 November that Bulgaria then won’t be able to export electricity to neighbouring countries- not to mention that electricity prices will rise. So, although there are serious plans to restart the Belene reactor project, Bulgaria still needs to find a real solution to its energy question.

The Judiciary

Another major issue is judicial reforms. According to TOL, there are currently three autonomous bodies that investigate crime. The prosecutor-general, the police and a special institution, the National Investigating Services (NIS). The latter was created by the BSP and is composed of magistrates who deal with crime and corruption by senior state officials.

The Bulgarian Helsinki Committee described the three institutions as autonomous, not as cooperating bodies. This redundancy not only leads to overly bureaucratic and time-consuming work, but also it often does not guarantee criminal suspects a fair trial. However, the EU has not given any specific advice on how to reorganize these bodies more efficiently and fairly.

And there is more. TOL explains that these three institutions are overseen by the Supreme Judicial Council (SJC), an independent body. The idea was good, because under the old regime, judicial bodies were under Communist control. However, the SJC developed into a body in which politicians have hardly any influence, something that also makes it hard to reform.

But there are also good signs. Although the EC’s report cannot be misunderstood, the European Parliament is continuing with its preparations to receive Bulgaria into the European club. After the June elections 18 Bulgarians, among them former Sofia mayor Stefan Sofianski, became so-called “observers” at the European Parliament. And, abiding with the rules of democratic representation, even one Ataka MP went to Brussels. Under this scheme, the Bulgarian MEP’s can do the same work as their EU colleagues, but they don’t have the right to vote. And, having in mind that about 20 Bulgarians are working for the European Parliament as interpreters, the body needs to recruit more.

The political stakes are now so high that Bulgaria cannot afford to fail the 1 January 2007-deadline. The Balkan country should prove to be ready, though only just. But Brussels has the final word. The coming months until April 2006, when the European Commission will give its final verdict, will be crucial.

……………………………………

Jan Buruma is a Dutch freelance journalist specializing in the Balkans. He has 15 years of experience with Bulgaria, including three years spent living there, and speaks the language. He has written for among others the Dutch Balkan Bulletin and the Czech-based Transitions Online.

Bulgaria Enjoys New Foreign Investment, But EU Crisis Looms

(Balkanalysis.com Research Service)- Bulgarian foreign investment continued strongly with several high-profile acquisitions in recent weeks. But now that the European Union’s failed attempt at creating a constitution has affected enthusiasm for enlargement, will there be any negative results for Bulgaria?

On June 1, Telekom Austria signed a Share Purchase Agreement which gave it total ownership of Mobiltel AD. According to the Sofia News Agency, the mobile provider is valued at “up to EUR 1.6 B.” With 3.14 million subscribers, MobilTel is the largest mobile operator in Bulgaria with almost 64 percent of the subscriber market. Telekom Austria CEO Heinz Sundt acknowledged the “strategic advantage” the acquisition would give his company in Bulgaria.Until now, MobiTel had been owned by a consortium led by ABN AMRO Capital, Citigroup Investments Inc. and Communications Venture Partners Limited. But the consortium also included some of MobilTel’s existing Austrian shareholders.

The market as a whole is faring robustly. Bulgaria’s other big mobile operation, GloBul, is owned by Greece’s national company, OTE.   Its first-quarter 2005 operating income “…shows an increase by 64% on the year-ago period… the rise was mainly due to higher receipts from subscription fees, which increased by 71%.” For the same periods, GloBul profits more than doubled, from 16 million euros to 34 billion, with a 55 percent year-on-year subscriber increase.

According to the Sofia Echo, Bulgaria’s telecommunication market “…grew by 11 per cent in 2004 after Bulgarian operators expanded their range of services, and because of constantly increasing competition after the licensing of the third GSM operator.” Further, mobile services in Bulgaria “…continued to grow at the expense of the fixed-line market… The former state monopoly, the Bulgarian Telecommunication Company (BTC), lost 40 per cent of its incoming and 11 per cent of its outgoing international call traffic after the end of its monopoly of the provision of leased lines and fixed-line services.:

In another sector, global giant Coca-Cola, through its Greek subsidiary, last week announced its total acquisition of Bulgarian mineral water company Bankia. According to the Sofia News Agency, the amount Coca-Cola Hellenic Bottling Company S.A. paid for the Sofia-area Bankia “was not disclosed.”

This continuing interest comes at a time when the country’s tight fiscal policy has led to a record 345 million euro budget surplus.

But will the recent defeats of the EU Constitution in France and Holland, and the resulting atmosphere of doom and gloom gripping the union, have any effect on Bulgaria’s business climate? After giving Bulgaria the green light for 2007 accession and specifically crediting it for its painstaking reforms, the flustered Eurocrats are now worrying about the effect of the votes on their economy and taking it out on all-but-assured candidates such as Bulgaria and Romania by hypocritically backpedaling in the wake of the referendums they had thought concluded. With other countries waiting to negate the constitution, such as the Czech Republic and Denmark, the EU is grasping for any obstacle it can to appease its population’s wrath with its autocratic, endlessly expansionistic ways.

Thus, in the wake of the referendums, Enlargement Commissioner for Enlargement Olli Rehn recently stated that Bulgaria and Romania will receive “early warning letters” that “would focus on the evident current shortcomings in the reforms of both countries.” Bulgaria had been expecting to make final negotiations this fall for a 2007 entry into the European club.

Comparing the situation to a “yellow card” in football, Rehn intimated darkly his hope that “…both countries can read the political climate of Europe.” There’s no doubt about that.

According to Rehn, Bulgaria is “lagging behind” in 5 areas (most notably legal reforms and the fight against corruption and organized crime) and Romania, in 7 areas.

And, according to the British international property investment specialists Assetz International, the Bulgarian (and Turkish) property markets could be “hit hard” by the EU’s backtracking.

A company representative, Stuart Law, said on June 4 that

“…Turkey was supposed to start negotiations in October 2005 – it is clearly now in greater danger of not getting off the ground as several EU members are fully against Turkey joining. In addition Bulgaria and Romania have signed a treaty to join in 2007 but unless it is ratified by all 25 EU member states it cannot go ahead and only 2 have done so far. These two countries are suffering from corruption and other problems and the property market is a little bit ‘wild-west’ at present – if these issues are not dealt with to the satisfaction of all the EU nations then membership could be off the cards for these two countries and the property market particularly in Bulgaria could go into freefall after its early strong gains in house prices…

Investors should treat property investment in these not-yet-to-join countries as highly speculative and beware of the loose claims made by property agents for the guaranteed returns they could make – don’t put all your eggs in one basket with any kind of investment – especially property where the resale-market could dry up overnight and leave you high and dry – the three highest risk property investment areas are now Turkey, Northern Cyprus and Bulgaria.”

Regardless of the EU’s effect on the Bulgarian economy, Reuters reports that there are also fears that Bulgaria will elect a Socialist government big on public spending in the June 25th elections, thus gouging the record budget surplus.

EU-Bound Bulgaria Continues to Impress with its Mafia Killings

(Balkanalysis.com Research Service)- It is in the grips of the mafia, but Bulgaria will nevertheless join the EU in 2007.

Or will it? Brussels has threatened that if it does not clean up its act that accession might be imperiled, reports Reuters in describing the latest affront to civilized society in Bulgaria: the stabbing on Tuesday night of oil executive Yavor Markov while entering his apartment building. The 41-year-old Markov was executive director of Estel Oil Bulgaria.

According to Reuters, “…Minister Georgi Petkanov told news agency BTA that business interests were the most likely motive for the killing. Markov had never been the subject of police investigation.”According to the Sofia News Agency, “…two companies are registered [in] Markov’s name – ‘Estel Oil Bulgaria’ Joint Stock Company and ‘Delta International Trading.’” Not much information is readily available about either, but the first is described as being a “petrol-trading firm.”

Markov does not seem to have been a well known figure abroad. Until the Bulgarian media follows up on this case, there is little else to be said about him.

Over the past several years, such murders have become commonplace, in Sofia as well as in other urban areas of Bulgaria. “There have been efforts to rein them in, but they are still more powerful than the police – or else working together with them,” said one bemused Sofia local. Yet also considering that many foreign car rental agencies refuse to sell insurance only in the case of visiting Bulgaria, it is ironic that it is Serbia and Macedonia that have been stigmatized as dangerous places to live. Unless a war’s on, one is far more likely of getting caught in the crossfire in Bulgaria.

As in Russia, post-Communist popular culture in Bulgaria has developed its own mafia ideals. Media outlets like Planet TV play round-the-clock music videos, almost completely identical, each featuring another sultry, siliconed vixen with one name and well-built young men decked out in suits, sunglasses, and large, American-style vehicles with tinted windows. They’re always wielding mobiles and stirring vaguely alcoholic drinks, and the girls are always puckering and undulating seductively.

The reality- even the imitated reality – is somewhat different, as an experimental visit to Sofia’s Planet Cafe recently showed. The shy young waitress, who like the sirens on TV could have been a model, was accosted by a 40-something year old man who, while he was appropriately dressed in a suit and surrounded by other men also so attired and outfitted with phones, sunglasses and vodka, was somewhat more portly than the svelte young mafiosi in the TV videos.

Failing in his forceful bid to win a kiss from the rather surprised waitress, the man left with his entourage and muttered something like “I will not forget you, baby.” On the way out his comrade packed away the enormous water pipe that had been finding gainful employment under the table.

Big business interests from the leading EU countries are eager to get to work in Bulgaria, and reap fortunes from yet another Eastern European state they’ve taken in. If all goes according to plan, they will soon have their wish. But it just might be more lively than they had anticipated.

 

Bulgaria’­s June 2005 Elections: Long Live the King?

By Vassia Gueorguieva

The last parliamentary and presidential elections in Bulgaria surprised the world. In the summer of 2001, Bulgarians elected the exiled monarch Simeon II Saxe-Coburg Gotha to the Prime Ministerial post. Later, voters chose Georgi Parvanov, leader of the Bulgarian Socialist Party, over the incumbent President Stoyanov, who ran for re-election.

Will new surprises follow in the June 25 elections?Saxe-Coburg Gotha spent most of his life in Spain after being exiled from Bulgaria with the advent of the Communist regime in Bulgaria. Today, despite his Prime Ministerial post, he is often referred to by the public and the national media as “the king.”

Saxe-Coburg Gotha’s political platform when he stepped into office included and ambitious program to improve the economic situation in Bulgaria and attract foreign investments within 800 days of the beginning of his mandate. After his electoral victory, one of the most circulated Bulgarian newspapers, “24 Hours,” began publishing a countdown of the days on its front page. This marked the beginning of the decline in the party’s popularity, which was highest during the 2001 electoral cycle.

Today’s political rating of Saxe-Coburg Gotha’s party, the National Movement “Simeon II” (NDSV), has fallen below its 2001 level. Alpha Research reports that about 51% of the Bulgarian electorate would still have voted for him in August, 2001. However, a steep decline was observed in December that same year, as only 22% of Bulgarians would still have voted for him. In January 2005, only 13% reported they would cast their ballot for NDSV.

Doubts about the ability of NDSV to win a second mandate in 2005 have been persistent. The municipal elections of October 2003 were won by the Bulgarian Socialist Party, which received 33% of the vote. It was followed by the Union of Democratic Forces, which won 21%. NDSV won only 10% of the vote. Also, February proved to be a month marked by challenges to the party’s unity and survival. Parliamentary Speaker Ognian Gerjikov, a member of the NDSV, was relieved of his duties after a ballot proposed by the opposition, which accused him of having turned the Parliament into an extension of the executive power.

Days later, Saxe-Coburg Gotha’s government faced a vote of no confidence, which it survived after striking a deal with one of the smaller parties, New Time. This was the sixth no confidence motion the government survived since it came to power. Cabinet changes followed after the motion, but they also raised discontent among the public. While the parties have not yet officially started the election campaign, the vote of no confidence was generally perceived as an attempt to discredit and destabilize the ruling NDSV and call for early elections.

One of the opposition parties, the Union of Democratic Forces (UDF), which was defeated by Prime Minister Saxe-Coburg Gotha in the 2001 elections by 42.7% to 18.2%, has began preparing for the parliamentary race by concluding a pact with the rest of the parties from the political right to not attack each other in the upcoming elections. This is in stark contrast with the past trends of balkanization of the existing political parties, which was more a response to personal divergences among politicians within them, than as a response to the need to represent a particular constituency.

However, UDF is unlikely to be a serious competitor in the June elections since its public rating has also been steadily declining since 2001. Alpha Research opinion polls report that in January 2005, only 6.6% would vote for them in parliamentary elections.

Among the major political parties, for the first time since the transition to democracy, the Bulgarian Socialist Party (BSP) is the leading political force in Bulgaria and commands strong popular support. While only 10% would have voted for it in August 2001, about 22% would have done so in January 2005. Domestic political analysts predict BSP’s victory in the June 2005 elections.

Sociologists from ASSA-M explain that BSP has managed to win more support from the young and the unemployed. These two groups have been traditionally difficult to tap by this party since most of its supporters have been the elderly population. The explanation the sociologists provide for the rise of popularity of BSP in comparison with the other political forces is not that much on what BSP has done, but rather on what it has not done, as it has been relatively sheltered from scandals. During its late February 2005 plenary session over the party’s political strategy until 2015, BSP boldly set as one of its goals the victory of the upcoming parliamentary elections.

Besides domestic analysts’ forecasts of an electoral victory for BSP, foreign observers also foresee a victory for the party. The Economist Intelligence Unit forecasts a victory for BSP in the context of a coalition with the predominantly ethnic Turkish party Movement for Rights and Freedoms.

The winner in the elections will probably lead Bulgaria into European Union (EU) membership in 2007, as the country is scheduled to sign its Accession Treaty with the EU on April 25th. Bulgaria already became a member of NATO in 2004 and most probably there will not be major shifts in its foreign policy of further European integration if BSP marks a victory in the elections. The party has been getting closer to the image of modern left parties in the rest of Europe.

The most pronounced changes might be in terms of Bulgaria’s involvement in Iraq, as BSP vowed to pull out the country’s contingent from Iraq if it won the 2005 elections. Thus, a change in government will be more likely to mark changes in domestic policies, such as whether to keep the currency board after 2007, which BSP might remove if it came to power.

Yet, despite the predictions, NDSV might still be able to change the outcome of the elections in its favor. It already surprised analysts in the 2001 election and it might very well do so again in 2005. Bulgaria might still spend 4 more years with its former monarch as head of the executive. The electoral options are set: Simeon or Socialist?

……………………………

Vassia Gueorguieva is a Ph.D. Candidate at American University, Washington DC. She has worked for the Bulgarian Parliament and in 2001 took part in the Organization for Security and Cooperation in Europe (OSCE) Parliamentary Election Observation Mission to Bulgaria.

 

AMBO Trans-Balkan Pipeline Agreement Finally Signed

(Balkanalysis.com Research Service)- Top representatives of Macedonia, Bulgaria and Albania met on Tuesday in Sofia to ink a memorandum of understanding with Ted Ferguson, president of the AMBO (Albania-Macedonia-Bulgaria Oil) pipeline project. The American-based corporation has been struggling since 1994 to get the attention of key political and industrial backers, in order to begin construction.

The first obstacle was the preoccupation of relevant parties during the Clinton Administration with the massive Baku-Tbilisi-Ceyhan pipeline in Anatolia. Then came the wars in Kosovo and Macedonia in 1999 and 2001, which left investors jittery. Now that the situation seems to have stabilized, however, the future looks bright for AMBO.

This week’s gala event in Sofia brought together the major leaders of the countries involved: the Macedonian, Bulgarian and Albanian Prime Ministers, Vlado Buckovski, Simeon Saxe-Coburg-Gotha and Fatos Nano respectively. On Monday they signed a political declaration confirming their countries’ support for the pipeline. At the same time, reports the Macedonian Information Agency (MIA), Macedonian Minister of Economy Fatmir Besimi, Bulgarian Minister of Regional Development and Public Works Valentin Cerovski, Albanian Minister of Industry and Energy Viktor Doda and AMBO’s Ferguson signed a memorandum of understanding.

“…The construction of [the] AMBO oil pipeline is of strategic interest for Macedonia, the region and beyond, while the project is concrete proof that the climate of solidarity and understanding exists in this region, and I believe that it will improve the citizens’ living,” declared Buckovski. For his part, Nano called the project “…an excellent example for partnership” as well as “more than exchange of material energy.”

But is the signing merely symbolic? After all, a rival pipeline that looked good to go until recently – the Burgas-Alexandropolis deal between Russia, Bulgaria and Greece – appears to have stalled due to internal disagreements. However, AMBO president Ted Ferguson (erroneously named as “Pat” by the BBC) claims that his project has received $900 million of investor funds “…from the Overseas Private Investment Corporation (OPIC) – a US development agency – the Eximbank and Credit Suisse First Boston, among others.” A big mystery until now had been whether the AMBO project actually had any solid backers. While the cash now appears to be there, an announcement has yet to be made regarding the committing parties among the oil industry.

The construction of the pipeline should take three or four years and when finished will transport 750,000 barrels of oil per day. According to the Sofia News Agency, some 25 percent of the oil to be used has already been supplied.

As could be expected, the Greek government is pushing for the Burgas-Alexandropolis alternative, citing its relative cost-effectiveness and time-saving qualities. However, as backers of AMBO have long pointed out, the Greek project does not really take care of the prevailing environmental concern (that is, avoiding the congested Bosporus shipping lanes), as it merely transfers the problem to the island-congested Aegean. An oil spill in the Aegean would be devastating for Greece’s vital tourism industry.

The AMBO project, on the other hand, avoids the sea entirely, crossing the Balkan Peninsula overland and terminating at the Adriatic port of Vlore.

 

Oil: Bulgaria Talks Transit, Greece and Macedonia Make Up

(Balkanalysis.com Research Service)- Owing to its geography, Bulgaria is a natural choice for all future Black Sea oil export routes from the Caspian to the Balkans. As has by now become a usual event, Bulgarian President Georgi Parvanov continued to point this out, this time in talks held last week with Azerbaijani counterpart Ilham Aliyev.

Parvanov concentrated specifically on the proposed AMBO (Albania-Macedonia-Bulgaria) pipeline and the Burgas-Alexandropolis (Greece) pipeline – twin priorities for Bulgaria and other Balkan states with an interest in the future of oil transit through the region.

Stating that “Europe is interested” in Azeri oil and gas, Parvanov characterized Bulgaria as “…a country through which these products can be supplied, and all parties involved are interested in working in this direction.” Aliyev responded by saying that such cooperation “…could be very useful.” The same subjects were broached during this week’s visit to Sofia of Greek President Kostis Stephanopoulos.

On 1 October, Novinite.com reported that Russia, Bulgaria and Greece will sign an agreement on Burgas-Alexandropolis within a month, after meetings were held between the head of the Russian government staff, Sergey Naryshkin and Bulgaria’s Regional Development Minister, Valentin Tserovski.

The three parties have equal shares in the project, the major advantage of which would be to decrease dangerous Bosporus freighter traffic. However, while the risk of an environmental disaster due to an oil spill would therefore be reduced, the problem would not be eliminated entirely: tanker traffic will still have to resume from Alexandropolis westward, through Greece’s island-cluttered Aegean Sea.

In contrast, the proposed AMBO route bisects the Balkans, starting also in Burgas but ending up in Vlore, Albania – thereby sparing the Aegean of any possible spills. It would thus seem eminently preferable on environmental grounds.

The difficulty with establishing such pipelines has long been due, backers contend, to unresolved problems on the part of the Caspian producers. But even pipelines that have made it past the planning stages – such as the controversial, $3.6 billion Baku-Tbilisi-Ceyhan project – tend to get mired down in political and other protests.

Environmental concerns over the Borjomi Nature Reserve have vexed project leaders BP and slowed construction in the Georgian section of the pipeline. This week, in a bid to placate the Georgians, the British company announced an additional investment of $10 million in providing pipeline security. In general, two more credit lines will have to be opened by early 2005 to finance the expected $2.6 billion in loans to international financial bodies backing the project.

Environmental concerns have also slowed work on a Balkan pipeline under expansion, the Druzhba-Adria pipeline project meant to integrate oil flow from Russia to the Adriatic. The two pipelines are to meet in Hungary, and represent a joint effort by the governments of Russia, Belarus, Ukraine, Slovakia, Hungary and Croatia. Plans made in December 2002 to have the pipeline completed one year later look to have been over optimistic.

In Croatia, public outcry over possible damage to the country’s vital Adriatic coast led to the creation of an environmental impact study. While the report was finished in June, it awaits official confirmation on the ministerial level. Croatia’s spokeswoman in the Ministry of the Environment Ministry, Kata Gojevic, told Reuters on Monday that the ministry must form an assessment commission to consider the study, and that “…it is not easy to set up an independent commission. Croatia is a relatively small country and does not have too many experts, and most of them have already participated in preparing the study.” Gojevic declined to give any timeline for completion of the whole exercise.

This tiring talk of exploiting new transit routes comes at a time when the big international oil companies are seeing exploration costs outweigh value.  The Financial Times this week quoted research by energy consultant Wood Mackenzie which “…shows the commercial value of oil and gas discovered over the past three years by the 10 largest listed energy groups is running well below the amount they have spent on exploration.” The “record levels” companies are budgeting for exploration worldwide can guarantee production growth for only about another five years.

Similar bad news was announced last week in Bulgaria, when the British gas drilling company Melrose announced abandonment of an offshore, 1,032 meters-deep exploration well near Varna. According to the Sofia News Agency, the company remains undeterred, and hopes to strike it rich in other locations in the vicinity by “…extending the 3-D seismic survey, currently being acquired in the area immediately to the south of Varna West, to cover the Varna East prospect in order to give a direct comparison with the Galata structure,” where an exploration well may be dug.

Preliminary testing has left company officials optimistic. Despite the “disappointment” of the Varna West failure, Melrose Chairman Robert Adair stated that “…we are delighted by the excellent early results from the 3-D survey and we remain on schedule to drill an exploration well on a channel system prospect by late second quarter 2005.”

In other Balkan oil news, the Athens News Agency reported that Hellenic Petroleum and the Macedonian government have agreed on a new management scheme for the existing Thessaloniki-Skopje pipeline.

According to Economy Minister Stevco Jakimovski, a new joint company will commence operations from 1 November, with Hellenic retaining an 80 percent share and the Macedonian government, 20 percent. While no solution was announced regarding longstanding revisions to the OKTA refinery privatization, and Hellenic’s request for international arbitration, the ANA argues that “…a suspension of legal action could allow both sides’ experts to work out a compromise deal.”

2004-2009 Back Archives