Business In Bulgaria: An Overview for Investors and Managers in 2010

Commentary on the business environment in Bulgaria must begin with a discussion of corruption. For the bulk of Bulgaria’s short post-communist history since 1989, corruption has been an important defining context of doing business in the country. Compared to other post-communist states, such as the Baltics, which summarily dismissed and banned their erstwhile communist leadership after the fall of the Soviet Union, as well as Romania, which scuttled its communist strongman Nicolae Ceausescu with particularly violent resolution, Bulgaria’s transition from communism to true democracy has been slower. Bulgaria’s communist nomenclature continued to officially hold the reins of power in Bulgaria for years after the official expulsion of Bulgaria's communist strongman, Todor Zhivkov.

During these final few years in power, members of the communist political elite, including personnel from the security services, were able to consolidate gains, taking favored positions in the privatization of state assets and shoring up relationships that would serve them lucratively going forward. By maintaining control over various aspects of politics, law enforcement, customs agencies and other state apparatuses, a continuum of personal straddling both legitimate and illicit institutions arose in an unpredictable new order, assuming positions of power in the wreckage and confusion that followed the collapse of communism. This continuity of personnel would play a major role in the slowed development of the country in the years since, as Bulgaria continues to struggle with a culture of corruption, inconsistent economic growth and the consistent threat of political isolation within Europe. An analysis of corruption is therefore appropriate for any prognosis of the future of business climate in Bulgaria. This section of the report seeks to paint a useful picture of corruption as well as a discussion of progress to date in the fight against corruption in Bulgaria.