by John B. Tieder, Jr., Senior Partner
Introduction
I finished my teaching assignment in Bulgaria in May, 2007, five months after it had joined the European Union (EU). A few months and one year later, my wife and I and friends went back to Bulgaria, but this time as hiking and sightseeing tourists.
There were two sets of observations. The first was to view Bulgaria from a tourist’s perspective - something that we had not previously done. The second was to see how things had progressed and were perceived after a year and a half of EU membership.
First, the tourist perspective. No hotel and restaurant reviews, but a few general observations. Tourists are susceptible to the usual, out-of-towner treatment, especially in Sofia, e.g., a cab ride which should cost USD 7-8 was for one of our friends, USD 60; solution – have your hotel arrange for the taxi. Some hustle for unofficial money exchange, street vendors and others, but tame in comparison to New York, Rome, or Paris. Pickpocketing, often it seemed by gypsies using their children as decoys, is a problem, but I have seen more in Paris than Sofia. There is virtually no danger of physical assault. Hotels and meals in Sofia are at the level and cost of a mid-size U.S. city; outside Sofia it is very reasonable, e.g., in a town named Kovachevitsa a bed and breakfast with dinner by an award-winning chef cost approximately USD 120 per couple plus the cost of wine which is nominal, and that was the expensive place.
A little on the food. Bulgaria borders Macedonia, Greece and Turkey on the south, and the food is definitely of a Mediterranean flavor. There are lots of fresh and organic fruits and vegetables, wonderful cheeses, simply grilled meats, primarily pork and lamb, soups and stews. A staple is Shopska Salad ©cucumbers, tomatoes, red peppers, and a local white feta-type cheese.
Bulgarian wine, according to my wife and wine-drinking friends, is excellent and very reasonable, USD 10-15/bottle. My test is beer and the locally brewed ones are very good and very reasonable, USD .75-1.00. The real treat is Rakia; a liquor prepared from grapes, plums, or other fruits.
Hiking is very well organized. The mountains are not very tall; 10,500 is the highest peak. There are numerous archeological sites (Thracian, Greek, Roman, and the Bulgarian and Ottoman empires) and especially churches and monasteries. We spent a night in the Rilla Monastery which has existed in some form since 1075. The accommodations are basic and cheap but the experience is priceless. Orthodox iconography alone is worth the visit. Museums are basic and can be missed. Leave Sofia and explore the small towns.
One place of peculiar interest is the southern town of Sandanski. Many products, e.g., food, clothing, shoes, silver jewelry, furniture are considerably cheaper in Bulgaria than in other EU countries. Since Sandanski is close to the Greek border, there are regularly arranged bus tours from Greece to Sandanski, specifically for shopping.
Not too far from Sandanski is the home and shrine of Baba (Aunt) Vanga. Baba Vanga was blind from birth, but came to be regarded as having a direct relation with God and the ability to see the future. A considerable cult grew up around her and pilgrims started to visit in large numbers. When she died, her home, especially her consultation room became a shrine and a church was built. In death, there are even more pilgrims.
We did not visit the chief tourist attraction of the Country which is the Black Sea Coast. Many other tourists we talked with consider it comparable to the Aegean, but at 25% of the cost.
In summary, a great vacation at a reasonable price if you like to hike and visit archeological and religious places, but onto the business world after a year and a half in the EU.
Life and Business in the EU
Bulgaria joined the EU on January 1, 2007. Like many recently joined countries, it is not complete membership, e.g., there is not yet monetary union. Bulgaria still uses its currency, the “Lev” instead of the Euro. The exchange rate in May 2007 was 1 Lev = .60 USD; in August 2008 it was 1 Lev = USD .80. The Lev is closely tied to the Euro and in August 2008, the USD was at an all time low to the Euro.
In May 2007, when I was teaching in Bulgaria, the relationship between Bulgaria and the EU was in the honeymoon stage. There was a great deal of EU money flowing into Bulgaria for infrastructure projects, especially roads, water and sewage treatment facilities and environmental improvements to the power industry. There were also a great many loans for business development and smaller grants for “Bulgaria Beautification.” It was a great deal of giving on the part of the EU, but little in way of a return by Bulgaria; only some uneasiness as to the future.
By August 2008, the relationship had changed. The Bulgarians were starting to experience the costs; of particular concern were rising prices in all sectors, but especially food. Full membership in the EU means EU prices. For those on fixed incomes, it is particularly difficult.
On the EU side was a realization that the concept of, “transparency” (polite way of saying lack of corruption) was not taking hold. While we were there, the EU suspended a Euro 750,000,000 aid payment due to Bulgaria’s lack of progress in law and court reform and controlling corruption and crime. Subsequently, the grant was completely cancelled. Corruption in Bulgaria can take the brutal form; if money does not achieve the goal, physical intimidation is employed. A widely reported example was the County’s largest steel plant whose executives allegedly drained it of assets with the consent of the Government; one of the executives was killed by a sniper.
On a smaller scale, we observed both the good and the bad use of EU bank loans to smaller businesses. I mentioned above an excellent small bed and breakfast. It was in the small town of Kovatchevitsa, about 250 kilometers from Sofia. The surrounding countryside is beautiful, as is the hotel which was built in the Bulgarian Revivalist style. The remainder of the town, with the exception of a charming tavern is, however, reminiscent of the opening scene in the movie, “Borat”; those of you who have seen it will know what I mean. The hotel was funded with EU money and was obviously a wise investment.
In contrast, we stayed in another new hotel not too far from Sandanski, also funded by an EU loan. It was quite nice but had some peculiarities: no registration beyond giving your name was required (most hotels require your passport data), cash only, no receipt, the rooms were not made up during our 3-day stay, breakfast which is typically a lavish buffet in Bulgaria, was over-ripe bananas, moldy bread, eggs cooked to someone’s order and not yours, and tepid, weak coffee. This was all grudgingly served by an unsmiling waitress who made it clear that guests at this hotel were not expected to stay for breakfast. Indeed, she was right; for 3 days only one other couple was there for breakfast. The hotel facility itself, however, was quite elaborate, terraced with a swimming pool, nice view, and even a small zoo. It did not make sense until our guide pointed out that it was owned by organized crime and was a means of money laundering – this explains the lack of registration and cash only policy! Perhaps they were able to pay back the EU loan, but it does not seem that this is what the EU had in mind when they loaned money for small business development.
There is a jarring contrast between old and new. Bulgaria, even though it is fairly mountainous, has almost perfect cell phone coverage. This includes the Blackberry network. Even in rural areas, teenagers go about their daily life while texting with one hand. In contrast, we went to a rural post office to buy stamps for post cards to send back to the U.S. It took 45 minutes, including a telephone call to an absent supervisor to complete the transaction.
On our first day, my wife and our friends stopped to take pictures of a horse drawn hay wagon. By the second day it was clear that ¨horse power« in the agricultural sector is still common. Shepherds still take their sheep into the mountains for the summer. The largest portion, almost 50%, of the EU’s budget goes to agricultural support and I wonder if there is an incentive to modernize. It’s charming if you are a tourist!
In general, it appears that the transformation to EU standards is wrenching but will eventually succeed. The corruption, especially in the court system, will eventually get fixed, but not without some major convulsion. Replacements for the old, polluted industries will eventually arise. A post-socialist generation (i.e., coming to maturity after 1989) is just starting to emerge. The only concern here is that they will be discouraged by the corruption and emigrate. The country is losing population, especially its educated young people. I am still amazed at the number of young Bulgarians I meet in the U.S. and Canada.
As I mentioned in my original summary (Building Solutions, Fall 2007 and Winter 2007-2008), there does not appear to be a great opportunity for U.S. contractors with the significant exception of the power industry. EU loans go to EU contractors. There are also significant Japanese grants and loans which go to Japanese contractors, e.g., Taisei is expanding the Sofia subway system under a Japanese Government loan.
My wife and I will definitely return: both of us for further hiking and to see faculty members who we now consider good friends, and me for business. Our friends, were all equally enthusiastic and hope to return. My recommendation try it for a vacation; be wary of business opportunities.
Next report – Latvia where I taught at Rezneke College this past November. The future looks like it will include Kosovo.
The information or opinion provided in this article is the author's own and not necessarily that of Watt, Tieder, Hoffar & Fitzgerald, LLP. The author is solely responsible for the information and opinion that he or she has provided. The information contained herein does not replace seeking specific legal counsel to directly address individual client needs.
Watt, Tieder, Hoffar & Fitzgerald is one of the largest construction law firms in the world, with a practice that encompasses all aspects of construction contracting, claims and disputes resolution, and transactional legal services. WTHF principally represents large general contractors, design firms, and sureties throughout the country and internationally.
|
