Economic Update

Published 22 Jul 2010

Expectations are running high in Bulgaria’s press and official political circles concerning the possibility of establishing US military bases in Bulgaria under NATO auspices. While details still remain sketchy, surveys of possible base sites are known to have begun in earnest. However, the government of Prime Minister Simeon Saxe-Coburg still has not clarified where it stands on this politically volatile issue.

Minister of Foreign Affairs Solomon Passy, who played an influential role in spearheading Bulgaria’s efforts to join the NATO alliance through the establishment of the lobbying group “The Atlantic Club” pushed the issue to the fore in mid-August by releasing a list of 5 potential NATO base sites. These included the coastal cities of Burgas and Varna, urban centres such as Pleven and Plovdiv, and the more general Rhodope mountain region located in southern Bulgaria.

Then in an August 15 interview with the Bulgarian News Network (BNN), Defence Minister Nikolay Svinarov confirmed reports of Washington’s search for a Bulgarian base, and that special emphasis was being given to a potential site adjacent to the south-western town of Gotse Delchev. The site is reportedly attractive to military planners, given its location near the Greek border, its proximity to a planned trans-border motorway system and an already existing airstrip that could be expanded to accommodate larger aircraft.

Since the fall of communism, Bulgaria has sought to build stronger relations with NATO members. A number of Bulgarian military facilities have been used recently for training purposes by alliance forces, which has helped boost the country’s prospects as the host of a future NATO base. Of particular importance amongst NATO strategists is the Graf Ignatievo airbase located near the town of Plovdiv, which recently served as a venue for one of NATO’s largest air exercises within Bulgaria. The site has received a number of major upgrades subsidized by the US Air Force as well.

Bulgaria, along with other former communist states such as Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia, received the long-awaited formal invitation to join NATO at the Prague summit in November last year. In order to become a future member of NATO, Bulgaria has committed itself to a rigorous series of structural reforms – entitled ‘Plan 2004’ – that has so far resulted in a significant reduction of its military forces from 120 000 in 1998 to a present day modernized force consisting of 45 000. Another area of reform focuses primarily on the pressing need for Bulgaria to upgrade its obsolete and dilapidated military hardware; the majority of which had been built and maintained under the auspices of the Cold War-inspired Warsaw Pact. With the Russians lacking the necessary technological expertise and financial resources to help its former ally in its modernization efforts, the Bulgarian government has been forced to look elsewhere for assistance.

Bulgaria’s incorporation into the military alliance will occur once the 19 current NATO members unanimously determine Bulgaria has met the alliance’s criteria and ratify the country’s membership. At present, 9 NATO members have reportedly given their initial consent to Bulgaria’s membership, and final approval from the remaining members is expected to occur at the alliance’s May 2004 summit in Istanbul.

Military analysts predict that NATO accession will cost Bulgaria approximately USD1 billion for the purchase of new military hardware and the upgrade of its current arsenal. It comes as no surprise that a host of prominent multinational defence contractors have recently descended upon Bulgaria so as not to miss out on prospective lucrative deals. In an exclusive interview with the Oxford Business Group Rumyana Strugarova, the official spokesperson for the Bulgarian Ministry of Defence, said that she and her superiors had met with representatives of Lockheed Martin, General Dynamics, IBM, and BAE Systems Plc to acquaint them with Bulgarian military’s modernization program and, perhaps more importantly, elaborating on some of the projects that these companies could participate in.

According to an official statement released by the Defence Minister, Nikolay Svinarov, Bulgaria has already commissioned the services of Lockheed Martin to help develop an air sovereignty system. In addition, the international telecommunications company Marconi has reportedly played an instrumental role in the establishment of a field communications system for a specific Bulgarian brigade valued at USD50m.

In an interview with Reuters in late July, Mark Stevens, the European Director for BAE Systems, one of Britain’s largest defence companies, provided a detailed account of his company’s recent efforts to secure a USD110m contract to help upgrade Bulgaria’s fleet of 30 Soviet-made MI helicopters to NATO standards. Commenting on his company’s overall strategy and objectives for the Bulgarian market in an interview with the Oxford Business Group, Stevens added that his company was looking to “establish a permanent presence in Sofia.” Stevens added that the helicopter deal “will be only the start, laying the groundwork for a long-standing presence in Bulgaria. Our approach is one of strategic partnership, not only on a defence level, but on industrial level as well.”

Noticing Bulgaria’s potential, two more defence contractors – European Aeronautic Defence and Space Company (EADS) – and the Israeli defence electronics firm Elbit Systems Ltd – are also in competition for the prized MI helicopter contract. Although the Ministry of Defence claims that it will announce its choice of contractors by the end of December, sources from within the defence sector say that the ministry may be forced to delay its final decision largely because of the inherent bureaucratic difficulties involved in trying to satisfy varied interests from within competing government bodies.