A New Type of 'Special Relationship'

Economic News

22 Jul 2010
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This year sees Bulgaria and the US celebrate a century of diplomatic relations, with a once-frosty distance now transformed into a generally warm friendliness. Of late, Bulgaria has also been strengthening its ties with the US, particularly thanks to its role as a staunch supporter of the US-led 'War on Terrorism'. Now, this may pay off economically, with contracts for Bulgarian firms in Iraq promised and the possibility of US bases setting up in Bulgaria.



"Relations between the US and Bulgaria are going from Cold War coexistence to warm, strategic partnership," US Secretary of State Colin Powell said during his visit to Sofia back in May. "As a result of the democratic path that you have chosen, relations between Bulgaria and the United States are the best they have ever been in the past 100 years."



This still remains the case today, despite a few recent hitches.



Largely setting the pace for this improvement has been the security and foreign policy agenda. Trade relations, while good, have never been as central, with the US ranking in sixth place in terms of FDI in Bulgaria, at USD309.9m, according to first quarter 2003 figures from the Bulgarian Foreign Investment Agency. Overall, US investors have established a presence in a variety of sectors, namely: IT, consultancy and energy - with the later of particular importance given recent plans to privatise seven regionally-based electricity distribution companies by the end of the year.



Yet it is in the security field that the relationship has developed most strongly. Bulgaria sent military technicians to support the US-led effort in Afghanistan in 2001, while it has also heeded US requests over Iraq. A 485-strong light-infantry battalion has been sent to join forces under Polish command in the Shia-dominated southern Iraqi city of Karbala. The US, in turn, is footing the bill for that deployment, while governance in the city has now been handed over to Bulgarian officers. There has also been talk in recent weeks that the military's mission may be extended.



As a reward for its continued support of US foreign policy aims, Bulgaria was invited to participate in future Iraqi reconstruction efforts. With investment opportunities in Iraq expected to reach between USD220bn and USD600bn in the coming decade, this is a considerable pie for the US to serve up. In addition, Bulgaria's former role as a major trading partner with Iraq during the Cold War resulted in an Iraqi debt to Bulgaria estimated at approximately USD1.7bn. Little surprise then that Sofia has taken a keen interest in Iraq's future development.



Shortly after US forces gained the upper hand in Iraq in mid-April, a total of 54 Bulgarian companies began lobbying the Bulgarian Industrial Association (BIA) in an attempt to secure prospective reconstruction contracts. In discussions with Bulgarian Deputy Prime Minister Nikolay Vasilev the previous month, US Ambassador James Pardew had already outlined several fields that would benefit greatly from Bulgarian expertise. These were: construction and infrastructure projects, telecommunications, health care and pharmaceuticals.



To date though, contracts in Iraq have been on a small scale. Recent examples of this were Bulgarian arms manufacturers supplying 1000 AK-47 assault rifles to the Iraqi army, while pharmaceutical company Balkanpharma AD has sent humanitarian aid to Karbala.



Meanwhile, the US has wholeheartedly endorsed Bulgaria's efforts to join NATO in time for the military alliance's May 2004 summit in Istanbul. Yet joining the alliance is an expensive business, with the underlying cost to Bulgaria estimated at around USD1bn. Most of this is due to the need to upgrade much of the country's obsolete military arsenal with modern, state-of-the-art hardware that adheres to NATO standards. This also makes Bulgaria a natural target for the sales pitches of US defence and technology companies, with Lockheed Martin, General Dynamics and IBM all highly interested in the Bulgarian market.



The defence relationship has also been strengthened by Washington's newfound interest in establishing military bases in Bulgaria. How deep this interest goes is still a matter of debate though, as during a joint meeting with Bulgarian Foreign Minister Solomon Pasi in Washington in mid-October, US Secretary of State Powell pointed out that while he was "pleased with Bulgaria's receptiveness" to the idea, it was still "premature to talk about any specific place or any specific presence".



Nevertheless, discussion of possible sites has continued, with special emphasis centring upon an area adjacent to the south-western town of Gotse Delchev. This site is of strategic significance given its location near the Greek border, its proximity to a planned trans-border highway that will improve travel between Greece and Bulgaria and vital access to an airstrip that can be expanded to accommodate larger aircraft.



Pasi highlighted these geographical advantages in an interview with AP in early June.



"This region serves as a good jumping off point for fighting international terrorist groups hidden somewhere, without a capital, without a face and without a government," he said.



However, relations between the US and Bulgaria have also faced some hurdles of late. Washington's decision in mid-July to suspend USD10m of its USD19.5m military aid package to Bulgaria in response to Sofia's decision to side with the EU in supporting the establishment of the International Criminal Court (ICC) was one such difficulty. For its support of the ICC, the US included Bulgaria on a blacklist of 35 countries, six of which are also NATO candidates.



Yet, last week the US Senate foreign relations committee approved a bill ensuring that US military aid to Bulgaria and the six blacklisted NATO invitees would not be dependent on bilateral agreements over the ICC.



One other recent dispute occurred in the days leading up to late October's municipal elections. Prime Minister Saxe-Coburg appointed a former high-ranking intelligence officer from the Cold War era, General Brigo Asparuhov, as his personal special intelligence advisor. This caused alarm from NATO in particular, with the appointment only being cancelled at the last-minute following behind-the-scenes lobbying from both US and NATO officials.



Balancing the demands of the US foreign policy agenda with the country's desire for speedy EU membership has also sometimes posed difficulties. Staunch support for the US over Iraq led to a much-publicised rebuke from French President Jacques Chirac, which also came as a reminder of where the country's main economic interests lie. Negotiating a path between these two powerful and important allies looks likely to be a challenge Bulgaria will have to face in the century to come.

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