London, 25 November 1998 (RFE/RL) -- Bulgaria's Deputy Prime Minister Alexander Boshkov says he's confident of international backing for ambitious plans to make his country a key transport link between Western Europe and Turkey, Russia, the Caucuses and Central Asia.
Speaking yesterday at the Royal Institute of International Affairs in London, Boshkov said that Bulgaria is now working on plans to upgrade its infrastructure as a way of attracting more foreign investment. As part of this upgrading, he explained, Bulgaria is stressing the trade importance of four pan-European transport routes that cut across its territory.
"We are confident these infrastructure projects will be supported internationally because of the pan-European corridors. Four of them pass through Bulgaria. For all of these corridors, we are going to get international support, because they are needed both by the countries of the Caucuses and Central Asia for the flow from east to west, and for Russia to get to the Mediterranean, and to link up with Turkey and Greece."
Boshkov said Bulgaria's geographic location, which he called a "liability for centuries" past, has now become an asset in an era of globalization, expanding transport links and fast-growing telecommunications. He noted that it is Bulgaria's policy to be open to its regional neighbors.
Boshkov is Minister of Industry as well as Deputy Prime Minister in Bulgaria's reformist United Democratic Coalition that won power in April of last year. He was in London this week to address a conference on emerging markets.
The message Boshkov delivered was simple: After years of governmental instability, hyper-inflation and near-bankruptcy, Bulgaria is on the way to catching up with other Central and East European reforming nations. That makes it, he said, a stable and attractive haven for foreign investors.
Boshkov noted that Sofia's new Government has curbed inflation and balanced its budget with a help of a currency board that oversees all important monetary and fiscal transactions. He said he was confident the present Government would serve out its full term. That would allow it to enact what Boshkov described as a "huge" reform program which includes large-scale privatizations. He noted that Bulgaria's exports to Russia, its traditional trade partner, are down to some six percent, while almost 50 percent of its foreign trade is now conducted with European Union countries.
Boshkov also said that foreign investment in Bulgaria --led by Germans, Belgians and Americans-- soared last year to 636 million dollars, almost 20 times the figure for 1992. This year's international financial crisis has caused a fall-off in foreign investment, but Boshkov predicted that it will grow strongly in the first three years of the next century.
"What a dramatic change in investment orientation in 1997! In 1996, it all went down the drain, the country went practically into bankruptcy, we had hyper-inflation, a government that was good-for-nothing, so early in 1997, we had a popular uprising, peaceful, we had early elections in April, 1997, and the markets immediately responded to a country that was still quite risky, but had a promising future."
Boshkov listed as persuasive reasons for investing in Bulgaria its location, its new-found political stability, its competitive labor costs, and recent legislation aimed at encouraging foreign investment. He also said the currency board, introduced in July last year as the centerpiece of the reform program, had been effective in imposing tight constraints on fiscal and monetary policy. It had helped Bulgaria to reduce inflation to low double-digit figures, after running at what has been authoritatively estimated (by the EBRD) at almost 600 percent last year.
Boshkov says that some admirers of the currency board credit it with restoring macro-economic stability to the country. They see the board as "some kind of miraculous solution to our problems -- a disciplining straitjacket."
Could a similar currency board help Russia face the expected return of high inflation following the collapse of the ruble in August? Boshkov says that he recently had talks in Moscow with Russian economic leaders who thought that a currency board might indeed be the answer to their problems. But he told them not to deceive themselves, stressing that a currency board can only be effective if there is the political will to support it.
"A currency board in Russia right now is absolutely impossible, because a currency board means discipline and the collection of taxes. Because you need to have a balanced budget, you can't print money. The only way you can have a balanced budget is to collect your taxes. And now does the Moscow administration collect taxes in Vladivostok, let's say? If they got a penny, they'd be happy."
Still, Boshkov said, given the right circumstances, a currency board can be effective. It is, he stressed, helping to create a stable environment in Bulgaria, allowing people, as he put it, "to finally stop worrying about tomorrow."