5. Private Property Rights In the past year there are four draft laws which violate rights over private property. The first draft was proposed by the Interior Ministry, a draft for nationalization of property obtained with illegal operations. The original idea of the draft is to get control over property which as evidences support was obtained with illegal means. The second draft is an amendment to the law on state property. This draft will permit to the public administration to nationalize property for infrastructural projects for a market-valued compensation. The current rules oblige public servants to compensate for such a private property with a similar piece of land and/or building space. The third draft is the so-called Kornezov amendments (voted in the Parliament, first reading). This is a legal provision which will permit to the prosecutors to intervene in private contracts at his disposal. And finally, the last draft is similar to the above-mentioned. It is a draft with a special provision that in case of death the pension funds spent by you and transferred to private pension funds might not be inherited. In fact, this is a nationalization procedure of private savings. International Agreements 1. Invitation to NATO, EU accession negotiations and administrative capacity The invitation for NATO membership is by all means the best event for Bulgarian foreign policy. It was made possible because of the alliance's need to ensure enforcement of unilateral foreign policy and predictability regarding fulfillment agreements and declared intentions. Bulgaria was the only former-Warsaw Pact country to violate an embargo at the eve of the membership invitation. After 1999, from all post-socialist countries, only those on the Balkans have ever caused doubt for, or even actually happened to sell weapons to Iraq. During 2002 Bulgaria was acknowledged by the EU as a "functioning market economy". This was beyond doubt a positive sign. Any other phrasing would make foreign observers ask themselves what was going wrong; the very questions would have negative impact on any possible investment initiative. At the same time, local observers and entrepreneurs focus rather on problems, barriers and inconsistent reforms. Summarized in the wording of EU accession and 'functioning market economy' criteria, the highlights of the economic 2002 in Bulgaria presented in this report suggest that: 1/ the common consensus on the direction of reforms is fragile; 2/ the restricted monetary discretion of the Central Bank (the Currency Board arrangement) which limits administrative abuse and guarantees stability of prices may be dismantled; 3/ property rights enjoy weak public recognition and protection. The Copenhagen Summit confirmed a relatively close timing for Bulgaria's accession in 2007. This timing is obviously optimistic. In order to reach the ten new members in terms of major convergence indicators (e.g. those calculated by Deutsche Bank, http://www.dbresearch.de/PROD/999/PROD0000000000046453.pdfsee more), Bulgarian economy has to grow by an average two-times higher rate during the next five years. On the other hand, not only the economic, but also the political positioning of the country towards EU membership requirements is somewhere between the ten candidates and the Balkan countries. The major difference is the following: for the first group the major challenge is the integration in the common market; the latter still have significant problems with 'justice and home affairs'. Bulgaria seems to be the only candidate which might face serious problems with the progress of negotiations on the 'justice chapter'. At first sight, these events suggest fatalism: Bulgaria behaves similar to the otherwise demonized 'Balkans' rather than as a future EU and NATO member. Another country - Croatia - stays economically closer to the EU; there is a slight chance that it will be adjoined to Bulgaria and Romania for 2007-membership. However, future developments are not easy to foresee: in both cases we witness highly unsatisfactory administrative performance. Instead of conclusion: In 2002 the 'rule of law' principle was frequently violated, or neglected, not only by the government, but by the parliament, opposition, trade unions and the judiciary altogether. By rule of law here we refer to a state of the society, where: 1. Major individual rights - of life, property and freedom - are guaranteed. 2. Laws, no matter how adopted, do not contradict these rights, but ensure equal protection. 3. Laws are such that every one can plan his/her own actions and make contracts with others under rules that are known beforehand, and no ex post facto laws are passed. For it is true for sure that not every act adopted by the parliament through lawful procedure is legitimate, i.e. ensures 'rule of law'. This is possible due to inconsistencies within the constitution itself, which guarantees rights which may be then restricted by a parliamentary majority. But after all, those who make decisions - in government, legislature or judiciary - do have the choice to uphold these rights and freedoms, instead of renouncing them. During the year attempts of the kind were various: Laws were changed for the only reason to allow individual personal appointnments; " Civil Procedures Code was amended so that state prosecutors may interfere in private contracts; " Numerous ideas for non-court confiscation procedures were announced; " Numerous amendments in the Privatization Law of the kind were adopted; " Judges dared to discuss on economic expediency of administrative acts and laws; The list can be continued. From a business activity perspective, what seem most important are both intentions and actions of administration, which do not go in line with rules and procedures, but aim at changing them ex post facto. The exemplary case of the idea to exclude privatization deals from judicial examination is self-explanatory. At the same time Bulgarian Telecom and Bulgartabak sales followed clear and known procedural rules, but were stopped by the court precisely by discretionary decisions upon economic expediency. The environment for doing business (and living, in general) in Bulgaria is more and more subject to the whim of individuals, personal agendas of MPs, ministers or judges, and rarely to rules and principles that are at least to some extent honored by the entire citizenry, precisely the rules that uphold equality before the law and protection of rights and contracts. |
