Article in the German business weekly Wirtschaftswoche http://www.wiwo.de/

Kalina Pavlova and her family have never steered away from criticizing the situation in the country. Even under communism in Bulgaria, Kalina’s home was often very noisy. “We closed the doors and reviled the regime until we started sweating,” says the architect. The family had good reasons. Her grandparents once owned many lands, until the communists took them.

Now, the exquisite Bulgarian sits in a street coffee shop in her hometown Varna. Tourists are wandering around, enjoying the last days of Indian summer. The season is coming to an end, but one can hardly find a free spot on the beaches of the popular seaside metropolis.

Pavlova, the founder of the Greens party in Varna, sips her coke and is hesitant about continuing with words. Naturally, Bulgaria is now regarded as democracy and private ownership of land is self-evident. “However, people are not happy. Their anger from political relations grows with each passing day and everyone who can leaves the country,” she says. Even a quarter of a century after the fall of the Iron Curtain, democracy is still very weak.

Disgruntled Citizens

Unhappy citizens gather together for more than 4 months every night in the downtown of the capital Sofia. Sometimes hundreds come, sometimes between 20 000 and 30 000. These are not socially isolated Bulgarians with low incomes; with whistles, drums and creative banners they demand the government’s resignation. These are mostly educated middle class people giving expression of their anger from cronyism, corruption and the rule of oligarchs in the second poorest country in the EU – only in Romania people are worse off (see chart). Office workers in suits and ties march alongside students, artists and mothers with strollers.

In February, when people took to the streets and demonstrated in Varna, 500 km away from the capital Sofia, Pavlova was also with them. The politician from the Greens party gets angry mostly because of the machinations of the group TIM in her hometown. TIM – this is a widely branched and murky network of more than 100 companies with approximately 30 000 employees. The group was founded in the early 90s by former elite commandos. The acronym is derived from the first names of its three bosses. It is assumed that they gained their first money, incidentally, through drug trade, extortion, car theft and prostitution. In 2005, the then U.S. Ambassador in Sofia called them “leaders of organized crime” in an internal document, made notorious by findings of “Wikileaks.” The network is “the greatest threat to Bulgarian economy,” the cable says.

Today, the empire TIM also includes, among others, several TV stations, a newspaper and the flag carrier “Bulgaria Air.” The management of the murky network has excellent ties with politics in the capital, but mainly in the Black Sea city of Varna, where TIM develops most of its activities. Hence, the conglomerate controls all grain trade in northeastern Bulgaria.

Violent Methods

“Varna belongs to TIM,” says Georg Tuparev, Vice President of the Bulgarian Greens party, and one of the best experts in the dubious tangle. Through privatization deals, its companies secure for themselves the fattest pieces around for pocket change,” Tuparev establishes, besides TIM still deal with racket in Varna. The network, he argues, also manages a national retirement fund, which diverts substantial amounts to its own companies. Virtually no newspaper dares to report TIM’s suspected machinations. Those who dare are intimidated by “violent methods,” says Tuparev who has experienced intimidation attempts coming from the group. “A modern form of feudalism,” he says.

TIM’s ties in local politics in Varna spread so far that the project design bureau of the group is the one which develops the city’s urban plans. And as a rule, it favors mostly companies from the network. To others, the “planners” bring fear and terror. For example, if a restaurant owner refuses to pay the “protection” amount, he is threatened with re-categorization of the land on which their establishment stands, says architect Pavlova. The population of the city revolted after it became clear that TIM has secured for itself a long-term lease of the so-called “Alley One.” Hotels and shopping centers must pop up on the picturesque, overgrown with trees coastline of the city. “We just had enough,” says Pavlova.

TIM’s ties spread all the way to Germany too. The huge hangars at Sofia International Airport glitter bluish -gray in the morning sun. “Lufthansa Technik Sofia” is written in yellow letters on their upper outside edge. Since 2007, the subsidiary of the German airline career repairs aircraft here. The traditional ball of the German Economy in Bulgaria was hosted in its halls. The local partner of “Lufthansa Technik” is “Bulgarian Aviation Group,” a company linked to TIM. Germans hold a majority stake in the joint venture. “Lufthansa” refrained from comment on the specific accusations against TIM. “Legal review and assessment of accusations against Bulgarian companies are the obligation of Bulgaria’s judicial system, and the country is an EU Member State,” said one of “Lufthansa’s” spokespersons.

Airport operator “Fraport” is also bound with TIM’s flagship – the chemical and fertilizer corporation “Himimport.” The joint venture “Fraport Twin Star Management Airport,” in which the Germans hold 60%, is located in Varna and manages the airport there, and the one in the other Black Sea city – Burgas. The Union of critical shareholders in Germany has repeatedly criticized the activities of the Group, whose shares are traded on the MDax segment of the Frankfurt Stock Exchange. “Fraport” violates the ten principles of the UN Global Contract, after committing to comply with them,” says Bernd Moritz from the management of the Union of critical shareholders. Yet “Fraport” remains silent about the case. Its spokesman, again, refers to the competence of Bulgarian justice.

Suspicious actions such as those of TIM, allowed and supported by politics, slowly but steadily nose-dive confidence of both elites and ordinary people in their country. Consent and hopelessness grow. More than one million Bulgarians left the country in recent years. Mostly the well-educated try a fresh start abroad, including in Germany.

“Nothing is left of the old euphoria from the accession to the EU in 2007. Many feel Brussels is guilty for our misery,” says Pavlova. Empty rumors that Sofia pays to Brussels more than what it receives from the EU in the form of aid continue to spin off,” she explains.

The economic and financial crisis, but mostly their own inability to carry out reforms and the intertwining between corrupt politicians and oligarchs paralyze the Balkan country. The balance shatters any illusion. In 5 years Bulgaria has fallen in the “Doing Business” report of the World Bank from 46th to 66th place. FDI shrank since 2008 by 80%. In the index of perception of corruption of “Transparency without Borders,” the country occupies 75th place after Ghana, Saudi Arabia and South Africa.

Apparatchiks and Oligarchs

When the crisis hit in 2008, it was painfully realized that Bulgaria has not undertaken any real reforms after the fall of the Iron Curtain. Unlike Poland or the Czech Republic, where during political changes there were alternative forces as “Solidarity” and “Charter 77,” on the Balkans these changes of the system were dominated by apparatchiks from the second echelon of the former Party-State. The elites quickly fenced their territories. And oligarchs began to pillage the country.

“Bulgaria was accepted in the EU too soon; many old structures still exist,” says journalist Dragomir Ivanov. The problem: joining the Club of the Rich, as he called the EU, first legitimized questionable groups like TIM.

***

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