Winter of change: Bulgaria and the crisis of 1996/97

Written by on December 27, 2018 in Bulgaria - Comments Off on Winter of change: Bulgaria and the crisis of 1996/97

At various points in the decades after the formal departure from power of Bulgarian Communist Party dictator Todor Zhivkov at the end of 1989, a range of commentators proclaimed the end of the transition. That is one debate; another is when that transition really began.

For now we shall speak of a Bulgaria of what now seems of old; of a Bulgaria long before the Nato membership of 2004; of EU accession of January 2007; even of the Bulgarian Presidency of the Council of the EU in the first half of 2018. A Bulgaria of bitter memory.

For some, the true transition began in the winter of 1996/97, and the intervening years previously were lost to the rigidity, incompetence and downright double-dealing of the party, hitherto the Bulgarian Communist Party, that had re-branded itself as the Bulgarian Socialist Party and put the country on a road that led not only to economic ruin but also to rampant organised crime.

If that sounds strongly put, ask a random selection of Bulgarians about the bitterness of that winter – the shortages, the hyperinflation – and then ponder how some key issues from those times remain unresolved.

Strictly, the socialists had not had Bulgaria to themselves after 1990, but a centre-right government headed by Philip Dimitrov from late 1991 for about a year proved unequal to the pressures of the times.

Speaking in Parliament on January 20 2011 in the debate on the motion of confidence that Prime Minister Boiko Borissov’s Cabinet had requested, Borissov and lieutenants such as Tsvetan Tsvetanov had harsh things to say about the days of credit millionaires, about the roots of today’s problems and about those who had allowed them to take hold.

Downhill run

Whether by default or design (depending on the politics of the Bulgarian with whom you are in conversation) the post-1990 socialist governments pursued policies that enabled the rise of questionable business groups, saw privatisation either neglected or carried out in kleptocratic manner, made possible the rise of hollow banks that served only to funnel money to credit millionaires, and ultimately meant hunger and cold for many Bulgarians.

By the beginning of winter 1996, bread was running short through mishandling of wheat exports, oil was running short and the lev was performing much like a brick tossed into a mineshaft. Autumn found the local currency at about 70 to the US dollar; the New Year saw it pass the 3000 mark.

The socialists, under Lyuben Berov and then Zhan Videnov, failed to follow up the foreign debt payment deferment deal that had been negotiated by the Dimitrov administration. The consequence was Bulgaria’s credit rating plummeting, and banks popped like clusters of soap bubbles. There was a run on banks, but for many it proved as futile as leaping at those same popping bubbles.

Consumers were caught in a pincer of hyper-inflation and shortages. Not that shortages were as much of a problem as the fact that the value of salaries was decimated overnight.

Ivailo (not his real name), who in late 1996 was at his first job after graduating from university, said: “I woke up one morning and my monthly salary was suddenly worth the equivalent of four dollars”. Maria (an alias), then a student, says: “my part-time job was, overnight, now paying me three dollars”.

Emigration accelerated – among those who could afford the fare out.

Uphill

The centre-right opposition, led by former finance minister Ivan Kostov who had been head of the Union of Democratic Forces (UDF) since 1994, found itself being called on to lead mass protests.

Students and those who were young people at the time recall that it was really those at the universities who were driving the protests, coming up with innovative forms of demonstration and a hard-line strategy that would accept nothing less than the ouster of the socialist government.

The UDF leadership, according to Maria, hardly seemed to have an idea what to do with the thousands of youngsters who were infuriated and ready to take action. The initiative was with the students.

“We met until late at night and came up with ideas for demonstrations. One day, we carried soap and towels, saying that we wanted to wash our hands of the situation as the communists were doing. The next, we carried a coffin, saying that we wanted to bury communism. After that we made a big model aircraft out of paper, saying that we wanted to fly out of this country, we wanted nothing more to do with it,” Maria says.

The mass protests sought to make the country ungovernable. Major roads and ports were blockaded by protesters. So was the centre of Sofia.

“It was freezing cold and we would sit outside, around huge fires. The old ladies – who had shouted pleas to us not to leave when we carried the paper plane – brought us hot tea and kepabcheta. Emotions were running high.”

Memoirs of the time underline that the street protests were by no means confined to students and other hard-core political types who might be expected to turn out at such times. Ordinary people, seized by frustration, anger and even fear of how much worse the collapse could get, took to the streets.

When police beat protesters outside Parliament in January, sending more than 200 to hospital after a blockade of the National Assembly kept more than 100 BSP MPs from being able to leave, national anger erupted.

Ivailo recalls that the time was a radicalising one. “I found out how to make Molotov cocktails. I wanted us to get the materials and throw Molotov cocktails at the police. Yes, students would die when the police shot at us, but it seemed there was no alternative to bring things to a head.”

At the outset, the media was anything but willing to even cover the protests. The newspapers of those days, in thrall to the old establishment, largely ignored what was happening in the streets. Bulgarian National Television, then the sole national broadcaster, initially left events uncovered, though when the momentum of protests became inexorable, some staff let their sympathies be known – playing the Beatles’ Let it Be before and after the main news bulletins, making the McCartney song a continuing part of Bulgarian political legend.

Slavi Trifonov, later to become a television talk show host, initiated the playing of songs dating from the time of Bulgaria’s struggle for liberation from Ottoman rule. Likening a Bulgarian government to rule from the Porte is emotive stuff.

A conspiracy theory from the time lingers. Some believe that Multigroup, the controversial business empire that flourished in the first years after 1990, discreetly helped at least some of the protesters, in a move intended to get rid of Videnov.

For those were protesting, a vivid memory is of listening to Darik Radio, which they say was alone in being honest and comprehensive in its reporting about the protests.

Political endgame

The November 1996 presidential election victory by Petar Stoyanov of the UDF had precipitated disarray within the socialists, making them even more vulnerable when by the time of the January protests described above.

Videnov had announced towards the end of December that he was stepping down as prime minister and as BSP leader, although he said he would stay in office in an acting capacity until elections were held.

In early February, breaking point came. Maria recalls word reaching the protesters that the army was to be deployed to break up the crowds of thousands in the centre of Sofia, with no quarter to be given.

Speculation continues about a huge internal fight in the BSP about whether to embark on a ruthless military crackdown or to capitulate. Then-influential interior minister Nikolai Dobrev is said to have played a decisive role in persuading the party not to embark on a course that could have produced Bulgaria’s own Tiananmen Square. Whatever the truth, history records what happened.

On February 4, the socialists gave up, handing back their mandate to attempt to form a government, and as word spread, the grim mood among the protesters turned to jubilation.

Stoyanov, who had taken office on January 22, appointed Sofia mayor Stefan Sofiyanski on February 12 as acting prime minister at the head of a technocrat interim government.

In his evocative passages on those days, in his book The Good Balkans, British journalist Jack Hamilton quotes Stoyanov as telling a huge crowd in central Sofia: “The government has given up its mandate. There will be early elections…

“I am with you. I do not promise that you will be richer or live better. But under the next government I will be honest and you will be masters of your lives. We will not build a factory of dreams,” Stoyanov said.

Dreams

With the assistance of foreign advisers, the Kostov government elected in April 1997 embarked on ambitious reforms, following on steps already taken by the Sofiyanski administration – most importantly, the introduction of a currency board to stabilise the lev by hitching it to the Deutsche mark.

Kostov announced, to considerable skepticism, the goal of Bulgaria joining the EU within 10 years from 1997 (it did so on January 1 2007).

A reform package was agreed with the International Monetary Fund and the World Bank, opening the way for a three-year IMF loan of about $800 million in July 1998, while Kostov’s government led large-scale privatisations in 1997.

The IMF money was used to support the reform programme, which saw the development of financial markets, reform of the agricultural and energy sectors and liberalisation of trade. Inflation plummeted and interest rates eased, though it would be years before the banking market approached the norms of the West.

The Bulgaria of today’s politics and policies was being shaped – though, in turn, the impact of thorough reforms and allegations of corruption would see the UDF government defeated in turn in June 2001 by the advent of former king Simeon Saxe-Coburg.

Where were they then?

Notes on today’s prominent political figures, and what they were doing at the time of Bulgaria’s 1996/97 crisis

Former president Georgi Purvanov: The crisis found him as deputy leader of the Bulgarian Socialist Party and left him as its leader.

Prime Minister Boiko Borissov: In business for himself with the Ipon-1 security company he had founded a few years earlier.

Tsvetan Tsvetanov, currently parliamentary leader of Borissov’s GERB party: Was then a chief inspector at the Interior Ministry.

Sergei Stanishev, who was to lead the BSP for several years, now is an MEP and leader of the Party of European Socialist: Not yet an MP, Stanishev was head of the socialist party’s foreign policy and international relations desk.

Ataka leader Volen Siderov: Having fallen out with UDF circles, Siderov had headed the public relations campaign for the socialists in the 1995 Sofia municipal elections; the crisis found him pursuing a career in journalism and public relations.

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