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Bulgaria Defence Report Q1 2007

Published by: Business Monitor International

Published: Mar. 1, 2007 - 38 Pages


Table of Contents


Executive Summary

Bulgaria Security SWOT

Bulgaria Political SWOT

Bulgaria Defence Industry SWOT

Chapter 1 - Security Risk Analysis

BMI’s Security Ratings

Table: Regional Security Risk Ratings

Table: State Terrorism Vulnerability Index

Regional Security: Europe

Overview

Internal Terrorism

International Terrorism

Criminal Activities

Bulgaria Terrorism Risk Ratings

Bulgaria Physical Safety Risk Ratings

Bulgaria Conflict Risk Ratings

Political Overview

Domestic Political Outlook

Chapter 2 - Security Overview

Internal Security Situation

Table: Regional Insurgent Groups

External Security Situation

Bilateral & Multilateral Security Relations

Chapter 3 - Defence Industry

Armed Forces

Modernisation Programme

International Deployment

Weapons Of Mass Destruction

Chapter 4 - Market Overview

Industry Trends & Developments

Table: Key Players - Bulgaria Defence Sector

Arms Trade Overview

Procurement Trends & Developments

Chapter 5 - Industry Forecast Scenario

Army Enlargements

Government Expenditure

Table: Bulgaria Defence Sector - Historical Data & Forecasts

Chapter 6 - Macroeconomic Forecast Scenario

Table: GDP, Output & Population

Chapter 7 - Company Profiles

Arsenal Co (previously Arsenal JSC)

Arcus Co

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Abstract

As a result of EU accession and NATO membership, Bulgaria is undergoing significant political and defence changes. In 2006, a two-month period of post-electoral deadlock was broken with the formation of a tripartite government - encompassing the two main parties on either side of the political spectrum. But how long can this 'compromise' last? Additionally, there was a presidential ballot in Bulgaria in Q406, and local elections are forthcoming in 2007, which will add further pressure to the process. One issue that has seen significant attention is Bulgaria’s commitment to stamping out corruption. The Bulgarian government fired some 46 employees from the Ministry of Internal Affairs in 2006. The Department of Inspectorate confirmed that the employees were fired as they were accepting bribes, some as high as EUR1,000, for stopping a proceeding. Bulgaria has continued to crack down on corruption after the EU announced that, despite its admission to the Union, it was still concerned about Bulgaria’s corruption track record. The fired employees were relatively low-ranking officials, and the litmus test will be whether the Bulgarian government is willing to rid corruption from the higher levels of government.

Bulgaria’s regional security outlook was secure in the first quarter of 2007, but there may be shifts in the stability of Eastern Europe as a result of Ukraine adopting a relatively confrontational stance on national security. In Q10,7 Ukraine opted to develop the Hrom surface-to-surface missile system (SAM), which will have an 80km-290km range, The 290km range presents a threat to neighbouring states, such as Bulgaria. However, the immediate danger is offset by the fact that Ukraine’s defence posturing will affect many NATO member states, and as Ukraine is considering joining the alliance it is unlikely to detonate the Hrom SAMs.

The Bulgarian defence industry is relatively mature but is having to compete in a fast-moving market. Bulgaria’s ties with NATO led to the trend for defence firms to increase their participation in the modernisation process. According to Defence Minister Vesselin Bliznakov, Bulgarian defence firms are now encouraged to ‘actively participate in the tenders and programmes’ of the NATO Consultation, Command and Control Agency. The aim is to expedite the interoperability process, and at the same time strengthen the local defence industry. Military expenditure is set to increase significantly in the short to medium term (1-5 years), with the 2007 budget indicating that expenditure will reach 2.38% of GDP. NATO regulations stipulate that at least 2% of GDP needs to be spent on defence modernisation. To maintain the increased expenditure, Bulgaria receives assistance from the EU, which has committed some US$8.6bn for modernisation.

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