In 2011, the Economic Program focused on four key topics: energy security and sustainable development; hidden economy and anti-corruption; competitiveness and the knowledge economy; and the impact of the European Funds in Bulgaria.
- Energy security and sustainable development. The Economic program published a series of reports on the quality of energy governance in Bulgaria. These elaborated on the necessary policy measures for filling in governance gaps, such as in public procurement and for transitioning towards sustainable development.
- Hidden economy and anti-corruption. The Economic program published The Hidden Economy in Bulgaria and the Global Economic Crisis. A round table and a conference organized by CSD discussed the size and share of the hidden economy, bad practices in public procurement, the lack of transparency in the energy sector, the healthcare and pharmaceutical sectors, as well as the losses associated with VAT fraud.
- Competitiveness and knowledge economy. With the active participation of CSD, Bulgaria was included, for the sixth time, in the 2011 edition of the World Competitiveness Yearbook, published by IMD (International Institute for Management Development). According to the ranking, in 2011 the Bulgarian economy occupied 55th place out of 59, losing two positions compared to the 2010 results. CSD experts took part in the elaboration of the annual innovation performance assessment report Innovation.bg 2011.
- Evaluation of the impact of the European Structural Funds on Bulgaria. The Economic program prepared two analyses on the effects of the EU Structural Funds and in particular the European Fund for Regional Development (ERDF). The first report focused on EU fund’s effects in the areas of renewable energy sources (RES) and energy efficiency of residential housing, while the second reviewed the overall effects of ERDF interventions.
I. Energy security
Energy governance in Bulgaria faces multiple challenges of technical, legal and institutional nature. The review of the execution of Bulgaria’s big energy infrastructure projects undertaken by the government in 2009 – 2011 revealed serious problems in terms of governance. CSD’s Economic Program continued its work on advocating for better governance and transparency in the energy sector. Its focus in 2011 was energy security and diversification. Through its research, public awareness raising, the organization of multiple round tables and public discussions, as well as policy forums with national and international participation, the Center for the Study of Democracy has put these pressing issues into the spotlight of the country`s public policy agenda.
A highlight of CSD’s advocacy work on energy governance was the presentation of the report Energy and Good Governance in Bulgaria: Trends and Policy Options. The policy forum on the recommendations of the report took place on 18 January 2011 at the National Assembly of the Republic of Bulgaria. Among the panelists at the event were Mr. Martin Dimitrov, Chairman of the Economic Policy, Energy and Tourism Committee at the National Assembly, Mr. Traicho Traikov, Minister of Economy, Energy and Tourism, H.E the Ambassador of Norway and H.E the Ambassador of Hungary in Sofia (the country holding the EU rotating presidency then), the Head of the International Secretariat of the Extractive Industries Transparency Initiative, Mr. Jonas Moberg, the Director of the Sofia Office of Konrad Adenauer Foundation Mr. Andreas von Below, representatives of the National Assembly and other stakeholders. H.E. Tove Skarstein, Ambassador of Norway to Bulgaria noted that, albeit slowly, Bulgaria had demonstrated tangible progress in improving the transparency of the energy sector. Mr. Traicho Traikov, Minister of Economy, Energy and Tourism pointed out that, for the first time in 20 years, energy decisions were subject to such an extensive discussion among experts as well as among the general public. Minister Traikov noted that the discussion of the proposal for the new energy strategy of the country was about to commence, which was indicative of the government's strong commitment to transparency. According to Minister Traikov, CSD’s report clearly and accurately described the energy situation in Bulgaria. As the process of building a better governance structure is long, Minister Traikov stated that the government’s efforts in 2011 would be targeted at the restructuring of the management of state energy companies, the balanced inclusion of renewable energy sources in the network, as well as the implementation of important national energy projects.
The report Energy and Good Governance in Bulgaria: Trends and Policy Options explores the major deficiencies in the strategic, institutional, and legal governance of the Bulgarian energy sector. The analysis of the management of state-owned energy companies and large energy infrastructure projects in the recent past reveals the disregard for even the most fundamental principles of accountability and control in their planning and implementation. This has affected negatively the Bulgarian taxpayers and consumers, has jeopardized the financial stability of the state-owned energy companies, and, ultimately, has reduced the energy security of the country. The report recommends that the implementation of the large energy infrastructure projects be reconsidered and be based on a sound cost-benefit analysis with regard to Bulgaria’s energy security.
The Center for the Study of Democracy and the Norwegian Institute of International Affairs (NUPI) organised a round table, on 26 May 2011 in Oslo, on the various aspects of good governance in the energy sector and in particular on anti-corruption policies in public procurement. NUPI and CSD presented their joint publication Anti-corruption in Public Procurement: Balancing the Policies during the round table. Among the participants were high-ranking Norwegian officials and experts as well as the Ambassador of Bulgaria to the Kingdom of Norway. The publication, available in English only, reviews the existing counteraction measures against corruption in the sphere of public procurement in Norway, Bulgaria and the EU. The area of public-private contracting presents high corruption risks everywhere in the European Union, and adequate measures should be taken to counter those risks. Only 1.6% of the total EU public procurement market is won by entities originating from another EU country, which in effect points to a dysfunctional internal public procurement market in Europe. The text of the publication enabled the Center for the Study of Democracy to prepare and submit to the European Commission an official position regarding the public consultation on the modernization of the European public procurement system.
The topic of Bulgaria`s nuclear energy, post-Fukushima, was discussed during a round table, organised by the Center for the Study of Democracy on 31 May, 2011. Professor Bulat Iskanderovich Nigmatulin, former Deputy Minister of Energy of Russia in charge of nuclear energy, and currently serving as First Deputy General Director of the Institute of Natural Monopolies in Moscow, participated in the event. Professor Nigmatulin pointed out that from a global perspective there cannot be any talk about a renaissance of nuclear energy because new projects are only in their infancy in fast developing economies such as China, and because of the growing phobia towards this type of energy in developed countries such as Germany. In his opinion, the cost of nuclear energy is extremely high in the former Soviet bloc and, in addition, economic growth is fully assured via the energy savings resulting from the use of modern technologies. This results in a negligible increase in the projected demand for new energy generation capacities. The central challenge to nuclear energy development in Russia and Eastern Europe, and to some extent in Bulgaria, is whether there will be enough customers for this type of energy.
CSD hosted a round-table discussion on energy security on 28 July 2011. General James Jones, former NATO Supreme Allied Commander Europe and former National Security Advisor to President Obama, and Mr. Traicho Traikov, the Bulgarian Minister of Economy, Energy and Tourism, were among the distinguished participants.
General Jones acknowledged that the topic of energy security remained largely unnoticed in the general national security debate. He noted that there was a lack of a coherent US energy security strategy. The US energy portfolio is divided between 9 departments and 30 oversight committees and subcommittee, affecting the coherence of energy policies. Minister Traicho Traikov specified that in Bulgaria energy security and national security were one and the same issue now. Bulgaria attempts to improve national (energy) security through investment in renewables, conventional and new technologies as part of a wider European effort to improve energy supply and economic competitiveness. The challenges that Bulgaria faces are that within the EU it is hardly possible to convince some (bigger) nations that they should give up part of their sovereignty in energy decision-making. Overcoming this is a prerequisite to common energy policy in Europe, which is of paramount importance to smaller EU member states such as Bulgaria. Participants in the discussion indicated that Bulgaria could benefit from a more proactive energy security policy, through clearly defining its own national energy projects rather than reacting to outside initiatives.
The Center for the Study of Democracy organised a series of other events, dedicated to the topics of energy security and good governance in the energy sector.
- A round table at CSD on 10 March 2011 discussed the role of the Black Sea Region for the country’s economic development and for security relations, including energy security within the European Union. A reoccurring theme in the discussion was the development of a common EU strategy and policy on the EU level on key security issues, and a more active participation of Bulgaria and Romania in its conception.
- The link between organised crime and energy security was discussed on 25 March 2011. Mr. Dimitar Georgiev, Deputy Minister of the Interior, opened up the event by touching upon the challenges that law enforcement bodies face with regard to the infiltration of organised crime into the energy market. Mr. Steve Harvey, Senior Expert, OC Networks Unit, Europol, gave a presentation focusing on three scenarios linked to the potential risks that the infiltration of organised crime into the energy sector of Europe might create.
- The Center for the Study of Democracy and the Institute for Energy at the Joint Research Centre (JRC) to the European Commission held a seminar in Petten, the Netherlands, to exchange experience in energy security research. The event, entitled “Gauging Energy Security: European and Bulgarian Trends”, was held on 5 April 2011 and included topics on the modeling of energy policy in Europe, gas demand and interconnectedness of gas networks in Europe, etc.
- Exchange of good practices on the application of foresight in the areas of energy and environment took place during the round table discussion “Environment and Energy Foresight: EU-China Cooperation”, organised by the Center for the Study of Democracy on 11April 2011. The participants voiced the opinion that Bulgaria was at the threshold of renewing its energy generation capacity and faced important choices concerning the reduction of pollution, the construction of nuclear plants and the lowering of harmful emissions.
- The Center for the Study of Democracy hosted a seminar discussion on 18 April 2011 on sharing the experience with renewable energy sources (RES) from the US and some developing countries around the globe. The key-note presenter at the discussion was Mr. Kumayl Khaleeli, VP Corporate Development and Strategy of “Suntrough Energy” - a California-based developer of solar thermal power plants in a range of developing countries in Africa, the Middle East, Asia, and Latin America.
- The Center for the Study of Democracy organised a round table on Bulgaria’s energy security in light of the experience of the new EU member states from Central Europe. The event took place on 28 April 2011.