BULGARIA: A COUNTRY IN TRANSITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00895R000200110002-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 22, 2016
• Document Release Date: January 30, 2012
• Sequence Number: 2
• Publication Date: March 1, 1984
• Content Type: REPORT

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Directorate of
Intelligence
Bulgaria:
A Country in Transition
An Intelligence Assessment
Seer-et
EUR 84-10041
March 1984
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Directorate of Secret
Intelligence
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Bulgaria:
A Country in Transition
An Intelligence Assessment
European Division, EURA,
This paper was prepared by with a
contribution by ~ of o e ffice of
European Analysis. It was coordinated with the
Directorate of Operations. Comments and queries are
welcome and may be directed to the Chief, East
Secret
EUR 84-10041
March 1984
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Bulgaria:
A Country in Transition I 25X1
Key Judgments Bulgaria is entering a period of political and economic transition that
Information available portends increasing strains in its traditionally close, subservient relation-
as of 15 February 1984 ship with the USSR. In particular, declining economic support from the
was used in this report.
USSR threatens to slow Bulgaria's economic growth and, ultimately, could
have more serious political consequences. The main irony is that party
leader Todor Zhivkov, once a totally dependent pro-Soviet sycophant,
clearly recognizes that he must increasingly chart his country's develop-
ment in terms of economic reforms and new openings to markets in the
West.
Bulgaria's pace of economic development-though impressive compared to
the rest of Eastern Europe-is already slowing and is further threatened by
Soviet efforts to reduce its "cost of empire." Moscow is:
? Pressuring Sofia to balance its sizable bilateral trade deficit.
? Demanding the better quality exports that Bulgaria otherwise would sell
for hard currency or consume domestically.
? Pressuring Sofia to increase its share of the defense burden.
To cope, Sofia is testing alternate strategies-including economic reforms
and gradually expanded ties with the West-that could diverge from
Soviet interests. The Zhivkov regime hopes that economic reforms, stress-
ing profitability and decentralization, combined with new technology from
the West, will allow Bulgaria to escape the pattern of economic stagnation
in Eastern Europe. To date, this new strategy has been restrained by
bureaucratic resistance, by a timidity about departing from Soviet econom-
ic and political preferences, and by a Western reticence flowing in part
from Bulgaria's poor international image.
Zhivkov is, nonetheless, making more policy decisions predicated on
Bulgaria's needs as opposed to those of the USSR or the Bloc. Sofia is al-
ready being somewhat more assertive in CEMA councils and showing less
enthusiasm about Soviet foreign policy initiatives that increase East-West
tensions. The political dynamics in Bulgaria suggest this trend toward
greater assertiveness will continue because:
? Zhivkov, now the master of his own party, seems to view the uncertainty
surrounding the unstable Soviet leadership as an opportunity to expand
Bulgaria's room for maneuver.
? His emphasis on Bulgarian nationalism to enhance his regime's domestic
prestige is likely to bring out latent resentment of Soviet tutelage.
? Gradual generational change in the Bulgarian leadership-currently
controlled by Zhivkov-is shifting the balance of power away from older,
pro-Soviet apparatchiks toward younger technocrats who advocate poli-
cies based more on Bulgaria's parochial interests.
iii Secret
EUR 84-10041
March 1984
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While we believe Bulgarian-Soviet interests will conflict more frequently,
major changes in the relationship are unlikely in the near term-say the
next one to three years. For a variety of economic and sociocultural
reasons, we doubt that Zhivkov will purposely antagonize Moscow, as does
Romania's more flamboyant Ceausescu. Rather, we think he will pursue a
Kadar-like approach, ostensibly remaining loyal to Moscow while pursuing
sometimes controversial policies that he perceives as necessary. We believe
the succession, when it comes, promises to accelerate the trend toward
more Bulgarian-centered policies.
In the longer term, we think Bulgaria's national interests will conflict with
Soviet demands more directly, and in time more serious fissures in the
relationship may develop. But the degree to which Bulgaria pursues its own
interests against Soviet priorities will be closely linked to its progress in
achieving some greater measure of economic autonomy.
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Key Judgments
On the Verge of Change
Relations With the Soviets: A Stimulus To Change
1
Diminishing Economic Returns
2
Economic Reform
6
Overtures to the West
3
Opportunities for the West?
8
The Less Likely Scenario
10
The Post-Zhikov Era
11
Past and Future Leadership Struggles
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Figure 1. The statue of Czar
Alexander II is a monument to
the close, historic Russian-
Bulgarian ties that predate the
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Bulgaria:
A Country in Transition
On the Verge of Change
Bulgaria today is an anomaly of political and econom-
ic stability in the Soviet empire. It has the only ruling
East European Communist party that has neither
rebelled against Soviet dominance nor experienced
serious challenges to its supremacy. The party, in-
stalled in 1944 by the occupying Soviet army, was
immediately able to capitalize on the defeatism felt by
a people who had been on the losing side of two world
wars. Moreover, Bulgarians harbored no deeply anti-
Russian sentiments because Czarist troops liberated
Bulgaria from the Ottoman Turks in 1878. The
regime, accordingly, has never had to cope with the
sort of nationalist-inspired, anti-Soviet attitudes that
are common elsewhere in Eastern Europe.
Nor has dissent been much stimulated by aspirations
for human rights, no doubt in large part because of
the efficiency with which the security service deals
with the occasional expressions of overt opposition.
Moreover, Bulgarians are by nature a tolerant people
with modest expectations, and centuries of oppression
by stronger occupying powers have taught them to
survive by avoiding confrontation. Finally, the regime
has been skillful at co-opting those institutions and
forces that have been competitive power centers else-
where in Eastern Europe-such as the church and the
intellectual community. On the economic front, Bul-
garia's cautious financial policies and Soviet support
have shielded Sofia from the debt crisis hitting East-
ern Europe and enabled the regime to improve living
standards; Bulgaria's growth rate (though still mod-
est) has been the highest in the area since 1980.0
After repeated challenges in his first decade of power,
Todor Zhivkov-Bulgaria's 72-year-old leader-is
now considered "an absolute monarch,"
While this is something
exaggeration, Zhivkov has over the years rid the
leadership of rivals in his own generation and replaced
them largely with younger men known for both their
technical competence and their loyalty to him. With
his power consolidated and his own team in place,
Figure 2. After three decades
as Bulgaria's party leader, 72-
year-old Todor Zhivkov enjoys
Zhivkov has been in a position in the last several years
to lead Bulgaria in new and controversial directions
(see appendix).
Relations With the Soviets: A Stimulus To Change
Changes in economic and political relations with
Moscow over the last several years appear to be
encouraging Zhivkov to devise and implement a more
"Bulgarian" way in his domestic policies. In the
economic field, Moscow's own resource constraints
have encouraged the USSR to decrease its support to
Bulgaria along with the rest of Eastern Europe. On
the political side, subtle signs of conflicting interests,
first evident at the end of the Brezhnev era, became
more pronounced after Yuriy Andropov came to
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Diminishing Economic Returns. Soviet gratitude that
Zhivkov had maintained Bulgaria as one of their most
dependable allies paid Sofia substantial economic
dividends. Even now, trade with the Soviet Union
accounts for 55 percent of Bulgaria's total trade
turnover, the largest share in Eastern Europe. In
particular, the Soviet Union supplies 70 percent of
Bulgarian energy consumption, 100 percent of its iron
ore imports, and 60 percent of its imported timber (see
figure 3). Persistent trade deficits with Moscow, cou-
pled with CEMA policies that until recently set prices
for Soviet energy and raw materials at lower-than-
world-market prices, have provided sizable subsidies.
According to one recent Western estimate, implicit
Soviet trade subsidies totaled $1-2 billion a year over
much of the past decade. These were the largest
subsidies per capita to any East European country.F_
for increases were denied.
Moreover, recently released Bulgarian data show that
Bulgaria's terms of trade with CEMA-that is, most-
ly with the USSR-worsened by a total of 18 percent
in 1981 and 1982. Rising prices for Soviet oil proba-
bly were the dominant factor. According to a source
of the US Embassy in Sofia, Moscow also rejected a
Bulgarian request last year for a 1.2-billion-ruble,
interest-free line of credit. According to the source,
the Soviets had routinely approved similar types of
Bulgarian requests-though smaller-since 1976.
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In addition, imports of Soviet oil in excess of Bulgar-
ia's domestic needs have allowed Sofia to reexport oil
for hard currency. In 1981 and 1982 the reexport of
Soviet fuel-almost exclusively oil-accounted for
one-third of Bulgaria's hard currency exports. Zhiv-
kov frequently justified Bulgaria's subservience to
Moscow by asserting that Bulgaria gained more from
the relationship than it gave (see inset, page 4).
In the past several years, however, Bulgaria, along
with most other East European states, has begun to
receive less Soviet support-a trend that we believe
will continue because of the Soviet Union's other
economic concerns.
Although Sofia has not officially acknowledged a
reduction in Soviet oil deliveries, trade data for 1982
indicated some cutbacks in Soviet supplies to Bulgar-
ia. Some Embassy sources say that
Moscow's anger over Bulgarian reexports of Soviet oil
resulted in a temporary cut in oil shipments.
khe shipments have since been
restored to previous levels but that Bulgarian requests
Thus far, the reduced Soviet support has not had a
major impact on the lives of most Bulgarians, but we
believe that the impact on the standard of living may
soon be felt more directly. Embassy sources have
reported for some time that the USSR is pressing
Bulgaria to balance its 1984 trade; last September, for
example, Soviet officials reportedly demanded in-
creased deliveries of fruits and vegetables, despite
drought-diminished harvests in Bulgaria
Moscow
rejected low-quality food shipments from Bulgaria,
and others claim that the Soviets have demanded
more of the top-quality exports-largely foodstuffs-
which Bulgaria usually consumes itself or sells on
hard currency markets. Moreover, according to a US
Embassy source, the USSR has told Bulgaria it will
make significant reductions in oil deliveries after the
current five-year commitment expires next year.'=
'These demands by the Soviets may be the chief reason why
Bulgaria is reportedly becoming more vocal in demandin higher
prices for agricultural exports within CEMA.~
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Figure 3
Bulgarian Economic Dependency on the Soviet Union
Eastern Europe: Energy
Imports From the
Soviet Union as a Share of
Total Energy Consumption,
1970 and 1982
Bulgaria
Czechoslovakia
East Germany
Hungary
Poland
Romania
Implicit Trade Subsidies
per Capita, 1978`
^ 1970
^ 1982
Eastern Developed Others
Europe West
Bulgaria
Czechoslovakia
East Germany
Hungary
Poland
Romania
a Includes other Communist countries and LDCs.
b Includes Czechoslovakia, East Germany, Hungary, Poland and Romania.
'These figures are based on a 1983 study by Michael Marrese and
Jan Vanous, Soviet Subsidization of Trade with Eastern Europe.
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Bulgaria's Strategic Role in the Soviet Camp
The Zhivkov regime has traditionally been a reliable
supporter of the Kremlin. It has faithfully backed
Soviet foreign policy initiatives, and it constitutes the
political and military anchor of Soviet influence in
the Balkans and on the Warsaw Pact's southern
flank. The Soviets no doubt particularly value such a
reliable ally because all other Communist regimes in
the region are either independent-Yugoslavia and
Albania-or obstructive-Romania. The Soviet
Union has no troops stationed in the region to protect
Bulgaria's 165,000-man army by itself poses no
threat to other states in the region. But the country's
location makes it a potential springboard for Soviet
military power. Major Warsaw Pact exercises-in-
cluding "Shield 1982 "with 60,000 troops, the largest
exercise hosted by Bulgaria-emphasize the potential
for the USSR and its allies to open quickly a
southern front in Bulgaria.
Short of a military role, Bulgaria also serves as a
useful surrogate for Soviet pressures and blandish-
ments in the region. Sofia, for example, has been a
center of international arms smuggling, and the Yu-
goslavs continue to read the ebb and flow of Sofia's
Political Relations Cool. As the USSR's economic
support has eased, signs have appeared-mostly in the
form of private comments by Bulgarian officials to
Westerners and in very subtle tones in the press-of
growing friction in Soviet-Bulgarian political
relations:
? The earliest noted problems stem from Soviet reser-
vations about Zhivkov's increasing identification
with Bulgarian nationalistic themes to enhance his
regime's image at om and-abroad. In the mid-
1970s Zhivkov appointed and staunchly supported
his Western-educated daughter Lyudmila Zhivkova
as the key figure in a highly popular campaign for
assertiveness on the Macedonian issue as a barometer
of Soviet policy in the region. In the past few years,
Sofia has taken a soft tack by improving relations
with Greece and Turkey and joining in some regional
development talks. In 1981 Zhivkov sponsored a
renewed call for a Balkan Nuclear Free Zone. In view
of US strategic concerns in Greece and Turkey, the
latter proposal strikes hard at US interests, particu-
larly as the Papandreau government in Athens is
receptive to Zhivkov's plan.
Bulgaria also assists the Soviet Union in internation-
al goals beyond the Balkans. Its intelligence support
and military sales in the Third World-most notably
to Iraq, Libya, and Nicaragua-underscore its role
as a Soviet proxy. Bulgaria also reportedly provides
Moscow considerable assistance in the legal and
illegal acquisition of high technology.
Sofia recently purchased a 50-
percent share in a US business computer company
which will give it legal access to controlled technol-
ogy, as well as to training on, and the maintenance of,
the equipment
more relaxed, more nationalistic cultural policies.
The USSR disapproved of Zhivkova's unorthodox
attitudes, especially her openness to Western influ-
ences. Her sudden death in 1981 had a devastating
effect on Zhivkov personally, and Soviet coolness
toward her before and after her death is no doubt a
factor in Zhivkov's attitudes toward Moscow. His
subsequent actions to preserve her legacy have
proved to be genuinely popular, probably deepening
misgivings in Moscow.
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Figure 4. The impressive Lyud-
mila Zhivkova Cultural Palace
in Spa-named for Zhivkov's
late daughter-is a symbol of
her often unorthodox cultural
policies and support for Bulgar-
Zhivkov
took offense at Moscow s criticisms Sofia's highly
nationalistic celebrations of the 1,300th anniversary
of the first Bulgarian state-his daughter's most
expansive project. In a rare public reference to the
issue during a speech in Moscow in November 1982,
Zhivkov claimed defensively, "We are not national-
ist megalomaniacs, not ungrateful people." The
issue is still very much alive, judging from Zhivkov's
continued emphasis on Bulgarian achievements and
the fact that the Soviet representative at the Bulgar-
ian Cultural Congress last May notably failed to
pay homage to Zhivkov's late daughter-a conspic-
uous omission compared to the lavish accolades
from Bulgarian officials.
During the brief Andropov era, a chill developed
between Zhivkov and the Soviet leader. And Zhiv-
kov's uncharacteristically self-assertive behavior sug-
gests to us that he is taking advantage of the greater
flexibility arising from the uncertainty surrounding
the aging Soviet leadership:
? Zhivkov's first talks with Andropov in November
1982 were given lesser billing by the Soviet press
than those of the other East Europeans on the same
day.
? Zhivkov played down the importance of Andropov's
personal power in talks with the US Ambassador
last August. He also implied that Western allega-
tions of Bulgarian complicity in the papal assassina-
tion attempt had complicated his relations with the
new Soviet leader.
? Sofia also downplayed-compared with Brezhnev's
passing-its ceremonial expression of grief when
Andropov died.
With Chernenko, an old ally, now in charge in
Moscow, Zhivkov may hope to revive some of the
special relationship he, as dean of the Warsaw Pact
leaders, once enjoyed in the Kremlin. But, given all
the potential sources of friction, this will not be easy.
Even differences over important defense issues have
caused strains. the
USSR criticized Bulgaria's performance in the War-
saw Pact "Shield 82" exercise in the fall of 1982 and
pressed a reluctant Zhivkov to increase Bulgarian
defense spending. More recently,
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Figure 5. Then Soviet leader Brezhnev and Kon-
stantin Chernenko with Zhivkov at the Crimea in
1981. Zhivkov probably hopes that, with Cher-
nenko as the new Soviet General Secretary, Bul-
garia will regain the preferential economic treat-
Sofia has argued against Soviet counter-
deployments of nuclear missiles in Bulgaria. We think
it is unlikely that Zhivkov could refuse Soviet missiles
if pressed by Moscow, but he may well carp in private
about the costs of stationing Soviet nuclear missile
units, the introduction of Soviet support units, and the
effect on Sofia's efforts to push a Balkan nuclear free
zone. There have also been some subtle indications of
Bulgarian reticence in supporting Soviet foreign poli-
cy moves that contribute to East-West tension, such
as Moscow's handling of the Korean airliner incident
and its decision to break off the INF talks in Geneva.
New Directions
No doubt recognizing that Bulgaria must look more
to its own devices as its relationship with the Soviet
Union slowly changes, Zhivkov has:
? Moved forward with an economic reform program,
despite some domestic opposition and practical
problems in application.
? Made political overtures for increased trade with
the West, including the United States, despite
heightened US-Soviet tensions.
These experiments, although limited in scope, are
noteworthy for a regime that in the past has never
strayed far from Soviet practice and is still over-
whelmingly dependent on the USSR.
Economic Reform. Sofia's four-year-old economic re-
form is its second such major program; the first fell
victim to conservative opposition and Soviet nervous-
ness following the Prague Spring of 1968. According
to Bulgarian officials, the main goals of the New
Economic Mechanism (NEM) are gradually to:
? Increase reliance on profits as performance indica-
tors, limit subsidies to unprofitable firms, and give
managers more autonomy.
? Encourage expansion of the private sector in agri-
culture and services and the use of incentives to
increase productivity.
? Tie prices more to world prices.
The reforms are not nearly as far reaching as those in
Hungary. To date, the NEM has not introduced any
restructuring of the economy, turned to market forces
as a means of determining prices, or promoted private
enterprise outside of agriculture.
The NEM has apparently met some success in agri-
culture but has run into obstacles since being expand-
ed to the industrial sector in 1982:
? Official encouragement of the private sector in
agriculture may be partially responsible for the
growth of agricultural production in 1981-82. De-
spite severe droughts in 1980 and 1983, the agricul-
tural sector has performed well enough to enable
Sofia to improve domestic food supplies and main-
tain exports.
? In the industrial sector, judging by the most com-
mon complaints, bureaucratic inertia and selective
application of reform guidelines stalled the reforms
and forced a reexamination of tactics in mid-1983.
At that time, Zhivkov told the US Ambassador that
"profits are under house arrest" because of the
unspecified disruptions they caused in industry.
Party Secretary and Politburo member Ognyan
Doynov told the Japanese Ambassador that enter-
prise managers were applying only those aspects of
the NEM they saw as beneficial-presumably pur-
suing profits at the expense of investments and
improving the quality of production. Moreover, in
our view, the enterprise managers do not yet have
adequate experience in dealing with their new re-
sponsibilities.
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Eastern Europe: Domestic Economic Indicators
4.0
-3.1
3.0
2.8
1.0
3.5
2.4
2.6
3.0
3.0
9.3
-16.9
4.9
4.4
-2.0
7.8
1.1
3.4
1.1
2.0
-2.4
19.2
9.0
-5.3
5.0
Industry
1.6
1.9
1.2
0.5
1.5
Agriculture
-2.0
5.7
-12.0
1.1
1.5
Consumption
-0.2
0.1
1.4
1.3
1.6
Investment
1.8
1.4
-4.6
3.2
0.0
East Germany
Agriculture
-3.0
6.1
-0.7
4.9
-3.0
Consumption
1.2
1.8
1.8
0.9
-0.5
Investment
1.0
-5.8
-5.6
-2.6
-5.0
Poland
GNP
-1.9
-2.4
-5.4
-4.0
2.0
Industry
-1.0
-1.5
-12.7
-4.0
3.0
Agriculture
-5.6
-8.5
4.3
-3.5
2.0
Consumption
-1.5
1.0
-3.6
-9.3
1.0
Investment
-7.9
-12.3
-22.7
-19.0
5.0
GNP
4.4
-1.6
0.6
2.7
-0.5
Industry
3.2
3.2
-0.2
-0.9
2.0
Agriculture
2.5
-11.0
0.3
7.8
-5.0
Consumption
5.6
2.4
2.1
-0.4
-2.0
Investment
4.1
3.0
-7.1
-2.5
1.0
a Preliminary estimates.
Source: CIA estimates.
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there are widespread
debates in the leadership over how far to go with the
next phase of the reforms. According to one US
Embassy source, one school of thought argues that the
reforms should be rolled back, while another is urging
a slowdown until the Soviet leadership clarifies its
attitudes toward economic reform in the USSR and
Eastern Europe. A third group believes the reforms
should continue but is divided itself over how much
decentralization can be allowed without endangering
Overtures to the West. We think that a search for a
new basis for Bulgaria's economic development, prob-
ably with the Hungarian example in mind, underlies
Sofia's attempts to pursue increased trade ties in the
West. The same process has increased the influence of
Zhivkov's younger and more pragmatic economic
advisers, who have long been advocating a more active
pursuit of high technology and improved management
techniques available only from the West. Zhivkov, in
any event, has undertaken initiatives which involve
both risk and potential embarrassment in order to
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Judging by Zhivkov's comments and announced deci-
sions, he is still solidly behind the group that is
pushing reform, despite the temporary reevaluation of
the NEM he introduced last year:
? In a major speech last May, Zhivkov ordered an
expansion of the reforms and called for a party
conference in the spring of 1984 to find new ways to
correct the "shameful" decline in the quality of
Bulgarian export goods.
? In September Zhivkov purged Aleksandur Lilov, a
Politburo member and party secretary for ideology,
who Western observers in Sofia believe has been a
leading critic of the reforms.
? Deputy Prime Minister Lukanov told a US Con-
gressional delegation in December that the NEM
remains official policy and that further economic
growth must involve structural changes to help the
economy withstand the strains.
? In January Zhivkov announced a number of party
and government changes which seem designed to
further the implementation of reforms.
We suspect that behind-the-scenes debate on the
reforms is building momentum and that Zhivkov
himself may not have decided how far he can allow
them to go. According to Embassy sources, Prime
Minister Filipov has already made several private
speeches suggesting that new steps are being consid-
ered. But we expect the results of the midcourse
correction will only be clarified after the party confer-
reverse the country's economic isolation from the
West and its excessive dependence on the USSR.
Bulgaria now has few trade links with the West.' Its
inefficient industry, lack of raw materials, and small
domestic market-only 9 million people-provide
limited opportunities for Western trading partners.
Worse, the country's unsavory reputation-for divert-
ing Western high technology to the USSR and for
supporting Third World insurgencies and internation-
al smuggling-poses political obstacles to major trade
concessions by the West.' Sofia thus has neither a
special trade agreement with the EC nor MFN status.
Despite few returns so far, Zhivkov is persevering ,
with a number of economic innovations to improve
Bulgaria's access to Western technology and its at-
tractiveness to Western businessmen.
? In 1980 Zhivkov created the Bulgarian Industrial
Economic Association (BIEA) to develop more so-
phisticated approaches to the West and implement
economic reforms.
? The same year Sofia passed a new joint investment
law designed to attract Western investment and
know-how.
' Bulgaria's principal nonsocialist partners-Libya, Iraq, and
Iran-have proved unreliable politically and economically.P
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Bulgaria
has invested in over 50 firms in Western Europe and
in a US computer firm in order to acquire manage-
rial and technical expertise.
? For several years, Zhivkov has centered much atten-
tion on Japan and,
promised favorable treatment if Japanese firms
supply new technology for Bulgaria's metallurgical,
communications, and food-processing industries.
? In hopes of improving its hard currency holdings,
Sofia has upgraded its tourist resorts and undertak-
en expensive advertising campaigns in Western Eu-
rope to promote Bulgarian tourism.
Zhivkov also has begun to show an awareness that
improved trade with the West depends on better
political relations. he
decided sometime last year to ado t a more concilia-
tory approach to the West. he
sent an official to Budapest last summer to learn how
Hungary accommodates US sensitivities. Subsequent-
ly, numerous Bulgarian officials have emphasized to
US officials a desire to improve bilateral ties, and
Zhivkov has directed several positive gestures, among
them:
? Granting an unprecedented four-hour private meet-
ing with the US Ambassador last August, in the
course of which he instructed Foreign Minister
Mladenov to resolve some contentious bilateral
issues.
Opportunities for the West?
Western observers are increasingly speculating that
the new set of policy guidelines on economic reform
and relations with the West means that Zhivkov is
willing and able to take a more independent course
from Moscow. Bulgarian officials on a number of
occasions have tried to reinforce this impression with
their Western contacts:
? A Bulgarian official recently told a US Embassy
officer that Sofia's close identification with Moscow
will change over the next two to three years as
Bulgaria gradually weans itself away.
? In a meeting with a US Congressional delegation in
December, Zhivkov reiterated his desire to improve
bilateral ties and asserted that, beneath the socialist
surface, "we are capitalists."
Bulgarians may paint an overly independent picture
for Westerners, but even Sofia's most suspicious
rivals, the Yugoslavs, may be acknowledging a
change. Recently a Yugoslav foreign ministry expert
on Balkan affairs, for example, told a US Embassy
official that Belgrade would welcome improved US-
Bulgarian ties, especially if they could help reduce the
Kremlin's influence in the Balkans.
We believe, however, the continuing Bulgarian eco-
nomic dependence on the Soviets will limit Zhivkov's
ability to maneuver. He has neither the ability, nor
the desire, to risk a major shift in his relationship with
the USSR. Moreover, we doubt that he is prepared to
halt traditional Bulgarian activities such as COCOM
violations, proxy actions in the Third World, and
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? Halting the jamming of VOA broadcasts last
September.
? Muting the protests over the arrest of a Bulgarian
spy in New York in September.
? Favorably resolving several divided-family cases
and a previously rejected USIA theater exhibit.
These gestures are noteworthy because they coincided
with the worsening atmosphere in East-West relations
and Soviet pressure on Eastern Europe to reduce its
ties with the West.
support for arms smugglers.
That said, we do see some opportunities for a gradual
increase of Western influence in Bulgaria. We believe
that Bulgaria's determined and potentially risky pur-
suit of expanded ties with the West reflects a growing
realization that there are limits to what Moscow can
do and that Bulgaria must look to the West if it hopes
to develop further. Moreover, Sofia's ability to assert
its own interests against Soviet priorities will depend
on achieving a greater measure of economic autono-
my. If the incipient discord in Soviet-Bulgarian rela-
tions continues, we believe there will be greater
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opportunities for some expansion of Western influ-
ence. The younger pragmatists probably are even now
looking for some demonstrable success in cultural and
trade openings to the West, partly to strengthen their
position vis-a-vis the hardliners before Zhivkov leaves
the scene. We think that this group in the longer term
might even find it worthwhile to alter some of Sofia's
objectionable behavior-including perhaps its toler-
ance of international smuggling-so as to increase
economic opportunities in the West.
Outlook
We do not anticipate a dramatic change in Bulgaria's
overall political and economic orientation, but emerg-
ing new directions promise more ethnocentric atti-
tudes and a desire for greater flexibility on the part of
many Bulgarian leaders. Conflicts of interest between
Moscow and Sofia, principally over economic-cum-
defense issues, will present challenges for the Bulgari-
an regime and will almost certainly have a corrosive
effect on bilateral political understandings. F_~
With Bulgaria's economy still so heavily tied to
CEMA and still dependent on deliveries of Soviet
energy and raw materials, Zhivkov is unlikely to
undertake autonomous foreign policies along Roma-
nian lines. Moreover, his characteristic prudence in
dealing with the Kremlin suggests he is unlikely to
borrow trouble by gratuitously antagonizing Moscow.
Because Bulgaria is Moscow's only reliable ally in the
Balkans, Zhivkov realizes that the Kremlin would use
its political, economic, and even military leverage to
preserve its position in Sofia and the existing balance
of power in the region.
We do, however, expect that Zhivkov will increasingly
attempt a Kadar-like approach by expanding his
autonomy in domestic and international affairs. He is
likely to move cautiously, at each step testing the
limits of what he judges to be Soviet tolerance. In
particular, as Soviet economic support continues to
decline, we expect that Zhivkov and his pragmatic
advisers will pursue economic innovations designed
gradually to lessen Bulgaria's excessive reliance on
the USSR. Over time the effectiveness of economic
reforms and the ease with which alternate markets
can be developed in the West will become more
important factors in Bulgaria's economic development
and its ability to achieve greater political autonomy.
In addition, Zhivkov is likely to rely increasingly on
appeals to Bulgarian nationalism as a legitimizing
force for his regime. In aggregate, these dynamics
suggest that Bulgarian and Soviet interests will not
coincide as easily as they have in the past.
The Less Likely Scenario. If there were more drastic
cuts in Soviet support than we now anticipate, the
relationship with Moscow could deteriorate sharply.
The regime would be hard pressed to find substitutes
for Soviet deliveries except in Western markets for
scarce hard currency. Sofia would be forced to make
tough choices about allocating scarce resources, which
could lead to a decline in domestic living standards.
Such a blow to the economy could have important
political consequences, inviting clashes between Bul-
garian party factions over domestic and foreign priori-
ties. Under these circumstances, Zhivkov could be-
come more aggressive in defending Bulgaria's
national interests-especially in bilateral economic
negotiations and in CEMA.
If such drastic consequences were in prospect, we
would first expect to see some warning indicators,
including:
? A significant drop in Bulgarian living standards,
perceived to be the result of cuts in Soviet economic
support.
? Reports of spreading resentment in the leadership
toward Moscow.
? Removal of the most pro-Soviet elements in the
Bulgarian leadership, such as Prime Minister
Filipov.
? A more active Bulgarian role in the Balkans inde-
pendent of, and perhaps in conflict with, Soviet
interests in the region.
? Stepped-up willingness to challenge Soviet desidera-
ta for CEMA and the Warsaw Pact that conflict
with Bulgarian national interests.
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Should this less likely scenario evolve, Moscow could
take steps early to preempt a significant weakening of
its influence in Bulgaria. It could, for example, re-
sume higher levels of economic support or it could
reverse the trend through coercive measures such as:
? Using its influence in the Bulgarian leadership and
security apparatus to attempt to strengthen the pro-
Soviet elements.
? Introducing some Soviet troops in Bulgaria, perhaps
in conjunction with Warsaw Pact measures to
counter INF deployments or NATO exercises.
? Moving against Zhivkov and trying to replace him
with a Bulgarian more loyal to Moscow.
The Post-Zhivkov Eras The succession, when it
comes, may well mark a major watershed for Bulgar-
ia. Even if Zhivkov does designate an heir-a rare
move for a Communist leader-his departure after
over 30 years at the helm will leave a power vacuum
that will almost certainly invite factional struggles.
Divisions between ideologues and technocrats over
controversial issues-such as the appropriate close-
ness of Sofia's relations with Moscow-promise to
preoccupy and divide the immediate post-Zhivkov
leadership.
Over the longer term Bulgarian leaders of the next
generation are likely to be more aware than their
predecessors of the limits of Soviet economic support
and less appreciative of what support has meant to
Bulgaria in the past. We believe that their gradual
but persistent determination to find alternatives to the
Soviet economic model and to expand ties with the
West will inevitably conflict with Soviet objectives
with increasing directness
In the longer term, therefore, we believe there will be
increasing strains in Bulgarian-Soviet relations. From
a broader perspective, ensuing frictions will under-
score Moscow's difficulty in maintaining its East
European empire. The growing willingness of even
traditionally subservient East European regimes to
pursue national interests in conflict with the Soviets
portends more serious challenges to cohesion in the
Warsaw Pact.
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Appendix
Past and Future
Leadership Struggles
Todor Zhivkov is the unchallenged leader of his party
and country; after three decades in power, he has
ruled longer than any other leader of a Warsaw Pact
state. His rise to total dominance was, however,
protracted and sometimes unsure. Because no one in
the leadership is positioned to inherit many of Zhiv-
kov's power bases, the eventual succession promises to
see a return to the intense factionalism that character-
. ized the Bulgarian party in the past.
Romania. Soviet sources discovered the conspiracy 25X1
and informed Zhivkov. Although the plot failed, it
apparently brought home to Zhivkov the dangers of
ignoring Bulgarian nationalist aspirations.
Zhivkov subsequently has faced no serious challenge,
but his dominance of the party was not complete until
the ouster in 1977 of Boris Velchev, who was by all
reports a staunch hardliner and a rallying point for
opponents of Zhivkov's programs. In the late 1970s,
A Troubled Career
Zhivkov's first 15 years in power were largely a
struggle to survive. Zhivkov came to the party leader-
ship not in his own right, but as a consequence of the
party's perceived need to copy Soviet practice. When,
following Stalin's death, then party leader and Prime
Minister Vulko Chervenkov came under pressure to
divest himself of his multiple offices, he ceded his
party post in 1954 to Zhivkov, a little-known protege.
The already badly divided Bulgarian party became
even more so. In the ensuing competition, Zhivkov
compensated for his lack of an independent domestic
power base by portraying himself as Moscow's man in
Sofia. With a bold stroke, Zhivkov in 1956 denounced
Chervenkov as a Stalinist and demoted him to Deputy
Prime Minister. Chervenkov's power waned but it
took nearly six years for Zhivkov to overcome Cher-
venkov's supporters, remove him from the Politburo,
and finally ease him out of the party. At the same
time, Zhivkov removed several other rivals, but only
after a quick trip to Moscow to consolidate Kremlin
support.
Zhivkov emerged from this phase of his struggle still
not the absolute master of Bulgaria. Factionalism
continued, and there was even an unsuccessful coup
attempt by party and military leaders in 1965. The
conspirators, members of the same World War II
partisan group, disliked Zhivkov's servility to the
Soviets and probably aspired to an autonomous course
similar to those by then followed by Yugoslavia and
Zhivkov for the first time could be confident in his
power base. He has since sought to refurbish his
popular image by stressing Bulgarian nationalism in
cultural matters, by rejuvenating his aging and ideo-
logically rigid regime, and by entrusting younger
advisers to undertake an economic reform program.
The Presuccession Lineup. We do not believe any of
Zhivkov's present subordinates would dare challenge
him at this time. At 72 years of age, he is reasonably
f
eventual departure
rom the scene will doubtless leave
a power vacuum. There already has been some ma-
neuvering between pro-Soviet hardliners and younger
reformers over such issues as cultural and economic
policy, and these debates are likely to sharpen as
leaders try to strengthen their position for the eventu-
al transition
Politburo member and Prime Minister Georgi "Gri-
sha" Filipov (64) is, we believe, the dominant force
among the pro-Soviet loyalists. One of the architects
of Bulgaria's economic reform program, he nonethe-
less argues against its more far-reaching aspects.
Filipov's major liability is that he has image problems.
Born and raised in the USSR, he still speaks with a
Russian accent and is widely perceived to be abrasive
and excessively pro-Soviet. In recent months, he has
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tried to overcome this liability by identifying himself
in his public speeches with Bulgarian nationalist
themes and by advocating improved living standards.
Judging by the frequently negative comments by
Bulgarian officials to Western officials, however, he
still has a long way to go.
The younger technocrats want Bulgaria to open up
more to the world and to modernize.
they are better educated and more
nationalistic in their private attitudes and, unlike the
old guard, are increasing in numbers and influence
within the leadership. Among them are Todor Boz-
hinov, a 53-year-old Politburo member and Deputy
Premier, who is one of Zhivkov's top economic advis-
ers. He helped draft the economic reform and is
reportedly popular even among older party leaders.
Politburo member and Party Secretary Ognyan
Doynov, 48, and candidate Politburo member and
Deputy Premier Andrey Lukanov, 45, are also power-
ful and influential members of this camp. The promo-
tion of Chudomir Aleksandrov, 47, to the Politburo
and as First Deputy Prime Minister in January 1984
further strengthened this group. All have impressed
Western contacts as capable, pragmatic leaders who
are likely to play influential roles well into the post-
Zhivkov era. The chances that the successor will come
from among this group will increase if economic
reforms register demonstrable results over the next
several years.
Between these rival factions stands Politburo member
and Party Secretary Milko Balev who, at 63, may be a
compromise candidate to balance the extremes in the
party. His main strength is a close relationship with
Zhivkov because of his years of loyal service as
Zhivkov's chief of staff. Over the last year Balev has
assumed a much more prominent role in the leader-
ship, judging by his active role in foreign and domes-
tic affairs
Balev is recognized for his ability to influence party
policy and personnel decisions because he controls the
people and information Zhivkov sees.
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Balev is currently the most likely candi-
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The Soviet Factor. Moscow will play an important-
though not necessarily decisive-role in influencing
the succession process. Filipov is probably the Krem-
lin's preferred choice, but Moscow may fear that
backing an unpopular candidate would provoke fac-
tionalism and resentment from the more nationalist
elements in the Bulgarian leadership.
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