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Bulgaria

Bulgaria in Comecon

The most important event in postwar Bulgarian international economic relations occurred in 1949 when it became a founding member of Comecon. Comecon was an attempt by the socialist economies to simplify the planning process by synchronizing the five-year plans of member countries and (more importantly), by achieving what Marxists called an international division of labor. Countries within Comecon would specialize in the products they made most efficiently and export the surplus. Products that a country could not produce efficiently would be available from one or more of its Comecon partners. This design was intended to eliminate some redundancies inherent in the Soviet economic model where each country produced goods of all categories. Although the concept achieved isolated successes such as Bulgarian forklift trucks, broad growth was blocked by the uniform socialist preoccupation with heavy industry and the lack of a single convertible currency. The currency issue in particular made intra-Comecon trade a cumbersome process requiring negotiation of annual bilateral trade agreements for all member nations.

In the 1980s, exports to the Soviet Union consisted primarily of machinery, electronic components, and agricultural goods. These included forklift trucks, electric engines, telephones, tobacco, fresh fruits and vegetables, and wine. Imports from the Soviet Union were mainly energy and raw materials, including oil, natural gas, iron ore, ferrous metals, and cotton. In 1988 Bulgaria still relied almost entirely on Soviet oil and natural gas. East Germany and Czechoslovakia were the next most important Comecon trading partners, accounting for 5.2 and 4.6 percent of exports, respectively, and 5.9 and 5.4 percent of imports, respectively. Exchanges of goods between Bulgaria and these countries emphasized both exports and imports of machinery and the export of agricultural products.

In the initial years of Bulgaria's Comecon membership, the country benefited from energy prices below world levels, especially for oil, in two ways. The cost of developing otherwise inefficient industries was lower, and reexport of crude and refined oil for hard currency bought Western technology to upgrade the industrial infrastructure. Comecon members paid for their imports through bilateral clearing agreements, with no exchange of hard currency. In the initial stages of Comecon, Bulgaria exported mainly food, the price of which was lower in Comecon than on the world market. Later, however, Bulgaria paid for imported Soviet raw materials largely with machinery that was priced higher than on the world market.

Beginning in 1974, Soviet energy exports were based on a floating five-year average of world prices that rarely matched market prices at a given time. Even when Comecon prices were above the world level, Bulgaria benefited from the lack of currency exchange in the Comecon system. But dependence on Comecon trade, especially Soviet energy exports, damaged Bulgaria tremendously when economic reform swept through the Soviet sphere in 1989 and 1990. Of Bulgarian exports, 62.5 percent still went to the Soviet Union in 1988, and 53.5 percent of imports came from that country. The new trade system established after reforms required trade accounts to be cleared in hard currency at current world prices as of January 1, 1991. (Bilateral protocols for this procedure had not been signed by that time, however; Bulgaria still owed Hungary 87 million transferable rubles in 1991.)

After the political reforms in Eastern Europe, the Soviet Union announced cutbacks in energy exports to Eastern Europe. This caused energy and raw materials shortages. In 1990 Bulgarian industry was forced to curtail production sharply; meanwhile, consumers endured severe shortages of gasoline as fuel prices doubled. A new set of export and import regulations adopted in mid-1991 removed import taxes from 200 types of raw materials and consumer goods in critically short supply. The same regulations set export price minimums to eliminate pricing below world market levels; export of crude oil, metals, grains, and textile raw materials was banned.

Data as of June 1992


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