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Melrose Finds New Natural Gas Deposits in Bulgaria
Bulgaria's Economy Minister Traikov (right) together with Melrose CEO David Archer (middle) and UK Ambassador Steve Williams. Photo by BGNES

AES Corp., the U.S. power producer with operations in more than two dozen countries, is keen on constructing in Bulgaria a USD 400 M solar power plant with a capacity of 80 megawatts, the American ambassador in Sofia announced.

“AES has been waiting for six months to go ahead with its investment, which costs nothing to the Bulgarian government,” US Ambassador to Bulgaria, James Warlick, said a joint press conference with representatives of AES Solar Energy.

The ambassador pointed out that Bulgaria has repeatedly said it needs energy diversification and foreign investments. He made it clear the American company won't hesitate to approach Romania should its bid to enter the Bulgarian market continue to be hampered.

Bulgaria is undergoing a boom in the renewable energy sector, but experts have warned the government it could actually end up doing more harm than good for the environment.

The current boom originates in a European Union-wide agreement under which Bulgaria has said 16 percent of electricity consumption will come from renewable energy sources by 2020 compared with under eight percent now.

AES Corp., is the second American company, which voiced plans for investments in Bulgaria and was personally presented by the US envoy here for the last two weeks.

In the middle of July Ambassador Warlick gave an official presentation of the American company Chevron, which has expressed interest in drilling for shale gas in the country.

Chevron Corp. has applied for a permit to explore for natural gas in shale deposits in northeastern Bulgaria near the Romanian border.

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Romanian companies have announced their intentions of moving their businesses to Bulgaria due to the tax policies in Bucharest, the Romanian “Ziarull Financiar” reports.

“The new measures, taken on a daily basis by the government, do not surprise me. I want to move Interagro's headquarters to Bulgaria in September. We will translate all documents in Bulgarian by then and we will look for a new building. I would rather pay the 10% flat tax and all the other taxes to the Bulgarian state and pay only land and property taxes here,” said Ioan Niculae, owner of "Interagro", the third biggest Romanian corporation.

Niculae has also expressed his frustration with the approach of the Romanian secret services towards the business.

“I do not want to be under surveillance day and night only because I am a Romanian entrepreneur,' he said.

Interagro has ended 2009 with EUR 315 M in turnover, which is a drop by 70% in comparison to 2008 when the company announced EUR 538 M in turnover.

The company has also declared EUR 13,7 M losses after announcing EUR 16,7 M profit in 2008.

According to “Ziarull Financiar”, managers of local subsidiaries of foreign companies are also disappointed.

“If the government continues to act in such a chaotic and amateur manner, it will lose my trust in the Romanian economy's stability,” said Cristian Cornea, general manager of the local subsidiary of the Polish group “Can-Pack”, which owns an aluminum packaging plant in Bucharest with a EUR 40 M turnover.

Similar concerns have been expressed by Alin Ursu, director of “Angelli Spumante & Aperitive”, soft drinks producer with a EUR 14 M turnover for 2009.

“We are in the hands of the politicians. What has been done for us so far is catastrophic,” Ursu said, pointing out that the increase of the VAT has led to a 10% drop in the number of trade holdings.

He has also noted that the increase of the excise had a negative effect on the sales as well.

Florin Pogonaru, President of the Association of Businessmen in Romania (AOAR), has stated that the basic conditions for a good business field are stability and predictability.

“Our Bulgarian neighbors have reached this. Their taxes do not change and the investors can see that,” Pogonaru said.

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Spain's energy group Electra Holding announced it has joined forces with Madrid-based construction firm Grupo Ortiz to work on infrastructure projects in Bulgaria and other countries in Eastern Europe.

The construction company will hold a majority stake in the newly formed joint venture company, which is called Ortiz Electra and plans to run in tenders for the construction of railways and purifying stations.

In April energy holding Electra announced it plans to build a 100 MW wind power park in the central part of Bulgaria and has already bought 5000 decares of land.

Electra started its activities in Bulgaria at the end of 2009 and said it had earmarked a total EUR 650 M for the acquisition and development of renewable energy projects in the country.

The investment is to be made over the next four years.

Electra operates wind parks with a total capacity of 480 MW in southern Bulgaria, two units for electricity production from biomass with a total capacity of 19 MW and a factory for biofuel with a capacity of 30,000 tons per year.

Grupo Ortiz provides construction services in major infrastructure projects in road, railway and air transport, as well as in industrial and business park projects.

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Lufthansa Technik Sofia, a joint venture between Germany’s Lufthansa Technik and the Bulgarian Aviation Group, announced it will invest in the construction of new facilities for aircraft overhaul and maintenance near Sofia Airport.

The company, which has served so far 40 planes of more than 20 airlines in Europe, the Middle East and Northern Africa, said it has been flooded by orders and will accept no more by the end of 2011.

Another 35 aircraft will be serviced over the next 17 months.

The maintenance, repair, and overhaul complex located at the airport of the Bulgarian capital Sofia was opened in October 2008.

Together with the Bulgarian Aviation Group, which owns 20% stake in the enterprise, Lufthansa Technik has invested more than BGN 50 M in the modernization of the maintenance facility and the training of the workers.

All types of planes of the series Airbus A320 and Boeing 737 are serviced in the repair complex, which has a total area of 6 000 square meters and allows the simultaneous servicing of two planes.

Lufthansa Technik has four other similar facilities Schoenefeld Maintenance Centre in Berlin, Lufthansa Technik Malta, Shannon Airspace in Ireland, and Lufthansa Technik Budapest.

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The business climate in Bulgaria is showing some signs of recovery in July with an increase of 1,4 points compared to June, according to the latest figures from the National Statistical Institute (NSI).

The industrial business climate index growth of 2.3 point in July was mainly due to improved assessment of industrial managers about the enterprises' current state and moderate optimism regarding upcoming months.

The most serious problem hampering the sector continues to be the uncertain economic environment, followed by lower local and international demand and financial problems.

The majority of the managers expect that sales prices will maintain their current levels and export will increase in the next 3 months.

The construction business climate index is down by nearly 1 point compared with June; the reason is more pessimistic estimates of the current state of their companies and the decreased construction activity in July.

In July, work orders in the sector went up, while the number of clients who fail to pay on time is slightly down, according to the NSI survey.

Managers described the greatest difficulties in the construction industry as financial problems, the uncertain economic environment and low demand. They expect less activity in the next six months and more layoffs.

In July, those who forecast price stability continue to outnumber the optimists in the construction sector.

In the retail industry, the July business climate index is down by 0.5 points with managers saying the state of their companies is improving, but still predicting lower volume of sales and orders in the next sixth months. Here again, the uncertain economic environment and reduced demand are seen as the main difficulty, while the negative influence of financial problems is going up.

In the services sector the business climate index is up 4 points compared to June due to more optimistic managers' assessment of the current state of their businesses, but forecasts for the demand in the upcoming 3 months are more pessimistic.

The uncertain economic environment, followed by competition and lower demand are also the main factors seen as hindering the services sector. Managers do not expect a price increase in the next three months.

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The representatives of the Bulgarian cabinet, the employers and labor unions, from the so-called Three-Way Council, agreed Wednesday on several new measures for reducing the social security deficit.

The debate surrounding the Social Security Institute (NOI) lasted three days and concluded with promises from Prime Minister, Boyko Borisov, that the mandatory insurance contribution would not go up until the end of 2012 while criminal charges would be faced only by employers who conceal these contributions and not by those who fail to pay them.

The business in the face of the employers say that increasing insurance deposits would not solve the problems of the retirement reform and of NOI because it would not motivate the economy's recovery.

The labor unions, however, insist on increasing these deposits as a way to stabilize the retirement and social security systems, but at the end all three sides declared a common position to balance the latter by the end of 2015 when revenues from insurance deposits should cover the social security expenditures. By 2020, the retirement pension of all insured Bulgarians must reach 65% of his or her average income for their entire service.

The Three-Way Council also decided to institute measures to limit cash payments between businesses and to make the direct bank deposit of salaries mandatory.

The Social Policy and Labor Minister, Totyu Mladenov, reiterated the pension reform will not be postponed.

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Central European Media Enterprises Ltd., which bought Bulgaria's first national private television bTV earlier this year, said its revenues rose 10.3% to USD 201.7 M in the second quarter as the Bulgarian acquisition offset a slump in ad income.

“The decisive actions we took in the last four quarters to reposition our business, including the sale of our Ukrainian operations, the acquisition of bTV in Bulgaria and integration of Media Pro Entertainment, have paid off,” CME Chief Executive Officer Adrian Sarbu said in the statement.

Net income during the quarter was helped by a gain of USD 217.6 M from the sale of the Ukrainian operations. Revenue rose to USD 201.7 M from USD 182.9 M. Operating income before depreciation and amortization rose 1% to USD 46.19 M.

“The first half of the year was difficult, with only the Czech Republic and Slovenia starting to recover,” Sarbu said. “The second half will be challenging, but our continuing audience leadership uniquely positions us to take advantage of any improvements in our markets.”

News Corporation completed the sale of the largest Bulgarian private TV station, bTV, to Central European Media Enterprises in late April.

Rupert Murdoch’s News Corporation sold bTV for a total of USD 400 M plus a payment of USD 13 M for a working capital adjustment to Central European Media Enterprises owned by another tycoon, Ronald Lauder.

Regulatory clearance from the Bulgarian Competition Protection Agency was received on April 8, 2010.

Under the terms of the agreement, CME will acquire 100% of the terrestrial free-to-air TV channel, bTV. It will also take control of the two genre channels, bTV Comedy and bTV Cinema, along with News Corporation’s 74% interest in Radio Company C.J which operates five radio stations.

The approval of Bulgaria's watchdog came just as CME wrapped up the sale of Ukrainian channels Studio 1+1 and Kino to local businessman Igor Kolomoisky for USD 300 M and said it would use the proceeds to close its Bulgarian buy.

News Corporation was advised by JP Morgan, while CME was advised by Deutsche Bank AG, London Branch.

The sale is the third large deal on the Bulgarian TV market for the last two years after the US Central European Media Enterprises bought the cable TV2 and Ring for EUR 110 M, and the Swedish MTG Group acquired Nova TV for EUR 620 M.

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Natural gas prices in Bulgaria will go down in the fall of 2010 as a result of extraction from three new deposits discovered by UK-based company Melrose resources.

The three new natural gas deposits – Kaliakra, Kavarna, and Karvana East – are located in the very northeast of Bulgaria, in the Black Sea off the Kaliakra Cape.

The discovery of the new deposits was announced Wednesday by Bulgaria’s Economy Minister Traicho Traikov together with the CEO of Melrose David Archer and UK Ambassador to Bulgaria Steve Williams.

Archer has pointed out that the new deposits are a real commercial discovery, and that the company will start laying pipes for the extracting of the natural gas in August.

The price of the natural gas will be negotiated between Melrose and the Bulgarian government. However, the UK company has made it clear that it will be a lot under USD 300 per 1000 cubic meters of gas, which is the price that the Bulgarian government is currently trying to get from Gazprom, the country’s only natural gas supplier.

“Our own production will reduce the average price of natural gas in Bulgaria. This will be in addition to the reduction of the price of the Russian natural gas that we may achieve in our talks with Gazprom. The natural gas from these new deposits will be 5%-10% cheaper than the price that we will request from Russia,” explained Bulgaria’s Economy Minister Traikov.

The three new deposits discovered by Melrose contain over 3 billion cubic meters of natural gas which will guarantee 20% of Bulgaria’s annual consumption (20% = 500 million cubic meters) over a period of 6 years.

Minister Traikov promised that during its sitting next week the government is going to grant Melrose a concession for the newly found deposits.

He has pointed out that the strategy of the Cabinet provides for developing Bulgaria’s own production of natural gas, and that he expected the discovery of new deposits, including of shale gas, in the northern part of the country.

Melrose is also cooperating with the Bulgarian government for constructing the future Galata natural gas storage facility, which will be the second of its kind in the country in addition to the existing storage facilities at Chiren. The Galata facility is located close to the spot where the Russian-sponsored gas transit pipeline South Stream is expected to enter Bulgarian territory after starting at Novorossyisk in Russia, and going through the Black Sea for about 900 km.

Melrose Resources plc is an Edinburgh-based oil and gas exploration, development and production company with interests in Egypt, Bulgaria, Romania, United States, France and Turkey.

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The site and assets of Bulgaria's largest steelmaker Kremikovtzi will be offered for sale in the middle of September, four months after the behemoth was sent into liquidation.

The closed-bid auction will start at BGN 565 517 510, which according to trade unions and analysts is far below the market price.

It was not immediately clear whether investors have declared interest in the sale.

In mid-July, Bulgarian Minister of Economy Traicho Traikov invited ArcelorMittal, the world's biggest steel producer, to participate in the liquidation sale for bankrupt metallurgical giant of Kremikovtzi.

The news comes nearly a year after the majority of creditors of the troubled steel-maker rejected the rescue plan for the struggling company, while workers staged numerous rallies to call on the state to approve the recovery plan and bring to justice those, who have allegedly siphoned the company.

The sprawling communist-era behemoth near Sofia was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with a dire economic conditions, and multiple controversies about mismanagement and financial draining.

The total debts of Bulgaria’s former largest steel-maker amount to BGN 1,9 B, whereas the market value of all of its assets has been estimated at BGN 837 M.

Kremikovtzi, one of Bulgaria's biggest companies, provided jobs for over 5 000 people and its future was a politically sensitive issue ahead of the general elections last summer.

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The CEO of Vorskla Steel Bulgaria, Viktor Demyanyuk, declared at a press conference Wednesday that the company is still interested in purchasing the Bulgarian obsolete steal mill Kremikovzi.

The Ukrainian Vorskla Steal, related to billionaire, Konstantin Zhevago, will take part in the public tender for the mill's sale despite the fact the latter is “a jalopy with the price of a Mercedes,” according to Demyanyuk.

The CEO insists his company, which has been declared insolvent, has money for the purchase, but wants first to check thoroughly the real condition and state of Kremikovzi in order to make sure he can have a return on the investment and the mill can really produce something that can be sold on the world market.

The asking price is BGN 565 517 510 M.

Demyanyuk says he already has a recovery plan for the mill; had conducted preliminary talks with the companies to which the behemoth owes money and they were ready to accept differed payments.

The CEO further presented documents evidencing embezzlement, Value Added Tax (VAT) draining schemes at Kremikovzi, and the illegal sale of electric power to other companies for prices 25% higher than the market ones.

Demyanyuk was firm “Vorskla Steel” was chased away from the mill on purpose with the sole goal to declare it bankrupt.

Earlier Wednesday, Bulgaria announced the site and the assets of its largest steelmaker Kremikovtzi will be offered for sale in the middle of September, four months after the behemoth was sent into liquidation.

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The Sofia City Hall must revise their decision to bind the purchase of the land plot near the Russian Church with the sale of its share of the Central Market Hall, the NGO “Civic Committee for Salvation 2000,” demands.

Citizens insist on obtaining from the municipality complete information about all procedures involved in the deal and want it published on the internet, along with the reports of the appraisers.

They further ask the Mayor, Yordanka Fandakova, to comply with the Construction and Public Works Act and give all parks and gardens in the capital a public, municipal property statute.

The Committee was established precisely with the goal to preserve the park near the Russian Church in downtown Sofia.

Last Thursday, the Sofia City Hall finalized the deal to swap its shares of the Central Market Hall and become the owner of the park near the Russian Church, both in the downtown of the Bulgarian capital.

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A large majority of all Bulgarians, sixty three percent, are not going on vacation this summer, according to a recent poll of the National Center for Study of Public Opinion (NZIOM).

The poll shows results not much different than two years ago when this percentage stood at 64.

Similarly to previous years only young people, people with college education and the residents of the capital Sofia are more inclined to travel for leisure during the summer season – about 60% from all three groups plan a summer holiday.

The beach remains the long-time top favorite destination as well. Those aiming at the mountain are twice fewer while rural vacations have been increasingly popular in the conditions of an economic crisis.

Comparative studies show that there is a low, but stable number of Bulgarians, 4%, who prefer to vacation abroad. They still plan to so, despite appeals to boost local tourism and despite the crisis. This group includes again the wealthy, the educated, those from Sofia and the youth.

The poll has been conducted between June 25 and July 2, 2010, among 1 000 Bulgarians.

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Syria's outstanding debt to Bulgaria will be high on the agenda of the country's foreign minister during his two-day visit to Damascus, starting on Wednesday.

Minister Nikolay Mladenov is scheduled to confer with Syrian President Bashar al-Assad, Prime Minister Mohammed Atri and Foreign Minister Walid al-Muallem.

Syria and Bulgaria signed in April a deal to write off most of Damascus' outstanding debt to the European nation.

Under the agreement, signed by Bulgaria Prime Minister Boyko Borisov, Bulgaria agreed to write off USD 54 M of Damascus' debt. Syria has vowed to study ways to repay the remaining USD 17 M.

The European Union has recently expressed deep concerns over Syria human rights cases and strongly condemned the sentencing of two Syrian lawyers and a writer on charges that appear to be in breach of their fundamental rights and freedoms.

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The French Interior Minister, Brice Hortefeux, declared half of the illegal Roma camps in the country would be demolished in the upcoming three months.

Hortefeux further vowed to deport to Bulgaria and Romania all Roma, who have violated the law in any way.

The Minister's statements came after an emergency cabinet meeting following the clashes between Roma and the police in central France.

Most of the Roma in France came from Bulgaria and Romania after the two countries joined the EU in 2007 and are seen by the majority of the French as a threat to security, according to France Press.

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The EU Health and Consumer Policy Commissioner, John Dalli, declared he will assist Bulgaria in the creation of an integrated electronic health care system.

The information was released by the Bulgarian Health Ministry Wednesday after a meeting between Dalli and Bulgaria's Deputy Health Minister, Desislava Dimitrova, during the 18th International AIDS Conference in Vienna.

EC is to help Bulgaria in the development and implementation of electronic health records which are to connect online patients, doctors and the National Health Insurance Fund (NZOK).

Possibilities and opportunities for inclusion of the Health Ministry in programs for the sharing of experience with other EU Member States which have already instituted quality electronic health care systems have been discussed during the meeting.

Dalli had further voiced strong support for the strategy to restructure Bulgarian hospitals and showed thorough knowledge of the planned measures to optimize their services in order to increase the efficiency and quality of health care, according to the Health Ministry.

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The Bulgarian Labor Minister Totyu Mladenov has announced that the pension reform will not be postponed due to the “dramatic situation” in the National Social Security Institute.

Mladenov participated in a meeting Wednesday with the head of the Institute, Hristina Mitreva, the executive director of the National Revenue Agency, Krasimir Stefanov, employers and trade unions.

“At the moment the deficit in the Institute is BGN 206 M, due to the unpaid insurances for the first half of 2010,” Mladenov said, noting that the macro framework envisions BGN 50 M smaller deficit for 2011, more than BGN 300 M less for 2012 and more than BGN 570 M for 2013.

The minister has also announced that the changes will be submitted to the Council of Ministers next week and that the Parliament will vote them in September.

He has also stated that the Finance Ministry will propose a packet of measures for increasing the revenue of the budget of the National Social Security Institute.

According to Mladenov, the main difference between employers and trade unions will be the size of the insurance fees in the future.

Before the meeting, the employers have stated that they have negotiated with PM Boyko Borisov that the insurances will not be raised and that not paying will not be considered a crime, only the hiding of insurances.

The trade unions have announced their agreement that the insurances should be raised from next year. However, they have stated that they will not step back from their request that the rasie should be smooth.

The employees have demanded a simultaneous smooth increase of the necessary years of service for retirement and the necessary retirement age because, in their words, if only the years increase, this would be a discrimination towards the more qualified employees, which are the ones with higher degree of education.

They have also stated that there should be measure for analog payment in sectors, as well as for decreasing the options for cash payments.

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Bulgaria's parliament will hear on Wednesday Interior Minister Tsvetan Tsvetanov in connection with an incident in the southern town of Kurdzhali, in which plainclothes police officers beat up by mistake a family during an operation.

The hearing will be held at the request of the opposition left-wing Coalition for Bulgaria and the predominantly ethnic Turkish Movement for Rights and Freedoms.

Four policemen broke in the home of Aysel Mustafova in Kardzhali late on Friday night, and thrashed a family of four and a guest from Turkey.

The policemen discovered only in the morning that they got the wrong address. The husband Sabahtin Mustafov and the son Kadir were arrested and released as soon as the mistake became evident.

The family’s daughter, who is a student at the Plovdiv University, suffered a concussion, and failed to pass her Monday’s exam as a result.

Aysel Mustafova has submitted petition with the local police and all relevant state institutions protesting the treatment of her family and insisting on a thorough investigation and punishment of the persons responsible for the incident.

Bulgaria’s Interior Minister Tsvetan Tsvetanov apologized publicly on Monday to all Bulgarian citizens who were targeted by mistake over the weekend by the police officers as part of a special operation against prostitution rings.

Tsvetanov said there will most likely be disciplinary action against those responsible, and vowed to crack down on any abuse of police powers.

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Bulgaria's PM Boyko Borisov has participated in the opening ceremony of the road junction “Kachitza” in the city of Veliko Tarnovo.

The Bulgarian Interior Minister Tsvetan Tsvetanov and the Minister for Regional Development Rosen Plevneliev have also participated in the ceremony Wednesday.

The facility is a system of two roadabouts, which will help overcome the conflict situation, created by the crossing of the main road Sofia-Varna and one of the main streets in the city, crossed by more than 30 000 people daily.

The project also includes a construction of underground infrastructure and a system of collectors for removing surface waters.

The execution company is a consortium between the Austrian “Alpine” and the Bulgarian “Stroyinvest”.

Plevneliev has annoucned that the company has decreased the price of the project from BGN 15 M to BGN 11 M.

He has also added that the park space near the road junction will be done with a EU financing under the operational program "Regional Development" and it will be a joint project of the Ministry for Regional Development and the city's municipality.

The junction has been blocking the traffic in Veliko Tarnovo for about two years due to the lack of financing for reconstruction.

The project was stopped last summer during the ruling of the Three-way Coalition. However, after sweeping the power, in October last year, Borisov promised BGN 4,5 M for finishing the construction. The money were received in the end of April.

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Bulgaria’s Chief Prosecutor Boris Velchev has declared there was no way he could punish a prosecutor for making a deal with a defendant detained recently in police operation “Killers”.

On Tuesday, Bulgaria’s Prime Minister Boyko Borisov urged Velchev to inspect the case Metodi Ivanov, known as the “armorer” of the “Killers”, a recently busted group of paid assassins suspected for the June murder of football club president Yuriy Galev.

Two years ago Ivanov was offered a deal by the prosecution, and was sentenced to 2.5 years of probation for keeping illegal weapons.

“I can’t imagine there is any way I can demand a punishment for the prosecutor who made the probation deal with Metodi Ivanov,” stated the Chief Prosecutor on Wednesday pointing out that he had no legal means to do that as the law provided the option for the prosecution to make deals with defendants who confessed their guilt.

Velchev further said that the prosecutor in question who made the probation deal with the Killers’ armorer had left the Prosecutor’s Office 1.5 years ago.

With respect to another case in which local media reported that a prosecutor from the town of Byala Slatina had beaten up a teacher, Velchev said it was under investigation, and that there will be a harsh punishment if the man is proven guilty.

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German journalist Jurgen Roth, who is on trial for slander in Bulgaria for the publishing of his book about organized crime, "The New Bulgarian Demons," has something good to say about the Balkan nation's fight against corruption and organized crime.

“Prime Minister Boyko Borisov has definitely brought positive change to Bulgaria," Roth told Deutsche Welle, but added that the government still lacks the political will to change in many spheres.

Roth stressed that one of the most serious problems in Bulgaria is the lack of freedom of speech and the press, an opinion shared by most of the Bulgarian colleagues with whom he has spoken. According to him, this means the civil society cannot develop because freedom of speech is an integral part of its development.

Bulgarian elites are also still corrupt, which continues to undermine the pillars of society, he claimed. Roth believes, they must be fully suspended from power or else society's struggles will remain.

However, the urgency to change is missing in the government, he pointed out in the interview.

“On the one hand, the premier hopes to ensure order and stability in the country. On the other hand, the old political structures, even if to a small degree, have not yet changed.”

Asked if he agrees with Klaus Schrameyer's affirmation that blindness to the law is one of the biggest shortcomings of the Borisov cabinet, Roth contended it is unfair to single Bulgaria out in this case.

“Turning a blind eye to controversial issues is a problem in almost every Eastern European country, which is probably due to the communist past of the region,” he told Deutsche Welle.

He compared Bulgaria to Montenegro, Kosovo and Croatia and called Bulgaria a model for a democratic nation. “Bulgaria is on the right track,” he said.

Roth asserted that one of Borisov's priorities for the next year must be to create a strong civil society and pointed out that to achieve this the corrupt structures must completely come down.

Roth said it may be difficult, and mentioned it is important to keep in mind that the problem does not only concern Bulgaria.

“It is also a European problem,” he said.

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A failed runner for the office of director-general of the Bulgarian state-owned national television channel BNT has appealed the contest outcome, citing technical irregularities and corruption allegations.

Svetlana Bozhilova argues that the competition was launched before the end of the term of the previous BNT head in breach of the procedure. Besides she accuses the winner Vyara Ankova of being involved in corruption schemes.

The complaint was filed at the Supreme Administrative Court on Wednesday.

“I am not trying to trigger a scandal. I am just approaching institutions in a bid to tell the truth. Should there be a new contest, I will not run.” Bozhilova told Dnevnik daily.

She has already conferred with Senior Prosecutor Boris Velchev and has handed him documents, which show corruption schemes, involving Vyara Ankova, has incurred serious losses to the television.

In the middle of July the Council of Electronic Media (CEM) voted unanimously for the appointment of long-time journalist and news anchor Vyara Ankova as director of the Bulgarian National Television.

A total of seven bidders originally applied for the position. One of them was not allowed to participate because of incomplete documentation, and another one – because he was found to have been a collaborator of the State Security service of the former communist regime.

Vyara Ankova was born in 1966. She has a degree in English from the Sofia University. She took up a job as a reporter at the Bulgarian National TV in 1991, and has subsequently been a news anchor. She has specialized with CNN and the BBC in the early 1990s.

In the late 1990s she married Tomas Lafchis, a former president of the Levski Sofia football club, and became the BNT correspondent for Greece after her family moved to Athens.

Since 2004, she has served as the head of the “Information Directorate” at the Bulgarian National Television.

Ankova should come into office after August 1 and he appeal will not delay her appointment.

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Bulgaria's historical Black Sea town of Nesebar will remain a UNESCO World Heritage City for the time being, the Mayor, Nikolay Dimitrov, announced Wednesday.

The item to discuss the eventual change of the statute of Nesebar has been removed from the agenda of the 34th session of the World Heritage Committee in Brazil. It is still, however, unclear if the issue would come up again or if this is the final decision on it.

The picturesque beach town was slated for discussions over numerous requests to take if from the list of UNESCO World Heritage sites.

The Bulgarian Culture Ministry says they do not know where the requests came from, but the Mayor hinted in an interview for Darik radio that they have been a provocation against Bulgaria over the election of Bulgaria's Irina Bokova as UNESCO Director-General last October after a heated competition with other countries' nominees.

The complaints, however, revolve around two well known facts – illegal large-scale construction and the large number of market stands that tarnish the image of the historical Old Town.

The Town Hall declared they are making constant efforts to improve the situation and are undertaking serious measures such as restricting the street market stands, introducing police bike patrols, building parking lots with affordable prices, and developing restoration projects.

Upset visitors further say historical churches in the town are used by homeless people or as places for illegal trade.

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The wife of the notorious former director of the state-owned heating utility Toplofikatsia Sofia will be charged with large-scale fraud.

The information was announced Wednesday by the Sofia City Prosecutor, Nikolay Kokinov, following earlier reports that the woman has been arrested in a police operation targeting blackmailers.

The tip-off was sent by a business lady, whom the suspects pressed to pay BGN 30 000 so that the contract between her company and the Sofia heating utility is not suspended. Stanislava Dimitrova wife of Valentin Dimitrov aka Valio Toploto (The Warm), 25, and two other men were detained as they were handed BGN 10 000, the first installment of the required amount.

Dimitrova will remain behind bars for 72 hours, while her accomplices will be released after spending 24 hours in jail. (Earlier reports listed the number of the detained men at 3, but Kokinov said they have been 2 – one impersonating a family friend and the other a lawyer.)

The Prosecutor did not offer further details about how Dimitrova and the blackmail victim first got in touch, but said the latter never attempted to contact Toploto's wife. The negotiations between the two women began about 2 weeks ago in a classical extortion scheme.

Kokinov further disproved earlier information that Toploto is involved in the case.

Valentin Dimitrov and another five co-defendants are accused of embezzling nearly BGN 2 M from Toplofikatsiya’s finances for the period from 2003 to 2006.

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The son of Mustafovi, in whose home the police have broken in, has been working as a pimp with the police's target, Dzhem Mustafa, Bulgaria's interior minister has announced.

Minister Tsvetan Tsvetanov explained Wednesday in the Parliament the details for the incident in the southern town of Kardzhali, in which plainclothes police officers beat up by mistake a family during operation.

According to the minister's explanations, on May 18 the police received tip-off alleging Dzhem Mustafa of involvement in prostitution rings. He has been convicted to 2,6 years imprisonment for procuring and was released at the end of 2009.

The police have checked and confirmed the information, using special surveillance devices. The Prosecution's Office has been informed and the action plan was scheduled for July 23-26.

Tsvetanov has explained that the surveillance on July 23 has established that Karim Mustafov, the son of the Mustafovi family, has ordered two prostitutes from Dzhem Mustafa for two friends of his.

The police have followed the girls from their taking off to their stopping at the address of the Mustafovi family, in front of the father's car.

After a while the police have established that the prostitutes have gone away and went to the family's address. After they have introduced themselves as police officers, the father, Sabahatin Mustafov, let them in.

Although the father have not resisted, the police have put handcuffs on him, “which is the common practise for securing the area”, in Tsvetanov's words.

“Going towards the children's room, the police have decided that the prostitutes are there and have entered a little bit faster. These actions have caused the door to hit the daughter's head,” Tsvetanov said.

The minister has added that Karim has initially confessed that he ordered two prostitutes from Dzhem Mustafa for two friends of his, who were visiting. Later, however, he has refused to write this down in his written explanations.

Tsvetanov has announced that he has apologized to the mother, Aysel Mustafova. He also added that she would probably not agree that her son has been involved in procuring.

The minister said that the the investigation on the case will continue and that the Prosecution's Office will determine whether Karim should be punished or not.

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The Mustafovi family, in whose home the police have broken in Friday evening, will sue the Bulgarian police in the European Court of Human Rights.

During a Parliamentary hearing on Wednesday, the Bulgarian Interior Minister Tsvetan Tsvetanov has accused the son of the family, Kadir Mustafov, of ordering two prostitutes.

According to the minister, the reason for the police entering the family home was that Kadir has called a taxi driver, who, according to the police, was a pimp and who's phone was under surveillance.

In an interview for the Bulgarian Darik Radio Wednesday, Kadir claimed he knew the alleged pimp only as a taxi driver.

The son also said that the only reason for him calling the man was to order a taxi for two friends of his.

“If I had ordered a prostitute, it would now be all over the media because I think he was under surveillance that night,” Kadir said, adding that he came home after his sister told him she has broken her head and that police officers were in their home.

The son has stated that his family would not sue the interior minister on calumny charges.

“We will first solve the case with my family and then the other case. In the next days we will be in touch with the lawyers and they will have a statement on the case. We are suing the excesses of the police against the family,” Kadir said.

Friday night the police entered the home of the Mustafovi family in the Bulgarian city of Kardzhali during a special police operation.

The policemen discovered only in the morning that they got the wrong address. The husband Sabahtin Mustafov and the son Kadir were arrested and released as soon as the mistake became evident.

The family’s daughter, who is a student at the Plovdiv University, suffered a concussion, and failed to pass her Monday’s exam as a result.

Aysel Mustafova has submitted petition with the local police and all relevant state institutions protesting the treatment of her family and insisting on a thorough investigation and punishment of the persons responsible for the incident.

Mustafova and her husband are former police officers themselves.

"I am ashamed of showing up on the street, the neighbors thought that my husband and I were in a fight. This is a brutal repression,” Mustafova said.

During an explanation in the Parliament, Minister Tsvetanov stated that Kadir was workingtogether with the real police's target – the pimp Dzhem Mustafa.

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Bulgarian ethnic Turkish party DPS has announced it will inform the European Parliament for the incident in the city of Kardzhali where police officers have broken in and beaten a family “by mistake”.

DPS have been unsatisfied with the explanation by Bulgaria's Interior Minister Tsvetan Tsvetanov in the Parliament Wednesday.

Tsvetanov has explained that the son of the beaten family has been involved in the procure activities by the real police's target, the pimp Dzhem Mustafa.

The Deputy Chair of DPS, Lyutvi Mestan, has announced that his party has decided to ask again all the questions that have not been answered by Tsvetanov in a Parliamentary question under the procedure for Parliamentary control.

The questions will include whether there have been a prosecution's order for entering the family's home, whether the operation's plan have included entering this specific home, whether the minister has received a report on the operation and whether the report includes a medical certificate for committed violence.

Other questions will ask whether the father, Sabahatin Mustafov, has been bribed to not make the entering public, whether Tsvetanov agrees with Tuesday's statement by PM Boyko Borisov that the police actions should be shameful, what does the term “full operational freedom” include and what actions will be taken against the police officers.

Mestan has added that the need for a Parliamentary committee to investigate the case will be discussed after Tsvetanov asnwers the questions.

Remzi Osman, a DPS MP from Kardzhali, has stated that he was informed Saturday that a member of the municipal council of DPS in the city has also been involved in the case.

On Sunday, the MP met with the family and with the head of the district police office, who has told him that there have been a mistake and that he knows that the boy's glasses have been broken.

According to Osman, the regional police head did not know about the beaten girl and that the police have bribed the family in order not to make the incident public.

“I decided to talk to the interior minister on Monday. At the meeting, I asked for a psychologist for the girl and he agreed. I asked for other things as well,” Osman said.

However, in his words, the situation in the Parliament on Wednesday was different.

“Because of the behavior of the GERB MPs, this case, containing photos, medical certificates and a document from a psychologist, will leave the country,” Osman said, adding that foreign media, as well as representatives of the European Parliament, have already been informed about the case.

The Bulgarian socialists have also expressed their dissatisfaction with Tsvetanov's explanations in the Parliament.

“We are witnesses of a bad-directed action with some erotic moments. I understood all about the prostitutes and their rates, but I did not understand whether there was a prosecution's order for entering the home and whether there was a reason for the beating of these citizens,” said the socialist Kiril Dobrev.

He added that it was a matter of style and approach of governing.

“Since we have a PM who beats his own candidate for son-in-law and that remains unnoticed, why are you surprised that the police is beating too,” Dobrev commented, referring to Borisov's statement that he has once beaten his daughter's boyfriend because “he made her cry”.

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A DNA expertise on the case of the double murder outside “Solo” club in Sofia in April 2009 has proved that there has not been found any biological material on the knife, allegedly used in the murder.

The 23-year-old Iliyan Todorov has been accused of double homicide by hooligan motive of 21-year-old Kiril Vazharov, who was a national ice hockey player, and 24-year-old Vasil Alexandrov. The two got involved in a fight between two allegedly drunk groups of young people in front of “Solo” club in downtown Sofia on April 18, 2009.

Both men were stabbed in the back while trying to get away from the fight. A third man, Kiril Dimitrov, has also been seriously injured.

The police have not established yet the reasons for the fight. However, they suppose that Todorov hid the knife, with which he allegedly stabbed the victims, in the bag of his friend.

The Sofia City Court decided Wednesday to assign a second DNA expertise to prove whether it was possible to inflict heavy wounds by such a knife. The trial will continue in October.

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Bulgaria's Unit for Combating Organized Crime has arrested eight people during a special operation against drug dealing and prostitution.

The police have announced that the operation was conducted late Tuesday in Sofia.

A 36-year-old dealer and his 37-year-old client have been detected in the Sofia district “Dragalevtzi” and were arrested at the moment of the drug sale. The police have found 3 packets of cocaine plus 15 mobile phones and 5 SIM-cards in the dealer's car.

A 19-year-old and a 57-year-old, who have been in the car, have also been detained.

At the search of the dealer's home, the police have found three prostitutes – a 27-year-old woman, who have been detained three times for prostitution for the past six months, another woman the same age and a 16-year-old girl, who has been taken to the Center for temporary accommodation of minors.

A 19-year-old man, who has a criminal record, and a 20-year-old man have also been arrested.

The police have also seized nine more packets with white dust, which the drug test proved to be cocaine, as well as a computer with the girls' photos, information, price, fake identity documents and reports for the money earned from prostitution.

The eight have been detained for 24 hours.

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The European Union made a crucial step toward actually equipping itself with its own diplomatic corps on July 26, when the Council adopted a decision on the organization and functioning of the European External Action Service (EEAS).

The goal now is that the EEAS become operative by December 1, the anniversary of the entry into force of the Treaty of Lisbon, which boosted EU common external action by creating the position of High Representative for Foreign Affairs and Security Policy, currently held by Catherine Ashton, and by mandating it to be backed by a future External Action Service.

Monday’s Council decision – coming some four months since Ashton’s first proposal on the structure of EEAS was put forth – was the outcome of a long-drawn negotiation process among stakeholders, including the EU High Representative, the European Commission, the European Parliament, and member-states.

Among the many important hurdles in the process was the issue of the share of EEAS staff to come from the diplomatic services of member-states and the share to come from among public servants in EU institutions.

Greater representation of national diplomatic services might sound appealing insofar as it upholds the national interests and perceived sovereignty of member-states. Nevertheless, it would have in effect hampered the very purpose for which the EEAS is intended and would have proved to the detriment of the Union and its members.

Thus a crucial point was scored when the final Council decision prescribed that the majority – at least 60% – of staff should come from the Commission and Council. Member-states’ foreign ministries will have a share of “at least one third.”

The Lisbon Treaty, which mentions the EEAS only in Art.27(3), says only that the EEAS shall cooperate with member-states’ diplomatic services, and shall be composed by officials from the Council, the Commission and national diplomatic services.

This allowed for the lack of specification of proportions in the initial organization proposals for the EEAS, but their introduction was strongly pressed for, foremost by the European Parliament. Which, by the way, scored an important institutional win.

The EP’s punchline: the EU needs a External Action Service based on the Community principle, rather than on intergovernmentalism. Throwing jargon aside, the thrust is right: if we are to have a genuine EU foreign service, then it needs full-fledged institutional standing as a EU-body and independence from national authorities.

And having a genuine foreign service is what the EU must do, if it is to be a true body politic – if it has gone beyond being merely a shared market project. Which plain facts show that it has.

The very idea behind the reforms in EU’s foreign action introduced in Lisbon was to enable the Union to acquire its own coherent image, standing and leverage in the international scene – to “speak in one voice,” as they say.

But then the External Action Service, which will represent the Union across the globe and could give vital support to its foreign affairs High Representative, must be a truly unified body with a Community-profile and institutional status.

EU member-states have a long history of own diplomatic services, by which to further their national interests and international commitments. They have little to gain by infiltrating the nascent foreign service of the Union they formed.

What is most obvious, pulling for greater national influence within the EEAS would create new unnecessary doublings. National foreign services can promote national interests – the EEAS will promote shared goals on the EU level. No need to criss-cross.

Greater representation of national foreign services in the EEAS would also affect adversely the Service’s effectiveness, hampering its internal coherence. What is worse, that would not prove beneficial even for countries supporting laxer integration. For intrainstitutional dynamics in the EU relentlessly show that officials end up identifying with structures and positions within the institution itself, rather than with the member-state that sent them out. Greater national influence on the EEAS would just be an illusion that would nevertheless cost resources and precious time.

And the EU needs to speed up coming out on the international scene as a unified actor. Thus member-states should hope for a swifter ironing-out of the many outstanding issues around the EEAS – like budgeting, parliamentary control, precise organization and staffing of key positions.

Calling for fair representation of all member states within the overall EEAS staff – something that Bulgaria, among others, did – is indeed right, but that is not the best way of defending national interests. Member-states, especially smaller ones, should be looking at other ways.

If member-states are genuinely concerned about sovereign accountability of EU’s foreign service, then they could for instance work for stronger involvement and control on the part of the European Parliament. And they could work towards forging institutional ties between their national parliaments and the European. This space was widely opened by the Treaty of Lisbon, but has yet been largely unexplored.

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The former US Secretary of State, Condoleezza Rice, and the Queen of Soul, Aretha Franklin, took the stage in a rare duet.

The concert was held Tuesday evening at Philadelphia's Mann Music Center and aimed at raising funds for urban children and awareness for music and the arts.

Rice, who was the Secretary of State under the Administration of President, George W. Bush, but has formal classical music education, accompanied Franklin singing two of her biggest hits "I Say a Little Prayer" as well as "My Country 'Tis of Thee." She also performed Mozart's piano concerto in D Minor with the Philadelphia Orchestra.

After the concert Franklin said she was amazed by Rice's great talent, because she knew her only as a politician.

The two met for the first time at a White House function.

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A plane has crashed in hills north of the Pakistani capital, Islamabad, killing all 152 people on board.

The plane, an Airblue flight flying from Karachi to Islamabad, came down in the Margalla Hills.

Officials said the plane lost contact with the control tower minutes before landing.

The cause of the crash was not immediately known.

Pakistani TV showed images of smouldering wreckage on a foggy hillside, with helicopters overhead.

A huge rescue effort was launched, and the army sent special troops to help.

Officials said rescuers searching for survivors were digging through the rubble with their bare hands. The crash site, on a steep hill, has no roads.

"The plane is totally destroyed, the pieces and parts scattered over a large distance. Some parts of the plane are still burning. Some bushes have been burnt," said Express 24/7 television journalist Sabur Ali Sayed at the scene.

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More than 60 percent of Americans support the state of Arizona law to criminalize illegal immigration, which is set to take effect tomorrow, July 29, 2010.

“The law, known locally as SB1070, requires police officers, "when practicable," to detain people they reasonably suspect are in the country without authorization and to verify their status with federal officials, unless doing so would hinder an investigation or emergency medical treatment. The law also makes it a state crime - a misdemeanor - to not carry immigration papers. In addition, it allows people to sue local government or agencies if they believe federal or state immigration law is not being enforced,” according to The New York Times.

The US Justice Department filed a lawsuit against Arizona earlier this month to challenge the law. The federal government asserts that manipulating immigration policy is its own responsibility, not that of the states.

The question of whether SB1070 is unconstitutional is also under speculation.

According to recent Gallup poll results, 45% of Americans believe immigration needs to decrease while 17% think it should increase. The remaining 34% find current levels of immigration to be ideal.

There are between 15 000 and 40 000 Bulgarians residing illegally in the USA, according to estimates of Assen Assenov, a Bulgarian professor at the American University School of International Service.

In spite of Arizona’s law and hope to remove illegal immigrants, the Obama Administration is working toward giving the illegal immigrants already in the USA legal status.

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