On November 10, 1989 Todor Zhivkov resigned as head of the Communist Party and shortly after as head of state. During the stormy period of change power was taken by a wing of the Communist Party backed by the Kremlin. This group of people included mainly followers of Gorbachev’s ‘perestroika’ concept and felt the need to find a ‘new face’ of socialism and new methods of managing the economy. Developments in countries in Central and Eastern Europe, however, went far above and beyond the initial ideas of ‘perestroika’. The transition to democracy and market economy was first on the agenda. Simple cosmetic changes to the damaged face of the socialist system were no longer enough. Central Europe was faced with a unique historic opportunity - a chance to change everything. And that was precisely what occurred. In Bulgaria, however, people were not prepared for this.
The presence of such political entities and the genesis of the authors of the coup involved both overt and covert continuity in the development of the Bulgarian political and economic scene in the coming years. This continuity was drawn from the structures under the influence of the Communist Party and its secret police.
Zhivkov’s resignation was also a product of the changes that occurred following the ‘Velvet Revolution’ in Central and Eastern Europe - one of the most extraordinary events of the twentieth century. Although meant as a political revival process, the movement spiralled out of control fuelled by people’s unbridled desire for change. The communist regime in these countries was thus irreversibly weakened and compromised. Modernisation in countries such as Poland, Czechoslovakia, and Hungary (and to a lesser extent Bulgaria and Romania) led to a build-up of intolerance to non-liberal, non-democratic social practices. 1990 marked the year of big change in Central and Eastern Europe (although each nation’s experience varied by level of intensity).
Parallel to the decline of the USSR, Yugoslavia’s own nation states began to break away. Poland commenced a form of ‘shock therapy’ and the GDR was united with the BRD. In Bulgaria Lukanov’s Communist regime continued its desperate fight to remain afloat. Industry privatization remained lacking despite continuous promises of structural reform. One of the only initiatives discussed at the time was to relinquish some state property as part of a so-called ‘worker-manager privatization’ whereby the property of small to medium-sized economic structures would be transferred to the managers and employees working in them. This kind of privatization was never realized, however, not even in the years that followed. Moreover, if it had been, it would have served only the echelons of economic nomenclature.
A social structure of the classes holding elitist claims in post-communist Bulgaria was much more complicated. Higher functionaries, heirs to the communist party, heads of state, municipal administrators, nomenclatures in law enforcement and especially the notorious secret services all wished to stake their claim on a piece of the nationwide property pie.
The actions (or rather lack thereof) of these post-communist classes gradually resulted in a kind of ‘cold war’ and schism in Bulgarian society. Outwardly, the main participants in this divide included the newly-formed parties (especially the radical subdivisions within them), the syndicates, and the NGOs. Behind them, however, stood both internal and external organizations whose interest lay in provoking further societal unrest; thereby hindering any chance of political consolidation and allowing for a controlled heist of the country’s national treasures. Chaos escalated and the majority of desperate Bulgarian citizens found themselves in a state of existential crisis. Lukanov’s term marked the start of a massive shutdown of enterprises resulting in a sharp rise in unemployment. The engineering and electronics sectors (on which the socialist economy had depended for many years) were affected most heavily.
By March 29, 1990 Lukanov had declared a unilateral moratorium on the repayment of foreign debt. This was by far the most controversial act of Lukanov’s first term. It left deep scars in Bulgaria’s economy for many years to come. Lukanov understood that his government carried neither the capacity nor the capability to develop and apply a program for transition to market economy. The fact that the government failed to implement a program aimed towards a fully-functional market economy was thus its biggest fault. This government would remain forever in people’s memory as „Lukanov’s winter“ marked by cold, hunger, misery, empty shops, and power cuts.
At the same time, a troubled Bulgaria continued to hand out loans to companies and individuals abroad with money from the foreign exchange reserves belonging to more than 400 Bulgarian companies registered in Western Europe. According to reports and testimonials in the span of several months (from the end of 1989 to the summer of 1990) between $1 and 2 billion would disappear from currency reserves.
Moscow also began to disassociate itself from its once faithful ally from the Eastern Block and began to reduce its trade with Bulgaria. The export of agriculture thus collapsed, especially in regard to processing. During this time Bulgaria experienced some of its most difficult days in recent history. The moratorium on foreign debt isolated the country and the lack of economic reforms virtually ceased development. Political tensions rose as the country began to feel the brunt of the government’s failure to introduce drastic, immediate economic solutions. As Central Europe gained momentum Bulgaria stood still in complete deadlock. In view of the complexity of the situation Lukanov understood that outside help was needed urgently. In order to provide this kind of financial assistance to stabilize the country, however, institutions such as the IMF and World Bank wished to see the development of a workable reform program.
At the same time several programs were created to support a transition to democracy and market economy but these were products of political parties who differed so widely in opinion, so consensus could not be reached. Nor were the parties willing to consolidate their efforts. In the end, round table discussions resulted in little change. The collapse of national economic mechanisms and the reluctance to introduce radical reform thus led to a state of crisis. The drop in GDP and subsequent standard of living spiralled out of control and Bulgaria was faced with the most severe economic crisis in its history. Starting in 1989, thousands of high calibre professionals would flee the country in an attempt to improve their living conditions and realize their potential abroad. This mass migration soon reached epidemic proportions. Many high calibre candidates would seek solace in the West, ultimately depriving the country of its intellectual elite.
The absence of a clear program for transition to democracy and market economy was almost entirely due to limited opposition to the totalitarian, autocratic communist regime. This regime was amongst the most restrictive ones in the Eastern block; it was no coincidence that there were no large-scale national dissident movements in the name of democratization. All opposition was irreversibly suppressed.
The second half of the twentieth century also marked the infiltration of so-called ‘secret services’ into the fabric of society leading to the deformation of its functional mechanisms. This is the reason behind the country’s inability to introduce true democratic procedures, a functioning law system and liberalized economic policies after 1990. The suppressive nature of the autocratic regime not only hindered political development but also led to the formation of various units of organized crime. Soon this transformed into a conscious effort to suppress, administratively (and entirely unlawfully) any private enterprise and led to further decline in the income of the majority of Bulgarian citizens.
Andrei Lukanov’s second term following the elections of June 10, 1990 lasted until November 29 when the Prime Minister resigned. Officially, his resignation was assigned to pressure from the syndicates but other likely (unofficial) accounts seemed to point to the fact Lukanov’s party would not back the introduction of reforms which it was obliged to carry out at this time. If this government had been backed by its own party members and had been able to introduce effective reforms it is likely that Bulgaria would have flourished, similarly to the Czech Republic, Hungary, and Poland. At the time word had already spread of imminent, unpopular measures that would have to be taken by a trusted government - one supported by a majority of political parties.
Then in 1990 the Bulgarian Socialist Party came to find itself in an unusual position. It won the elections but refused to lead the country because it would have to introduce these unpopular reforms. Lukanov would thus be forced to collaborate with the UDF to form a coalition government. On October 30, 1990 he claimed “I truly believed and continue to believe that a single-party government is not a good option for Bulgaria. I would like to emphasize that my program is not a program of the BSP - my intention is to bring the country together. Its fundamental principles are ones I had developed long before November 10”. The UDF was reluctant to comply however, unless Lukanov disassociated himself from the BSP which he unconditionally refused. Lukanov’s contribution to the election of Zhelio Zhelev as president was both considerable and a deciding factor nonetheless. This included convincing the ‘hard-ball’ members of the Supreme Council of the BSP parliamentary group to acquiesce to, what was in their eyes, a ‘historic compromise’.
Later Lukanov would also be able to push through the decision to form a coalition government under Dimitar Popov. Lukanov nominated Ivan Tatarchev for Internal Affairs Minister and Georgi Pirinski for Deputy Prime Minister of Economic Reform. At the last minute, however, Ivan Kostov would refuse to accept this proposal and Lukanov would again be forced to look for alternatives. He desperately wished to convince the opposition as well as the West of his willingness for radical reform in the name of market economy and political pluralism.
To achieve this type of reform Lukanov found himself in need of outside help in the face of a group of specialists from the Chamber of Commerce of the United States of America led by Richard Rahn which would create a written plan for economic transition. This would be the only possible and relatively quick solution to the complex economic situation facing the country. Both sides understood that the transition from a totalitarian system to democracy and free market would not have a simple recipe. In order to formulate a plan with this level of complexity it was necessary to tap into and adopt some of the strategies used by Central European countries who had adopted reforms earlier. It would also refer to the experience of some Asian countries.
In Lukanov’s eyes the introduction of such a program would finally cater to the possibility of coalition with the opposition. Lukanov believed a coalition government would lead to two outcomes. One would be the disempowerment of the opposition itself which, through acceptance to work with the socialists on a program for economic reform, would abandon some of its more radical political demands such as (lustration????). The other outcome would be the legitimization of the socialists’ ‘new image’. Lukanov and his closest allies wished to prove to Europe and the world that they were then fully ‘democratised’, accommodating to the European ideas of socialism.
Again, however, his attempts were met with fierce opposition from the members of the communist party encumbered by the unchanging ideology that still permeated the political climate in the country. Lukanov was thus caught between a rock and a hard place. He understood that without the support of the hardened communist party members he could not retain the newly formed BSP nor remain in power for much longer. Thus, at the beginning of the nineties there was practically no change in the way the party functioned. Even a change in its name – to ‘socialist’ in place of ‘communist’ - was met reluctantly from most members of the party. For this reason, Lukanov was forced to play different roles - one for the West (including Rahn and Utt’s expert group), another for the Bulgarian opposition, and a third one (entirely different) for the members of his own party during the mass communist rallies occurring in 1990.
The internal forces working against Lukanov and his mission to transform the communist party into a modern socialist one continued even after his death. The communist parties in other ex-socialist countries all fell apart - save for that of the Czech Republic which kept both its name and its ideology intact even after the fall of the regime. Those who opposed the communists there formed the Social-Democratic party which plays a significant role in the country to this day. The old communist party in the Czech Republic thus dwindled down to a select few hard-core members and for the twenty years that followed it would always collect around ten per cent of votes during government elections. Perhaps this is unsurprising for an ex-communist country, be it the otherwise prosperous Czech Republic or any other.
In Bulgaria, however, Lukanov’s vision for a change both in the country and in his own party played out differently. As if all at once, one million members of the totalitarian party state would have to be convinced that they are now a party of European socialists in a democratic country; that they would be deprived of the privileges they previously held unconditionally under Article 1 of the communist Constitution. It was as obvious then, in the nineties, as it is today, twenty-four years later, that the communist party in Bulgaria did not and still does not have the potential or will to fully cleanse itself of its totalitarian habits. It would have been impossible in 1990 for the party and most of its members to accept a program for true transition to democracy, not least one created by American experts.
Lukanov clearly understood that he could not convince his own people to commit to it. Likewise he would never be able to win the support of the opposition - even armed with a program like ‘Rahn-Utt’ their unwillingness to collaborate with the communists was unfaltering. These circumstances meant the efforts put forth by the American experts were doomed from the start. The framework for reform they presented to Lukanov in October, 1990 was meant to serve as an operating document but one that would only work if concrete figures, dates, and responsibilities were agreed from the start. They were not. Moreover, it is debatable whether Lukanov himself believed an American program could, in reality, be put to action given the state of political chaos gripping the country at the time.
According to Professor Ivan Angelov, the author of two chapters of the program and the man who coordinated the work between the American experts and the Bulgarian consultants on the project, he and the other members of the team were demonized by their own party for even taking part. In fact, it is difficult to find a program for economic reform in recent Bulgarian history which has been more openly despised and more aggressively discredited by the members of the communist party than the Rahn-Utt plan. To this day, this document has been blamed for all the failures and misfortune befalling the country since the fall of communism. Paradoxically, there has never been a more infamous document that was in fact so little understood. Those who spoke and still speak against the program are unlikely to have ever read it. And most of those who have are unlikely to have any understanding of what it aimed to accomplish or the instruments it offered to achieve transition. This suggests this group of people was simply against the democratization of Bulgaria full stop [*] - against the development of its market and against its union with the other, already-developed Europe.