Series:Center for the Study of Democracy - CSD Policy Briefs

CSD Policy Brief No. 21: Investigation of Money Laundering: an Institutional Approach

CSD Policy Brief No. 21: Investigation of Money Laundering: an Institutional Approach

Author(s): Author Not Specified / Language(s): English

Keywords: Money Laundering; grey economy;

The latest research by the Center for the Study of Democracy reveals that the annual revenue from organized criminal activities and corruption amounts to more than BGN 4 – 5 billion per year. This amount only includes criminal incomes from trafficking and distribution of drugs, smuggling of cigarettes and other excise goods, prostitution, corruption (related to rigging of public procurement) as well as tax and VAT fraud. The above estimated amount of “dirty money” in the economy excludes revenue from other illicit activities, such as financial fraud, trafficking in cultural goods, as well as money generated by Bulgaria’s sizeable grey economy, estimated at 30% of GDP in 2009. In addition, the growing real estate market in Bulgaria made the country an attractive destination for laundering of large amounts from illicit revenues from Europe and other continents. The actual size of the inflows of “dirty money” into the country is, therefore, hard to estimate, as there are difficulties in assessing the amounts coming from abroad.

CSD Policy Brief No. 22: The Energy Sector of Bulgaria

CSD Policy Brief No. 22: The Energy Sector of Bulgaria

Author(s): Boyko Nitzov,Ruslan Stefanov,Valentina Nikolova,Dobromir Hristov / Language(s): English

Energy security in Central-Eastern Europe and the Black Sea region is fraught with risks. By virtue of its geography, Bulgaria finds itself in a difficult nexus, drawn into Eurasia’s contentious energy geopolitics and as a European Union member, involved in the Union’s fragmented energy policy and complex regulatory, energy efficiency and climate change objectives. That position is challenging, but it also presents decision-makers in Sofia with opportunities. The EU-backed Energy Community, of which Bulgaria is a member, seeks to foster regional cooperation in the Balkans and around the Black Sea, but is stymied by geopolitical questions such as Turkey’s EU membership prospects and Russia’s assertive energy strategy within the EU. On the other hand, Bulgaria is actively involved in geopolitics due to the country’s almost 100 percent dependence on imported gas from Russia through one pipeline, which forces it into seeking answers to the questions. Bulgaria imports about 75% of its primary energy resources (oil, gas, nuclear fuel, coal) from Russia.

CSD Policy Brief No. 23: Energy Efficiency in Bulgaria: the Case for Market‐Based Approach and Transparency

CSD Policy Brief No. 23: Energy Efficiency in Bulgaria: the Case for Market‐Based Approach and Transparency

Author(s): Author Not Specified / Language(s): English

Overall, the Bulgarian economy seems to have completed the transition from heavy industry to less energy intensive light industry1 and thus already picked the low hanging fruit of natural gains in efficiency. The country is probably at a point, as some experts2 argue, from which onwards any additional gain in efficiency will have to be attained through advances in technologies of energy production, conversion, transportation, and use which will call for cost‐effective approach and a strong incentive system. At the user end this means fleet replacement by installing more efficient appliances, buying less thirsty vehicles, improving insulation of buildings, lighting improvements, and deploying more efficient production technologies and procedures. In conversion, thermal power plants, boilers, and a plethora of other hardware devices will have to be replaced or updated, along with production methods and procedures. In energy transportation, smart grids, more efficient district heating nets and other solutions will have to be implemented. To execute the tasks, extensive investment in energy efficiency will have to be made over the next decade.

CSD Policy Brief No. 24: Introducing Organised Crime Threat Assessment

CSD Policy Brief No. 24: Introducing Organised Crime Threat Assessment

Author(s): Author Not Specified / Language(s): English

Keywords: Organised Crime;

MAIN POINTS * Introducing of EU-wide best practices of producing on a periodic basis of national reports assessing the threats from organised crime, which will facilitate the daily and long term activities of Bulgarian law-enforcement institutions. * Establishing of a permanent mechanism of institutional interaction, which will give full use of the instruments of publicprivate partnership, aiming at widening transparency in law-enforcement activities. * The application of modern methods for operative information gathering and analysis of the activities and finances of the organised criminal groups, in addition to the illegal markets under their controls. * Taking measures to facilitate the exchange of data between Bulgarian lawenforcement entities and between them and their EU counterparts in accordance with the Stockholm Program of the European Council.

CSD Policy Brief No. 25: The Green Element in the Sustainable Energy Policies of Europe

CSD Policy Brief No. 25: The Green Element in the Sustainable Energy Policies of Europe

Author(s): Author Not Specified / Language(s): English

Since the definition of the term by the World Commission on Environment and Development (Brundtland Commission) in 1987, ‘sustainability’ has become one of the most prominent political terms in the international affairs to rule agendas for decades ahead. The series of relevant meetings on the issue of sustainable development and climate change in Rio (1992), Kyoto (1997) and Johannesburg (2002) and Copenhagen (2009), as well as the overwhelming proliferation of green organisations and advocacy groups in Europe, have predisposed the European Union to take the vanguard role in the global effort for more sustainable and greener development. One of the first expected steps to take in that direction was to devise a sound and comprehensive legislation structure governing the European and national energy and environment protection policies in the way that they follow the principles of sustainable development, or namely avoiding degradation of natural resources, protection of the environment, promotion of equitable sharing of the products and resources of prospering economy to all groups of society. Main purpose of this study is to review and discuss the development of regulation at EU level to guide corresponding national legislation and policies designed to address the challenges of sustainable development, notably those on the environment dimension and as regards to the most relevant economic sector – energy. The paper will briefly examine the development of the idea and strategy for sustainable development in Europe over time, the concrete EU legislation and instruments to facilitate national policies to support such development.

CSD Policy Brief No. 26: Organised Crime and Corruption: National Characteristics and Policies of the EU Member‐States

CSD Policy Brief No. 26: Organised Crime and Corruption: National Characteristics and Policies of the EU Member‐States

Author(s): Author Not Specified / Language(s): English

Keywords: Organised Crime;Corruption;

MAIN POINTS 􀂾 Based on a statistical analysis of 14 indicators (measuring corruption, organized crime, the effectiveness of government, macro‐economic indicators and the grey economy), seven clusters of countries emerged. Starting from the cluster where the manifestation of corruption and organized crime was weakest, the clusters were: (1) Denmark, Finland and Sweden; (2) Austria, Belgium, Ireland, Germany, Luxembourg, the Netherlands, Slovenia, Spain and the UK; (3) France; (4) Estonia, Latvia, Lithuania, and Portugal; (5) Czech Republic, Cyprus, Greece, Hungary, Malta and Slovakia; (6) Italy; and (7) Bulgaria, Poland and Romania. 􀂾 Political corruption is organised crime’s most powerful tool and local level political and administrative authorities represent the most likely criminal groups’s target. In the case of police corruption the main reasons why organised crime uses corruption are to obtain information on investigations, operations, or competitors, (FR, NL, UK) and protection for continued illegal activities. In the majority of Member States, organised crime targets the judiciary, particularly the courts, much less than the police or politicians. Corruption of customs officers mainly helps organised crime avoid detection of smuggled goods, avoid investigations. 􀂾 Among the recommendations addressed to the European Commission is undertaking steps to widen the information and analysis tools such as benchmarking indicators to measure the threats from organized crime and corruption, and to assess the impact of measures to curb these threats. Another recommendation is to develop detailed guidelines to encompass a broad range of criminal offenses under the definition of corruption in national Penal Codes. 􀂾 EU Member‐states are urged to further develop their institutional capacities in order to conduct impact evaluation of measures against organized crime and corruption, and to build public‐private partnerships to facilitate anti‐corruption cooperation.

CSD Policy Brief No. 28: The Hidden Economy in Bulgaria after the Economic Crisis

CSD Policy Brief No. 28: The Hidden Economy in Bulgaria after the Economic Crisis

Author(s): Author Not Specified / Language(s): English

Keywords: grey economy;

MAIN POINTS 􀂾 The hidden economy has grown among businesses, but declined among the population. The social cost of the economic crisis is a declining employment among the groups with the lowest qualifications. * There is a rise in cases involving tax evasion, avoidance of customs, fees, and excise duties, as well as VAT fraud. As businesses suffer through the recession, they become more likely to not declare part of their revenue and economic activities. * There is a slight decrease in the incidence of undeclared payments ‐ in 2010, 11.6 % of the population reported having received a remuneration higher than the one stated in the contract with their primary employer. 􀂾 Governmental measures to reduce the hidden economy do not seem to have produced the desired results. 􀂾 The general economic situation and development are more important for the dynamics of the hidden economy than government control measures.

CSD Policy Brief No. 29: Public Trust in the Criminal Justice System – An Instrument for Penal Policy Assessment

CSD Policy Brief No. 29: Public Trust in the Criminal Justice System – An Instrument for Penal Policy Assessment

Author(s): Author Not Specified / Language(s): English

MAIN CONCLUSIONS: ››› Of all the EU member states, Bulgaria is the country whose citizens are the least satisfied with the performance of the main government institutions. ››› Trust in the main institutions concerned with criminal justice in Bulgaria – the police and courts, is low and has remained practically unchanged over the last decade. At the end of 2010, a positive evaluation of police performance was given by less than half of the country’s adult population and barely one in five gave a favorable opinion of the courts. ››› The low public trust in the courts and police can also be accounted for by the high level of corruption in these institutions. ››› The low trust in the courts and police is conducive to public attitudes of insecurity. Society begins to perceive crime as an inherent part of reality rather than a problem that can actually be addressed. ››› A state’s penal policy can only produce results if sufficient attention is paid to trust, legitimacy, and security. It is therefore recommended to adopt a system of indicators for the assessment of public trust in criminal justice in Bulgaria. ››› These indicators are an instrument for improved formulation of the problems faced by criminal justice institutions and for more effective monitoring of changes in public attitudes. This would make it possible to focus the attention on strategic issues and long-term policies in the area of security and justice not only on the national, but also on the European level. In order to ensure comparability of the impact assessment of various implemented policies, it is recommended to adopt uniform indicators for measuring trust in criminal justice in the European Union and the member states, which should take place within the timeframe of the Stockholm Programme (2010-2014).

CSD Policy Brief No. 31: Antimafia: The Italian Experience in Fighting Organised Crime

CSD Policy Brief No. 31: Antimafia: The Italian Experience in Fighting Organised Crime

Author(s): Author Not Specified / Language(s): English

Keywords: organized crime;

KEY POINTS The Italian approach to countering organized crime encompasses a number of complementing measures, which are tailored to the specific threats posed by the mafia. ››› Specialised legislation for facilitating and accelerating of pre-trial and judicial proceedings against mafia leaders and members ››› Harsher penalties and special penitentiary regimes against high level members of organised crime groups, which pose a serious threat to society. ››› Preventive confiscation allowing for expropriating mafia assets in favour of the society and the state. ››› Holistic antimafia policies have been pursued in the infiltrated by the organised crime municipalities and provinces. These policies include dissolving of the mafia controlled local authorities and implementing programs for improving security and economic development in Southern Italy.

CSD Policy Brief No. 32: A Reinstating the Duty‐Free Trade at Bulgarian Land Borders: potential Setback in the Fight against Organized Crime and Corruption

CSD Policy Brief No. 32: A Reinstating the Duty‐Free Trade at Bulgarian Land Borders: potential Setback in the Fight against Organized Crime and Corruption

Author(s): Author Not Specified / Language(s): English

Keywords: CSD; CSD Policy Briefs; Center for the Study of Democracy; organized crime;corruption;

KEY POINTS ››› In January 2012, a proposal to amend the Duty Free Trade Act was submitted to the Parliament by an independent MP (Emil Vasilev, formerly of the marginal opposition party Order, Law and Justice). The sole purpose of the proposed amendment is to allow for the reopening of the duty‐free trade outlets at Bulgaria’s land borders with non‐EU countries in the exact same format with the exact same operators as at the time of their closure three years ago; ››› The proposal is a major threat to border security, tax revenues and might undermine the stability of the state budget; ››› The reopening of the duty‐free shops would reverse the progress made in the fight against corruption, organized crime and excise goods smuggling and threatens to re‐kindle political corruption and clientelism.

CSD Policy Brief No. 33: Management and Disposal of Confiscated Criminal Assets

CSD Policy Brief No. 33: Management and Disposal of Confiscated Criminal Assets

Author(s): Author Not Specified / Language(s): English

KEY POINTS ››› The management and disposal of confiscated assets are important aspects of the overall process of confiscation, but they still remain marginal to the public debate in Bulgaria. ››› The existing legal and procedural gaps impede the effective management of confiscated property, frequently causing its plundering or demolishing. ››› The sale of confiscated real estate is further complicated by problems with mortgages and executive charges, incomplete property documentation, reputation of the former owner, and unfavourable market conditions. ››› The Bulgarian legislation concerning the allocation of proceeds from the sale of confiscated property is not in compliance with the relevant ratified UN conventions, which recommend using these revenues for compensation of the victims of crime. ››› The legal possibilities provided by Bulgarian law for re‐use of confiscated property for socially beneficial purposes are seldom applied and are not sufficiently publicised among the potential beneficiaries. ››› Among the important legislative gaps is the lack of a specific procedure for the transfer of confiscated real estate. The introduction of such an instrument could facilitate the utilization of these assets for the public benefit.

CSD Policy Brief No. 34: Bulgarian Economy: Competitiveness 2012

CSD Policy Brief No. 34: Българската Икономика: Конкурентоспособност 2012

Author(s): Author Not Specified / Language(s): Bulgarian

KEY FINDINGS Yearbook of IMD once again recommended to implement relevant and adequate measures to ››› increase in employment, with a focus on long-term unemployed and youth unemployment; ››› tackle corruption and avoidingpaying taxes; ››› cutting red tape and encouraging quality public services including the construction of electronic government; ››› promote investment activity; ››› introduction of measures to fund R & D; ››› diversification of gas supply, improve energy networks and energy efficiency, encouraging rene-wable energy sources; ››› improve the qualification of managers, accounting and auditing practices

CSD Policy Brief No. 35: Corruption and anti-Corruption in Bulgaria (2011 – 2012)

CSD Policy Brief No. 35: Corruption and anti-Corruption in Bulgaria (2011 – 2012)

Author(s): Author Not Specified / Language(s): English

Keywords: Corruption;

KEY POINTS ››› Following a period of improvement (2009 – 2010), administrative corruption experienced by citizens in Bulgaria is once again on the rise in 2011 – 2012, although still below the levels observed under the previous government (2005 – 2009). The average monthly number of corruption transactions in 2011 was approximately 150,000. ››› Corruption pressure in Bulgaria stems from the very structure of the public administration, and the lack of customer­oriented culture and approach in delivering public services to citizens and businesses. A sustained improvement of the corruption situation is possible only through measures that would systematically change this environment. ››› The scale of corruption in Bulgaria is such that, without a radical administrative reform, even a substantial increase in the capacity and efficiency of law enforcement would not provide sustained decrease of corruption, neither within law enforcement itself nor in the society at large. ››› Administrative corruption experienced by businesses has declined in 2011 – 2012, reaching the lowest levels on record. Although this decline has not been deep enough to produce a marked improvement in the past 3 years, the positive fundamental changes that took place in the business environment and reduced corruption pressure after Bulgaria’s EU accession seem to have taken root.

CSD Policy Brief No. 36: Educational Integration of Refugee and Asylum-Seeking Children: the Situation in Bulgaria and the Experience of other European Countries

CSD Policy Brief No. 36: Educational Integration of Refugee and Asylum-Seeking Children: the Situation in Bulgaria and the Experience of other European Countries

Author(s): Author Not Specified / Language(s): English

Keywords: Asylum-Seekers;

KEY POINTS According to the Migrant Integration Policy Index (MIPEX) for 2011, Bulgaria reaches an average of 15 per cent of the internationally recognised standards in relation to policies on access to education, assessment of knowledge upon arrival and assistance during language learning. The educational integration of RASC in Bulgaria is organised in two stages: preparation for school enrolment and integration into the public school system. ››› The main focus is on the preparatory stage which ensures school enrolment. The second stage, during which the true educational integration of RASC takes place, develops in the public schools and is not supported by special programmes and additional resources. ››› The studying of Bulgarian language is viewed as the main (and the only) element of the educational integration of RASC. Other particularly important aspects of educational integration like preparatory courses in the main subjects, participation of parents in the education process, providing school materials and appliances or mother tongue training currently remain unconsidered by the responsible institutions. There is no systematic observation and data collection with regard to RASC presence and performance in the public school system of Bulgaria.

CSD Policy Brief No. 37: The hidden economy in Bulgaria: 2011 – 2012

CSD Policy Brief No. 37: The hidden economy in Bulgaria: 2011 – 2012

Author(s): Author Not Specified / Language(s): English

Keywords: hidden economy;

KEY POINTS The hidden economy in Bulgaria has decreased in 2011 – 2012 among both businesses and the population. Yet, the registered gains are modest. Deep structural labor market problems and long-term business environment issues continue to constitute favorable conditions for the development of hidden economic activities in Bulgaria. The Hidden Economy Index results show: ››› decrease in the incidence of undeclared employment due to rising unemployment and lack of re-entry of labor force; the decrease has also come partially from the increase of employment in the informal (self-subsistence) economy; ››› decline in tax evasion as a positive result of the government’s focus on administrative and control measures in the tax compliance area. In the short-run, government measures countering the hidden economy seem to be more productive in the tax evasion area while the economic environment positively affects the undeclared work situation. Publicized frequent statistical errors recently raised concerns about the quality of the supplied statistical data for decision-making. While implementation of control measures has achieved some success, very little has been done for the introduction of positive reforms to reduce incentives for the development of the hidden economy. Implementation of structural (e.g. changing the regressive character of social security and tax system) and administrative (e.g. promoting better service delivery as opposed to more controls) reforms is lagging behind

CSD Policy Brief No. 38: Improving Policy and Programs for Assistance and Reintegration of Child Victims of Trafficking in Bulgaria

CSD Policy Brief No. 38: Improving Policy and Programs for Assistance and Reintegration of Child Victims of Trafficking in Bulgaria

Author(s): Author Not Specified / Language(s): English

Keywords: road casualty;

KEY POINTS ››› Bulgaria is one of the few countries in Europe to develop a National referral mechanism for victims of trafficking, including children. ››› A network of 14 crisis centers for children victims of violence and trafficking have been developed in the country, which plays a key role at interim care stage. ››› The main financial and human resource of the system for assistance of child VoT is directed at the stage of crisis intervention. ››› The National Referral Mechanism has no guidance for the implementation of durable solutions for child VoT. ››› The country currently has no specialised programs for long term reintegration of child VoT. ››› The existing programs for assistance of child VoT do not include measures, mechanisms and resources for adequate work with parents. ››› The prevailing durable solution regarding child VoT is the return of the child to the family. However, in the absence of adequate monitoring of the long term reintegration however, this practice leads to increased risk of re-trafficking. ››› There is no centralized data collection for victims of trafficking, including children, in the country. ››› There is no practice of conducting monitoring and evaluation of the programs for reintegration of child VoT.

CSD Policy Brief No. 39: The Bulgarian Economy: Competitiveness 2013

CSD Policy Brief No. 39: The Bulgarian Economy: Competitiveness 2013

Author(s): Author Not Specified / Language(s): English

MAIN POINTS ››› Bulgaria is ranked at 57th position, 3 places below the position achieved in 2012 and the lowest since its inclusion in the yearbook in 2006. This almost 20 places lower than ist highest achievement in 2009 – 38th place. ››› The country continues to have a fiscally stable, open and export-oriented economy with one of the lowest living and business costs in Europe. ››› Bulgaria continues to suffer from the lack of adequate business culture and institutional framework, while also being plagued by a labor market crisis leading to one of the lowest employment levels Bulgaria has reached in its post-communist history in 2013. ››› The most pressing problem of the Bulgarian economy is surging unemployment, with youth and long-term unemployment being persistently high. ››› The 5 main challenges which Bulgaria faces in improving its competitiveness are: o Modernise public administration to increase evidence-based efficiency and regulatory quality; o Reduce administrative costs and provide EU funded incentives for innovation and entrepreneurship; o Strengthen the judiciary to tackle corruption and reduce business uncertainty; o Reform the governance of the energy sector to preserve cost competitiveness, diversify gas supply, and improve energy efficiency; o Tackle hidden economy and related labour market inefficiencies.

CSD Policy Brief No. 40: Bulgaria’s Energy Security Risk Index

CSD Policy Brief No. 40: Bulgaria’s Energy Security Risk Index

Author(s): Author Not Specified / Language(s): English

MAIN POINTS ››› Energy security is of critical importance to Bulgaria. The biggest identified threat to Bulgarian national security is poverty, and in particular energy poverty. Bulgaria’s non-transparent energy sector seriously undermines the country’s economic development. Establishing regular sound monitoring mechanisms on energy security could be key for adequate policy-making in the area. ››› The Index of U.S. Energy Security Risk Indicator (IESRI), developed in 2012 by the Institute for 21st Century Energy at the American Chamber of Commerce shows that since 1980, Bulgaria has had one of the worst energy security risk index scores both nominally and compared to the OECD averages. Its scores over the period averaged about 158% higher than those for the OECD. ››› Bulgaria’s energy security risk index increased since 2010. This recent deterioration relative to OECD averages is based on the energy expenditure volatility of the Bulgarian economy that according to IESRI has increased more than 10 times in the last 3 years (since 2009), reaching in 2012 one of the highest levels since 1980). ››› Among the main risk factors to Bulgaria’s energy security is its high dependence on fossil fuels import, in particular in the gas sector. The very high concentration of the Bulgarian gas market (monopoly of supply and distribution) provides ample opportunities for rent-seeking. Bulgaria’s involvement in various national, smaller regional, and large international projects can reduce the risks to its energy security if it is based on clear-cut prioritization of preferred options following sound and transparent cost-benefit analysis.

CSD Policy Brief No. 48: Anti-Corruption Measures in Law Enforcement Institutions

CSD Policy Brief No. 48: Anti-Corruption Measures in Law Enforcement Institutions

Author(s): Author Not Specified / Language(s): English

Keywords: CSD; CSD Policy Briefs; Center for the Study of Democracy; Corruption

In countries with endemic corruption, integrity reforms can only be successful if anti-corruption institutions succeed in tackling internal corruption challenges. A sharp decline of corruption in law enforcement would provide society with the necessary tools to pursue tangible change. The experience of established democracies is that a successful transformation depends not simply on individual measures but rather on the introduction of sets of effective anti-corruption measures across the entire public administration. Corruption among lawenforcement officers has been viewed with an increasing concern by the authorities and the public in many European states. As a result, while no common approach has ever been tested with respect to the judiciary, elected politicians or the customs, countering police corruption has become an all-European effort. During the last decade, several European countries developed multi-institutional systems for police integrity. On EU level, platforms like the European Partners against Corruption (EPAC) were introduced, enabling specialised anti-corruption institutions to cooperate and share experience. In addition, Europol, Interpol and the UN developed and shared the blueprints of common standards and good practices in preventing police corruption

CSD Policy Brief No. 49: Media Ownership in Bulgaria: State of Play and Challenges

CSD Policy Brief No. 49: Media Ownership in Bulgaria: State of Play and Challenges

Author(s): Author Not Specified / Language(s): English

Transparency of media ownership and media pluralism are directly related to fundamental constitutional principles, rights and freedoms such as independence and freedom of the media, freedom of expression, pluralism of opinions and citizens' right to information. Consistent application of these democratic principles is required to prevent the vicious practice of using the media as an instrument for state capture.