BMI's Executive Summary

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For Bulgaria, the success of achieving EU entry at the start of 2007 could soon give way to growing risks to political stability, as the broad government coalition loses a key binding issue. There are no indications yet of potential trouble, but with a new opposition party gathering considerable support and 2009 elections on the horizon, BMI does not discount destabilising changes over the next 18 months. Bulgaria has also become an increasingly confident player in regional defence issues.

The Bulgarian defence industry is relatively mature but is having to compete in a fast-moving market. Bulgaria's ties with NATO led to the trend for defence firms to increase their participation in the modernisation process. According to Defence Minister Vesselin Bliznakov, Bulgarian defence firms are now encouraged to 'actively participate in the tenders and programmes' of the NATO Consultation, Command and Control Agency. The aim is to expedite the interoperability process, and at the same time strengthen the local defence industry.

Military expenditure is set to increase significantly in the short next 1-5 years, with the 2007 budget indicating that expenditure will reach 2.38% of GDP. NATO regulations stipulate that at least 2% of GDP needs to be spent on defence modernisation. To maintain the increased expenditure, Bulgaria receives assistance from the EU, which has committed some US$8.6bn for defence modernisation. In recent years the United States has financially assisted the modernisation of the Bulgarian Armed Force, mainly through the Foreign Military Fund (FMF). In Q108, the FY08 FMF funding request stood at US$13.2mn. Bulgaria also benefits from the International Military Educational and Training (IMET) assistance programme. The programme supports the Bulgarian Armed Forces' officer training development. The FY08 IMET request totalled US$1.7mn. It is likely that the support from the US will continue in the near future as Bulgaria has become an important Eastern European base for the superpower.

Contents

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Chapter 1 - Executive Summary

Bulgaria Security SWOT

Bulgaria Political SWOT

Bulgaria Defence Industry SWOT

Chapter 2 - Security Risk Analysis

BMI’s Security Ratings

Table: Regional Security Risk Ratings

Table: State Terrorism Vulnerability Index

Regional Security: Europe

Overview

Internal Terrorism

International Terrorism

Criminal Activities

Bulgaria Terrorism Risk Ratings

Bulgaria Physical Safety Risk Ratings

Bulgaria Conflict Risk Ratings

Chapter 3 - Political Overview

Domestic Political Outlook

Chapter 4 - Security Overview

Internal Security Situation

Table: Regional Insurgent Groups

External Security Situation

Bilateral & Multilateral Security Relations

Chapter 5 - Defence Industry

Armed Forces

Modernisation Programme

International Deployment

Weapons Of Mass Destruction

Chapter 6 - Market Overview

Industry Trends & Developments

Table: Key Players – Bulgaria Defence Sector

Arms Trade Overview

Procurement Trends & Developments

Chapter 7 - Industry Forecast Scenario

Army Enlargements

Government Expenditure

Table: Bulgaria Defence Sector – Historical Data & Forecasts

Chapter 8 - Macroeconomic Forecast Scenario

Table: GDP, Population & Output

Chapter 9 - Company Profiles

Arsenal Co (previously Arsenal JSC)

Arcus Co

Chapter 10 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Chapter 11 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index

Competitive Landscape for European Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's European Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: