Rumen Radev - Full University of National and World Economy Lecture

Dear Professor Statev. Dear organizers, participants, and guests on this forum. Your Excellencies. Dear lecturers. Dear students!

 First I want to thank for the invitation to be a guest at the University of National and World Economy - the largest, oldest and most prestigious higher education school for economics in Southeast Europe. I would like to congratulate the organizers for your ambition to provoke a debate about the present and future of the Bulgarian economy, about the socio-economic development of Bulgaria. You, the professionals in this field, know best how difficult it is to develop long-term strategies in these dynamic times. But it’s important to have a debate. A debate to highlight problems, to advocate ideas, to seek national solutions. More importantly, young people are involved in this debate. Because they will realize the ideas and they will bear the consequences of these ideas. Congratulations once again for this wonderful initiative.

 When we talk about economics, we must remember that it is inextricably linked to politics. Because no economy can develop successfully if the state, in the face of the legislature, the executive, and the judiciary, does not create the necessary favorable conditions, and no government can succeed unless there is a workable, sustainable economy behind it. We must also not forget that the economy, its success, the success of each policy is measured by the benefits this policy brings to society. A policy can be presented to be successful through PR bluffs, for example. But this can not last long, as it has to bring real benefits. And real benefits are always measured with high living standards and quality of life.

 For such a policy to be successful, we need to be aware of a few things. First, where are we? Second, what are our goals and where we want to go? And thirdly, what priorities and strategies we form and what tools we will implement to implement them.

 So, the first very important question: where are we? And it is important because it is the starting point of our ambitions. Equally important are the criteria for comparison and assessment against our own past in regional and European format against the global tendencies for the development of a competitive economy and a prosperous society. If we compare to Bulgaria 10-20-30 years ago, we will outline a number of successes. A democratic constitution was introduced; the path from planned to market economy has come; privatization was carried out, albeit in Bulgarian style; Bulgaria was admitted to the European Union and NATO. And without those things, the country would be marginalized on the European scene.

 The legislation is harmonized with the European one in a number of areas. Large European funds have been absorbed. Infrastructure is upgraded. Foreign investments were attracted. Industrial zones were opened. In recent years, the IT sector and tourism have seen significant growth, and financial discipline and macroeconomic stability are in place.

 At the same time, however, with the same successes, Bulgaria has taken a firm place in the rankings on mortality rates, the migration of young and able-bodied populations, the depopulation of entire regions. Bulgaria is the poorest country in the European Union with millions of people living in poverty, with pensioners massively deprived of pensions that are shockingly low for a member state of the European Union with widespread domestic crime and corruption.

 We can think a lot about the reasons to get here. We can, of course, look for them in all directions. Let's say, in the barbaric way of privatization, the destruction of our agriculture; in the age structure of our economy, whose main share occupies sectors with low added value and low pay for labor. Also in the gray economy, which hinders fair competition, perhaps the lack of strategic investors and the vicious desire to attract them with cheap labor and low taxes, with social dumping. Perhaps in the desperately low, against the backdrop of the other Member States of the European Union, labor productivity, labor costs, competitiveness, the effect of which is further exacerbated by the lack of sufficient investment in R&D and the lack of important reform in the field of education. Maybe in using the state budget as a tool for suppressing social protests. Perhaps in the non-established financial decentralization of municipalities, without which it is clear that there is no way to develop the initiative and civic activity at the local level. Certainly the lack of trust in the judiciary, the ineffective administration, the lack of e-government.

 We can go a long way. But I think that is enough and everything listed here is actually the result of the most important reason, and it is political and it is the ineffective institutional environment. Today we are celebrating the Constitution Day and congratulate you on this bright occasion. This is the great statehood of the newly liberated Principality of Bulgaria. A successor to the old Turnovo Constitution, the present Constitution of the Republic of Bulgaria introduces and defends important ideas and principles of democracy and responsible governance. Our constitution clearly identifies the main institutions in the state, the clear division and the due cooperation between them. These institutions must ensure the most important thing a Bulgarian entrepreneur, investor and taxpayer needs, and that is protection, predictability, and security. Without them, we can not have the environment in which to develop a successful economy.

 The Bulgarian Parliament is the main guarantee of the democratic system of our political system, and we must support its work, but not uncritically. I sincerely want to have a strong and successful parliament. But when we have very frequent and sometimes even chaotic changes in legislation, which leads to unpredictability and instability of the Bulgarian legal order combined with a low degree of control and efficiency of implementation. All this has a negative effect on the business environment.

 Let's take a look at the legislative process. It has already become practical in the transitional and final provisions to propose important amendments to other laws not directly related to the theme of the legislative initiative. Increasingly between two readings, changes are proposed, and substantial changes at that, and thus public debate and impact assessment are avoided. I believe that the burden of public consultation should be put forward at the beginning of the legislative process and the requirements of the Law on Legislation. They should apply not only to the proposals of the Council of Ministers but also to the proposals of the MPs. We also see how important bills, which are in fact part of the government's government program, are brought by MPs - say the Concessions Act. Such an approach leaves doubt for evasion of responsibility.

 Another problem for the business environment in Bulgaria is the lack of transparency, the ownership of management decisions and the spending of public funds. Here too we can give examples: when a decision of the Council of Ministers is set on spending a huge public resource - a budget surplus, and a billion for half an hour without clear criteria and debate; when the same companies earn consecutive millions of public water cycle and highway contracts, of course, that is, all others are dropped on the basis of bad documents, say, ten companies remain one; when a persistently huge public resource is still being invested in a deeply unfair remediation program, which is launched at unjustifiably high prices in violation of laws, as the Court of Auditors' report, without public scrutiny mechanisms, without thorough in-depth analysis efficiency and safety, with no alternative for financial and environmental performance if the same funds would be spent on other things, say, in domestic gasification or in modern high-tech energy programs. Are there estimates, how many more households, how many more public organizations, small and medium-sized enterprises would benefit from such programs and whether they would be fairer.

 Another example. When companies with vague ownership and capital take concessions to our nature or purchase the power distribution system, telecommunications, and other important sectors, revealing the lack of ability and sufficient will in the state to protect the public interest.

 Against this background, what are our goals and where do we want to go? Maybe we should set ourselves as the main goal of eradicating poverty and misery, of mastering and overcoming the demographic catastrophe, of stopping depopulation in the already deprived regions, of returning more Bulgarian citizens back from abroad, of becoming a rich country, but how rich? There were such high goals - to reach 60% of the average European level, even 70. I remember that Estonia had set itself the goal of becoming the richest European country and is now somewhere in the middle.

 What criteria should we use to measure this goal, and what does it mean to be rich? I think the ultimate goal is important. But the mechanism we are going to achieve is equally important, and this is definitely a high sustainable economic growth with an increasing share of innovation and high added value production with a focus on competitiveness. I'm not an economist, and I do not dare to give any advice, recipes on how to achieve these goals precisely how to unfold this mechanism. But I think that the words of a great writer, philosopher, and humanist, his pre-death words will be particularly relevant for the builders of modern and future Bulgaria. Are there among you graduates of German high schools? Well, then you should know who the words "Licht, mehr licht" are. Okay, I'll help a bit, Johann Wolfgang Goethe: "Light, more light".

 “At this moment, Bulgaria looks like a construction site, where something is being built, but we don’t know what it is, because it is in the dark. Some people carry construction material in and come back to get some more, while at the same time other people steal that material because it is dark. Some people are managing the construction site, flail around blueprints, but other people are pulling the strings from the dark. Some people are building a wall, but it's so fragile and unstable that they have to start repairing it before its finished because it is dark. Some people are building roads and highways, but they mess up the proportions and holes start appearing because it is dark.We don’t know who are the real owners, the real builders, the real value of the site, or what and to whom is being paid, because it is dark. The media do not tell the truth because they can not see it in the dark or because they do not want to see it. But one thing is clear. Young and enterprising, as well as many foreign investors, leave the site and look for another, lighter site.

 Its high time we turned on the lights – this is the most important and urgent task we must do for Bulgaria, for there to even be a Bulgaria. Let's highlight the processes in the state. Being transparent of ownership, of management decisions, of spending public resources. Have clear rules that apply them to everyone. Prosecution and court have the last chance to regain confidence in them and in Bulgaria by stealing the thieves, corrupt, law-abiding, whether they are from the ruling, from the opposition, from their own magistrate ranks, uncompromisingly.

 When we demand and establish clear and transparent rules and democratic principles, when we restore confidence in the state and statehood, then I am absolutely sure that the initiative and entrepreneurship of the Bulgarian will very quickly lead to the desired economic results.

 So I understand the main role of the state and the participation of each of us. We need to realize that now, more than ever, irreconcilability with arbitrariness and crimes, active citizenship is needed. The way to realize this, the time has shown, that we need people with adequate education and culture, with knowledge about the economic and social processes, of new technologies in Bulgaria and the world, with a different view of the development of Bulgaria and of the world, with other ideas for the future. And most importantly, with a different energy and morality. You are these people. Your future depends on you, it's your responsibility.

And we can take many steps to have a really prosperous society. But two, in my view, are absolutely essential - quality education and information. And I will share my views on education. I welcome every policy and decision that leads to more funding for education. But simply raising teachers' pay and repairing school infrastructure we will not achieve the quality education we need. It must be competitive. In some countries, for example, they are already studying information technologies programmed in kindergartens. How will our children compete with these children in 15-20 years?

 I also want to give a somewhat lateral look to the education system. Out-of-school forms of education that can and should involve public organizations, parents, state. In February, during my visit to Yerevan, I took a look at the TUMO Creative Technology Center, created by public and private initiative, but with the huge support of the state. For me, it was a mixture of emotions. Admiration by the magnitude of the thought and actions of the hosts and a disturbance when compared to what we are doing here. Imagine an enormous beautiful building with halls filled with the latest generation of computer stations. I'm not saying computers, but computer stations, cinemas, studios. And children, hundreds of children I saw that day, organized in groups and projects by young enthusiastic instructors. Every day after school and on weekends thousands of children pass through this center, voluntarily and free of charge.

 How different from schools! These expensive modern computer stations with modern, latest-generation, licensed software that is not available in school. These wonderful young instructors, highly trained in their field, not in available at school. These projects, specially developed, and programs where children acquire important competencies in a variety of fields, such as programming, modeling, computer graphics, animation, design, photography, directing, etc., which cannot be professionally taught in school, and with these competencies these children become absolutely competitive on the world market.

 And another important thing - part of the instructors were young Armenians who return periodically from Silicon Valley, from Hollywood, from Google, from other world corporations, and with great pleasure share their knowledge and experience with these children aged 12 to 18 years. Such centers were already being built in other Armenian cities. They are also being built in Paris, Moscow, Dubai, Beirut.

 Building such centers in every bigger Bulgarian city will not cost much. But we give, as I have already mentioned, billions for construction and rehabilitation. I do not blame anyone. This is an out-of-school form. But a nation that does not follow what world processes are, where the world is going, what competencies it wants from its citizens in the future that does not create these conditions, I say nation altogether, which, invests in its styrofoam instead of its children, leaves its kids in misery, misery, and ignorance, such a nation has no joyous future.

 I will readily support every government that prioritizes such policies and supports them with real action. I will work enthusiastically with this government, for which these policies are a value and an inner conviction.

 A few words about higher education. And I will share your experience with two different models that I have passed through. The first is the Air Force and the Rakovski Military Academy. How to tell you, despite the extremely busy schedules, you can afford a lighter mode during the semester. It is important, however, when the session comes, to have all the questions. Take all the lectures, all the notes, all the textbooks, hang up, read everything, remember it, reproduce it without a mistake in the exam. You become an excellent student. Maybe it sounds familiar to you. I do not know how he is with you at the moment.

 The other model. Then I went to Air War College, the US Air Force Strategic Academy. Right from the beginning, to make my life easier, to orient myself in the situation, I asked for the exams. It turned out we can’t understand each other. They can not understand what I'm talking about. It turned out that there were no conspectus, no sessions, no exams, but there was another thing. All topics, lectures, sessions are specified for the year ahead with absolute precision. All reading materials are distributed. Every night you have to read them. You have about 100 pages on a subject that is tomorrow. The next morning, a prominent speaker arrives in the auditorium - a minister, a scholar, a general, a bank owner, or a large corporation, a prominent journalist, a public figure, etc. who turns all this upside down, what you have read. After that, we break down in seminars, close at the seminars, at least four hours of complete analysis and discussion of what has passed.

 At the same time, two teachers are constantly with us,  provoking questions and registering every hour, every minute for each one. Participation, activity, formulation, defense, and imposition of such leadership. By the way, you run essay programs and you are forced to write essays of varying volume, on different topics, with different transmission times. You’re out on a second delay. An extremely competitive environment, very tense, in which you have to build on your knowledge base, defend your own views. Competitive, because only the first 20 are awarded an excellent diploma and this is an absolute guarantee for a glamorous career in the Air Force or the US State Administration.

 And here are the two models. One - teaching, memorizing and reproducing finished, glimpsed I can say, knowledge. The other model - stimulating critical, creative, strategic thinking, developing leadership skills and self-learning skills for a long period of time after you finish this school.

 I am absolutely convinced that our higher education system, and beyond that, of course, must not only offer the necessary knowledge but also educate personalities and leaders with the necessary competencies for the challenges of the future. And the future belongs to those who are able to build an effective system that will allow them to obtain the first necessary information, transform the information into knowledge and apply this knowledge before their opponents. Apparently, this is how it works and the world is working.

 And with that, I will finish. I'll give you an example of the information. In recent years I visited the State of Israel twice. The first time, three years ago, I was at the invitation of their Air Force Commander and saw a system for acquiring and analyzing object information. The visit also included familiarity with the base for unmanned aircraft - 6 squadrons, but not with toys, huge 15-meter-long airplanes with a state-of-the-art reconnaissance equipment on board across a wide electro-optical spectrum that were flying over this small state 250 hours a day , complete information not only about the immobile, but also about all objects, including people who are subject, interest in the security of society. And this information is also used for business and environmental purposes.

 The second time, last month, I had the opportunity to get acquainted with a system for acquiring and analyzing information about processes in the fields of economics, banking, energy, cybersecurity. This was done in the so-called CyberCity, initiated by Prime Minister Netanyahu, and united the interests and capacities of the state, business, education, and science. By the way, when we met Netanyahu, he started the meeting with an interesting slide. It showed me the top 10 of the world's most powerful companies - 2006 and 2016. In 2006, seven leading companies were in the field of energy and only one in the field of information technology. In 2016, the same figures, except that the absolute domination of IT corporations and Israel actively participated in them.

 You can then refer to Bulgaria and analyze the results for yourself. They are interesting. So for CyberCity. Outwardly it resembles a Bulgarian technopark, but not quite. Inside, young people - engineers, scientists, IT experts, the financial sector, analysts, students - work because it's built up to the university. One of the centers we visited was for energy. But let me tell you that CyberCity is receiving a huge amount of information from around the world. It is processed according to special criteria. Neutralizing cyber attacks and, very importantly, formulating profitable management and defense strategies. In the energy hall - a huge screen, an on-duty team. This satellite map screen shows, in real-time, all power plants, the power transmission network, power distribution centers, and larger consumers. And in real-time, not only the physical state of the whole energy system is monitored, but what cyber attacks are currently taking place and how their neutralization is going.

 We also went to another center. A great electronic map of the world, where interesting charts presenting information about real-time cyber attacks around the world and other interesting processes.

 I asked why was it necessary for a small Israel to monitor the situation and have information from Hong Kong, through Paris, to Seattle. The logical answer is because Israel is developing an export-oriented economy and joint ventures with many countries, so it is important to know the situation in the regions and these countries.

 But for me, the real answer is the following: in today's digital and global world there are no small and big states. There are countries with big and small ambitions. There are countries that persistently pursue, united, their ambitions. There are also states that have resigned, lost faith in their own abilities, and have shrunk in the shell of their gray everyday life and self-pity.

 I wish you great ambitions - personal and national. And a lot of strength and faith to do them.

Good luck!

Question: Martin Petkov, MAE specialty. Mr. President, thank you for being here at our university. We also thank the student council for organizing this big event. My question is related to one of the priorities of the Bulgarian Euro-Presidency. As we know, cohesion policy is one of these priorities. How do you see its future?

Rumen Radev: will answer your question directly. The fundamental principles, the most important for me in the EU - are unity and solidarity. Cohesion is a high manifestation of solidarity. There is definitely a future and there must be a future, but it depends on us how aggressively and competitively, we, as a beneficiary country, are going to work so that cohesion continues. I will also share your personal experience: at the European Council meeting in March last year - because at that time it was an official government and I participated as President at several meetings, the cohesion policy was not at all embedded in the draft of the Rome Declaration. I made a very argumentative statement which was adopted - this policy was set out in the Rome Declaration and as a priority in two sections, respectively, it will continue in the Long-term Financial Framework, from which we already expect first results in May. But it is very important for us how we will keep going inside and what we will stand for because there must be a very good balance between infrastructure and human capital. I do not know if you can imagine how you feel the results of yourself in Cohesion Policy, can anybody measure it? But one thing is certain - we need to have much more attention to investing in human capital, it is vital for Bulgaria. I'm not saying that infrastructure is not important, but human capital will be decisive. And you as the people who are dealing with the economy must take into account the risks of the future, let us have option B how will Bulgaria and the Bulgarian economy look like in years when there may be no cohesion policy. What restructuring will we have to do, are we ready to do it?

Also, have not all European funds weakened our initiative, entrepreneurship and, I can say again, the word "aggressiveness" to attract resources? Obviously, we will have to think more and more, to be ready to get loans. And that means being very, very, very responsible for everything you do and working hard so you can return your loans.

Question: Hello, my name is Marinela Apostolova and I study business informatics, third course. The ECB is deeply worried about Bulgaria's entry into the Eurozone. Do you think we are ready for the "Club of the rich", should the Bulgarian citizen and taxpayer be worried? Thanks!

Rumen Radev: Surely our future is in the Eurozone. Otherwise, the EU itself is losing meaning in the long run. All countries must be in the Eurozone. The question is when and how much readiness we will get there. We are now ready for the European Monetary Mechanism - we have the ambition to submit, as you know, a membership application as soon as possible. We have met the stringent financial requirements for a deficit, inflation, currency sustainability, and so on. The very fact that we have been on a currency board for 20 years is enough to have confidence.

You said the Club of the Rich - the decision is not political, it is not the EC, the decision about our readiness is at the ECB, but there is always a political nuance. I remember when last year we met with Commissioner Dombrovskis, and shortly thereafter, Mrs. Merkel said the same thing: your main criterion should be raising income. The real convergence index is extremely low and this disturbs our partners. In recent Eurostat studies that came out, we are, if I'm not mistaken, 48 percent. This is what bothers everyone. And I think efforts should go not so much to fight outside and to political lobbying, but to a strong economic and social policy so that we reach this convergence index.

Moreover, when we take into account all the economic crises that have unfolded especially in certain countries in the Eurozone, we have to make a very clear plan of what we will achieve and a clear risk analysis and assessment. Without them - just to advocate for membership, will be a little risky.

Question: Hello! My name is Georgi Stamatov - a student, second year, specialty "Human Resources". My question is - on Saturday morning the United States, Britain, France struck Syria with missiles. Do you consider this operation to be successful, right and why?

Rumen Radev: I have already mentioned the US Air Force Strategic Academy - there the main discipline we were studying was "Effectively based operations". The success of a military operation is judged by the effects it achieves. Especially for this operation military effect - negligible. Financial effect - minus half a billion dollars. Political effect - mostly internal to the states that struck the blow. In my opinion, the main effect was on the UN. This operation has proven that the UN is increasingly overlooked and no one can replace it for the time being, and this increases the risk to the world instead of reducing it.

I also want to say that the situation in Syria differs greatly from the two wars in the Gulf, Kosovo, and Libya. Then it was simple - we had a coalition against the regime. Now we have the United States, France, the United Kingdom, and we have other strong players - Turkey, Israel, Iran - all of whom are pursuing their own interests and conducting independent operations. All countries need to be aware of this fact. And, above all, the big difference - Assad is backed by Russia with restored military power and tangible presence and commitment. This is what everyone has to realize. It must also be realized that the strategies of past conflicts cannot be implemented in this situation because they can face even bigger challenges.

And all that we all observe - the politicians of all countries, all the participants are increasingly tempted to bring in aircraft, ships and other equipment to realize their political ambitions. However, it should be borne in mind that when you send all this technique, these weapons are driven by people with their emotions, I can say, and fears. Just a drop of nerves, a mistake, and we are on the verge of a direct collision. That is what I have to say, so my call is: "Less weapons, more dialogue".

Question: Hello, colleagues! My name is Antonia Todorova, third course, "Law". I first want to thank you for being here today, we are honored. You have the greatest approval among politicians in Bulgaria, which brings you a lot of responsibility. It is obvious that you are a responsible statesman looking at the future. How do you intend to realize the future ideas and do you think to create a political party? Thank you!

Rumen Radev: In fact, this question was as much as the whole lecture, thanks for that. The president is president of all Bulgarians and he cannot create political parties. But if people's frustration with the political status quo continues to grow, we will witness the creation of new parties and I understand Bulgarian citizens.

The full script is available in Bulgarian here

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Alex Dimchev

Alex Dimchev is a writer, editor, and weapons master for EUscoop.com

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