Bulgaria’s Lack of Reform Stunts Nation’s Rebirth : East Bloc: Bickering between ex-Communists and opposition leaders threatens to bring down the government for a third time in less than 18 months, scaring off foreign investors.

An idyllic retreat that once nestled the Communist elite among flowering fruit trees and sprawling lawns now stands empty of guests but full of possibilities for a new life as a luxury spa.

The Bankya estate of former dictator Todor Zhivkov boasts a covered pool and sauna that could be readied for visitors in hours. Suites opening out to bird song and pine forests need only to have their king-size beds made. Marble terraces overlooking bucolic vistas beg to host outdoor cafes.

Bankya’s rebirth needs only a cash infusion, and more than a few foreign financiers are pondering the venture.

But investment in Bulgaria remains a risky business in the absence of reform laws and a democratic constitution, both held hostage to parliamentary bickering and a penchant for chasing ghosts of the past.

Former Communists and defiant opposition leaders are mired in a new bout of name-calling and posturing for early elections, which threaten to bring down the Sofia government for a third time in less than 18 months.

Deputies to the Grand National Assembly have shelved crucial reform bills to comb through secret police files and have busied themselves trading accusations over who worked with the Communist dictatorship, overthrown in November, 1989.

“At this crucial moment, we need legislation badly,” President Zhelyu Zhelev said in an interview. “This is not the time to engage in political squabbling, to look into the past and draw petty political dividends.”

Indeed, Bulgaria is reeling from its worst economic crisis in postwar history, with food and energy shortages taking a heavy toll. Infant mortality and contagious disease have shot up for the first time in decades, with epidemics of polio, hepatitis and trichinosis blamed on contaminated water and spoiled food. Consumer prices have tripled in recent weeks, while trade and industrial output have taken a free fall. Bulgaria’s gross national product shrank by 10% in 1990 and may decline another 15% this year, scuttling tens of thousands of jobs in a society still lacking an economic safety net.

The only hope for a turnaround is foreign investment to kick-start production and new loans conditioned on Bulgaria’s agreement to repay the $11 billion it already owes.

But as the weeks lapse into months of parliamentary paralysis, the outlook for the future grows increasingly bleak.

Zhelev, a respected writer and founder of the anti-Communist Union of Democratic Forces (UDF), has balanced skillfully between his opposition alliance and the dominant Bulgarian Socialist Party since agreeing last August to serve as head of state. He has won high marks for stabilizing the political crisis that forced out Prime Minister Andrei Karlov Lukanov and his Socialist government last November.

But the nonpartisan leadership named in the aftermath now risks suffering the same fate.

Both the 16-party opposition coalition and the Socialists--the renamed Communist Party--agreed in December to tackle reform laws to facilitate foreign investment and privatization and to enact a new constitution to replace the Communist-drawn blueprint in place since 1971.

But the National Assembly’s calendar has been repeatedly disrupted by partisan fighting. Most recently, warring deputies have been distracted by a scandal involving secret police files and opposition demands that the former Communists be stripped of all remaining property. At the opposition coalition’s insistence, a parliamentary commission was set up to review files of the defunct State Security agency to determine if any current political leaders had worked as agents.

When a Sofia newspaper published a list of 32 allegedly compromised National Assembly members, the opposition coalition was outraged to see that it contained the names of some of its most prominent members.

“The list itself is a provocation,” fumed opposition coalition leader Filip Dimitrov. “It is an obvious attempt on the part of circles of the Bulgarian Socialist Party . . . to discredit people who have nothing to be blamed for.”

The parliamentary commission is under the direction of an opposition coalition deputy, who has publicly confirmed the accuracy of the published list. But Socialists also have access to commission files, and one probably was responsible for the newspaper leak, Dimitrov asserted. He accused the Socialists of feigning interest in preserving the current Assembly only because they fear that new elections will remove them from power.

Deputy Prime Minister Alexander Tomov, a leading Socialist, has dismissed the allegations as ridiculous, charging that it is the opposition refusing to buckle down to business.

Exasperated by the crippling stalemate, Zhelev and Prime Minister Dimitar Popov have been pushing deputies to take the high road and adopt the reform laws and the constitution by the end of May.

But the appeals have fallen on deaf ears. Even the investment laws the two sides agree on remain delayed by political grandstanding, and the most optimistic observers say a minimum of six weeks is needed for constitutional debate.

Bulgarian citizens have become grossly disenchanted with the political fiddling that has placed them at the back of Eastern Europe’s march toward market economies.

While leaders of Zhelev’s party interpret voter disgust as a development likely to favor the opposition force, there remains some uncertainty over the likely outcome of another election.

Sociologist Yuri Aslanov recently predicted that at least 30% will not bother to vote.

Some Western diplomats in Sofia say the current situation is frighteningly similar to that of a year ago when the opposition became convinced it was headed for victory based on strong support in the capital and other large cities.

The Socialists won 53% of the vote in elections last June, primarily from support in the tradition-bound rural areas, where most of Bulgaria’s 9 million people live.

“What we are seeing again in Bulgaria is a picture very similar to that of last year, where you have a very sophisticated (Socialist) organization and an absolutely shambolic (anti-Communist party) organization,” said one Western envoy. “The opposition is still inexperienced, still disorganized and doesn’t have the national infrastructure, despite having had a year to do something about it.”

Election expenses also figure prominently in the conscience of Bulgarians whose state coffers are painfully empty. Many condemn the current parliamentary impasse as nothing more than a selfish battle for power.

“I have the impression all they do is quarrel,” sighed Radka Palyakova, 70, a retired seamstress surviving on the equivalent of $22 a month. “Whatever has been, has been. Let’s leave the past and get to work so we can live better.”

The June vote that was the first multi-party contest in Bulgaria in half a century cost 50 million leva, or about $18 million at the exchange rate in force then. Government spokesman Yassen Indzhev estimates this year’s ballot will cost five times as much because of inflation.

Popov, a former judge appointed in December to oversee a caretaker government after Lukanov resigned, sees the parliamentary flare-ups as natural occurrences in a nation only recently freed from totalitarian rule.

“Such culminations may be unusual for countries that enjoy a free and peaceful development of democracy, but in conditions like ours they have their own logic,” the prime minister explained.

He also defends the leadership’s decision to prosecute Zhivkov, whose 35-year dictatorship drove Bulgaria to ruin.

Case No. 1, as the trial is referred to, was aimed at symbolically righting a devastating wrong. But the protracted proceedings against the ailing, discredited Communist have become a mockery of their original intent, further illustrating Bulgaria’s fixation on the past at the expense of the future.

While parliamentary work has ground nearly to a standstill, Popov has tackled some difficult tasks by government fiat. The lifting of price controls initially sent inflation soaring to triple digits, but it has recently pulled back to about 40%. The government has also curbed the black market by allowing the national currency, the lev, to float freely against the dollar.

Despite those advances, a 30% drop in industrial output can be corrected only by privatization and foreign investment, both held up by draft laws locked in the Assembly.

By entering so late into the competition for limited Western investments, Bulgaria runs the risk of having to settle for the least attractive projects--such as nuclear power stations to supply energy to Western countries where new plants are unwelcome. Oil exploration and tourism also offer some prospects for successful ventures, as Bulgaria enjoys diverse natural wealth--from Black Sea beaches to mineral-rich mountains--and a road network unrivaled in Eastern Europe.

And dozens of former government guest houses, like Zhivkov’s villa at Bankya, are available for private operation as soon as the law allows, said Jordan Hristov with state-run Interhotels.

“We need that law on private investment in order to step on firm ground with foreign partners,” Hristov said, noting that several well-known hotel chains have expressed interest in Bankya.

International financing agencies, such as the World Bank and the new European Bank for Reconstruction and Development, have opened talks with Bulgaria on how to straighten out its economic mess and offer supporting credits for future joint ventures.

But Bulgaria’s progress toward European integration could fall with the fortunes of the government, if the parliamentary paralysis forces new elections before the Assembly’s mandate for reform and a constitution is fulfilled.

“Western countries have sent the very clear message to Bulgaria that one thing this country cannot afford at the moment is instability,” one European envoy said. “The West has just opened the door to various funds. But we want to get across that doors that have been opened can be shut again.”

Bulgaria: On the Brink Again

Just how serious a threat is its political paralysis to Bulgaria? Consider that the Eastern European nation is:

* Suffering some of its worst fuel and food shortages.

* Experiencing increases for the first time in decades in infant mortality and contagious disease, with epidemics of polio, hepatitis and trichinosis blamed on contaminated water and spoiled food.

* Enduring a tripling of consumer prices, with a simultaneous free fall in its trade and industrial output. Its gross national product plunged 10% in 1990 and may plummet 15% more this year.

* Already under the gun to pay debts of $11 billion.

* Confronting the prospects of conducting an election that will triple the cost of the last national contest, which ran up roughly $18 million in bills.

AT A GLANCE

Population: 9 million

Area: 42,823 square miles (about the size of Delaware)

Monetary unit: the Lev

Language: Bulgarian

Religions: Eastern Orthodox, 27%; Muslim, 8% (atheist, 65%)

Economic activity: Processes agricultural, mineral, timber products; manufactures machinery, electronics, chemicals, metals.