After winning the general election on 18 December 1994, the Bulgarian Socialist Party formed a government of non-partisan experts, members of the political club called Ecoglasnost and members the Bulgarian Agrarian National Union, a mouthpiece of the former communist regime. What happened during the Videnov cabinet? It failed to continue the economic reforms as a result of which the economy crashed and by the end of 1996 the country was plunged in hyperinflation. The government’s policy aimed to revive the ailing state enterprises, yet it controlled the prices of their output. So, the enterprises, whose production depended on importing resources went downhill. The lack of bank control allowed banks to extend unsecured loans and that in turn resulted in banks failing in a domino effect. The government launched what was termed “mass privatization” using so-called “bond books”. In 1996 many Bulgarians were duped into buying “bonds” which would entitle them to stock or involvement in the management of enterprises up for privatization. Two years later the companies were transformed into holdings, some of which soon went under and the minority shareholders lost their money. But let us hear Prime Minister Zhan Videnov talking at a press conference one year after his government assumed office:

“We must not forget that the Democratic left took over the country’s administration at a time of unprecedented economic crisis, a drastic decline in output, a huge number of failing enterprises, abandoned or taken over by competitive markets, a collapsed banking system. People needed stability and that was something that proved extremely difficult to attain. In our election platform we assumed the commitment to stop the ruination and to revive Bulgaria as a prime strategic objective – by changing the economy, reviving production, protecting farmers, setting down clear cut rules in market relations, a social and effective privatization, international integration. We promised change, justice and security.”

But reality was to prove very different. Because of the bad grain crop across the globe in 1995 the EU, USA and Canada restricted grain exports. Yet this did not stop the Bulgarian Socialist Party from extending the deadline for the export of grain and allowed grain from the previous but also the current harvest to be exported. Thus, the first signs of shortages appeared in October 1995. The national reserve proved practically empty and wheat prices almost doubled. In March 1997 an investigation was launched into the grain crisis and it went to court in 2009 when all defendants were exonerated. The court ruled that Vassil Chichibaba then agriculture minister, his deputies and Kiril Tsochev, deputy prime minister and minister of commerce were not guilty of causing the crisis. Though no one was convicted the crisis was very real, 15 banks went bankrupt hyperinflation of over 300 percent raged. All this triggered protests that brought the Videnov cabinet down; the BSP then refused to form a second cabinet within the same term of office. But it was not just the crises and the inflation or the protests - organized crime was getting out of control. On 25 April 1995 one of the founders of the major criminal grouping VIS, Vassil Iliev was shot dead, execution style. To this day his murderers have not been found. Zhan Videnov handed in his resignation as Prime Minister and as socialist leader on 21 December 1996 and that marked the end of the bickering inside the party – “for’ or “against” the government that had developed into a full-blown war after the loss of the presidential elections on 3 November 1996.

But there is a second theory as to why Videnov resigned – his conflict with Andrey Loukanov who was head of the Bulgarian-Russian gas company Topenergy. Loukanov went to war with Videnov over the Prime Minister’s demand that Russia sell natural gas at lower prices while keeping the gas transmission network Bulgarian. Topenergy mediated between Gazprom and Bulgargaz and Loukanov was a major figure in all matters regarding the company. But soon he was to become a problem himself because he would not allow private companies to become mediators which was Gazprom’s aim. As to his assassination – the perpetrator remains unknown to this day – we shall be going into that next time.

Now, 18 years on, the Videnov cabinet is history and Zhan Videnov himself is out of politics. Yet his cabinet will not be forgotten and will serve as an example of how a country must not be governed in the hope that the winters of our discontent shall never be repeated.

English version: Milena Daynova