US embassy cable - 05SOFIA1545

UNCLAS SECTION 01 OF 02 SOFIA 001545 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAID, PREL, ASEC, BU, Floods 
SUBJECT: BULGARIA: AS FLOOD WATERS FALL, EXTENSIVE COSTS 
LOOM; AGRICULTURE HIT HARD 
 
Ref: A) SOFIA 1224; (B) SOFIA 1272; (C) SOFIA 1398 (D) SOFIA 
 
1404; 
 
1.  SUMMARY:  Though government officials are still 
completing on-site damage assessments, their preliminary 
estimate of flood losses stands at one billion leva (USD 625 
million) and 10 deaths.  A recent USDA report shows the 
agricultural sector has sustained substantial damage, 
estimated at USD 160 million.  Flood waters have affected 
many areas of agricultural production, resulting in crop and 
livestock losses and damage to agricultural infrastructure 
and equipment.  To date, the government has extended a total 
of 247.5 million leva (USD 155 million) for immediate flood 
recovery operations, but continues to rely on EU assistance 
to cover most of the damages.  USAID has provided a total of 
USD 450,000 to CARE-Bulgaria and the Bulgarian Red Cross for 
flood recovery operations.  END SUMMARY. 
 
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COST OF FLOODING CONTINUES TO RISE 
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2.  The figure of USD 625 million in damages is likely to be 
revised upward, as both government and municipal bodies 
continue on-site damage assessments, revealing the full 
scope of the disaster.  According to preliminary information 
from the government, about 16,000 homes and buildings were 
damaged by the floods.  Nearly 200 residential buildings 
were completely destroyed and another 1,292 residential 
buildings remain uninhabitable.  In addition, hundreds of 
bridges, dikes and drains, as well as substantial segments 
of the railroad and road systems, were damaged. 
 
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AGRICULTURAL SECTOR HIT HARD 
---------------------------- 
 
3.  Flood waters had a substantial effect on agricultural 
production, resulting in the loss of crops and livestock and 
damaging agricultural infrastructure and equipment.  The 
government's preliminary assessment estimates agricultural 
sector losses at 72 million Bulgarian leva (USD 45 million), 
of which USD 2 million is due to damaged rural 
infrastructure.  However, it expects total damages in the 
agricultural sector alone to reach 123 million leva (USD 77 
million).  The actual cost will be better known after 
flooded areas have been drained.  Regions planted with 
sunflower and wheat were the hardest hit agricultural areas. 
 
4.  A recent USDA report, however, estimates total losses to 
the agriculture sector even higher at USD 160 million.  The 
report finds that of the estimated loss to the agriculture 
sector, 43 percent is due to reduced yields in total grain 
production; 11 percent to reduced grape production; and 9 
percent each to reduced vegetable and fruit production. 
Livestock losses have been estimated at 6,000 pheasants; 
2,407 poultry; 426 beehives; 267 pigs and 124 sheep.  The 
report also shows that the damage to the irrigation 
infrastructure, most of which was built in the 1950-60s, is 
estimated at 31 million Bulgarian leva (USD 19 million). 
There are other non-quantifiable costs, including reduced 
competitiveness of Bulgarian agricultural products due to 
deteriorated quality and higher production cost, the need 
for more expensive imports due to short supply of local 
produce for the canning industry and wine manufacturers, and 
increased consumer prices. 
 
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NEW CABINET SETS PRIORITIES, RELIES ON FOREIGN AID 
--------------------------------------------- ----- 
 
5.  While a Parliamentary ad-hoc commitee is preparing a 
draft crisis management law, the newly-approved government 
has outlined its basic emergency relief and rehabilitation 
efforts.  The short-term objectives are to ensure that 
schools are ready for the new school year, identify and 
tailor assistance to different household needs, accommodate 
those left without homes, clean up river beds, restore dikes 
and rehabilitate roads and railroad infrastructure.  To this 
end, the government has extended a total of 247.5 million 
Bulgaria leva (USD 155 million) for immediate flood relief. 
Of this total, 9 million leva is for financial assistance 
for the worst-hit households, with each household entitled 
to receive 1,000 Bulgarian leva (USD 625).  The government 
earmarked 120 million Bulgaria leva (USD 75 million) for 
repairing infrastructure. 
 
6.  Bulgaria continues to rely on EU assistance to provide 
most of the financial resources.  The Bulgarian Finance 
Ministry has sent a second request to the EU for the amount 
of 850 million Bulgaria leva (USD 531 million), having 
revised their initial request, which was only for 75 million 
euro.  In view of the extensive damage from the flooding, 
the Bulgarian government plans to request that EU funds 
slated for other pre-accession programs be re-directed for 
flood-related assistance. 
7.  In the meantime, Bulgaria has received humanitarian aid 
from individual countries and international donor 
organizations totaling 1,061,000 euro.  In addition to an 
initial USD 50,000 to the Bulgarian Red Cross, USAID 
provided USD 400,000 to CARE-Bulgaria for flood recovery 
operations.  CARE-Bulgaria used these funds to procure a 
variety of needed resources, including drinking water, food, 
disinfectants, bedding and blankets, protective clothes for 
working in water, and inflatable boats with outboard motors. 
CARE-Bulgaria is also distributing public awareness leaflets 
on basic sanitation and disinfectant usage.  (Note:  The 
Embassy's public diplomacy program surrounding these 
donations has been exceptionally effective.  Our assistance 
has been warmly recognized throughout the government and the 
country.  End Note.) Hungary recently announced that it will 
also provide humanitarian aid (primarily disinfectants). 
 
8.  COMMENT:  Though the waters have receded and 
humanitarian aid has eased the most urgent effects of the 
flooding, substantially higher costs of the overall damage 
are looming.  This could well be the most costly flooding in 
Bulgaria's history, and the Bulgarian government will need 
substantial assistance.  Aside from the lack of financial 
resources necessary for flood recovery operations, longer- 
term problems including proper crisis management law and 
clear-cut guidance for emergency relief and rehabilitation 
must also be addressed.  Although the economy in the first 
half of the year remains on solid footing, the recent 
flooding will likely have a negative impact.  Agricultural 
sector output, which accounts for less than 10 percent of 
GDP, will shrink further, and flood recovery operations will 
entail substantial budgetary expenses.  The central bank has 
already taken notice, cautioning that flood recovery 
operations will push demand up, possibly leading to higher 
inflation.  The IMF has also warned that budgetary 
discipline must still be maintained even in the face of this 
disaster.   END COMMENT 
 
BEYRLE