THIS autumn, the US and Bulgaria are expected to sign an agreement to build three American military bases in the country. According to Bulgarian armed forces commander General Nikola Kolev, the bases would probably be opened either at the end of 2006 or the beginning of 2007, at the same time as the country's accession to the European Union. Many are asking whether the greater US military presence will encourage or discourage Bulgaria's economy. 

The bases

The bases in Bulgaria are part of a larger US plan to shift its troops currently stationed in Central Europe further east, as a Soviet invasion in Western Europe is no longer a threat and the US's current military issues centre on the Middle East. 
In December last year, Defence Minister Nikolai Svinarov said that a permanent deployment of US troops to Bulgaria would involve up to 3000 people.
The following month, NATO's top commander in Europe, General James Jones, said in Sofia that he planned to recommend to the US Congress that "four or five" military bases be built in Bulgaria.
Jones visited three possible locations - the Novo Selo base in Eastern Bulgaria, the Bezmer airbase near Yambol to the southeast, and another in the Black Sea port city of Bourgas.
Novo Selo has been used for several years as a training centre for French and Italian army troops.
The Graf Ignatievo airbase, near Plovdiv in the south, the naval base at Atia and the airport at Sarafovo, in Bourgas, were also named as possible locations. 
Sarafovo had been used as a refueling station for US aircraft that were performing operations in Afghanistan and Iraq. 
Svinarov said that the Bulgarian army would achieve a new level of interoperability with these bases. Bulgaria also hopes to get support to modernise the army, rather than financial compensation, in exchange for use of its military facilities.
There is another possible benefit. The Center for Data Analysis at the Heritage Foundation, an American conservative think tank, have pointed out that US bases all over the world have attracted US investors, which have been beneficial to host countries.  

Worldwide experience

The Heritage report concludes that the tens of millions of US troops deployed since 1950 have had a clear and positive impact on the countries where they have been welcome. 
Based on data from 94 countries, the report said that there was a positive unconditional relationship between troop deployments and growth. There was also a positive conditional relationship that factors in other variables like war, political stability and initial GDP levels.
For example, a deployment of 500 000 US troops to a host country spread over five decades was associated with an increase of one per cent annual GDP growth per capita.
According to the report, the evidence collected rejected the hypothesis that the US military was economically exploiting or harming nations where it was deployed, which affirmed the non-imperial nature of US deployments in modern history.
The authors said that troops provided stability and made investors more willing to invest in a given country. US troops also brought with them relatively successful political and economic ideas from the United States, which host countries often choose to adopt.
The security guarantee of US troops was a powerful signal to foreign investors, perhaps even a deciding factor for firms choosing where to locate new factories. US-guaranteed security would therefore spur higher levels of domestic and foreign direct investment and would lower the risk premium in interest rates.
The presence of US security forces allowed host nations to lower their own defence expenditures, which resulted in sizeable savings. This allowed the country to use more of its own resources for physical and human capital accumulation.
The presence of US troops in an allied host country logically fostered human rights, stable economies, and the rule of law, if not outright democracy. Often, the promotion of pro-growth institutions was intentional, but the effect was presumably just as powerful, and more common, when unintentional. Uniformed US soldiers usually mingled with local populations and are highly visible ambassadors of everything from racial equality to technological prowess.
The Heritage writers were sceptical that the troops-growth relationship could be exploited. Troop deployments are likely to be effective in enhancing growth only when founded upon an alliance with the host country and coupled with intangible factors involving diplomatic efforts and cultural relationships.
Their models said that the duration of US troop deployments matters more for long-run economic growth than overall force strength. In terms of economic growth, there are diminishing returns for every additional soldier deployed to a foreign country. The growth benefit of US troop deployments grew stronger over time.
Countries with high US troop presence during the 1950-2000 period enjoyed GDP per capita levels in 2000 that were nearly double the world average, while the 50 countries with the fewest US troops had income levels that were roughly half the world average. Likewise, countries with the most US troops grew nearly twice as fast as the world average, while countries hosting the fewest troops grew at only two-thirds the world average over four decades.
Japan and Germany experienced miraculous economic expansions in the decades following World War II. In both cases however, a US military occupation coexisted with a massive US effort to reconstruct the countries' political and economic systems. 
Most cases of large US engagements cannot be characterised as "occupations". Even the US deployments in Japan and Germany a decade after World War II ended had become less occupations than part of mutually supportive Cold War alliances. 

Bulgarian perspectives

It is hard to see the Heritage Foundation's model working in Bulgaria.
Provided that no more than 3000 US troops will be stationed in Bulgaria, the country could hardly be placed among the beneficiaries of the troops-growth relationship. Some economists have said that such a small number of military personnel may not bring in even a single US dollar of investment. Even the most enthusiastic American company would not consider coming to Bulgaria, even assuming it could locate it on the map. 
US-Bulgarian economic relations in the past 12 years have not been at a high level. Bulgaria is a small market, and even its strategic location or strategic future, as an EU member, cannot attract the attention of serious investors. 
It is also hard to see Bulgaria benefiting from added security. The recent world situation shows that countries hosting US military personnel have not become safe havens. On the contrary, they have become targets of terrorist groups.   
A look at Bulgaria's neighbour Turkey may be worthwhile. US military presence and even greater military aid have boosted Turkey's economy, but Bulgaria is unlikely to gain even a fraction of the small portion the US injects into its neighbour. It also seems that Turkey is not particularly secure even with the US military. 
It appears that Bulgaria will have to invest some serious money to protect itself from terrorists after it starts hosting US military personnel. The launch of the bases in Bulgaria might have a negative impact on non-US investors that have already come or are planning to come to this country. It is also worrying that the US military is eyeing the Black Sea coast, which serves as one of the main sources of income for the country thanks to tourism. 
The Heritage Foundation's argument that the US military presence would foster institutions and improve human rights and the rule of law may be its weakest. Considering that state institutions in Bulgaria have never had a serious influence on the population, one wonders how a mere 3000 US troops could change anything.