I am very pleased to be here this morning to address this group on this topic and I want to first congratulate the organizers of this event - the Center for the Study of Democracy - for this open discussion of a very difficult issue. This discussion helps raise the awareness about the public and private sectors, about the negative effects of organized crime and corruption. And this morning, for the most part, I'm going to speak about organized crime.

The combined effect of opening the borders in Europe and then this transitional period of post-Soviet market economies in Eastern Europe has contributed to the ease with which organized crime and illegal profits can move through the borders. This in turn has contributed to the expansion of criminal networks. By its international nature illegal activities such as trafficking in arms, narcotics and people necessarily involves the co-operation of customs agents, border police, law enforcement units, members of judiciary and other government officials.

Organized crime in Bulgaria is not a new phenomenon. It is simply more visible today. It existed before the change and in that time I think it was simply integrated more closely into the system. But the effect of the whole system to the establishment of democracy has created some confusion. But we should make no mistake - organized crime is absolutely incompatible with democracy. Democracy and successful market economies rest their foundation on the rule of law, the development of equal rights of citizens and equal opportunities. And organized crime is a system which seeks power and financial reward by illegal means. It has leaders and organizations, it uses fear, violence, bribery for advantage and operates outside the law and in some cases it may appear respectable.

But the effects of these organizations are devastating on the society and we cannot consider organized crime as an isolated fact, a group that exists away from decent people. Its effects are pervasive. Organized crime corrupts young people and gives them the wrong signals, wrong rule models. Millions of dollars are lost each year in taxes. This is money that is available for health programs, for schools, for social services and other serious requirements of the society. These people have no concern for the well-being of the people of Bulgaria. It corrupts the legal system and the courts cannot become effective. And it damages the moral fiber of society. As wealth is generated by organized crime and these groups grow, so there is a need to find a legitimate means to hide their profits and therefore we face money laundering - a movement of money through shell companies and some would appear to be legitimate businesses.

Organized crime also gains access to public administration, participates in privatization, procurement and concession processes throughout the country. The economic effects are significant and a substantial harm is inflicted on the national economy from the lost of taxes, which I've mentioned, strip resources of state on businesses and reduced investor confidence in the country.

Secondly, bribery and corruption tilt the playing field against honest businesses and create unfair advantages to those willing to engage in unethical and illegal practices. Ultimately these economic effects impede the development of a middle class which is key to a stable economy and a political base. A further danger is posed by the increase of organized crime money being used for high-level influence and patronage to assist them in their activities. This is a corrupt relationship between organized crime, politicians and government officials that threatens the very security of the state.

Bulgaria's perspective membership in NATO makes this challenge all the more urgent. The threat to our security today, and I'm not talking about just the security of Bulgaria but I'm talking about the security of the US and the Western countries, is not just military but terrorist and criminal groups thrive on corruption and lax enforcement of laws and regulations. And this is not confined to a single nation, these are global problems.

Organized crime is a major issue in Bulgaria. Organized crime in Bulgaria is too prominent and too powerful and everyone knows it - the people know it, the legal system knows it, the police know it, prosecutors and courts know it and the international investors know it.

But I have faith in Bulgaria. The country is going to deal with this plague. People at some level and at some point are going to demand that the country deals with it. The question is when and how that will take place because to deal with it would require a unified determined and forceful effort of leaders, institutions and citizens and it would not be easy. But I again have faith and I hope that this conference will bring about new ideas and will generate a new enthusiasm, strategies for addressing these important issues. I wish you very much a productive conference. Thank you.