Back in the Balkans: under the ashheap of history, hope is still smoldering.

Under the ashheap of history, hope is still smoldering.

Mr. Oliver is the chairman of the Pacific Research Institute.

WHETHER you're a bleeding- heart liberal who thinks that all the world needs is love and plebiscitary democracy, or a hard-hearted conservative who believes that limited government is the sine qua non for freedom, a trip to Bulgaria will make you think again.

In economic performance, Bulgaria is at the bottom of the class of the former Communist countries of Eastern Europe. In 1994, the Bulgarians voted Communists back into power. The Communists postponed needed structural reforms, supported money-losing state enterprises, and slowed privatization -- and that led to the postponement of an International Monetary Fund disbursement of over a half a billion dollars. Last year Bulgaria was the only Eastern European country to have negative GDP growth ( - 5.6 per cent).

Dilapidated Communist buildings, their facing peeling off like old paint, litter the landscape. Monuments to Communism remain, perhaps because the Bulgarians are too poor to dismantle them, perhaps also because the Russians liberated them twice, in 1878 from what they refer to as the ''Turkish Yoke,'' and then again in 1945 from the Nazis. (Also because the Bulgarians have been negotiating with the Russians for gas and don't want to offend.)

In the euphoric wall-tumbling days students in Sofia succeeded in covering the mausoleum of a hero of Communist times with graffiti. But when the Communists returned to power they cleaned it up, and it stands today, pristine, embarrassing, in a central square.

Then too, many Bulgarians are tired. Life is tough. Many people live in what they call the ''jar'' economy. During the summer they farm little plots of land and put up the food in jars; this is what they live on during the winter. Farm machinery is scarce. You see old men and women tilling the land by hand with hoes, guiding donkeys, carrying water from trucks to rows of crops, guarding their flocks by day.

Many are old and depend on their hard-working children to send them money. But the best and the brightest of the children -- or perhaps just the swiftest -- fled after the wall came down: six hundred thousand of them, almost 8 per cent of the population. The rest struggle on, with an average annual wage of $1,000 before taxes, which climb quickly to 40 per cent. Sure, it's tough getting out of a Dark Age. These things take time. But nine years is a lot of time. How much longer will they have to wait? That depends on how fast foreign investment comes to Bulgaria. And that depends on how stable the country seems. Catch 22.

Everything is for sale in Bulgaria: hotels, vineyards, mining companies, small shops -- everything, even raw, undeveloped land. You can get a list on the Internet (www.geobiz.com/fia). Unfortunately, Bulgaria's integrity is also for sale: you may not be able to clinch your deal without paying 10 per cent to some official. Corruption is rife, insists one American official involved in privatization. A British banker disagrees -- corruption in the privatizing effort is ''not that bad.'' And The Economist cautiously recommends ''invest.''

The American said the Bulgarians should push privatization as fast as possible notwithstanding corruption. There are two ways of looking at the fees paid to the highest officials (not counting the president, Petar Stoyanov, who everyone says is honest). The fees can be viewed simply as overhead: you'd pay 10 per cent to a property broker, why not to a pol? The important thing is to get as many businesses as possible out of the hands of the government. But the down side of bribery is that new owners may spend two to three years milking the company just to pay the bribes -- and during that time the economy gets little benefit from privatization.

Politicians are not the only free riders. There are also the wrestlers -- yes, wrestlers. Wrestling used to be big in Bulgaria. You see the has-beens hanging around, overfed, in dark coats and glasses -- mean, probably, but with glazed eyes. They have become ''enforcers'' for ''security'' firms. Our guide said that when she first got her car she didn't ''insure'' it with one of the security firms. Shortly afterwards, the glass of one headlight was smashed. Then someone tried to steal the car. Now she too has a sticker.

But, we were told, the mafia is being beaten back. A law was passed forbidding insurance companies from hiring people with criminal records.

The big mafia, of course, is interested in bigger deals, like making and selling pirated CDs. The mafia was producing forty million copies a year, only one million of which were for the Bulgarians. The rest were for the Russian market. A trainload being shipped to Russia was intercepted and the illegal CDs were found hidden all over the train -- in the seats, inside the walls, in the lavatories. The entire crew had been bribed. Now the ring that produced them has been put out of business.

But the biggest deal of all is gas. While we were in Sofia, Bulgaria closed a deal with Gazprom, the Russian gas company. A major mafia organization was squeezed out of the deal.

Bulgaria is the ash heap of history Ronald Reagan spoke about. The ash is deep, but, even so, the flowers poke through.

Bulgaria is a pretty country -- our host insists it is more beautiful than Switzerland. In Sofia, a number of nineteenth-century buildings survived the World War II bombing, giving the city that stately European look. And the mountains, snow-capped even in May, provide good skiing in winter only 45 minutes from downtown Sofia.

The ground floors of the buildings in Sofia are mostly shops now (including Cerruti, Escada, and other international names). During the Communist days there was nothing to sell, nothing to buy, and so the ground floors were used for small apartments. Now there is color, commerce, life. There is also a ''women's market'' in Sofia, where fresh food is sold. In Communist days, the food was shipped to the Soviet Union.

And there has been direct foreign investment. Bulgaria claims to have one of the most liberal foreign-investment codes in Central and Eastern Europe. It allows companies to establish joint ventures, buy Bulgarian companies, make portfolio investments, and freely repatriate profits. American Standard, the plumbing concern, has built a factory in Bulgaria. Shell Oil is buying gas companies and building gas stations; in two to four years it may become a major supplier of energy to the country, which would relieve Gazprom --and its shady fellow countrymen -- of its monopoly power. Total direct foreign investment in 1997 is estimated at a half a billion dollars, with U.S. companies providing about $60 million of the total.

Some of the young people we met said there was not yet a feeling among their peers that they had to pull together for Bulgaria. But new institutions -- stepping stones to civilization -- are springing up to change that. There are a number of homes for wayward children, an Outward Bound program, a Junior Achievement program, and a program to recognize and reward brave journalists.

The Church (Orthodox), compromised by centuries of complicity with the state, is not yet a force for reform and rehabilitation. But people are getting married in church now, and young couples are having two or three children. Under Communism most had only one.

In 1990 the American University in Bulgaria was established in Blagoevgrad (12 miles from Macedonia). AUBG, housed in the old Communist Party headquarters and accredited in the U.S. through the University of Maine, provides a Western, liberal-arts higher education. We went to the graduation ceremonies. The band played Elgar's ''Pomp and Circumstance'' while the graduating class and the faculty processed in. The ceremonies opened with the playing of the Bulgarian national anthem and ''The Star-Spangled Banner.'' The American ambassador spoke about change. Her father, who had been U.S. ambassador to the Soviet Union, had spoken at her own graduation from Radcliffe about change.

During our visit to the library we checked the computer catalogue and found the complete works of Russell Kirk and William F. Buckley Jr. -- ensuring that young Bulgarians can become knowledgeable in ghosts, spies, permanent things, and the tablets. The ash may be deep, but even forty years of it were not enough to smother completely the spirit of hope, the yearning for freedom, and the knowledge of what is required to build a civil society.

What can the U.S. Government do? Not much. Most Americans probably haven't a clue where Bulgaria is (Sofia is 35 miles east of Serbia). In the end, Bulgaria, which has rejected Communism twice (the Communists were thrown out a second time in January of 1997), must be saved by Bulgarians. The U.S. Government sends about $30 million a year. More might be better, but that's not clear. We should ''encourage'' them to privatize faster, to lower their tax rates, not to tax American aid, and to keep their market free in order to attract foreign investment, essential to their growth. Bulgaria's last best hope for rebuilding a civilized society is Bulgaria.