A long series of crises shook Bulgaria's political establishment in the second half of 2018. After three cabinet ministers from GERB party were replaced in response to a deadly bus crash at the end of August, the government also lost a vice-PM - Valeri Simeonov. The co-leader of United Patriots nationalist alliance that is the junior partner of GERB in the government coalition fell victim to a long-running protest of mothers of children with disabilities, whom he recklessly offended. His resignation was preceded by a division among the nationalists which might result in a split of United Patriots on the eve of European Parliament elections in 2019.
Bulgaria was shaken by a number of protests, marches and vigils since the end of the summer. In August, farmers protested against the mass culling of animals in Strandzha, near the Turkish border. In September, people took to the streets in defence of two arrested investigative reporters, while in October mass vigils commemorated the killed Ruse-based journalist Victoria Marinova. The ongoing protests of mothers with children with disabilities took down vice-PM Valeri Simeonov, while a series of state-wide marches against increased fuel prices and taxes on cars sparked fears of a new Winter of 2013 protest wave that took down the first GERB-led government.
In 2019, three years after the Bulgarian National Bank completed the last comprehensive assessment of the financial sector of the country, it's time for round two. Six Bulgarian banks will be probed once more after Sofia launched its bid to establish close cooperation on banking supervision with the European Central Bank as part of its request to join the EU's Banking Union. The six lenders whose assets will be subject to a quality review include foreign-owned UniCredit Bulbank, DSK and the United Bulgarian Bank, as well as domestically-owned First Investment Bank, Central Cooperative Bank and Investbank.
In November, the leader of the parliamentary group of the ruling GERB party announced that Sofia would not join the UN Global Compact for Migration, following pressure from socially conservative forces within the government and from the Socialist opposition. Even though Sofia's participation in the international deal on migration was diplomatically ensured months earlier, the final decision was changed just a few weeks before the document was adopted at a UN conference in Marrakech, Morocco, in December. Bulgaria may side with Hungary and Poland if the European Council tries to initiate a procedure to strip Budapest and Warsaw of their voting rights due to their alleged breach of rule of law principles. So far, Bulgaria's parliament and the coalition government have both been in favour of backing Hungary's leader, Viktor Orban. Members of all Bulgarian parties represented in the European Parliament opposed its declaration that bashed the Hungarian authorities' attack on judicial independence, media and academic freedom in September.
Bulgaria will try to set in motion two major energy projects in the coming months. The government is currently seeking private investors who would complete the construction of Belene nuclear power plant abandoned in 2012. Additionally, it is gearing up to build a new pipeline that should carry Russian natural gas from Turkey to Central European markets via Bulgarian territory.
Bulgaria's vice-prime minister for demography and economy, Valeri Simeonov, stood down and returned to his seat of a member of parliament in mid-November after more than a month of protests. The leader of the National Front for the Salvation of Bulgaria, one of three nationalist parties backing the GERB-led government caused public outrage after calling mothers of children with disabilities marching for a fairer Disability Act "shrill women" using "their supposedly ill children" for their own gain. Mariana Nikolova, chief of staff of Mr Simeonov and a long-time civil servant, took over his job.
In the last days of November, the government allocated 200 million levs (100 million euro) for the maintenance of Bulgaria's ageing fleet of Soviet-made MiG-29 fighter jets and Su-25 ground attack airplanes. According to the transcript of the cabinet meeting, the money will come from the 371 million levs (185 million euro) budget for the armed forces upgrade for 2018 that was supposed to finance three major modernization projects of the Bulgarian armed forces, including the purchase of new fighter jets, navy vessels and armoured vehicles. All of the aforementioned projects have made little progress in the past year.
On 8 November Prosecutor-General Sotir Tsatsarov announced he had asked the country's parliament to lift the immunity of six MPs, five from opposition Bulgarian Socialist Party and Volya ("Will") party and one from the ruling GERB. The three Volya MPs, including party leader and businessman Veselin Mareshki, face charges of extortion, while the ex-journalist, BSP member and staunch critic of PM Borissov Elena Yoncheva is suspected of laundering money from the now defunct Corpbank.
On 30 November Bulgarian president Rumen Radev said that "Europe should not become hostage to Ukrainian domestic politics", basically reappraising the words of Russian President Vladimir Putin that the 25 November Azov sea incident was 'a provocation' by his Ukrainian counterpart Petro Poroshenko seeking to rally support ahead of the upcoming elections in Ukraine. This comes in contrast to Mr Radev's previous comments that resonated with the position of the Bulgarian government which urged both sides to calm down but also called out Russia for not following international maritime law.
Bulgaria has reinvigorated its ties with the Arab world and Israel recently. In the past three months, PM Borissov has met the leaders of the United Arab Emirates, Egypt, Morocco and Israel at various forums. The meeting with Israel's Benjamin Netanyahu led to promises for a program for joint manufacturing of military drones, as well as for collaboration in the gas sector. Arab countries - including Saudi Arabia - have become Bulgaria's largest weapons export destination, attracting half of the country's 2017 1.2 billion euro arms sales.
MIGRATION Bulgarian ruling coalition succumbed to populist conservative forces in parliament and government, vowing to snub joining the United Nations Global Compact for Migration. In a swifter repetition of the debacle following the adoption of the Convention on preventing and combating violence against women and domestic violence, known as the Istanbul Convention, the ruling GERB party decided to change entirely its stance on the Compact in order to mitigate possible public scandals on the delicate migration topic, still fresh in Bulgarians' minds from the 2015-2016 refugee crisis period.
MINING FOR GOLD
Canada's Velocity Minerals exercised its option to acquire a 70% interest in the Rozino gold project in Bulgaria from Gorubso-Kardzhali through the delivery of a Preliminary Economic Assessment (PEA). The PEA estimates steady-state annual gold production of 65,000 ounces and peak annual output of 78,000 ounces. The after-tax internal rate of return (IRR) is seen at 33.1%. Saleable gold dore will be produced at Gorubso's CIL plant in Kardzhali. Subsequently, Velocity announced it has received positive results from trench sampling outside the PEA area.
Swedish game developer Stillfront Group acquired 100% of Bulgarian peer Imperia Online for 10 million euro plus an earnout consideration in an aggregate maximum total amount of 17.5 million euro. Both the purchase price payable upon completion and the earnout will be paid 50% in cash and 50% in newly issued shares in Stillfront. The final amount of the yearly earnout component will depend on the EBIT development of Imperia Online but cannot exceed 7 million euro in 2019 and in 2020. Imperia Online booked net revenue of some 4.1 million euro in the January-August period of 2018, with an operating margin of approximately 48%.
TELCOS GOING NORTH
Bulgaria's Allterco is close to selling its telecommunications business to Norway's LINK Mobility Group for at least 7.9 million euro. The deal includes all shares in Allterco's Bulgarian units Teravoice, Tera Communications and Allterpay, as well as Romania's Teracomm RO and Macedonia's Tera Communications DOOEL. The transaction was initially expected to be completed by the end of April, but the negotiations were temporarily suspended, as LINK Mobility Group became the subject of a takeover offer by Victory Partners VII Norway. Allterco's shareholders will put the deal to the vote on December 5.