The week: Is Bulgaria the limp pig of EU regulation, coal is (still) here, minimum wage surpasses Montenegro

The week: Is Bulgaria the limp pig of EU regulation, coal is (still) here, minimum wage surpasses Montenegro

Also: New Parliament is up, as well as the new 12 bn. Leva Plan

It's 2010 and a small Bulgarian company is registered with 9 employees. Danida deals with cybersecurity and exploits vulnerabilities in mobile phones. It is soon to grow fast, change management and ownership and even its name.

Under the new identity of Circles Bulgaria, the company earns worldwide fame in certain well, circles. In 2015 Intelligence Online quotes the company as a breakthrough player in intercepting 3G traffic. It uses the SS7 protocol (the main protocol for connection between different mobile networks) to hack into phone traffic.

By 2020 Circles already has over 20 million leva (10 million euro) revenue and advertises itself as a company with more than 800 dedicated professionals. It's also owned by the same people who own the Israeli NSO Group. Yes, the same group that became a household name this week after the global journalistic investigation about its software Pegasus which was used to eavesdrop on journalists, activists, and even politicians (might we say, Macron?).

Circles Bulgaria is a small, but significant piece of the puzzle: in its quotes to The Guardian, NSO claimed it is regulated by the export regimes of Cyprus, Israel and Bulgaria. Circles does indeed have a license to export from the Bulgarian economic ministry, valid until 2023. NSO now says though they are different entities and "Circles and its employees are not related to Pegasus in any manner - either in its development, nor in its export from Bulgaria. NSO's technology Pegasus is in no way related to the Circles operations in Bulgaria and anywhere else in the world".

That might be true. Yet on the point of Bulgarian regulators, it's sufficient to say that the heads of Bulgarian security services were fired by the new government for loyalty towards their ex-PM Boyko Borissov and thus the inability to investigate the myriad of corruption schemes around the previous government (look at Words of the Week). It is also a curious fact that the ex-PM of Israel Benyamin Netanyahu was a close friend (and a role model) of Borissov.

All of that serves to prove one long-known point for "Capital Weekly": to try to regulate world-class IT capabilities and companies with third-world regulators and politicians is a difficult and dangerous task.

Keep your friends close and your phones closer.

this week's newsletter is brought to you with the help of

Martin Dimitrov & Lilia Ignatova


Speaking about politicians: A New Parliament

Wednesday marked the start of the 46th National Assembly, which, one must hope, will last more than the previous one (namely a month).

Without much fanfare, the largest and most inexperienced new party in Parliament - There is such a people (TISP) thankfully switched from full imperious mode - proposing an expert Prime Minister and cabinet the day after the elections without consulting other parties - to dialogue mode.

At the opening ceremony, the leader of TISP's parliamentary group Todor Yordanov said that if other parties genuinely wanted to change how Bulgaria was governed, there should be no problem forming an anti-GERB government within the next 14-15 days.

Questions and scenarios

Thus, the coming week of inter-parliamentary discussions will be pivotal for the political future. There are several things to look out for:

  • What would be the terms TISP proposes to other parties - asking them to support a TISP-led political cabinet, another expert cabinet or a coalition government with representatives of the anti-status quo parties?
  • What policy priorities would the parties be able to get behind and how would minority players (Democratic Bulgaria and the renamed Stand up, BG! We come coalition) ensure the fulfillment of their demands?
  • What would be the role of the perpetual kingmaker in Bulgarian politics - MRF, which was also invited by TISP for talks - in backing the proposed political construction?

Answering these questions would give us hints about where a potential future cabinet is heading. In any case, expect a lot of instability and shake-ups in the country where "coalition has become a dirty word" (as TISP leader Slavi Trifonov said) and four or five very disparate parties will try to form one.

European Commission cops out

"Concerns remain," "Significant challenges remain," "remains a source of concern"

These mealy-mouthed phrases, mixed with a half-hearted appraisal of the effectiveness of the judicial process and the implementation of institutional reforms, formed the bulk of the second Rule of Law Report on Bulgaria published by the European Commission on Wednesday.

The document, which substituted the annual Cooperation and Verification Mechanism appraisals by Brussels of Sofia's progress in implementing judicial reform, is, quite frankly, bland. This is especially visible compared to the US "Magnitsky Act" sanctions that directly hit Bulgarian oligarchs and power-brokers.

The Commission report fails to even mention some of the most blatant expressions of abuse of power by the Prosecution, corruption and public mismanagement of funds, evidence of which have appeared over the past year.

Disappointing, to say the least.

If Brussels won't do it, we will: the caretaker government chases Geshev

Last Friday, Justice Minister Yanaki Stoilov announced that he would ask the Supreme Judicial Council (SJC) - the organ that hires and fires magistrates - to dismiss Prosecutor General Ivan Geshev. Mr Stoilov's demands were based on a 108-page report issued by caretaker Interior Minister Boyko Rashkov, who listed a number of instances in which Mr Geshev twisted or stepped outside the law, pursuing political purposes.

These included the publishing of selected sections of wiretaps of President Rumen Radev's conversations, the storming of the Presidency by Mr Geshev's praetorian squad last summer and various other acts that "compromise the prosecutorial profession".

It failed, but that's the point

The SJC consists of mostly the same members who voted Geshev into office with a 20:4 majority in 2019. This week they voted not to even discuss any possible dismissal, so shutting the door on the issue for the moment.

But the move by Mr Rashkov and Mr Stoilov - and SJC's reaction - exposes the latter's complacency over Mr Geshev's abuse of power, which will in turn give ammo to a (potentially) willing majority in Parliament to pursue their dismissal.


Another task for Parliament: the Recovery Plan

The new recovery plan for the expected 12 billion levs from the EC is finally public and will be submitted to parliament. Changes were made to the energy and energy transition part of the plan, healthcare, and water infrastructure. The biggest single revision is the complete elimination of the irrigation project. In the previous version, 850 million levs were provided for new pipes of Irrigation Systems. Now this money is scattered.

Noone dare say: close state-owned coal mine and plant Maritza Iztok 2

This is still the red line the Commission wants to see before it approves the New Plan. The caretaker government decided to leave this for a regular cabinet. Someone someday would have to say it publicly though. Pretty soon.

Bulgaria's minimum wage surpasses Montenegro

This "milestone" was reached in 2021. We "beat" the small Balkan country by 1 euro after raising the wage to 332 euro in January. Bulgaria remains at the bottom in the EU in terms of the minimum wage (and has stayed there since joining the union) both in absolute terms and in purchasing power standards. Not only that, but it also lags behind non-EU countries such as Serbia and North Macedonia, according to the latest Eurostat data.

A deficit of 1.4 billion levs in the Road Infrastructure Agency.

The RIA found itself without a director and with a signal filed against it in the prosecutor's office for non-transparent spending of budget funds. First, the Ministry of Regional Development and Public Works announced that Apostol Minchev was relieved of the post of Chairman of the Management Board of RIA after less than two months in office. Then came the news from the Ministry of Finance that Ministers Asen Vassilev and Violeta Komitova had sent a signal to Chief Prosecutor Ivan Geshev about the methods the road agency used in assigning repairs during the previous administration.

The value of services exports is approaching 2.5 billion euro, but remains below the level of 2020 and 2019.

The sumis estimated in the period January-May, according to data from the central bank. The big difference in the export of services now compared to the pre-crisis period January - May 2019 is the tourism sector. Then, foreigners paid 1.58 billion euro for Bulgarian transport services and travel. This year, the bill shrank to 987 million euro, which is almost unchanged compared to 2020, when it was about 1 billion. Meanwhile, foreign direct investment reached 281 million euro, according to preliminary data from the central bank.

The big retail chains gave Bulgaria's business climate a grade of 3.2 out of 6.

The main obstacles to the business environment in Bulgaria are weak lawmaking, lack of dialogue between the state and the private sector, contradictory implementation of the legal framework, and slow administration of justice, according to results from a survey among the members of the Association for Modern Trade. The association members include large retail chains like Billa, Deichmann, dm, Kaufland, Lidl, Mr. Bricolage, Promarket, T Market, Fantastico and Hypoland.




Estonian digital banking leader BigBank is entering the Bulgarian market. The company operates in Lithuania, Latvia, Estonia, Finland and Sweden. The fintech firm offers financial services to business and individual clients. In Bulgaria, BigBank plans to offer consumer loans for individual clients, and later on - deposit accounts, housing loans and other services.


Transact Europe

An American fintech company plans to buy the Bulgarian Transact Europe for 30 million euro. GreenBox POS will acquire Bulgaria's Transaction Europe, the buyer said in an official bulletin on the NASDAQ exchange where its shares are traded. Transact Europe is the successor to TBI Credit. One of the core product suites of Transact Europe is the processing of credit and debit card payments on behalf of merchants.


ClimAccelerator Black Sea

ClimAccelerator Black Sea is looking for projects to tackle climate change. The accelerator program will support 14 local startup companies with green business solutions and clean technologies, and 11 of them will receive funding. The entrepreneurial initiative follows the goals and principles of the European Green Pact and is funded by the public-private partnership EIT Climate-KIC of the European Union.


Bulgarian Energy Holding raises 600m euro

State-owned Bulgarian Energy Holding (BEH) successfully placed a seven-year Eurobond issue worth 600 million euro at an annual interest rate of 2.45% late last week. The funds will be used to refinance a 550 million euro bond issued in 2016, as well as for general corporate purposes, the company said.

Bulgaria is one of 7 member states opposing the EU's Green Deal

Brussels' historic attempt to tackle climate change is already facing strong opposition from several countries in the EU as plans would hit households with higher energy costs. Seven countries, including Bulgaria, have spoken out against the plan, according to the Financial Times. EU officials told the Financial Times that the European Commission's efforts to extend the carbon trading system to the most polluting sectors of the economy, such as cars and buildings, are at risk because countries oppose the intention believing that Brussels will force the poorest to pay the bill.



Atanas Pekanov

The deputy prime minister in charge of the Recovery and Resilience Plan will be facing the public and parliament over the course of the next few weeks, defending the new Plan and effectively deciding what to put in or out of it.


14-15 days is the schedule the TISP party gave for forming a cabinet.


Cubo 2

The most famous beach bar in Varna gets an add-on and you should definitely visit in August. Also - lots of other suggestions for places to go are here.

Word of the week: Kutso Prase (Limping Boar)

This one sounds like a Monty Python sketch but it's true. On Wednesday, the former director of the National Security Agency (DANS) Dimitar Georgiev (yes, the same guy who wanted to skip the caretaker government and take a 3-months long vacation), was caught poaching near Simitli in Southwestern Bulgaria. Alongside him were an acting agent of DANS and the owner of the Bistritsa Tigers football club, which ex-Prime Minister Boyko Borissov plays for.

The three were arrested in the middle of the night and the police found four automatic rifles, over 200 bullets and a dead boar in their vehicles.

The explanation they gave to the police: they shot the boar because it was limping, so they thought it might suffer from African swine fever virus and decided to put it out of its misery. Needless to say, this caused a hoot on the Internet.

It's 2010 and a small Bulgarian company is registered with 9 employees. Danida deals with cybersecurity and exploits vulnerabilities in mobile phones. It is soon to grow fast, change management and ownership and even its name.

Under the new identity of Circles Bulgaria, the company earns worldwide fame in certain well, circles. In 2015 Intelligence Online quotes the company as a breakthrough player in intercepting 3G traffic. It uses the SS7 protocol (the main protocol for connection between different mobile networks) to hack into phone traffic.

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