You might think the Prime minister is in the hot seat in Bulgaria. You'd be wrong. If there is one seat which has barrels of dynamite stocked under it, it's the Regional minister's chair.
It's the make or break ministry, the Master of the roads and highways, the Lord of procurement, the one place where different mighty interests converge and corruption is the law of the land. The only comparable place is the Energy ministry, which we will talk about some other time. But there's one big difference: the energy network kind of works ok, and big consumers have already started going private, building their own solar energy supplies.
You can't build your own roads, though.
So the new bearer of this heavy crown - Minister Andrey Tsekov, has a puzzle to solve. As regular readers of our service know, the mess in road construction is one of the lasting legacies of Borissov's decade in power. At the height of GERB's control of the economy, they dropped procurement altogether, and started handing money to companies directly. This was done under the guise of "in-house contracts" where the state-owned companies got a billion or two, and then subcontracted the money to private ones.
The biggest and brightest jewel in this crown of dirt is Hemus highway - the road to Varna. Back in 2019, around 3.3 billion levs were dedicated to the completion of the oldest construction project in Bulgaria. They were given to the state-owned Avtomagistrali and it sent 1.1 billion of those to private companies as prepayment. Since it's illegal under EU rules to outsource in-house contracts, they were dressed up as "supply of services and materials". 4 years later, not a single kilometer of those 224 needed for completion is ready for opening, several parts are in the middle of construction, several lack documentation and at least one doesn't even have a construction plan ready.
So what do you do, if you're Tsekov? You can try to take your money back. Except, the law is not really on your side: those are not construction contracts, you can't blame companies for lack of documentation because it's the state's prerogative, and the 1-year period for invalidation of those contracts has passed.
In the meantime, you need new procurement, new money, new companies. Who's going to certify the job already done? That adds years to the project.
The wisest decision would be to renegotiate, settle with the builders, turn the contracts into regular ones, and speed up the work. Yes, that's going to cost a lot of political capital. GERB will mock the government for being hypocritical when they were criticizing them, while the reformist camp will scream "foul".
But let's leave corruption and petty politics aside for a moment. Look where we are. There is one almost finished highway to Greece and one "wanna-be" highway to the seaside. The latter one is so jammed with traffic, it's practically 2-3 years from being completely overwhelmed. There are no fast railway lines. The railway company is so messed up, it just lost another programming period and around 1.5 bln levs. There is no fast connection to northern Bulgaria.
People and businesses are screaming for solutions. Whatever plans anyone had for regional development, they are gone out of the window, because of lack of implementation and monstrous delays. In the time it took Bulgaria to build one-and-a-half highways, Istanbul got a gigantic new airport, Greece finished a railway corridor to Hungary through the Western Balkans and Romania turned Constanta into a Black Sea hub.
I'm sure if you ask anyone on any street in any Bulgarian city what this new government needs to do, they'll tell you one thing. Build the damn roads. Finish the damn highway. For the love of God, manage to build at least one high-speed rail in our lifetime! And fire those lazy imbeciles who got us into this mess and managed to lose yet another 1.5 billion this week (see below).
That is NOT rocket science. Greece managed and it wasn't exactly devoid of corruption. Croatia managed and they were not even in the EU. Just stop using corruption as an explanation, excuse or raison d'etre.
As a Romanian friend once told me: I'm hoping a day comes, when we have bigger dreams than fighting corruption. After 15 years of writing and investigating this, I wholeheartedly agree.
This newsletter is helped by
Martin Dimitrov & Monika Varbanova
1. Politics this week:
The non-coalition to sign a non-coalition agreement
Do you remember how WCC-DB have been extremely reluctant to call their alliance with GERB leader Boyko Borissov a "coalition"? Well, if we trust Borissov's words from Wednesday morning, "a governance programme" of the two parties is ready and next week an agreement will be signed. It will include a mechanism for how important decisions will be announced - jointly or with a press release. You can call it whatever you like, but we'd rather call it a coalition.
Boyko, Ivan, Barcelona
An internal audit carried out by the State Prosecution after Borislav Sarafov headed the institution in June discovered that the Barcelonagate money-laundering investigation had been dragged for years by the prosecutors, that is until the relationship between Boyko Borissov and Ivan Geshev fell apart a few months ago.
According to the report, the investigation has been carried out in "a non-rhythmic way", there have been several 2-3-month periods during which no action has been taken, while the investigative actions really kicked off in mid-May. The prosecutor assigned to the case, Stefan Hristov, delayed sending translated documents to the court for five months, and the entire translation took place in stages with separate decrees - a likely sign of administrative abuse by the prosecutors.
Some light armored support for Ukraine - after all
This week the WCC-DB-GERB majority in Parliament offered the besieged nation 120 old armored transports that are not exactly fit for frontline combat. The antiquated BTR-60s were produced in the 1960s and 1970s for the communist version of the National Guard and were mostly employed during the forced renaming and attempted ethnic cleansing of the Bulgarian Turks, colloquially known as the "Revival Process".
And, yes, let me tell you something about the Myrotvorets list
There has been lots of shouting about the list on the Ukrainian website, which keeps a record of people from other nations it deems "enemies of the state". It turned out a Bulgarian journalist, and some politicians were included in the list. The Foreign ministry and the Parliament went nuts about it.
Well, this may come as a surprise to you, but yours truly has already been for 7 years on this list: the first Bulgarian on it. All for interviewing a separatist and traveling to Donbas to do what journalists do - go and talk to people. I don't remember a President condemning Ukraine on my behalf, maybe because I don't really remember making any fuss about it.
It's not the best experience, and it's a shame Kyiv does that, but it's not going to get you killed. Ukraine, unlike Russia, doesn't send killers abroad.
But truth be told, if they do indeed start removing people from this strange website, I'd like to be taken off it too.
2. Economy:Look out, Lukoil, we're here for the money uhh the port.
Do you remember, some weeks ago, when I told you that whenever Delyan Peevski and Boyko Borissov agree on something you should always watch out and see how any change they agree on will benefit them? Well, my gut feeling tells me, we're on the way to yet another chapter in this story.
This Wednesday it transpired that MRF (Peevski's party), GERB (Borissov's party) and the government-holder WCC-DB agreed on taking back the port of Rosenets - the main entry point for oil tankers in Lukoil-Neftochim refinery. The port is concessioned until 2046 with a decision from the first Borissov cabinet in 2011. Since Lukoil is, obviously, a Russian company, it needed to receive a derogation from the new EU rules against Russian investments to keep the port - this happened last year, under the pretext that the refinery is vital for the Bulgarian economy.
Now this derogation will be taken away and the port will go back to the government, while Lukoil will pay taxes.
Something's not right
It all sounds rather plausible. But you always need to pay attention to the fine print. First, if Lukoil is the problem, why is it still going to use the refinery and the port? Or if the port is needed to stop Lukoil from using it, meaning it will be unable to operate the refinery, what is then going to happen with Neftochim and is this the first step towards nationalization?
And third, but definitely not last: who is the driving force behind this. "This is an initiative we produced together with GERB. This is a very old idea of ours", says Mr. Peevski. To put this in context, the other old ideas of theirs was how to take control of the whole EU funding system through the construction sector. Remember, this is the man the US called "the face of corruption" when putting him under Magnitsky sanctions.
"Our proposal was for the state to take over everything, together with the pipelines", said Borissov himself.
The road to the euro is open again!
Another sudden twist: after the infamous vote on "Green card' Legislation, which was supposed to open up Bulgaria's road to the eurozone, but ended up in failure, this time it passed without a glitch through the Economic committee of Parliament. The Ministry of Finance wanted Bulgarian insurers to pay upfront for damages abroad and appeal subsequently if they have a reason to. It's a mechanism to compensate victims of road traffic accidents in case of insolvency of the responsible insurer.
This was objected to by Lev Ins and GERB last time rejected the proposal. This time however, Lev Ins, GERB and everyone else is strangely silent.
It almost seems that a secret agreement has been forged between someone
Is the phenomenal growth of revenues for all companies in Bulgaria for 2022, according to K100 - the annual ranking of Capital of the biggest companies in the country. They are now 611 billion levs combined. Keep tuned to K Insights next week for the story; the whole ranking will be out soon and here is last year's one.
The increase of exports of specialized arms production in 2022 compared to 2020. This is about 1.6 - 1.7 billion euros, Minister of Economy Bogdan Bogdanov told BNT on Tuesday.
4. Business:Investments Revolut
8.8 Million transactions is what Bulgarian users of Revolut are completing every month. The company has more than 620 thousand active users in the country, it said to Capital, while confirming it is opening its "flexible savings" scheme to Bulgaria - the scheme is basically an investment in a low-risk mutual fund.
Is buying the Serbian Pharmanova, the company announced. The deal is going to be finalized in several steps, with a final date 3 years from now. There is no price announced, but the net revenues of the Serbian company are a little over 10 million euro, which is small compared to the Bulgarian one.
5. BrusselsBulgaria is late again
This time it is about the transposition of the directive for inland carriage of dangerous goods, applicable both to international and national transport operations performed in the EU; the disclosure of tax information (public country-by-country reporting on the amount of corporate taxes); and protection of injured parties in case of insolvency of the insurer.
Who is leading the EIB this autumn?
Margrethe Vestager was Denmark's nominee to lead the EIB once President Werner Hoyer's mandate ends this year. She was considered the front-runner, but her position is now unclear, after Vestager's appointment of Fiona Scott Morton, a U.S. national, to the role of chief economist at DG COMP, the Commission's department in charge of antitrust enforcement. Her choice of a non-EU candidate met a wave of criticism from lawmakers, including French President Emmanuel Macron. On Wednesday Vestager announced in a tweet that Scott Morton will not take up the position.
6. Energy:Is there gas here? Pay, and you'll find out
Bulgaria could become a shareholder with up to 20% in a consortium run by TotalEnergies and OMV Petrom, which is exploring for oil and gas in the Khan Asparuh block in the Black Sea. According to a draft decision by the Parliamentary Energy Committee from Wednesday, negotiations for this will be led by the energy minister, and the eventual investor will be Bulgarian Energy Holding (BEH). The draft decision was tabled on July 12, a few days after GERB lawmaker and energy committee chairman Delyan Dobrev announced on Facebook that the consortium expects to find gas at the eastern end of the block that will allow for the extraction of 13 bcm a year - a significant amount compared to the 2.5 bcm consumed annually within the country.
7. Watch out for:People: Stoyan Bratoev
The PM of Sofia Metropolitan can possibly claim the title of "Best Project Manager" in the country, since his subway company proved yet again to be the only railway operator with well-prepared plans and the ability to use grant financing fast. This time, he will get a portion of the 1.5 billion levs which the National Railway Company is (yet again) not able to claim because of mismanagement. Sofia will get yet another metro line, while the rest of the country will get no faster trains.
Rumen Gaitansky - the Wolf
It was a good week for the controversial businessman with interest in the waste management sector. First, the Administrative Court of Sofia-Region overruled a decision that put a halt to his plan for a massive waste incineration plant near Pavlikeni. Then Bird.bg announced the Prosecutor's Office closed the investigation into the loan Gaitansky took from the state-owned Development Bank. And finally, the hunting lodge he built illegally near Iskar dam would not be demolished soon, because the state company which owns the land does not have the money to do so.
Is the deadline for Kapital's new Factory of the Year contest! We are running it for the second year in a row and believe me, it's the fairest competition you'll find in Bulgaria: we have 4 different audits in 4 different sections and we aim to find the best factories here. So do apply and get to wear this badge for a whole year!
Ovoshtnik near Kazanlak is the place for the newest 5-star hotel in Bulgaria and the first in this vicinity. It's called Kings' Valley Medical & Spa Hotel and is a rather unusual sight for the fields around Kazanlak.
Agency:State Agency for Refugees
SAR has been under fire this week over two controversial decisions. First, Russian dissident Irina Dmitrieva sued the asylum body successfully over its refusal to grant her asylum, despite clear evidence that her public condemnations of the Ukraine war put her in danger if she goes back to her country. Additionally, SAR got under fire for rejecting the application of Iranian asylum seeker Ali Reza Hassan Beigi Rizi, who faces deportation - and a death sentence - to his home country over his conversion to Christianity. The cited reason for the refusal is that SAR is unable to verify the Iranian documents that prove he is condemned to death.
Weekly moment of Zen:
Watch lucky fishermen Stoyan Mihaylov and Todor Todorov finding themselves surrounded by a pod of playful dolphins off the shore of Primorsko in the Southern Black Sea.
На трупчета - to be kept on the wooden blocks
The idiom comes from the beloved socialist-era method of keeping one's car on several logs while repairing it, but in recent years it has become the synonym to describe the prosecutorial office keeping a case open for a long, long time, usually by abusing administrative or procedural rules, just so it keeps the person under investigation as hostage.