In case you have forgotten how close the war in Ukraine is, this week it came really close to Varna. Russia, it turned out, has practically closed off a section of the Bulgarian economic zone in the Black Sea, for "maritime exercises".
It's a common practice for countries to announce where they are going to schedule training sessions of their militaries, so that ships and commercial traffic does not go through. And it's not illegal for Russia to use this part of the Black Sea, since it's near the Bulgarian territorial waters, but not in them. Yet, it's clear that this is a maneuver to squeeze Ukraine and send a signal to NATO and Bulgaria - the exercises were announced right after the grain deal fell through.
Hopefully, nothing will happen. The last thing anyone in Moscow, Sofia, Washington, or Gent needs is an accident involving Russian and NATO militaries.
But there are several things I want to point out as important.
First, even though the "exercises" went without provocations, their immediate effect is that the price of every insurance policy for every cargo in the Black Sea is going to skyrocket, again. This already happened last year, it will happen again. And it will hurt all the companies using the sea as a trade corridor.
Second, although you might have had doubts about where Bulgaria as a society (or as a President) stands on the issue, there seems to be no hesitation in the military. They've already requested not only a battalion or a battlegroup, but for a whole division to be based in Bulgaria, if need be. This means up to 15 thousand well prepared soldiers from the rapid response force. Up to now, in Bulgaria there have been 1000 to 2000 soldiers from multinational forces rotating for exercises or for duty.
Deploying such a force needs infrastructure. The focal point of this effort is in the southeastern Yambol Region, around Bezmer air base, and potentially Dobrich airfield in northeastern Bulgaria. If a local military HQ is to be based there in case of need, it must be very well connected to the seaside, as well as the two directions vital for NATO movements - south and north.
The chief of defense simply said in response to a journalistic question: "We've informed the government what we need". I will translate this for you: there need to be fast rail connections, cargo trains, usable roads for heavy trucks, direct corridors to Turkey, Greece and Romania, usable airfields. In short, everything you need to get in & out lots of people and cargo, fast.
You've already heard me complain about the way we build infrastructure. Yet this is a different need. Left on its own devices, Bulgaria will probably never finish the South-North corridors, rail and road. But when the military comes in, things might start to work out. Case in point: the American investments in infrastructure in Western Europe after WWII.
So, the result of all of this might well turn out to be a fast connection between Istanbul, Burgas, Varna, Ruse, Bucharest and some other perks only wartime can bring.
This newsletter is helped by
Martin Dimitrov
Politics this week:
The Fathers of the New Constitution?
It took the reformist political forces quite some time - two years and five failed National Assemblies - to finally present their long-awaited constitutional reform bill. And the result is well, let's say it's not the American Constitution.
Among the main changes that were presented by the WCC-DB leadership last Sunday were the split of the judicial council in two (in order to strengthen judges), reformatting the institution of the caretaker government, limiting the power of the Prosecutor General, and introduction of the individual constitutional complaint.
So far, so good - nothing unexpected. To reform the judiciary has been, after all, the supreme reason to go into politics for some of those people.
Then came the new ideas
Namely - limiting the mandates of mayors to two, restricting the power of the caretaker governments and changing the national holiday from 3 March to 24 May, the day of Bulgarian enlightenment and the Cyrilic alphabet.
Here comes trouble
All 3 of those have some misguided conceptions. Let's start with the caretaker governments. The sole reason to seek limits to their powers, of course, is the recent example of the capinets appointed by President Rumen Radev. They did indeed rule for quite some time, without any oversight from Parliament. And this is not what the constitution envisioned.
Yet obviously throwing out the concept of appointing caretaker governments altogether might prove tricky. Justice Minister Atanas Slavov said that in recent years it has become clear that the status of the caretaker cabinet runs against Bulgarian parliamentarism and needs to change in the direction that will make an outgoing government a caretaker one until a new one is elected, like in Belgium and the Netherlands, for example.
Yet say Radev is gone, but there is a PM in power, whose desire is to hold on. This will prove a challenge and it doesn't look like the fathers of the new Constitutional thought a lot about that. Bulgaria is not the Netherlands.
According to DB's co-chair Hristo Ivanov, the discussions about the new status of the caretaker cabinet are at a very early stage.
Can you be corrupt in your first mandate?
The draft bill also provides for the limitation of the number of four-year terms a mayor can be elected. Here the motive is also clear - there are regions in Bulgaria which are practically feudalized. Most of them are in the hands of GERB and MRF, who will probably not support such a move. But leave aside the practical issues and focus on the fact that we're trying yet again to solve a criminal problem with political tools. A President is limited to 2 mandates because he is in practice immune from prosecution. A mayor is not.
What if a mayor is corrupt during the first mandate? Are we admitting there is nothing we can do for 8 years? If there are corrupt networks and kickbacks, there are other institutions which are supposed to clear them out. It is not the role of the Constitution to tackle corruption.
And last, but definitely not least: the matter of celebrations
What grabbed most of the attention, however, was the proposal to introduce 24 May- the Day of the Cyrillc alphabet, Bulgarian education and culture and Slavonic literature - as the national holiday instead of 3 March, the Liberation Day, which would be downgraded to an official holiday.
The only question here really is - why now?
It's plain to see that it's an attempt to turn away from Russia. Yet to try and do that in the midst of the biggest social divide in modern history means to not understand how the public works or acts. You can't simply impose a national holiday on a democratic nation and take away another, because in that fashion you'd be destroying both for years to come.
Expect a more in-depth discussion of the Constitutional reform proposal next week on KInsights!
Politicians meddle with Audit Office's work, ex-head claims
Politicians, including MPs and ministers, have regularly visited the National Audit Office, sometimes in their capacity of representatives of audited public entities, according to the unconstitutionally suspended former head of the institution Tsvetan Tsvetkov. This sort of unacceptable behavior ought to be investigated by the prosecution, as it demonstrates part of the reasons why the Audit Office has been so toothless in the past few decades.
Economy:
Budget, budget, on the wall who's the loudest of them all
Well, the government finally got a budget passed through Parliament. Needless to say, this has proved hard. In a marathon 12-hour session the budget committee in Parliament threw away some of the Finance Ministry's suggestions to improve revenue collection: firms to declare any cash they hold, restaurants and companies with over 50 employees to not pay salaries in cash, and commodities bearing high fiscal risk to be declared in advance.
Then Finance Minister Assen Vassilev banged on the table, said he doesn't support a budget bill that does not include these proposals and left. On the next day, during the plenary session of Parliament, most of that was voted in by the MPs of the three parties that hold the (non)coalition together.
Speaking of the three-party coalition, it sealed the BNB deal
An MP from MRF, Petar Chobanov, and Andrey Gyurov, an MP from WCC-DB, were elected deputy-governors of the Bulgarian National Bank (BNB) this week. Their election happened without a debate and proved that the country has indeed a working government coalition with a silent third member. Expect lots of new appointments in regulators.
Figures
3%
is the deficit in the freshly adopted budget
5
Goals have been set in the first official government program: Schengen entry this year, eurozone entry in 2025, slowing inflation, executing the Recovery and Resilience Plan, and making municipal projects and procurement more transparent and honest.
5.7%
Will be the annual inflation rate at the end of this year, **according to BNB
1.27
Bln levs in loans were handed out to households and companies in July. Almost half of loans to individuals were mortgages.
Business:
Start-up
BlackPeak
The venture capital fund added a genetic testing company to its portfolio. BlackPeak is part of a 4-party investment in Slovenia's GenePlanet worth 20 mln euro. It will own around 16% of the company.
Gas
TrillionEnergy
The Canadian company, which owns the rights for gas drilling near Dobrich but has not yet begun operations because of a lack of permits and local discontent, has partnered with an unnamed major energy trader. Bulgaria is one of the markets Trillion Energy will share information about with its partner.
K100:
It's time yet again for the best business ranking in the country, done by the brilliant Capital team. Here are some highlights and remember - we will be talking a lot more about that when we return in the autumn (if you are interested in paying for a special report in English, please let us know).
- 2022 was record breaking with its 60% rise in revenue for the 100 biggest companies. This was the largest jump in revenues since 2000
Watch out for:
People:
Delyan Dobrev
GERB MP and ex-energy minister has been vocal this week as an opponent of Finance Minister Assen Vassilev but got caught red-handed, when the AntiCorruption Fund discovered that an energy mogul - Hristo Kovachki, has been paying Dobrev's father thousands of levs per month for non-existent wood chips deliveries.
Konstantin Palaveev
Is the new head of the National Industrial Zones company. This is the first of probably many forthcoming changes in the boards of state-owned companies.
Date
30 September
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!
15 September
is the deadline for applying for another competition we're running - the award for city ideas called "Citylovers". This year we're boosted not only by our usual partners - the British Embassy but also by the generous Bulmarket Group and the money are up for grabs! Come and take it, if you have any workable idea for the city you are living in and you need financing.
Location:
Musagenitsa
After months of daily protests, the residents of the Musagenitsa district in Sofia managed to thwart the plans of newspaper publisher Petyo Blaskov to build a new apartment block in one of the last remaining green patches in the neighborhood.
VS
Plovdiv's rowing channel
Where the Municipality practically in silence allowed a private investor to build in the park. Expect many such deals to come through in the months before the local elections. Cash is a strong motivator.
In case you have forgotten how close the war in Ukraine is, this week it came really close to Varna. Russia, it turned out, has practically closed off a section of the Bulgarian economic zone in the Black Sea, for "maritime exercises".
It's a common practice for countries to announce where they are going to schedule training sessions of their militaries, so that ships and commercial traffic does not go through. And it's not illegal for Russia to use this part of the Black Sea, since it's near the Bulgarian territorial waters, but not in them. Yet, it's clear that this is a maneuver to squeeze Ukraine and send a signal to NATO and Bulgaria - the exercises were announced right after the grain deal fell through.
