The week: Brace, the rotation is coming

MFA

The week: Brace, the rotation is coming

The Suddenly-important Ministry, More Russian spies pop up, and Meta buys a company

MFA

© MFA


The Foreign Ministry (MFA) is not a wealthy institution. It doesn't have a big budget, nor does it give away procurement orders, and it rarely benefits from EU funding. In short, controlling it doesn't give you anything in terms of financial power.

So if you see the State in the way GERB sees it - as a network of loosely connected cash-reservoirs, which allow you to reward your business allies, this Ministry shouldn't be anywhere near the top.

Yet when the ex-PM Boyko Borissov threatened this week the future of the upcoming government rotation because of the MFA and who controls it, it became abundantly clear that something profound had changed in Bulgarian politics.

The co-chairman of the WCC-DB group Kiril Petkov and Borissov got into a head-on clash over whether the current foreign minister and future PM Mariya Gabriel should stay on or whether Nikolay Denkov should resume after the rotation. "We have one ministry and if they don't want Gabriel in it, we will appoint someone else," Borissov said.

I think what's changed is the priorities.

For well over a decade, it was absolutely vital for GERB (and its minor partner MRF) to keep its hand on the tap of state money and regulators. Over the past 18 months, however, it became clear that no change will be possible quickly, and they still control a lot of levers all over the country. Yes, money flows were reduced significantly, and the European prosecution service seems like a danger, but all in all, Borissov got what he wanted - he's absolved of corruption allegations, his mayors are mostly installed (he just won back total control over Sofia municipal council) and he is seen as a responsible statesman.

Now, the only really important channel he wants under his watch, is the link with the outside world. It is no coincidence that he was so angry at the US visit (see below) of some parliamentarians and ministers. He sees himself as the one who allowed this coalition to happen, who gave in, who wanted to please the American (as well as some European) partners. He wants to receive his share of the international credit for keeping the "Euro-Atlantic" course of the country, and wants to ensure that his party continues to be recognized as a pro-Western pillar abroad.

And he sure as hell won't allow someone to keep from him the messages Bulgaria sends or receives from its partners. You must remember this is vital for a politician who sees the US as the only power capable of bringing him down, and Brussels as the legitimation of his status.

And you also have to remember that in the past 15 years the only other person who controlled the MFA is President Rumen Radev. So at some point in the future, a huge reform should be in order. But obviously, not now.

This newsletter is helped by

Martin Dimitrov, Monika Varbanova, Evgeni Ahmadzai, Mary Ivanova

1. Politics this week:

The US visit: blink and you'll miss it

It was supposed to be a huge deal. The PM was going to meet the State Secretary, and Bulgaria and the US were supposed to sign a framework agreement for nuclear (and possibly even infrastructural) cooperation. But then Blinken went to the Middle East, which is quite understandably a lot more important at the moment, so Denkov had no business traveling. This left Assen Vassilev, the energy and the economy ministers trotting around, meeting the US energy secretary and a Deputy Secretary of State and in the end - not signing anything. So all in all, much ado about nothing.

Except to annoy Borissov, that is.

While on the surface this might appear as a simple brinkmanship move by GERB, it seems that Borissov is getting annoyed at WCC-DB. We will see how this will affect the rotation but it's not only the MFA that's on the line - the important Defense Ministry and its active head Todor Tagarev seem to be in GERB's crosshair, too. So expect a lot more of this kind of drama in the coming weeks, although it seems unlikely that any of it will break the "assemblage."

Russian spies everywhere!

First of all, it was discovered that an expert in the General Directorate for Combating Organized Crime (GDBOP) has been spying for Moscow, giving a Russian diplomat who is a persona non grata classified information from both national and EU partner services agencies. There might even be links to the national intelligence agency DANS.

The second story was revealed by the Mediapool website, which found out that, on more than 4,000 occasions, foreigners from countries in the former Soviet Union have used "obviously" forged documents to get Bulgarian citizenship. This "factory" for the production of Bulgarian citizens operated unhindered for years, even though the intelligence agencies (and Magnitsky sanctions) knew about it. Foreigners have managed to obtain Bulgarian passports (and thus the freedom to travel and work throughout the EU), even though they proved their origin with false documents. "This is a potential channel for infiltration of people from Russia's intelligence services in Europe," Atanas Atanasov from WCC-DB, who first raised the alarm about the case, said last week. But if you think this case smells of rot, wait until you hear about

A notary, who is not

The killing of Martin "the Notary" Bozhanov (who is not actually a notary), which we mentioned last week, has opened a whole can of worms that demonstrate the rotten inside of the Bulgarian judiciary, and especially - the prosecution service.

It turned out that Bozhanov has been known for years to the authorities because of his wide "circle of interests" that involved property fraud and running a private parlor, where high magistrates from the now defunct Specialized court and prosecution met in order to solve legal cases of VIP personas through the back door (oh, and it was called SS club, by the way - allegedly after the abbreviation of the Specialized court in Bulgarian, but the allusion to the Nazi paramilitary can't be missed).

Nothing to see here

Moreover, he has been the subject of journalistic investigations, complaints by judges, public stories and legends. It seems, however, that institutions in this country were never willing to actively engage with him and track his activities during his lifetime.

It is only now, after he was killed last Wednesday, that the mainstream media and institutions have taken it upon themselves to find out exactly how far his influence extended. The Supreme Judicial Council (SJC) announced that it would hear the investigative journalist Nikolay Staykov which is a first. The Parliament set up a commission of inquiry to investigate the influence of the deceased in the judiciary, but did not include in its scope an examination of facts about his possible ties with politicians.

In short: The implicated institutions and politicians practically staged a public lynching of a corpse, and their actions seem to be entirely in the realm of PR and covering their own tracks. The aim is rather the same as it seems to have been before - never to get to the bottom of the problem, which generally consists of a well-organized apparatus between politicians, magistrates and intermediaries. If it were otherwise, everyone would have asked completely different questions, like why Martin Bozhanov was killed exactly, and who ordered it.

2. Economy:

Farmers, again

Despite getting everything they asked for in their autumn 2023 protests - more subsidies and de facto continuation of the Ukrainian grains import ban - Bulgarian farmers used the opportunity and struck again this week. Emboldened by the actions of their counterparts in Western Europe, they blocked main arteries across the country, including the Danube bridge crossing near Ruse and the main road to Vidin for four days straight, increasing the length of their industrial actions by an hour each day.

This is despite a new memorandum proposed by the government to address their problems, which agreed a 150 million levs package of aid for the meat, milk, fruit and vegetables, honey, oil rose, tobacco and vines sectors.

All for one

Rumors have it that the ruling coalition will try to keep inflation and the deficit down by any means necessary. There were already talks with various companies to keep their prices lower, sources said, and they are going to continue. Meanwhile we hear that Assen Vassilev has gotten all the state expenditures under his thumb to keep the deficit low.

Figures:

0
The amount of euros Bulgaria got from the Second Payment from the Recovery and Resilience Facility, even though it filed for the money last year. Turns out, the EC still wants us to finish some reforms.

3. Business:

VC Eleven Ventures

Despite the ending of the sovereign FoF investment mandate that grants funding to local early stage startups, there are alternatives in the local ecosystem that young companies can make use of while waiting for the upcoming FoF. One of them is the Eleven Alpha program, organized for the second year in a row by Bulgarian venture capital fund Eleven Ventures, which mainly manages a resource from the EIF. Within three months, selected participants in the program will receive 300 thousand euros, an individual growth plan, as well as know-how from the partners at Eleven and their network of contacts, in exchange for a 10% stake in each participating company.

Metals

Aurubis

The copper plant in Pirdop, which was Bulgaria's largest company last year, ceased production at the end of 2023 - it has processed 7% less concentrates in October-December, reports show. This is part of a larger trend of industrial slowdown that KInsights wrote about on Tuesday.

Real estate

Avalant

The corporate real estate consultancy announced that it has carried out one of the largest office space deals for 2023 in Sofia - the renewal of the Cargill Bulgaria lease for Spas Shopov's SPS Tower building, which houses 1,600 employees.

4. Brussels

#New GMO - The European Parliament adopted its position on gene-edited plants as the clock is ticking to reach a certain number of deals before the end of the legislature, approving its amendments on the new rules for the highly controversial new genomic technologies (NGTs). However, our sources from the Council reveal that Member States didn't reach a common consensus on the topic and it might be postponed for the next term.

#Emissions cuts - The European Commission proposed a new 90% GHG emissions reduction target by 2040 (compared to 1990 levels), together with an Industrial Carbon Management Strategy to support the uptake of carbon capture, utilisation, and storage (CCUS). This will pave the way for a potential new package of sectoral policies later in this year.

#And more on C02 targets - The Belgium Presidency postponed a vote by EU ambassadors on new emission standards for trucks until Friday after Germany withdrew its previous support for the legislation, leaving the majority unclear.

5. Energy:

#Faster payments - The European Parliament has also formally approved legislation that will force banks and other payment service providers to offer EU citizens and businesses the ability to make virtually instantaneous money transfers. 5. Energy: Bulgarian energy sector losing positions

There is mounting evidence that Bulgarian energy is losing market share in the region. And this is not just about the signal light that came on in January with the record import of electricity. The lack of true reforms in the sector and the choice of political comfort over long-term foresight have led to reduced competitiveness and an even more complex outlook for the future.

There are a sufficient number of reasons for Bulgaria to continue to lose positions in the region in the coming years, and due to the integrated European market - for other countries to take a significant share even in its domestic electricity market.

Perhaps the biggest competitor is located in the south - for many years Greece depended on Bulgaria for electricity supplies, but has managed to reverse the trend. Today, Greece is in the process of meeting its targets for an 82% share of RES in its electricity production in 2030, combined with numerous gas, grid and geostrategic projects with third countries, some of which are already operational.

6. Watch out for:

People:

Delyan Peevski

It's been a while since he's visited this section, but the MRF deputy, power-broker in shade and an informal spokesperson for the ruling coalition deserves it. Sanctioned for corruption by the US and the UK, he nonetheless initiated the Parliamentary proceedings to investigate the killing of the abovementioned notary, and also said the Russian scheme for passports is scandalous. It is, indeed, and we also think this is not the first time he heard about it.

Yordanka Chobanova

The new head of the representation of the EU Commission in Sofia is the former Bulgarian ambassador to Slovakia (2016-2021), EU affairs adviser to the President and Deputy Minister of Regional Development and Public Works. From 2008 to 2012, she worked as Attaché for Regional Policy at the Permanent Representation of Bulgaria to the EU in Brussels.

Tsvetomir Petrov

The deputy from WCC-DB heads Sofia Municipal Council after a three-month-long deadlock in the institution. His election was a compromise between the two main fractions and it came a day after GERB called for new elections in the capital city.

Location:

Knezha

The small town in the traditionally underdeveloped Northwestern region surprisingly appeared in the top 3 of municipalities with the highest monthly salaries in the country (with a 2,813 levs) in a ranking of the Institute for Market Economy. The main reason is the strong growth in the production and processing of cereals and oilseeds in the region that includes sector leader Oliva.

Company:

Acutance Imaging

Instead of opening an office in the country, Meta, the parent company of Facebook and Instagram, has bought the little-known Bulgarian startup, which works on imaging technology. The deal would have gone under the radar, had it not been for the annual ranking of fastest-growing SMEs which Kapital makes. Acutance Imaging came in the top 3 just before they were acquired.

Word of the Week:

Шамар (slap)

The strategic lawsuits against public participation, or SLAPPs, as they are known, have become a dangerous commonplace in the relationship between Bulgarian public and private companies, and whistleblowers or journalists who investigate their activities. There are, however, reasons to be hopeful - this week, a court ruled that the Kozloduy NPP plant has to pay 25,000 levs for its attempt to sue an ex-worker and her mother, Natalia Stancheva and Yordanka Kulinska, for exposing that unauthorized medical activities had been carried out in an unregistered medical facility at the nuclear plant. Initially, the plant demanded a quarter of a million levs compensation for the alleged distribution of falsehoods by the two women.

This is not to say that pressure against journalists does not persist: this week, the insurance company Lev Ins "won" a European anti-competition for SLAPP cases, organized by the Coalition Against SLAPP Lawsuits in Europe (CASE) for its unprecedented 1 million levs lawsuit filed against Mediapool, which the insurer lost at first instance last month. But at least it is now noticeable from abroad.

The Foreign Ministry (MFA) is not a wealthy institution. It doesn't have a big budget, nor does it give away procurement orders, and it rarely benefits from EU funding. In short, controlling it doesn't give you anything in terms of financial power.

So if you see the State in the way GERB sees it - as a network of loosely connected cash-reservoirs, which allow you to reward your business allies, this Ministry shouldn't be anywhere near the top.

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