The week: The Roadmap to Russian energy serfdom

This is what they found:

In the period 2018-2020, during the last GERB government, Russia had practically taken control of Bulgaria's energy sector. Under pressure from Moscow, Bulgarian public procurement legislation was violated on a number of occasions, with both national and European interests ignored in order to fulfill Russian President Vladimir Putin's wish for a gas route that bypasses Ukraine. This is the continuation of the Turk Stream, which was hurriedly constructed by an Arab company in Bulgaria in less than two years for the staggering price of 3 billion levs.

Of course, most of that was obvious at the time - KInsights has described the publicly known outlines of the scheme on several occasions. What is new are the great details of how negotiations were conducted between the Russian, the Arab and the Bulgarian side, how Russia aggressively imposed deadlines, secured funding and pushed its interests in Bulgaria.

The documents give insight into how the Russian politicians were using all of their connections available - for example citing how the Bulgarian negotiators (read: GERB) asked Moscow for the parliamentary help of the Bulgarian Socialist Party (BSP) in order to allow Gazprom Export to take control of the project and Gazprombank to finance it, while keeping the formal winner of the tender - the Saudi consortium Arkad - as a legitimate facade.

Most notably, the leak includes the missing Roadmap for Turk Stream, which then-Energy Minister Temenuzhka Petkova signed in 2017, but which nobody ever (yes, including caretaker and ordinary ministers of Energy since then) was able to find. The pictures of the roadmap (available in Russian here) show that the construction of the Bulgarian section of Turk Stream was pre-arranged and all subsequent procedures (capacity tenders, public procurement, changes in the energy strategy, etc.) were entirely pro forma.

In practice, since 2017, the Bulgarian authorities have followed the model laid out in the map, without any real analysis of the economic benefits for the country of the project.

To have Moscow dictate what Bulgaria should build, who will build it and order around two of the biggest parties in the country is quite an impressive feat. It shows what Putin chose to gamble away with the war, but also - what hidden dependencies are still there.

The leaks come out right as WCC-DB prepares to enter negotiations with GERB over the future of the "Euro-Atlantic" rotational cabinet. One of the people who will lead negotiations on Borissov's behalf is Temenuzhka Petkova herself. It will be interesting to see if WCC-DB bring up the roadmap, or prefer to let bygones be bygones, as with much of GERB's legacy. All in the name of "Euro-Atlanticism," of course.

1. Politics this week:

On 6 March - exactly 9 months after the inauguration of the Denkov-Gabriel cabinet, Prime Minister Nikolay Denkov resigned, as per the gentleman's agreement struck between WCC-DB and GERB last May. With 216 votes "for" and no abstentions or objections, Parliament approved the resignation, and the next day President Rumen Radev announced he would start the process of forming a new cabinet, which begins with him meeting the largest parliamentary factions, on Monday next week.

The rotation of the cabinet, which was extensively negotiated last May, is proving far from smooth, however. For the past month, the leaders of WCC-DB and GERB have barely spoken to each other and have only attacked their respective visions for the future of the government, leading to speculation that Bulgaria might revert to the 2021-2023 endless cycle of early elections.

So, are we going to have a rotation?

If one asks GERB's leader Boyko Borissov - one of the people who ought to make the call - the answer would depend on the day of the week and/or who he is talking to.

Let's say you ask him on Tuesday, when he addressed his party in a specially convened national council in Sofia. Borissov told GERB that he worries about the country's geopolitical orientation and prizes his party's image. He spoke of his distaste for the partnership with WCC-DB, but added that he values his country more. So he recommended that negotiations ought to continue towards a compromise rather than - to a new election, where the pro-Russian forces of President Radev and Vazrazhdane might make gains.

If you heard him speak on Wednesday, however, just minutes after PM Nikolay Denkov filed his resignation, things would sound different. "There is no hope - we are going to a two-in-one election," Borissov lamented from the sidelines of the European People's Party (EPP) forum in Bucharest.

A social media post from Borissov's official profile just two hours after the previous statement showed him shaking hands with Ursula von der Leyen, assuring her that "as a responsible party GERB has insisted on shared responsibility with clear commitments in governance" in its ongoing negotiations with WCC-DB.

That's Borissov's favorite game - telling different people what they want to hear, even if he has to contradict himself 3 times in 24 hours. And if we know anything about the ex-PM, we'd be betting that the more dramatic he sounds, the more likely he is to be ramping up for a big breakthrough in talks with the reformists that ends up in a compromise.

Which ministers stay and who goes?

As we wrote last week, his party proposed a de facto 50-50 division of ministries and joint nomination of regulators to WCC-DB. And while the reformists keep the door open to negotiating how members of the regulators are appointed, what about the ministers? According to the May 2023 negotiations, they would be evaluated at the end of the term by Denkov and Gabriel and would not be dismissed on political grounds.

That seems to be going straight to the dustbin. At the party meeting on Tuesday, Borissov attacked the ministers of finance Assen Vassilev, defense Todor Tagarev, economy Bogdan Bogdanov, sports Dimitar Iliev and tourism Zaritza Dinkova. He also tried to sow discord between WCC and Democratic Bulgaria, demanding that DB leaders Atanas Atanasov and Hristo Ivanov "see how WCC usurped all power."

2. Economy:

Sofia and Bucharest can apply for an additional 85 million euro under the Border and Visa Management Instrument 2021-2027 to improve national capacities to protect the EU's external borders. This was announced by the European Commission on Monday. The additional funding can be used to expand or upgrade existing border surveillance systems, purchase vehicles, including thermal imaging capability, through the purchase of operational equipment such as motion detection cameras and thermal imaging cameras, and develop and upgrade systems. Cooperation between the EC, Frontex, the EU Asylum Agency and Europol, etc. will also be strengthened. The initiative is a result of the agreement with Austria on more funds for the Bulgarian-Turkish border, but it is unlikely that it would break the deadlock over the two countries' land Schengen application.

Figures:

According to a research published by the CAN Europe network, this is how much the potential extreme weather events would cost Bulgaria in the years to come if the country continues with its climate policy-related inaction.

3. Business:

The Bulgarian fund, which manages resources mainly from the state fund of funds, announced the completion of five new investments totalling 1,5 million euro in young companies - cybersecurity firm Kikimora.io, SaaS firm Team Schedule, logistics firm ECEON, e-commerce company Krik.bg and HR firm HROS.io.

Fashion

The fashion brand of designers Teodora Alexandrova and Dimitar Sulev, which produces clothes for Beyonce, the biggest stars in Hollywood and for the likes of Netflix, HBO and Warner Brothers, has been KInsights' story of success from this week. If you missed it, check it out here.

4. Energy:

Less than 4 months to go until July, when the electricity market is to be fully liberalized, there are a number of problems for everyone who is part of it, apart from the domestic consumers, who will not be affected and will continue to pay electricity at regulated prices at least until the end of 2025.

In the meantime, however, their suppliers - the current electricity distribution companies - will face major challenges, the latest of which, announced publicly on Thursday, is that the Energy System Security Fund has a deficit of 1 billion levs. This means that there is no money to pay compensations for energy produced, but not utilized - a situation that will only be exacerbated when the suppliers in question join those eligible to receive such compensations after the liberalization kicks in on 1 July.

In the tense political environment, it is not at all known what solution will be found and when.

5. Watch out for:

Serious air pollution in Sofia with nitrogen dioxide (NO2) from transport and especially from diesel cars was identified by a team of experts led by leading international air quality specialist Axel Friedrich, PhD. The first ever scientifically sound measurements of NO2 levels in the city reported peak pollution above 450 µg/m3 in some parts of the capital, compared to WHO recommended maximum levels of 25 µg/m3 per day. The report, sponsored by the For the Earth NGO, confirmed a fact that has been denied for years by local authorities (which even shut down some of the stations that measured NO2 pollution to tweak results) and demanded urgent action.

Ginka Varbakova

Residents of the villages of Sbor and Apriltsi in the Pazardzhik region allege that their lands have been seized by a company owned by the person who almost bought CEZ's Bulgarian business - Ginka Varbakova - which then constructed a solar park on them. Read more about this story here.

Place:

Bulgaria became the main protagonist (or, rather, antagonist) in the election campaign in N.Macedonia, which will be having a series of key elections for president (24 April) and parliament (8 May). Predictably, the reason is the clash over the "French compromise" from 2022 that was meant to unblock EU integration negotiations between Skopje and Brussels, but instead led to another deadlock - this time between the warring factions within the country. Apparently the situation is serious, as the Bulgarian MFA saw fit to issue a position on the matter and ask Skopje's envoy to Sofia to give an explanation earlier this week.

Institution:

An inspection by the Ministry of Education after a signal from lecturer Stefan Dechev found scandalous violations in the Faculty of Law and History at the higher education institution in Blagoevgrad and now the prosecution is investigating the case. The violations included unauthorized shortening of the terms for law students, dropping of otherwise compulsory subjects, illegal transfer of students from other streams into the law program, issuing passing grades when students have provenly failed an exam, with all this culminating with issuing of fake diplomas.

If you wonder why all of this was tolerated for so long (and maybe why it was properly investigated now), here are two speculations: 1) a lot of Bulgaria's political "elite," including MRF's Delyan Peevski, have a law degree from this faculty and 2) the former dean of the faculty (and current dean of the university) Nikolay Marin was the research supervisor of ex-Prosecutor General Ivan Geshev.

Source: Capital weekly

Weekly moment of Zen:

The locals from the Rhodope village of Hrabrino (whose name is a derivative of the word "brave" in Bulgarian) lived up to their village's name this week as they carried out a citizens' arrest of a few "bearded and disoriented" people who did not speak Bulgarian as they came out of a forest path near the village, thinking they were illegal migrants who crossed the border. The police came to investigate and found out they were, in fact, foreign students at the Medical University of Plovdiv who went for a walk in nature. "We admire the prompt and timely reporting when people witness wrongdoing or crime, but this course of action is not acceptable," the local police spokeswoman said. A friendly piece of advice from us: if you don't speak Bulgarian and sport a beard, be very careful not to look disoriented when you come out of the woods in the border regions of the country.