The week: The trick with the migrant scare

It turned out that the first fight was in fact a brawl between two equally sized friends' groups who, indeed, were fighting over a girl, but there was no harassment of the said girl - she was the ex of one of the Arab men. The attack against the British-Pakistani men was carried out by adolescent Bulgarians who have "specialized" in robbing foreigners, the police said. The fight in the refugee camp was blown out of proportion and surrounded by false accusations of migrant terror that has been plaguing the district - something that has been going on for a decade (and which I have personally debunked on several occasions in Capital weekly).

The fear of 'the other' is a well-known method of arousing anxiety. It has been at work in Europe for a long time, but especially since the Arab spring and the waves of migrants and refugees, which flooded the continent and disoriented its politics.

Nothing is really surprising, nor ironic enough in that field. Not the fact that it took several hours for wannabe politicians like (half-Polish) Krystian Szkwarek and (half-Cuban) Carlos Contrera to organize a march against Europe's "open borders" policy; or the fact that the mayor of Ovcha Kupel district from GERB and the party's mayor candidate (and descendent of Armenian refugees) Anton Hekimyan ran their own march against the refugee center in the neighborhood.

It is a very easy bandwagon to jump on and sadly, there will always be people willing to do so for their own sake.

Yet it is notable how the media was once again used as a very sinister tool in that.

The same websites and TV stations that devoted hours and hours of coverage to the said events (even though some of them were obviously fake news), devoted almost none to, say, the story of how Bulgaria outsourced its energy policy to Russia.

Makes you wonder whether the selection in many newsrooms is not (yet again) outsourced to some political cabinets.

This newsletter is created with the help of

Ognyan Georgiev, Evgeni Ahmadzai, Mary Ivanova and Monika Varbanova

1. Politics this week:

We know. We've been waiting, probably like you have, all week to see how the rotation between GERB and WCC-DB is going. Yet there was practically nothing to report, as the parties have (for the first time ever) been keeping their discussions secretive and very little information has been leaked.

but steadily towards success

Yet it can be safely assumed we're not heading for elections. So far, all we know is that GERB now wants to officially head six ministries: MFA, Energy, Defense, Agriculture, Innovation and Environment and Water. According to Capital weekly sources, the possible candidates for the Energy Ministry are the former GERB minister and negotiator Temenuzhka Petkova (who signed the TurkStream roadmap - read about it here if you've missed this week's top story) or former Deputy Energy Minister Zhecho Stankov. The Defence Minister Todor Tagarev is also in the crosshairs, to be substituted by GERB MP and head of the Defense Committee in Parliament Hristo Gadzhev.

And what do WCC-DB want?

Roadmaps for reforms. They seem somehow convinced that once those are promised, they will be followed pedantically. After all, the TurkStream case showed GERB can deliver if they really want to. WCC-DB are not Putin and Gazprom, however.

Bulgarians torn over willingness to fight for country: Gallup

Would you go to war? Only about 30% of Bulgarians say they would, according to a new poll by Gallup International, which has covered 45 countries around the globe. 42% of Bulgarians say they would not fight, and the rest are equivocal and do not know how to answer.

Globally, one in two say they would fight for their country if there was a war, one-third would not, and the rest are unsure.

We're not alone

Three caveats: first of all, Bulgarian results are actually not an outlier for the region and are similar to Western European ones. Secondly, despite relatively high levels of declared commitment to fight for one's country, the surveyors find an overall decline in the willingness to fight since the outbreak of several conflicts in different parts of the globe in recent years (you're less likely to want to die, when there is a palpable chance you might).

And lastly, the wording of the question in Bulgarian, which did not refer to "defending the country" but to "participating in a war that your country is involved in" might have been problematic in a country where parliamentary formations claim NATO will send Bulgarian troops to Ukraine.

2. Economy:

Restore VAT to pre-pandemic levels, abolish the maximum social security income, reintroduce progressive personal income taxation. Those were three of the most orthodox recommendations made by the representatives of the International Monetary Fund (IMF), who were on a mission in the country and spoke to the members of the National Assembly's Budget and Finance Committee on Thursday.

MPs: Thanks, but no thanks

All of them were politely rejected by the hosts. "We cannot follow these recommendations, I want to be very frank," Budget Committee Chairman Yordan Tsonev (MRF) said in response. Aleksandar Ivanov of GERB and Georgi Ganev of WCC-DB confirmed that their political forces would not accept these ideas, either. Of those who spoke at the meeting, only Rumen Gechev from BSP (the party which actually introduced flat taxation nearly two decades ago) supported the return to a progressive tax scale.

Food for flat thoughts

The flat tax was introduced as a solution to a particular problem: the state's inability to rein in the shadow economy and to reform the tax service. It also was supposed to act as a magnet for investments. The last of those things never happened. There might be some who came for the taxes, but all in all Bulgaria fares disastrously in the FDI field compared to others.

The first two, however, were more effective. The shadow part is supposed to be a lot smaller today than back in 2008 and the tax authorities are far more capable of administering a progressive scale.

Yet in order to claim more money for the state, you have to prove a need for it. And currently the evidence points in the other direction.

Case in point: the state as a bad owner

In four years, the state-owned Avtomagistrali company had fortified only 3 of the otherwise "urgent" 84 landslides or collapses under a half-billion lev procurement contract it signed with the state in October 2019. This is a finding by the State Financial Audit Authority into the company, which has led to its directors being fired.

And justice for none

None of the decision-makers has yet been held accountable in any way, although a number of institutions have found irregularities and breaches of the law. But hey, who needs justice when we can have stability.

Figure:

The value of the goods exported by Bulgaria in 2023. This is 6.9% less than the previous year and is mostly linked to the decline in exports of electricity, fuels and agricultural oils.

3. Business:

The Ruse-based transport company acquired a minority share (with an option to upgrade it to a majoritarian one) of the Slovak fulfillment operator Swiss point data.

E-mobility

German electric vehicle startup, which announced plans to build an electric car plant in Lovech and signed a memorandum with the government for state aid three years ago, has filed for bankruptcy in Aachen this week.

Retail

The Swedish home furnishings and furniture company announced it is cutting prices in a number of countries, including Bulgaria, due to the fall in global inflation.

Supermarkets

The German chain, which has been on the Bulgarian market for 18 years, announced it will open two hypermarkets in Sofia in 2024, which will bring the total number of its outlets in the country to 68.

4. Energy:

MPs got into a heated debate about whether and how nearly one billion is missing from the fund that guarantees the stability of the Bulgarian energy system. Speculation has been circulating in the past days that if the funds are not provided, electricity prices will have to be increased by 20% from July 1.

In fact, the money is missing not because someone spent it, but rather because the energy regulator wrongly forecasted the cash flow of the Energy System Security Fund (FSES). Lower electricity prices and dwindling carbon prices in recent months are the main reasons. The regulator could have reviewed (but did not) the balance of the fund's budget, reducing the estimated revenues compared to market realities, but also reducing the planned expenses - for example, huge compensations are now being paid for heating systems without the need for it.

Now the finance minister Assen Vassilev is obliged to provide the necessary funds from the budget.

5. Brussels:

#Ukraine: The EU promised to provide additional €5 billion to Ukraine for military imports from beyond the bloc. The move comes as the European Investment Bank supported the plans to boost defense spending.

#Industry: Industrial production across the eurozone fell by 3.2% at the start of the year, according to new data from Eurostat. The figures underscore how the euro-area's manufacturing base is suffering, particularly in Germany, the region's biggest economy.

#AI Act: Artificial intelligence will face strict new guardrails in the EU with the new AI Act voted in the European Parliament earlier this week. The regulation will clamp down on generative AI and emotion-detection algorithms and could set the tone for how the technology is governed in the West.

#Euro 7: On Wednesday, MEPs gave their green light to new EU rules to reduce emissions from passenger cars, vans, buses, trucks and trailers. Vehicles will need to comply with the new standards for longer, ensuring they remain cleaner throughout their lifetime. For the first time, they will include brake particles emissions limits (PM10) for cars and vans and minimum performance requirements for battery durability in electric and hybrid cars.

#Migration: The European Parliament also backed more effective EU rules for combined work and residence permits for third-country nationals. MEPs succeeded in setting a 90-day limit for a decision to be taken on applications for a single permit, compared to the current four months. Procedures on especially complex files might get a 30-day extension and the time to deliver a visa, if necessary, is not included. EU states will have the option to require an initial period of up to six months during which a change of employer will not be possible.

6. Watch out for:

Is in prime position to secure the spot of next head of the Bulgarian Church. The 55-year-old bishop of the biggest eparchy in the country has been working silently for years towards that goal, building political and business alliances and scheming in other bishops' backyards. And the Church is, make no mistake, a very wealthy and influential organization to control.

Konstantin Sulev

The prosecutor who filed an indictment against influence peddler and ex-head of the National Investigation Office Petyo "the Euro" Petrov is now facing charges for daring to do so and even Prosecutor General Borislav Sarafov had gone after him, dismissing him from office while the proceedings against him take place. It appears that the Omerta in the Prosecution is alive and well.

Kristalina Georgieva

Has been nominated for a second mandate as Director General of the IMF. Her candidacy has been filed in by the chief of the Bulgarian National Bank Dimitar Radev and is supposedly supported by the EU group in the Fund.

Place:

The military airbase near Plovdiv is a literal black hole. It was supposed to host the new F-16 we bought from the US a long time ago. The planes are nowhere to be seen yet, but the infrastructure for them is also still lacking. The Defense ministry is silent on the matter, yet the minister admitted some companies are pleading for more money. The whole thing was supposed to cost 300 million levs, yet is now at least ⅓ more expensive. The US is supposed to certify the base by October.

Date:

President Rumen Radev postponed the handover of the first government mandate to Monday at noon over the death of Patriarch Neofit. The GERB nominee for PM will have one week to fulfill it - or return it - from that point onwards.

Institution:

The Football Union is having its own date with destiny this Friday, as it terminates the long reign of Borislav Mihaylov. The question is whether it will also terminate the old ways of doing business and sports or not. Given the way Mihaylov was forced to resign (clue: Sofia was burning), it's not going to be a safe day to be in the center of Sofia.