The week: A hostile takeover at MRF Corp.

The week: A hostile takeover at MRF Corp.

A thunder in the Saray, Seventh election looming and house prices exploding again

© Georgi Kozhouharov


It has always been extremely hard to explain the MRF (known as the Movement of Rights and Freedoms) to foreigners. It has an intricate history, which started as a movement of Turks against their brutal suppression by the declining Communist state, evolved into a vehicle for the political interests of the 1990s mafia and ended up as the uncircumventable third wheel - formal or informal - in almost every single Bulgarian government since 2001.

It also has strange values - nominally it is a liberal party (although it's hard to conceive what its predominantly poor, rural electorate has to do with liberalism), but you'd find yourself greatly disappointed if you expected it to embrace, say, the gay pride movement.

And last, but not least - despite its ethnic nature, it has been the host of a myriad of problematic business people of entirely Bulgarian origin. Most notoriously, we're alluding to its current co-chair Delyan Peevski, sanctioned for corruption by the US and UK.

The closest we've come to properly describe the nature of the movement is the word "Corporation."

And this week we've been witnessing a purely corporate attempt at a hostile takeover of the MRF unfold in real time. A very hostile takeover, mind you. In it, the de facto "CEO" of the company, Peevski, has moved to usurp control over the corporation from its honorary chairperson, the very creator of the movement Ahmed Dogan.

In the past week, Peevski has single-handedly eliminated a good chunk of the top brass of the MRF that has been loyal to Dogan, at each level of politics - from the head of the Municipal Council of seaside Nesebar to some of the longest serving MPs like Filiz Hyusmenova and Ramadan Atalay. It was an interview with the latter in bTV on Wednesday that confirmed the suspicions - there is a civil war brewing in MRF.

The most blatant evidence for the division within the party came just hours later, when a third of its MPs (17, including the already ousted ones) voted against the GERB cabinet, following the advice of Dogan, and pitting themselves against 30 Peevski loyalists who supported it.

This matters for several reasons.

The most important one is that the movement has never split, especially so publicly. Many have tried - including some of the previous "CEOs" or GERB when it first rose to power - but the movement remained monolithic throughout the years, despite internal and external challenges. If the MRF's "golden finger" is no more, some certainties in the Bulgarian political system are going to change.

Secondly, the nature of the fault line matters - all (but one) of the ethnic Turks in the parliamentary group revolted against Peevski. Out of the 30 loyalists, 29 were Bulgarian. This is not to be underestimated - we should never forget that one of the main reasons why the MRF secured its position in the first place during the 1990s was the use of the so-called ethnic card - stirring fears of potential repressions against the minority that mobilized its members behind Dogan. What we're seeing now looks more like the revolt of the "white collars" brought in for corporate reasons, pitted against the old-guns.

Lastly, the crisis within the MRF is just one of the symptoms of the gridlocked Bulgarian political system. As the Wednesday vote showed, not even two full parties could vote for a cabinet in this fragmented landscape. This creates a vacuum of power - and we all know that nature does not tolerate such things.

The CEO Delyan Peevski might soon discover he has overreached himself. The next few weeks will show if this is the case - or if he could restore normality to MRF Corp., either by making peace with Dogan - or by sending him into oblivion. The latter, on the other hand, would signal the demise of the MRF - in the end, while it is a corporation, it is nonetheless built on the foundations of ethnicity. Without it, the colossus might find itself on clay legs.

And it will become just another venture ruined by Peevski, after his newspaper empire, Bulgartabac and Corpbank.

1. Politics this week:

Zhelyazkov cabinet fails to gain parliamentary approval

After a long, painful and largely unnecessary "discussion" in the parliamentary assembly, MPs rejected the proposed GERB cabinet that would have seen former parliament speaker Rosen Zhelyazkov as PM. It received the support of only 98 MPs - namely the 68 GERB deputies and the abovementioned 30 Peevski loyalists from MRF.

Curiously, the vote did not lead to the split of the new Velichie party, as many observers expected because of the loud quarrels that started out of the blue this week between former best friends - parliament leader Nikolay Markov and the ideologue (and main sponsor) Ivelin Mihaylov from the Historic Park.

Please don't vote for us

If you ever thought that the purpose of politics is to seek power (like every first year Politics student would tell you), Boyko Borissov is there to disagree. From the very day President Rumen Radev gave the exploratory mandate to Zhelyazkov and his party leader, the latter was extremely pessimistic about the formation of an actual government. "If the government passes, it will be due to [some procedural] trick and it will have a very short life - we will get out of it. We just have to pass next year's budget," Borissov said on Monday.

He also looked quite concerned - and, apparently - uncertain about the outcome - when the votes were cast on Wednesday in Parliament. And he once again hinted that the time has come to change the electoral system to allow the winner (i.e. himself) get extra votes.

The conclusion: expect a new election

Given the statements the parties made before the vote, the chance of a government being formed with the second and third mandate is only theoretical. Unless by some miracle some "non-partisan" formula for an expert or interim government is agreed, this means that there will be yet another election in Bulgaria in the autumn.

Seven is a lucky number, right? The question is - for who? It might well be for Rumen Radev, who might finally jump in parliamentary politics, one way or another.

Radev doesn't want further Bulgarian commitment towards Ukraine

Last week, President Radev refused to lead the Bulgarian delegation to the NATO summit in Washington next week, saying he was unhappy with some of the positions that the Bulgarian political establishment had agreed to sign up to there. He refused to specify what exactly these positions were - until yesterday:

"I do not accept the government turning Bulgaria into an indefinite donor for the war in Ukraine - - until final victory." he told journalists. "I do not agree with the commitment for concrete financial aid, it is not small at all, and it is for arming Ukraine. Nor with the commitment to provide weapons from the Bulgarian army's arsenal before we have received replacements," Radev further stressed.

He claimed that those who drafted and adopted Bulgaria's position for the NATO meeting were not clear what ultimate victory means - "how it will be achieved, what it will cost us in terms of time, money, resources and, most of all, in terms of risk, because with each passing day the risk of this war for us grows."

2. Economy:

House prices in Bulgaria go crazy again

The National Statistical Institute (NSI) reported at the end of June a record growth of 16% in house prices in Bulgaria in the first quarter of 2024 compared to the same period a year earlier. Compared to the last quarter of 2023, the growth was 7.1%. This is the highest level of the housing price index (HPI) since the beginning of 2022. Furthermore, there has been no similar quarterly growth at all in the last eight years for which data is available on the statistics website. The main explanations are that people are in a hurry to buy before the adoption of the euro, and bank lending is helping. There is also a version that a process of legalization of gray capital is underway. Despite the appreciation, transactions increased by 8.7%. The biggest growth is in transactions and prices in Sofia, Burgas and Varna.

Figure:

150 million euro

The amount of EU funding available for vegetable growers, livestock farmers, rose growers, organic growers and maize growers to apply for to get more efficient water management.

3. Business:

Banking Revolut

The users of the online banking app in Bulgaria had deposited more than GBP 323 million (about 745 million levs) by the end of last year, up 55% year-on-year. According to the company's annual report, 725,000 Bulgarians use its e-money app, up 44% from 2022.

M&A

Milestone Systems

Danish video technology company Milestone Systems, which has a development center in Sofia that employs more than 200 staff, has announced that it is merging with US cloud-based video surveillance solutions provider Arcules. For the time being, the deal won't affect the Bulgarian staff.

4. Energy:

Record low electricity generation in Bulgaria for June

In June, Bulgaria produced more electricity from solar than from any other power plants, with the exception of the Kozloduy NPP. More than wind parks, hydro plants and the coal sector. This means that Bulgaria has achieved a greener energy mix with almost no planning - a fact that might bring problems in the future. Read more about these in this week's energy piece here.

5. Watch out for:

Person
Victor Assenov

The blind Bulgarian amateur athlete who has become famous in the country's long-distance running circles for completing some of the biggest local trail marathons, accomplished his most impressive feat so far - with the help of two spotters and a special tandem bike, he managed to go around Vitosha mountain not once, but twice in the span of less than 48 hours during the annual Vitosha 100 race.

Place:

NDK garden

The favorite green space in the heart of Sofia became the scene of a new PR blunder from new Sofia mayor Vassil Terziev. After locals in the area screamed blue murder about the unwarranted change in traffic regulations on the neighboring boulevard, this week's mayoral decision to restart the process of reviving an old Balkan wars memorial alienated many of his most fervent supporters. While the intentions were certainly good - carrying out a proper competition on how the monument ought to look like - the way everything was communicated (after the fact and after only consulting architects and not the general public) created another unnecessary front for the reformist mayor.

Date:

October

The likely time of the next early elections according to President Rumen Radev.

Institution:

Bulgarian Orthodox Church

After only two rounds of elections, the fourth Patriarch of the Bulgarian Orthodox Church (since the restoration of the institution after the end of Commusins) was elected in the person of Bishop Daniil of Vidin, whose secular name is Atanas Nikolov. The election was held in two rounds, with the oldest of the candidates, Gabriel of Lovech, dropping out in the first round. In the second round, the majority chose Danaiil against Grigory of the Vratsa Eparchy (69 versus 66 votes).

While Grigory has been seen as the most pro-Western, and close to the Ecumenical Patriarch Bartholomew, Danaiil has kept the lowest profile of the three nominations and has expressed sentiments that echo Moscow's standpoint since the start of the Russian invasion of Ukraine. He is also the youngest (52 y.o.), which means that he will likely remain in the (lifelong) post for a long time. Danaiil studied English philology before becoming a monk and has served as the vicar to the Bishop of the USA, Canada and Australia between 2010-2018, when he was elected Bishop of Vidin.

Zen of the week:

Source: Archeologia Bulgaria
Source: Archeologia Bulgaria

A remarkable archaeological discovery was made by the team of Prof Ludmil Vagalinski in the ancient city of Heraclea Syntytica near Petrich. A fully preserved ancient statue was found for the first time on Bulgarian territory. The 2 m. high marble figure is likely of God Hermes who was highly revered in the region during the Ancient Greek era.

It has always been extremely hard to explain the MRF (known as the Movement of Rights and Freedoms) to foreigners. It has an intricate history, which started as a movement of Turks against their brutal suppression by the declining Communist state, evolved into a vehicle for the political interests of the 1990s mafia and ended up as the uncircumventable third wheel - formal or informal - in almost every single Bulgarian government since 2001.

It also has strange values - nominally it is a liberal party (although it's hard to conceive what its predominantly poor, rural electorate has to do with liberalism), but you'd find yourself greatly disappointed if you expected it to embrace, say, the gay pride movement.

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