Fear of the dark. This has characterized Bulgaria's business and economy this past decade. There was one huge unknown quantity - the size and shape of Delyan Peevski's power. The Magnitsky-sanctioned oligarch has been named behind every big scheme, every murky deal, every strange development in the state procurement, or every action (or inaction) of the prosecution service. How far does this power go, was everyone's guess.
Well, this past Sunday, this fear should have dissipated.
Because for the first time ever, Peevski stepped out of the shadows of others and stood by himself, confident in his powers, participating in elections under his own banner. There were all the gimmicks you'd expect from someone rumored to control an entire background army: lists of people with connections to the underground, help from the judiciary and police, a smear campaign against opponents. And of course - a huge "campaign" in the most susceptible places - the Roma neighborhoods.
Yet despite all this - the combined money and power of many - the omnipotent "dark" force of Bulgarian politics only managed to garner 11.6% of the vote. Still a lot, admittedly. Yet far from the "inescapable" force submitting everyone to his will.
And what's more this is not a unified electorate at all. There is nothing in Peevski or his "platform" uniting those people. If they follow him it's only because they either fear him or admire the control he wields. If 11 % turns out to be insufficient for a puppet-master role in the new government then these attributes are useless. Peevski has an obvious weak spot: he can't do opposition. His control depends on power and without it his followers and electorate will blow away like dust in the wind.
It's also expensive to do a campaign like this so he needs a government a lot more than, say, GERB.
So where do we stand?
We have Peevski revealed and sized up on the one side. We have a ton of radical parties on the other. You can't help but notice their number grows with every election. We started with 1 in 2021 and seven elections later we're on 4 (even though one of them didn't make it to Parliament because of 29 votes). More on that below.
This speaks volumes about the attitude of a growing number of Bulgarians towards politics. If you combine the votes for the anti-systemic parties, they are the biggest group in Parliament. It's only a matter of time before they realize that.
This is a precarious situation: a malevolent behemoth on the one side and a radical group on the other. If the crumbling ship of Bulgarian EU-bound politics doesn't manage to steer through, it will end up sinking somewhere between Scylla and Charybdis. And take the economy with it.
This newspaper is helped by
@Martin Dimitrov
POLITICS THIS WEEK
The rise of the little populistsThe most striking aspect of these last early elections has been the quiet rise of small, populist parties offering a hotchpotch of superficially conservative, nativist and redistributional policies. But, in the end, they are personality-driven projects that might unite behind anyone promising power or money.
We are talking of the likes of Metch ("sword") of the political renegade Radostin Vassilev, Slavi Trifonof's TISP, Vazrazhdane (Revival) and the new Velichie ("greatness") of Ponzi scheme tycoon Ivelin Mihaylov. More than 30% of all ballots cast in Bulgaria's parliamentary elections went to anti-systemic parties.
The radical specter
At the same time, it is important to note that they are not all the same - in fact, there are nuances (Vazrazhdane is openly pro-Russian, Metch is more neutralist and TISP is generally pro-Western) among the shared worldviews they hold. Most of them are socially conservative, nationalist positions verging on the extreme ("nationalize Lukoil" - Radostin Vassilev).
Vote-rigging speculation
Another dangerous effect of the recent election is the repeat rise of vote-buying after a short period of its relative decline, as well as the total helplessness of the institutions and the pro-democratic parties like WCC-DB to confront it. The liberal coalition came out with a strongly worded message about the serious evidence of vote-buying across the country on election day but said it wouldn't try to annul the vote because there was no point in even trying. So much for their defense of the law!
ECONOMICS
Business climate sees the sharpest decline since the pandemicThe business climate deteriorated sharply in October, with the overall assessment of the country's economic environment falling 5.6 points from September, according to the results of the National Statistics survey among managers of enterprises. The decline is the sharpest recorded in a month since the pandemic began, when the indicator plunged by more than 40 points in April 2020.
2024 doesn't end well
October's decline came mostly from retail, but numbers deteriorated in other sectors as well, with no exceptions. Thus, the overall index is down to 16.9% and is at its lowest level since October 2022. Managers across all sectors now have worse expectations for business in the coming months and are more reserved in their assessments, the survey shows.
General economic uncertainty and labor shortages are the most frequently cited problems by companies. This comes on the back of 18 consecutive months of decline in industrial production index, which is to be blamed mostly on Germany.
But the party was good!
The 2023 numbers are finally out and it's clear who the top 100 (and the top 300) companies are. You should definitely get the K100 issue because it's rare, unique and frankly, the best take on the Bulgarian market you can find. But all in all, it shows a decline in the energy sector for inflation and war-related reasons, and an exploding arms, pharmaceutical, solar and car sectors. We will have more on it next week.
We're still in the shady side
Bulgaria remains on the "gray" list of countries placed under increased surveillance due to "insufficient capacity in the fight against money laundering and terrorist financing". A total of 24 countries are on the list of the intergovernmental Financial Action Task Force (FATF). Bulgaria has been there since October 2023, along with countries such as Croatia, Monaco, the Philippines, Haiti, Syria, Venezuela, and others.
Figure:
1.08 billion levs
The assets in Bulgaria managed by the French giant in the asset management sector Amundi according to its most recent data
BUSINESS
LogisticsSpeedy
The Bulgarian logistics company has become the most expensive company on the Bulgarian Stock Exchange after its shares rose by over 95% in the last 12 months, reaching a market capitalization of 1.2 billion levs.
M&A
FIBank
First Investment Bank (FIBank) announced it has bought its headquarters in Sofia Tech Park from its two main shareholders, Tseko Minev and Ivaylo Mutafchiev, for about 80 million euros.
The deal will reduce FIB's administrative costs, as the bank will stop paying rent, and will have some effect on its capital ratios
ENERGY
Bulgartransgaz is up 200% for the first half of 2024The Bulgarian gas transit company's profit skyrocketed for the half-year, reaching 173.7 million levs compared to 58.6 million a year earlier, which is an increase of 196%, the company's financial report shows. The increase has mainly been driven by rising revenues from licensing activities, which reached almost 450 million levs (up 28% year-on-year). This is the result of the implementation of the interconnection projects between Greece and Serbia, the reversal of existing interconnections and the implementation of the infrastructure expansion project between the Bulgarian-Turkish and Bulgarian-Serbian borders. Part of the revenue is also generated from natural gas storage services at the Chiren storage facility, which increased by 71% year-on-year.
Kozloduy NPP's revenues drop by 35%
The situation is rather different at Bulgaria's nuclear power plant (NPP) in Kozloduy, which has again suffered a lengthy unplanned maintenance outage in the first half of the year that took one of its reactors out of service. Hence, despite higher electricity prices in early summer, year-on-year financial performance deteriorated. Revenues for the first 6 months of the year are down 35% from 2023. There are several reasons for the worsening financial result, such as the average price on the free market being 25% lower this year, but also the company's inability to place volumes on the exchange.
BRUSSELS
#TEMU - On Thursday, the Commission opened formal proceedings to investigate whether Temu may have breached the Digital Services Act (DSA) in areas related to the sale of illegal products, the potentially addictive design of the service, the systems used to recommend purchases to users and data access for researchers. The same procedures already apply to other online giants such as Aliexpress, TikTok, and Meta.#EV tariffs- The EU recently increased tariffs on electric vehicles, citing competition concerns. It will send representatives to Beijing to explore possible alternatives to avoid a trade conflict. These diplomatic efforts are aimed at balancing trade relations while supporting European electric vehicle manufacturers.
#Enlargement - This year's EU enlargement package highlights the progress made by candidate countries such as Ukraine, Moldova and Montenegro and emphasizes the importance of reforms in the areas of democracy and the rule of law for the accession process. Albania and Serbia showed strides in governance and anti-corruption, while Kosovo achieved visa liberalization. Turkey's negotiations remain stalled, while Georgia's status is under review following electoral concerns.
WATCH OUT FOR
PEOPLE
Georgi Cholakov
Amid the usual post-election shambles, the head of the Supreme Administrative Court contrived to secure his position. And all this in violation of the Constitution and a decision of the Constitutional Court. If you wonder why the court is important - it decides everything connected to the State or Local institutions, elections, as well as procurement.
Blagomir Kotsev
The new Varna mayor warned that a local coalition between the powerful financial group Chimimport, Revival party and GERB are trying to tie his hands publicly. They want to stop him from moving money from one part of the budget to another - an exclusive prerogative of the executive. The reason, Kotsev claims, is because he wanted more details on the shady deal whereby the government will give 30 million levs to Chimimport to finish the local stadium.
Abdulrahman Al-Khalidi
The Saudi dissident who has been detained for months in the temporary camp for foreigners in Busmantsi and who has staged a hunger strike for over 100 days, received a final expulsion order from the State Agency for National Security (DANS) after a Sofia court deemed his application for refugee status ineligible. Al-Khalidi recently told BNR that he is ill and in fear of deportation to Saudi Arabia, where he faces torture and harsh punishment.
INSTITUTION
Fund of FundsFive funds have applied at pre-selection level for the 32.2 million levs portfolio earmarked for the Enterprise Innovation Fund of the state-owned Fund of Funds. The money is planned to reach the selected fund manager in the second half of 2025 and they will invest in up to 40 companies with a maximum investment of 1 million euro.
PLACE
Cosmos movie theaterThe cinema, which is symbolic for Plovdiv, will finally be resuscitated, the local authorities announced this week. With 10 million levs, the municipality is hoping to attract companies willing to turn the abandoned cinema into a modern cultural venue. This would then become a new cultural focal point for the city under the hills.
DATE
1 December
The low-emission zone, or the so-called "small ring" where old, polluting cars are restricted from entering the center of Sofia, is making a comeback this year. It will be in effect until 28 February 2025. It will cover the boulevards in the ideal center of the city. It will affect cars that fall in the I and II Euro eco-categories. As a rough guide, petrol cars built up to 1998 and diesel cars built up to 2007 fall into these categories.
5 November
Is the day of the hearing of the Bulgarian commissioner nominee in Brussels. Apart from Ekaterina Zaharieva, several others are worth following - Hungarian candidate Olivér Várhelyi, Italian Raffaele Fitto, who is close to Italy's far-right party, Dutch candidate Wopke Hoekstra for his work with consultancy firm McKinsey and transparency regarding former clients and the Austrian Magnus Brunner who said Bulgaria should be let into Schengen. Might this just be very good news for the end of the year?
Fear of the dark. This has characterized Bulgaria's business and economy this past decade. There was one huge unknown quantity - the size and shape of Delyan Peevski's power. The Magnitsky-sanctioned oligarch has been named behind every big scheme, every murky deal, every strange development in the state procurement, or every action (or inaction) of the prosecution service. How far does this power go, was everyone's guess.
Well, this past Sunday, this fear should have dissipated.