It seems the year will end on a positive note. As far as we can tell, Austria is leaning towards agreeing to let Bulgaria and Romania enter Schengen as full members next year. This means a fully fledged land corridor between the Black Sea, the Aegean and the center of Europe.
Austrian officials have hinted at a potential change in their stance, which has been the main obstacle to full accession. Romanian Prime Minister Marcel Ciolacu expressed optimism about a decision being reached by December 2024, with implementation possibly starting in March 2025. A crucial meeting is intended (but not confirmed yet) for November 22 in Budapest, where interior ministers from Romania, Bulgaria, Austria, and Hungary could discuss the matter and potentially agree on measures for Romania and Bulgaria to complete as prerequisites for joining the Schengen Area.
This means new conditions for the two countries concerned. Let's not rush to conclusions yet, but this will bе а game changer. Truckers will be happy, of course, but this is going to be a huge boost to business activity all over the region. If you ask me, entering Schengen is probably even more important for the economy right now than entering the eurozone. We've detailed before why that's the case.
Yet what's even more important is the way Bulgaria is going to squeeze into that club, membership of which evaded it for over a decade. There is no other way to put it, so I'll be blunt. We'll sleepwalk into it. A caretaker government on the wheel, with no real authority figures in it, with nothing they can promise long-term in Brussels or in Vienna.
The real reason for our accession lies with Romania which has been pushing and promoting it on all fronts and we're kind of tied to them. And the Austrians want this out the way so they can probably do some deals in Brussels while lifting a veto they never really cared deeply about.
So that's the new reality we're living in. Things are happening to us, not because of us, but because of others. And this is only going to intensify, as politics in Sofia looks more and more like a massacre. I wouldn't dare suggest we might slip into the eurozone in the same way (this requires some more political action), but unfortunately, this is valid not only for the good news, but for the bad also. For example - Bulgargaz is bankrupt, the Recovery and Resilience plan is all but dead, and the European Prosecution service is finally starting to make arrests in Bulgaria. Inertia, it seems, can get you only so far.
This newsletter was helped by Martin Dimitrov.1. Politics this week:
Still there is no one to talk to in SofiaThe 51st National Assembly convened for the first time on Monday amid the boos of eight different protests outside and the usual fragmented turmoil inside. GERB leader Boyko Borissov said he wants a coalition yet still failed, as expected, to guarantee he wouldn't cooperate with the corruption mogul (and his unofficial partner for a decade) Delyan Peevski. The liberals (WCC-DB) on the other hand, are also unable to form an anti-GERB/Peevski coalition, because they don't want Vazrazhdane in, either. This makes it impossible to form a workable coalition, for now.
And the whole thing can still be called off
There are calls for total cancellation of the 27 October election due to voter fraud - a demand that is partially supported by many factions, such as WCC-DB (who just want a recount), BSP, Vazrazhdane and MRF-Dogan. However, the legal complaint for now concerns dozens of sections. Meaning all eyes now turn to
The Constitutional Court
Amid the scandals in and around the parliament, the swearing-in ceremony of the three new constitutional judges on Thursday went almost unnoticed by the general public. Which is paradoxical because at the moment the political conjuncture and the future governance of the country is largely in the hands of the Constitutional Court. It is also expected that they will be asked how the next caretaker government will be formed - by the discretion of the President or by a small circle of people, chosen by Parliament.
2. Economy:
Sofia and the restThe graph above indicates the salary levels in the regions and the line is the median salary for the country. As you can see, no other region but Sofia touches it.
The capital continues to be the behemoth of the national economy, but its share gradually declines because it is outpaced by several smaller regions, revealed the Regional Profiles 2024 study by the Institute for Market Economics (IME) on Thursday. However, the capital retains pole position with 41% of GDP in 2022, followed by Plovdiv, Stara Zagora and Varna, which still trail far behind at 5-6%.
Not one, but several countries
According to the analysis, the development of Bulgaria's regions is highly uneven - the leaders are developing ahead of the curve, while the weak ones are lagging further behind, and thus the gap between them is widening. While Sofia and several other industrial regions continue to grow substantially, other parts of the country are reporting slower wage growth, which creates preconditions for a divergence of living standards. The study also finds continuous problems with unemployment in 10 regions, far above the 4.3% average for the country - Shumen, Kardzhali, Smolyan, Vratsa, Silistra, Montana and Vidin.
Figures:
2.2%The GDP growth of Bulgaria for the July-September period, which has mainly been driven by consumption. On a quarterly basis, the indicator is up 0.5%.
-3.6%
The decline in exports for the first three quarters of 2024 according to national statistics (NSI), which is mainly driven by lower prices and contraction in demand.
13.8%
The growth of the average salary in the country for Q3 of 2024. Despite the high number, this indicator marks a cooldown compared to previous periods, where growth consistently reached 17-18%.
3. Business:
Energy Maritsa East-2 TPPThe honeymoon for Bulgaria's largest state-owned coal power plant in the country that lasted during the start of the Ukraine war seems to have ended, with the total amount of its revenues from operating activities in the first six months of the year reaching 480.5 million levs compared to 933.5 million levs reported for the same period of the previous year, or a 50% decrease.
Retail
BillaThe supermarket chain will invest more than 60 million levs in 2025, with the lion's share (44 million levs) earmarked for expansion, 14 million levs for the reconstruction of existing stores, and 4.7 million levs on the renovation of existing stores and 7.5 million levs for the new logistics base in the village of Zagore, company CEO Vighintas Shapokas announced.
M&A
SunotechThe Bulgarian company that is building solar parks around the world announced it will purchase a 40% stake in the Sofia-based software company Adex Energy, which develops products for management, data processing, energy production forecasting and trading.
4. Energy:
Bulgargaz goes brokeThe state-owned gas supply monopoly is technically bankrupt, according to the company's interim financial report published earlier this week, which raises some tough questions about its future. The public supplier loses market share, buys natural gas at high prices and then sells it at lower prices, and customers decline because of better conditions of competitors. The result of all this is that the company's revenues are melting by almost 60%, with the company ending the first half of the year with a net loss of 258 million levs (compared to 36 million levs for the same period last year), which amounts to an increase in its negative financial result by 611%. Let us remind ourselves that the company is still losing up to 1 million levs per day, because of the Botas deal with Turkey.
5. Brussels:
#MobyDick - the investigation of the European Prosecutor's Office (EPPO) under the name of the famous sea monster is probing for potential VAT fraud for 520 million euros and has reached Bulgaria. According to an EPPO announcement from Thursday, 195 people and more than 400 companies from several mafia clans have been involved in the highly profitable tax evasion scheme in 10 EU countries, including Bulgaria.
#Infringement - Bulgaria has violated three EU directives on environment, energy and climate, financial services and stability, the European Commission announced on Thursday. It is taking Sofia to the Court of Justice of the European Union for failure to fulfill obligations under the Urban Waste Water Treatment Directive. Another count is its failure to submit its final updated national energy and climate plan. It also sends a reasoned opinion to Bulgaria for not notifying it of the full transposition into national law of the amended Motor Insurance Directive.
6. Watch out for:
People:The current head of the Supreme Administrative Council, whose second (and - legally - last) mandate had lapsed months ago, will remain in office for an unknown period despite the constitutional limitations for this after a controversial decision by the Supreme Judicial Council.
Krum Zarkov
The ex-justice minister and BSP figure, now a presidential adviser, has been named by an angry Peevski this week as the potential leader of a new presidential party. Zarkov himself has not commented but he has been a pretender for a leader of the Left a while ago.
Date:
21 NovemberIf you or your company are interested in online security topics, check out the program of the CyberSecurity Forum 2024, organized by Capital weekly and AMATAS, and sign up! The conference will be held on 21 November at the Hilton Hotel in Sofia in a hybrid format, with the possibility to follow the discussions online.
Place:
Ihtiman
Where the winner of this year's CityLovers competition is based. This is the teacher in the local school Irena Petrova and her pupils who own a bee hive and produce honey they sell on a local market, donating the money to improve the lives of children with diabetes. They will get to build now a BeeSchool where kids will learn about the little insects and why are they so vital. And the runner-ups were a festival in Stara Zagora which will build a land-art installation and a teenage park in Chernomorez, near Sozopol. There were plenty of winners this year and we will tell you about it in an article.
The level of political discourse in Bulgaria has been deteriorating gradually and consistently for years, and the trend only seems to get worse with the entry of younger politicians on the scene. This week, Sofia Mayor Vassil Terziev summarized his first year in power by quoting the famous retro chalga song by Azis and Gloriya, which roughly translates to "We are not faultless, but we are genuine."
While it all might seem like a light-hearted joke, the reality on the ground is less funny. The main allies of the mayor from the Save Sofia movement threatened to withdraw their support for Terziev over unfulfilled promises and delays in key reform areas in the capital. While it is true that the new authorities face an uphill battle against interests that have entrenched throughout almost 15 years of GERB rule, the absence of quick, clear-cut victories might harm any prospects of meaningful change.
It seems the year will end on a positive note. As far as we can tell, Austria is leaning towards agreeing to let Bulgaria and Romania enter Schengen as full members next year. This means a fully fledged land corridor between the Black Sea, the Aegean and the center of Europe.
Austrian officials have hinted at a potential change in their stance, which has been the main obstacle to full accession. Romanian Prime Minister Marcel Ciolacu expressed optimism about a decision being reached by December 2024, with implementation possibly starting in March 2025. A crucial meeting is intended (but not confirmed yet) for November 22 in Budapest, where interior ministers from Romania, Bulgaria, Austria, and Hungary could discuss the matter and potentially agree on measures for Romania and Bulgaria to complete as prerequisites for joining the Schengen Area.
