The week: EU funds: the rise of the cities

If you ask me, we'll probably cut anything not already in the pipeline and almost done and then use the rest on defense, whatever that means.

But interestingly enough, we're not alone in this. If you take a look at the scoreboard of the EC, you'll notice that few countries have moved above the 30% mark in terms of reforms and milestones. Finland and Romania, to give a few examples, are both under 15%. 28% is the median for the whole EU. The whole RRP package has a little over a year left to be spent.

What that tells me, and I might be wrong, is that the new method of spending EU money has hit a wall. Even in the best of times, countries are not very good at setting targets, achieving them and modifying them along the way. Throw in energy insecurity, market upheaval, elections, and war and it gets nearly impossible to follow a timeline. Even countries with good bureaucracies like Austria and Netherlands are under 25%. Life is just not so susceptible to planning as it once was.

And the thing is, the European Commission plans to make this the default method of spending EU money after 2027. But there's a catch. National governments are going to get sidelined in this process more and more. A larger chunk than ever of the money is going to be distributed and evaluated by the Commission. This is a quiet revolution.

First, because for smaller units, such as municipalities and counties, planning is easier. A mayor can follow up on promises far more easily than a PM, because the stakeholders are fewer. A supranational competition is going to mean developing better capabilities at a local level and upping your game - like a football team suddenly entering a European championship. The Commission will have to work extra hard to avoid the pitfalls that UEFA has - wealthy cities with huge capabilities will have an edge here.

And here comes the second point. This is easier done on a EU-wide level, than on a national one. A government is beholden to internal interests. It can give money because it favors a certain place, or because it disfavors another one. This has happened time and again in Bulgaria and probably in many other countries too. The EU funding has become a way of rewarding or punishing local power by the central one.

For better or worse, a majority of EU citizens see the Commission as a fair judge. 51% of them said they trust it, a record since Eurobarometer began measuring this. So this new idea has a fair chance of success.

I know many here will scream at the idea that a non-elected body will supersede elected bodies on financial matters. But wake up - the Commission has been doing this for quite some time. And second, if we're giving grants anyway (which is a terrible thing for the business environment per se), we might as well try to do it as fairly and effectively as possible.

Politics this week:

Another thing we can outsource to Brussels: prosecution

The College of the European Public Prosecutor's Office (EPPO) has decided to open an administrative investigation into possible misconduct by the Bulgarian European prosecutor Teodora Georgieva. European Prosecutor General Laura Kovesi has informed the European Parliament, the Council of the EU and the European Commission that she will probe the Bulgarian branch of her own EPPO. Georgieva is temporarily suspended.

Wait, let's explain

Georgieva was supposed to be fighting EU funds' misuse. But in a place like Bulgaria, where the EU funds are controlled by a group of, say, 5 people, this means fighting against state capture. So inevitably, she has come up against some pretty deep interests. She complained about this to Capital last month.

This interview clearly struck a chord because a massive kompromat war was waged against the prosecutor. Tabloid media received emails signed off by Petyo "the Euro" Petrov, the notorious judicial kingpin from the Eight Dwarves case - who claimed that Georgieva had met him and received regular bribes.

Petyo who?

Ironically dubbed "The Euro", the ex-cop, ex-prosecutor and power broker has been missing for several years. Yet he, or someone else, has a hold on his massive video collection of kompromats, and uses them regularly. The allegations against Georgieva are not new - they first surfaced in October 2023, and the prosecutor's office then announced an investigation, which it then quietly dropped over lack of evidence of a crime.

So what is Kovesi checking?

According to Georgieva herself, the central office of EPPO is checking her compliance with the protocols, as she first interrogated witnesses and then withdrew from the case of the gas storage of Chiren. There is, she says, clear evidence of massive undercover pressure from Delyan Peevski against her, because he is behind a scheme to siphon state money from the works in Chiren. Georgieva says she received threats that the kompromats against her will be released to the media, if she indicted a former energy minister and current CEO of the national gas-transit company. The person in question - Vladimir Malinov - was supposed to be indicted this week.

So has the shit hit the fan?

Let's hope so. If there is any way of breaking out of this damn cycle, it is for someone from abroad to come and just call things what they are. Fingers crossed, Kovesi!

Meanwhile, Peevski is everywhere, again

After helping the majority pass many of the controversial appointees in key regulators (see more below), Peevski insisted PM Rossen Zhelyazkov should not go to the EU meeting in Paris on Ukraine. The leader of MRF-New Beginning called on "the prime minister to be here, to do his job and see what they will actually do for the people." That is just underlining the total unpredictability of this dark force in Bulgarian politics.

Economy:

Finally, NEK receives bids for Chaira Power Plant repairs The third tender for the renovation of the Chaira Power Plant is on its way to success. A total of five consortia have submitted bids to repair the facility, which collapsed in 2022. The documents were originally due to be submitted by March 11, but for unclear reasons the deadline was moved without explanation by the new executive director of the National Electricity Company (NEK), Georgi Dobrev. The price of the tender is 242.5 million levs excluding VAT. The interest in the contract is now good news given the lack of candidates in the previous two tenders.

Among the candidates for the repair of Chaira are the Energoremont-IDA PPP, which includes Metalik and Energoremont-Galabovo, the Foit-GBS Hydro alliance, which includes Glavbolgarstroy International and Foit Hydro; The consortium Dongfang-Geostroy-Divela, which includes three companies - Dongfang Electric International Corporation, Geostroy and Divela Ventures. The last bid was submitted by the Vaptech-Toshiba-GP Consortium, which includes Vaptech, GP Group and Toshiba International. Toshiba are the original equipment manufacturers of the hydro-energy plant.

400 million levs

The likely sum Bulgaria is about to pay to French defense manufacturer Thales for 3D radars for its army.

Business:

Startup

SplxAI

The Bulgarian venture capital fund LAUNCHub Ventures, which manages resources of EUR 74 million from the EIF, the World Bank, and private investors, is leading an investment of EUR 7 million in the American AI agents company with Croatian roots SplxAI.

Defense

Rheinmetall

The head of the largest European defense consortium Armin Papperger visited Bulgaria on Wednesday to see if Rheinmetall could make a joint venture with Bulgarian enterprises. He said his company is not in the country to solicit contracts, but to create a lasting partnership with the state and local businesses, and praised Bulgaria's munitions industry.

Energy:

Deadlines for connection of new RES will be shortened A new shortening of the deadlines for the connection of solar power plants is on the way - this will be done with amendments to the Renewable Energy Sources Act (RESA). They come in response to a series of directives, one of which Bulgaria is already in infringement proceedings for, and the aim now is to transpose them quickly so that "the case can be closed."

In general, the proposals are aimed at simplifying and reducing the timeframes of the procedures for issuing permits for the construction of new RES. This will create the conditions for increasing production and consumption from renewable sources to achieve the national target of at least 34.48% share of energy from RES in final gross energy consumption.

Watch out for:

People: Vasil Golemansky

The choice of another key regulator was made with the landmark support of MRF - New Beginning of Delyan Peevski. The only candidate for chairman of the Financial Supervision Commission (FSC) was nominated by GERB, received support from coalition partners TISP and BSP, but not from Ahmed Dogan's MRF faction, which seems to be increasingly pushed into a corner by its double.

Plamen Mladenovski

And one more appointment backed by Peevski: the former director of the Electricity and Heat Directorate at the Energy and Water Regulatory Commission (KEVR), will now head the key regulator. This was done with the votes of 138 MPs - practically all of the ruling majority plus MRF - New Beginning.

Company:

Bulgarian Church

Will get 78.37 million leva overall in 2026 - more than 50% raise from the budget of 49 million this year, after a proposal by the Holy Synod. This means Bulgaria is now paying 6.18 euro per person for the religious institution - way more even compared to the very religious Poland, where this is 1.8 euro per capita.