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Gesture politics: Sofia’s reborn Atlanticists

Part 2: Of nukes and jets

In the first part of this two-part article, we explored the new-found “Atlanticism” of Bulgaria’s former prime minister Boyko Borissov and of Bulgarian politics’ perennial back-stage eminence grise, oligarch Delyan Peevsky, as manifested in their zeal for achieving a quick ending to the privileges of the Russian-owned oil-refinery Lukoil Neftochim. We found it somewhat lacking in credibility in two respects.

  • First, in the light of a decade or more of subservience to Russian leader Vladimir Putin’s interests – a track-record that surely casts some doubt on these two gentlemen’s motives;
  • Second, in itself: for, sure enough, looked at closely, the policy they advocated doesn’t seem to be as radically “pro-Western” or “anti-Putin” as the duo would have had us believe. It seems more of diversionary tool to cover past and future sins.

In this part, we will first look at certain other steps that could be regarded as “less Atlanticist than they seem”. Second, we will look at these in historical perspective, in the general context of the nature of Bulgaria’s post-communist political and business elite. And, third, we will conclude with more up-to-the-minute remarks – on the dynamics of current political struggles and the prospects for the present government.

Of nukes

Now, I think it’s a fair generalisation that you can’t have real Bulgarian murk without politicians trying to use nukes to pull a fast one. And, sure enough, there’s a deal involving a nuclear reactor in offing just now. Except that, this time – and in accordance with this season’s Atlanticist fashion – the nuke in question is American rather than Russian.

Specifically, it’s an AP-1000 reactor from the US firm Westinghouse. A Front-End Engineering and Design (FEED) contract with Bulgaria’s Kozloduy NPP was signed in June this year, backed up more recently by a parliamentary allocation of BGN 500 million to cover preparatory work and the costs of a preliminary stage including design and studies. The project, if implemented, would involve newbuild of a block at Bulgaria’s sole NPP.  That would be Block 7, and would operate alongside two Russian-built reactors already in place as (one of which, incidentally, Westinghouse will be supplying with nuclear fuel starting next year).

Those two, both VVER-1000 reactors, are the only other blocks operating at Kozloduy – and are Blocks 6 and 7. Confused? Well, blocks 1-4, involving much older and smaller Russian reactors (VVER-440s), had been taken out of operation in the years before 2007 and are undergoing decommissioning. And, just to complicate things, some Bulgarian politicians have started since June to talk of a second AP-1000 reactor, as Block 8!

Returning to Block 7, however… Would you care to guess who is behind this little coup de théâtre? That’s right! The “Two Delyans and a Boyko” (D2-B1) drama act held centre-stage: Mr Borissov and Mr Peevsky had played visible roles in pushing the contract forward. while (in accordance with his gifts), parliament’s energy commission chief Delyan Dobrev had done most of the talking.

However, despite the haste surrounding the AP-1000 project – spurred both by Borissov-Peevsky political expediencies and by the Parliament’s speedy allocation of that BGN 500 million – scepticism prevails. If Bulgaria and Mr Borissov run true to their form regarding grandiose nuclear projects, the front-end enthusiasm could easily dissipate on the long and winding road to the final investment decision, as has happened many times before.

One might ask, indeed: why risk yet another half a billion just to find out, as on previous occasions, that unless the state finds all of the money to fund the project – which most probably wouldn’t leave much change from USD 25 billion for one reactor – the AP-1000’s fate will not be different from that of the VVER-1200 reactors proposed at Belene NPP more than a three decades ago?  For attracting interest in nukes from private investors is becoming next to impossible – a difficulty exacerbated by inability to establish long-term power purchase contracts, which means that this project is not marketable or bankable. That has been a very expensive lesson indeed, costing Bulgarian taxpayers almost USD 2 billion, and it’s relevant for any new NPP that Bulgaria undertakes – with the possible exception of replacements for the two Russian reactors already operating at Kozloduy NPP, which aren’t an issue now, since they are expected to remain online until 2047 and 2049 at least. So why pay yet more money to learn the same lesson?

And that suggests a rather important question. If the project does indeed prove unbankable, if it can’t be financed on a commercial basis by private capital, will those now talking about US nuclear reactors, as Kozloduy 7 and Kozloduy 8, be willing to secure the necessary state financing, exceeding USD 50 billion for the two, once they have used up these initial prep funds? It seems doubtful. There’s an English proverb that “a bird in the hand is worth two in the bush”. But this looks like a case of that very Bulgarian phenomenon of a “bird in the sky” – a promise of something in an uncertain future with dubious net present value.

So why are Messrs Borissov and Peevsky bothering with promotion of the AP-1000 reactor, well aware that it’s a dead-end street? The answer is simple: because it’s an element in a trade-off, personal and political, between “D2-B1” and US companies, in which transactional value is everything – and is mainly short-term rather than strategic.

Now, for those with long memories – a group within which A&A readers are surely prominent – there may be a certain sense of déjà vu here. Remember Turk Stream? How come Washington gave it such an easy passage? Well, that was no doubt partly because the White House was occupied at the time by Donald Trump, no friend of Ukraine. But a lot might also be explained by the willingness of the political engineers behind the critical Bulgarian segment of the pipeline – including Mr Borissov, then prime minister – to offer blandishments to the Americans.

One such was the incorporation of four compressor turbines supplied by the US firm Solar Turbines into Balkan Stream (the Bulgarian stretch of the Turk Stream project) – as well as other American goods – which reportedly did wonders to disarm US diplomats in Sofia. And it was remarkably cost-effective, at least for the Russians: the Kremlin got a nice new route for its gas into Europe – while US engineering firms sold a few bits of hardware.

Of jets

Admittedly, these may not have been the only price paid: in 2019, at a time when the sordid process of getting Turk Stream past potential obstacles – and thus stabbing Ukraine in the back – was still underway, Bulgaria committed to buying eight F-16 fighters, produced by US firm Lockheed Martin, after a prolonged controversy as to whether these or aircraft from Sweden’s Gripen should finally begin to replace Bulgaria’s antiquated fleet of Soviet-era MiGs. And, though it’s quite some time until even the first batch of F-16s will actually be delivered, it’s still going on: in November 2022, the then Parliament ordered a second batch of eight F-16s.

Now, the point here is not that F-16s are a bad idea. Quite the contrary. They are very good planes and the Bulgarian Air Force needs them. However, Bulgaria’s approach is erratic and flawed. This is best illustrated by contrasting that approach with that of its northern neighbour, Romania, which has been much more systematic (not to mention a lot quicker off the mark).

Thus, Romania acquired its first F-16s in 2016, following a contract with Portugal in 2013 to purchase 12 second hand F-16 A/B Block 15 MLU fighters. In 2019, the country signed another contract with Portugal for another five F-16 A/B Block 15 MLU fighters, which were delivered by March 2021. And in 2022, Romania signed a contract with Norway to purchase 32 additional F-16s, all second hand, and allowing it to perform a variety of missions – including air-policing, air-to-air combat, air-to-ground attack, and reconnaissance. And finally, earlier this year, Bucharest signed a USD 6.5 billion contract for the acquisition of 32 F-35s.

But, for our purposes, the most striking thing about the Romanian build-up is not that it started in good time or has involved a lot planes. It’s the fact that it has been conducted in accordance with a comprehensive and logical strategic plan. The plan, in fact, that you follow if you want to achieve a systematic build-up and replacement of Soviet weapon systems.

You start with the most affordable version of the proposed replacement weapons – second-hand ones – and then move to upgrades. In the interim, you train pilots, you add radars, and you improve infrastructure. And you build trust with the US, which is important, because the most recent F-16 purchases (from Norway) are Block 70s, which are full of sensitive technologies that the Russians would just love to know all about. And, once you have established that trust, you’ll be in line for some F-35s.

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Contrast the Bulgarian case. It has involved suspiciously timed purchase of planes, without an overall scheme and without attention to the things needed to maximise those planes’ utility, to ensure their combat capability. In themselves, Bulgaria’s F-16s are (or will be) fine. They will have the potential for all the mission types listed above in the Romanian case. But perhaps only the potential. The first batch will have no discernable effect on the capabilities of the Bulgarian Air Force (BuAF) when it is delivered in March 2025, because the BuAF lacks – and almost certainly will, by then, still lack – comprehensive ground support and 3D radars. The 2019 deal made sense only as the start of a process. But there has been little progress since.

In fact, it was a classic case of Trumpian transactional diplomacy. The Kremlin got a sweet energy deal worth USD 16 billion annually in gas proceeds, while the US got to sell some planes worth a few billion to Bulgaria as a “peace of mind” fee. And, meanwhile, the interests of the Kremlin’s enablers were looked after.

Now, maybe we shouldn’t be too hard on Mr Borissov in this connection. He’s a policeman through and through. He’s never trusted the armed forces, never understood their needs (and perhaps 2019 was a little early to consult his recent ally President Rumen Radev, an Air Force man by career!). But it should be noted that some Bulgarians “get it”. One of them is current defence minister Todor Tagarev.

He gives every sign of being a man with both the desire and the ability to formulate a long-term strategy which, systematically implemented, will ensure that Bulgaria achieves a real step-change in combat capability, backed by financial commitment and Western arms purchases. Mr Tagarev is a real expert, a real professional, and a man of real integrity. Which is probably while he is coming under such ferocious attack at present: fraudsters and careerists are crying foul because the Denkov government is denying them the means to keep playing their little transactional games in Washington.

And playing those games they certainly are. Witness recent events – several of them – sponsored by the Washington office of a Bulgarian construction company. Now, it’s difficult to identify a specific corporate interest served by these, but things become clear when you notice two things: first, the construction company GBS has done several major deals with Bulgartransgaz (BTG); and, second, top GERB top politicians attended these functions. So it’s a fair presumption that these were mostly intended as PR, image-making and networking opportunities for favoured Bulgarian politicians with a need to exercise influence in the US. And GBS is not the only company engaged in lobbying on behalf of the Bulgarian politicians.

What do they want?

“Influence to what end?”, it might be asked.

Well, one answer is clear: to keep the access to the Kremlin’s energy deals’ cash flows intact. In 2019 they were steering through Turk Stream. Now the Russian leader is in the final stages of putting in place what might be called “Turk Stream-2”, the Turkish Gas Hub (TGH) scheme that will allow Russian gas into Europe in the “anoymised” or “whitewashed” form of “TGH mix”. To make that work, he’ll need a certain amount of connivance in both Washington and Brussels. His proxies within the EU are working on that. And a little diversion helps too.

Which brings us back to Lukoil Neftochim. In the end, the whole ‘derogation’ exercise has a diversionary character. By concentrating attention on “Lukoil’s extra billion”, Messrs Borissov and Peevsky not only conveniently forget their own role in securing Lukoil’s monopoly and the failure of governments dominated or heavily influenced by them to address the issue of billions in profits diverted to Moscow in a timely fashion. They also help other major Bulgaria-based companies that benefit from the derogation to re-export Russian crude oil derivatives to the EU. No wonder most of them are on Ukraine’s black list.

But the BB-D1 group also distracts attention from the figure they should really be worrying about – one that is about a dozen times greater than that Lukoil “billion” – namely the value of the Russian energy exports sold by virtue of being able to transit Bulgaria. When the subject changes to the excise tax on Russian natural gas sold and transited, the Lukoil Atlanticists can retain some minimal credibility as they wail that the tax will cause their pet company – Bulgartransgaz – to face bankruptcy – even though they know that it is only BTG that can enforce the law and collect the tax in the first place.

A second answer suggests itself. Mr Borissov and Mr Peevsky might want to engineer the removal of the PPDB progressives in the coalition from power, in order to cobble together some ramshackle arrangement on who succeeds ownership in the Lukoil refinery with less enlightened elements – or even a return to caretaker cabinets. The likes of Mr Denkov, Mr Tagarev, and finance minister Assen Vassilev are, let’s face it, an inconvenience to them (and, of course, to Mr Putin). And if you want to topple a government, it never hurts to have goodwill in Washington, as well as in Brussels. Especially as politicians in both places have an extraordinary track record of tolerance for rogues in high places hereabout – even when they are clearly warned about them by diplomatic and intelligence professionals.

But there’s a third answer, summed up in a single word: “Magnitsky”. The Global Magnitsky Act of 2016 – named after a Russian tax lawyer who died in prison after offending Vladimir Putin – provides for punitive listing of those aiding and abetting abusers of human rights, and is nowadays a potent weapon against Mr Putin’s little helpers. Those on that list since earlier this year include Mr Peevsky and Vladislav Goranov, a GERB member who used to be Mr Borissov’s finance minister. And others may fear inclusion in the Magnitsky List. German broadcaster Deutsche Welle wrote in July that “the reputation of the new head of the energy committee, Delyan Dobrev, is also not impeccable. There is unconfirmed information that he was a serious candidate for inclusion in the latest Magnitsky sanctions list”. And, if Mr Goranov has been sanctioned, there’s good reason to suppose that his old boss Mr Borissov may not be safe. Keeping him and Mr Dobrev from getting onto the list – and getting Mr Peevsky taken off it – would certainly be something to lobby for. And a good reason to parade Atlanticism.

Success in this, and in ditching the progressives within the current government, would come at the expense of Bulgaria’s already rather battered long-term credibility and reputation in the US, of course. But, hey, who cares? That’s tomorrow’s problem!

Well, we should care. Back in the 1980s, US president Ronald Reagan cited an old Russian proverb as the best recipe for dealing with Russia: “trust but verify”. That’s also a perfect formula for coping with the Borissov-Peevsky double act. And remember: verification comes first.

Ilian Vassilev

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