Bulgaria’s new coalition and the future of South Stream

On the anniversary of the day that communist leader Todor Zhivkov was deposed and one-party rule was ended a quarter of a century ago, Bulgaria saw the entry into power of its first four-party coalition government. The new government came into being as a result of the October 5 elections, after a month of negotiations that for the first time were centred around platforms and policies rather than around the personal preferences of the political parties’ leaderships.

The coalition consists of the centre-right parties, GERB and the Reformist Block, together with two parties that are smaller in parliamentary representation, the nationalist National Front and the centre-left party, ABV, which splintered off from the Bulgarian Socialist Party. The new coalition reflects the voters’ rejection of the much-disliked three-party government of Plamen Oresharski, which lasted from May 2013 to September 2014. The parties that had formed it – the Bulgarian Socialist Party, the ethnic Turks’ DPS, and the radical nationalists of Ataka – will remain in opposition in the forty-third Bulgarian parliament.

The new government, led by GERB’s Boyko Borisov, will have its hands full on many fronts. But one of the key issues that outsiders will be watching is the South Stream project, the gas pipeline that is supposed to circumvent Ukraine and deliver Russian gas to Italy and Central Europe.

The governments in the region have been put under pressure both from Gazprom and from the European Commission.

Many of the governments in the region have been put under pressure both from Gazprom and from the European Commission: the Russian gas giant is pressurising governments to build the pipeline, while the European Commission tries to convince them to block the project. But for the last few months, they have had a convenient excuse not to do anything: Bulgaria’s decision to freeze the building of the pipeline, following a European Commission threat of infringement procedures. The Bulgarian tenders for building the pipe did not fulfil European Union criteria, and the project itself was not in line with the EU’s Third Energy Package stipulating third-party access.

From Bulgaria’s point of view, South Stream has one big flaw. Projected at a price of up to €7 million per kilometre, observers say that South Stream will cost more than twice what a similar pipeline would cost in Germany, for instance. The difference between the market price and the actual price could help back up a sophisticated type of corruption: through subcontractors, it could benefit different political actors to a degree unknown before in this part of Europe. Weak institutions in places like Bulgaria or Serbia are easy victims for this kind of graft. To ensure this does not happen, the new coalition agreement has specified clear conditions under which the pipeline would be built.

The agreement foresees liberalisation of the electricity and energy market, allowing consumers to choose their supplier; improving Bulgaria’s energy security through completion of the interconnectors with neighbours; development of local energy resources; and building South Stream “only in full compliance with EU legislation, in dialogue with the European Commission and if clear economic benefits for the country are proven”.

The future form and shape of South Stream will be a new test for the country’s – and the prime minister’s – ability to choose wisely.

Borisov’s track record in his first mandate as prime minister from 2009 to 2013 speaks for his willingness to genuinely cooperate with the European Commission and to keep a close eye on the bill that Bulgaria would have to foot on controversial energy projects. In 2010, he put a halt to the strategically risky and economically hazardous nuclear power plant Belene, which was supposed to see yet another Russian reactor installed in Bulgaria. The future form and shape of South Stream will be a new test for the country’s – and the prime minister’s – ability to choose wisely.

Bulgaria’s almost total gas dependency on Russia has given many in Sofia, Brussels, and elsewhere reason for grievance. South Stream’s advocates argue that diversifying the route of Russian gas, if not the source, will provide some relief. But its power to promote corruption and its strategic dimension in the current standoff between Russia and the EU will not allow South Stream to be “normalised” like its northern analogue. The new government in Sofia will have to negotiate the difficulties cautiously and with a view to becoming not only a part but also an active founder of the planned European Energy Union.