Comment by Emilia Milcheva:
While Europe is investing billions in its defense industry, Bulgaria is sending different signals. The deal with the Turkish state-owned company "Botaş", which has become a symbol of an unprofitable state commitment and with accumulated debts of over 360 million dollars, is getting a new lease of life. The contract with "Rheinmetall" However, which could position the country in one of the fastest growing industries in Europe, is entering revision mode.
If this is "strategic foresight", the progress seems to be known only to a narrow circle in power.
Bulgaria did not have the necessary money
What model of industrial policy is Bulgaria following at a time when the European Union is making the defense industry a strategic priority? Only a year ago, President Rumen Radev discussed with the CEO of "Rheinmetall" Armin Paperger the joint project with VMZ-Sopot for the gunpowder and ammunition plants and stated that with this investment "Bulgaria becomes part of the European defense ecosystem".
The previous cabinet had foreseen 667 million euros for the two enterprises, with 420 million euros of this amount relying on the European SAFE mechanism. And now Alexander Pulev, Minister of Economy in the government with Prime Minister Rumen Radev, announced that there are no funds for such an investment in the budget for 2026. The joint company "Iganovo" is being closed. It was understood that restructuring the financial model "will take a long time".
Everyone wants "Rheinmetall"... except Bulgaria
According to the Ministry of Economy, the original scheme, relying on the EU's SAFE credit instrument, can no longer provide the necessary financing in this form. Why this is only being established a year after the joint venture was announced is unclear.
While Bulgaria is reviewing its project, "Rheinmetall" is accelerating its expansion in Eastern Europe. In 2025, the German concern and Romania agreed on a gunpowder plant in Victoria, Brasov County, worth 535 million euros. Its construction is due to start this year, 700 jobs are expected to be created, and Romania will use funds from SAFE to finance part of the project. The EU funds approved for the defense initiative are 16.680 billion euros, Bulgaria's plan is for a five-fold smaller amount.
Romania's agreements with "Rheinmetall" also include local production of the Lynx combat vehicle, a medium-caliber ammunition plant, logistics and service facilities, and a training center.
In Lithuania, the German company is building a 300 million euro plant for 155-millimeter shells. The Baltic state has also requested a second one for ammunition under a scheme that was also approved in Bulgaria: 51% for the German company, and the remaining 49% for state-owned companies.
Recently, another Eastern European country announced a public-private partnership with "Rheinmetall". The Croatian company "Doc-Ing" and the German company will develop the next generation of autonomous and unmanned ground platforms for military and security applications. The ambition is to make Croatia a European center for modern defense technologies.
From Romania through Lithuania to Croatia, "Rheinmetall" is expanding its presence. Only in Bulgaria is the already announced partnership being reviewed. Instead of capitalizing on the unprecedented European interest in defense production, the country risks remaining only a supplier of individual components, instead of hosting new high-tech production.
Bulgarian companies also want to produce gunpowder
After the start of the war in Ukraine, Europe is experiencing an acute shortage of gunpowder. In Bulgaria, two private arms companies are also developing projects for such production - EMKO, owned by arms dealer Emilian Gebrev, and "Arsenal" - Kazanlak.
In March 2025, Radev publicly defended a project for a private gunpowder factory, without naming Gebrev by name. He said that for more than a year a Bulgarian investor has wanted to build a gunpowder factory, "but there is a complete blockage from both the "assembly" and the Glavchev government". In an interview with "Free Europe", former Defense Minister Boyko Noev said that a phone call from Delyan Peevski stopped Gebrev's project at an advanced stage.
The factory is planned on the site of the former military chemical plant in Smyadovo, and although the National Agency for National Security and Defense of the Republic of Bulgaria twice approved the project, it did not reach the production of military nitroester gunpowder for artillery shells. The facility is not included in the List of Strategic Sites of National Security Importance, which does not entitle it to state protection.
Unlike Gebrev, "Arsenal", which is the largest private arms company in Bulgaria with nearly 10,000 employees, has not publicly announced any details about its project. But information about it has leaked out anyway.
What are Bulgaria's priorities?
Three different projects for gunpowder factories show one thing - the problem is not the lack of investors. Europe is looking for new production facilities, Bulgarian companies are looking for markets, and foreign concerns are looking for partners. The problem is clearly not the lack of investors, but the state's ability to turn such projects into real production. While other countries are using European funds and the war as a catalyst for industrial development, in Bulgaria strategic projects are facing opaque decisions, political interference and a sudden change in state priorities.
And here the contrast with the unprofitable agreement with "Botas" becomes most visible. Projects that could bring new production, technologies and at least 1,000 jobs are being postponed or blocked with the explanation of "no money". At the expense of this, a contract that worsens the financial situation of the state-owned gas company every day is getting a new chance amid hazy prospects for energy and transport connectivity.
While Europe builds the factories of the future, Bulgaria will continue to pay the bill for "Botas".