When a few weeks ago the US vice president accused Denmark of not taking care of Greenland, he argued that the kingdom had not taken enough action to invest in the island, in its defense and in its development. As if polar bears had become a geostrategic threat.
Since Americans died during the construction of the Panama Canal, President Trump has repeatedly stated that the US should have control over it. Now imagine that Bulgaria allows the American investment fund “Elliott Capital Management“ to purchase our part of the pipeline “Turkish Stream“, “Balkan Stream“ -or whatever someone prefers to call it. This could be done by setting up an independent joint-stock company and acquisition of part of its capital – minority stake below 50%, majority stake of 50% plus one vote or anything between that value and 100%.
It could also happen through privatization of the company that currently manages it – again for a minority or larger stake.
This, of course, would be a huge mistake. First, because the pipeline is a profitable asset and Bulgaria does not need to share the profits with anyone. If we currently have an unprofitable contract that does not provide access to the transported gas, it will expire and with the lessons learned, a new one will be concluded that better protects Bulgarian interests. True, Bulgaria does not have terminals for unloading, but those that do have do not have a pipeline through which the gas can reach Central and Eastern Europe. Bulgaria is an unavoidable factor in this regard and should take advantage of its status si.
The purely economic reading of the issue also rests on the fact that we are currently in an extremely difficult fiscal situation. With 30 billion leva withdrawn in the last three years alone and the prospect of withdrawing as much more in the next two, Bulgaria looks like fresh meat for any highly liquid investor who wants to acquire assets.
The worst thing would be if, due to five years of confused fiscal policy, we offered strategic assets at a garage sale.
Painful reforms are preferable to the loss of sovereignty that would befall us if we sold even a minority share of a strategic asset such as the natural gas pipeline from Turkey to Serbia and Hungary.
The fund “Elliott Capital Management“ itself has already built a reputation as a partner with whom it is better not to get involved. This is an investment fund of the type “vultures“ who are looking for undervalued assets. In the case of the 2002 Argentine bankruptcy, “Elliott“ bought a debt with a nominal value of $617 million, which had depreciated and was traded on the secondary market for $117 million.
Argentina signed an agreement with its creditors, who held 90% of its debt, under which they forgave 70% of their claims and received the remaining 30%. The deal that Bulgaria concluded with the Paris and London Clubs in the first half of the 1990s is similar (in our case, the debt forgiveness was in a much smaller percentage) and with the issue of four types of “Brady bonds“ restructured its old debts, on which the government of Andrey Lukanov imposed a moratorium at the dawn of democracy.
„Elliott Capital Management“, however, does not accept the agreement as valid for its share of the receivables. A series of lawsuits begin. It comes to the seizure of an Argentine naval training sailboat docked in Ghana, where the fund seizes the vessel. They also try to seize deposits of the Argentine government in the US and Europe, as well as to acquire rights under contracts of the Latin American country with Elon Musk's SpaceX satellite company. In the end, an agreement is reached, in which Argentina pays them two billion dollars. Not bad for an investment of 117 million.
It is true that Argentina has a much worse reputation as a debtor and has gone bankrupt more than once, unlike Bulgaria,
which only once fell into the so-called “default“ on its debt – in 1990.
However, Bulgaria, like Argentina, is often the subject of claims by foreign investors who claim that they have been treated unfairly. Half a dozen cases have been filed against Bulgaria by companies in the energy sector before the arbitration tribunal of the International Center for Settlement of Investment Disputes at the World Bank. True, so far all have been won, and only the claim of CEZ is still pending.
It is more than clear that once we allow “Elliott Capital Management“ to our strategic energy infrastructure and state-owned enterprises, as a partner we will get uncompromising financial sharks, whose private interest will always be defended at the risk of prevailing over the national one. Who needs to put such a snake in our bosom?
“Elliott“ have already scared Bulgaria with a lawsuit as owners of bonds of Corporate Commercial Bank.
We should have no doubt that in the future, every time when the national views on the future of the pipeline diverge from those of the potential minority partner – “Elliott Capital Management“, the American ambassador will appear in the office of the prime minister or the president and will pressure us to respect the point of view of the American partner.
How many times, based on the current assessment of the pipeline, do we have to ask the Americans to admit them as a minority shareholder, which we do not need? Why take risks, given that they have no contribution to the development of the pipeline, nor to finding customers, and our geographical location makes us an unavoidable factor anyway?
Can you imagine, if one of our leaders does not bow his head to the American ambassador, how at one point someone like J.D. Vance stands up and declares that because he does not like how the grass around the pipeline is being mowed, he will impose sanctions on the Bulgarian management?
Joking aside — the protection of strategic infrastructure is among the most common reasons for starting a war.
Since the 19th century, when the crumbling Chinese Empire fell victim to military encroachments by the Russians, the British, the Japanese and the Germans – all those defending their interests on its territory.
Since Donald Trump came to power in the US, America has not invested in “soft power” – in NGOs, media and movements that would sow division in society and shape a desired outcome of domestic political processes. Trump and Vance use threats – first sanctions, then military force.
Someone might say that if the pipeline becomes an American corporate interest, it will be defended by the US – politically and militarily. That is, there is no way Russia can occupy us and take control of the pipeline if it is American. The question is: have we gotten to the point where every 20 or 50 years we have to provide some shiny toy to the new strong geopolitical partner to protect us? Is this our strategy for development and survival as a nation?
We see that the US and Russia are thinking about how to get Russian gas to Europe again. The paradigm is that US participation in the pipelines will become an indulgence for the “sinful” origin of the gas molecules extracted from the bowels of the criminal Russian state headed by dictator Putin. This is hypocrisy, but at least it finds logic in the American control over the pipes under the Baltic and North Seas. They can be effectively defended only by a great power. But why, among all the countries through which the pipeline passes on land, is the interest directed specifically to Bulgaria? Why is the Turkish or Serbian section not being offered?
Is it possible, because of its minority stake,
“Elliott Capital Management“ impose its will on what kind of gas will pass through the pipe? That is, the lever for determining transit customers,
which also brings economic benefits, to be placed in the hands of a foreign country? What then is the point of our strategic geographical position if we are willing to sell it for pennies?
If I were a fan of conspiracy theories, I would think that the compradors in our political class (those who please foreign interests first) have deliberately installed “We continue the change“ in order to drive Bulgaria into a debt spiral and force us to sell our last sound assets. Or even worse — When it became clear that the Bulgarian part of the pipeline would be built, an external force switched to Plan B and launched the PP-DB, again with the aim of bringing us to the brink of a debt spiral and forcing us to sell off assets.
Plamen Oresharski likes to remember how, after Bulgaria entered the European Union and the start of monthly meetings with his colleagues within the framework of ECOFIN, one of them told him that he would not give any additional money for anything until they held a gun to his forehead. Without such a threat, any sale of the Bulgarian section of “Balkan Stream“ or a share of it would be treason.