“Comrades, we appoint you millionaires”

Andrey Lukanov, Bulgarian PM, before 150 nomenclature cadres meeting Bulgarian Industrial and Industrial Association (today BIA)

November 1989


mafiaThe Peevski-Domuschiev amendment comes as a logical consequence of a long evolution in the ruling model of Bulgaria, an almost unavoidable stage – the consolidation of the proceeds and the preponderance of the post-communist nomenclature in its drive to create a version of national capitalism, insulating the country from globalist trends and fencing off Bulgaria from foreign influence. All of this is in the interest of indigenous oligarchs and political power brokers.


This is hardly an innovation. Rather it is reminiscent of the G-13 group story, a graft of a local breed of “wild capitalism” coupled with no less wild and fake nationalism, claiming Bulgaria was only for Bulgarian capitalists, – a reserved business territory, limited to the top brass of the Bulgarian Communist Party. Any competition coming from foreign investors was therefore most unwelcome, even dangerous.


The previous peak of this policy line was reached during the Berov government, which was dubbed the Multigroup government. There seemed to be no limits to their appetites – the nouveau riche wanted all, immediately.


Close to the present-day scenario.


The decline in foreign investment, observed today, is not a self-sustaining process. It is a deliberately driven policy. This explains the odd occurrences during the sale of CEZ’s assets; the blocking of the Nova TV deal, as well as Vivacom and Telenor; and the ‘soft’ barriers for foreign companies from participation in large public tenders, including the latest “home-brewed” sales of banks. At the back of these processes one can always identify the appetites of Bulgarian oligarchs and their political patrons – they want these assets without facing competition for them.


Worth recalling, Multigroup wanted to take under its private control essential sectors of the Bulgarian economy and the security sector, including business with Russia – crude oil and natural gas – building a parallel state essentially controlling the Bulgarian state from within, regardless of the electoral process. The paradigm went as such – whoever comes to power must reckon with the power and resources of us – the backstage capo di tutti capi.


The first attempt to run the parallel state ended in failure, leading to the collapse of the state, its security apparatus, the banking sector and the economy – a degenerative process accelerated by the government of Jean Videnov, who himself was overthrown by Lukanov’s group in the BSP. To hide traces, these forces conspired a second national catastrophe during the transition period.


The UDF government was an aberration, lasting only one term, quickly replaced by the subsequent project of the monarch-in-exile Simeon Saxe-Coburg Gotha.


The behind-the-scenes masterminds distrusted the UDF government for its attempt to set free from their grip. But the UDF government also had its sins – the failure to destruct the model and its main ‘input’, as acknowledged by Russia’s agents of influence – the privatization of the Lukoil Neftochim refinery.


The question remaining is: why the same masterminds who could have brought down the GERB government, which they helped install, chose not to recall Borisov from power? The fact is that the current government is closely associated with the Zhivkovs’ clan – therefore it suits them perfectly.


The Lukanovs’ group is seeking to regain control via President Radev and the BSP leader Ninova.


The “Peevsky-Domuschiev” amendment has become a milestone for the degradation of institutions, certifying the degree of erosion and the level of Putinization of the political and economic process in Bulgaria.


Note, Volen Siderov, the Kremlin’s frontman and a spokesperson for pro-Russian Patriotic projects, does not even bother to conceal, less to deny, the true motives for his legislative advances in favor of the “fundament” of the Borisov-Peevski government – the three oligarchs, Domuschiev , Zlatev and Bozhkov. They are backed by employers’ organizations, trade unions, political parties and even soccer clubs and above all – the Russian state. Most of all, the state prosecution, which enjoys a plethora of options between targeted investigations and attacks, can bring almost any dissenting or confronting businessman back to the mainstream.


None of the enlisted oligarchs is as independent as they would want to be. They are constantly subject to carrot and stick policies.  It seems that the Lukanovs’ clan, growing fatigued of being in the opposition, has begun to rebel and seeks a return to power. Let’s not forget the independent role of the former and current State Security apparatus, which has its representatives in both clans. Yet there are some nuances – the so-called ‘Librarians’ gravitate predominantly around the MRF and Peevski.


Moscow has vested interest in an open rivalry between the two clans, opting for the best choice of gains.


The year 2018 strongly resembles 1995.


The top guns at the Multigroup-SS group – exemplified by Delyan Peevski and the PM himself – coming from the Zhivkovs’ clan, desperately seek to retain their power monopoly, building in parallel private control networks. Borisov and Peevsky already feel strong enough to take control over the top media, the banks, the natural gas business, the fuel market and the whole energy sector.


Do not be surprised if the newswire soon runs stories on takeover attacks against Overgas. This is a long-standing target of both Peevsky and Borisov, aided by the other “fundamental” oligarchs. No doubt, this will be done under the premise of national interest, via state companies.


None of the oligarchs close to the government and the ruling coalition could survive in a normal market economy. Their unique competitive edge is valid only in a captured government environment. It is worth recalling the futile endeavors of one of them, Vasil Bozhkov, in infrastructure that led to a series of bankruptcies. His companies were good at winning public procurement tenders but were incapable of executing them on time and on budget. His current and longtime pivot into the gambling sector – where his forte features well – is totally dependent on the support of the Peevski ‘troops’ securing the inaction of the State Gambling Commission, the CPC and the Commission on Electronic Media – which all turn a blind eye to the legal and regulatory constraints. If gambling ads disappear from the Bulgarian air, from the football championship, from the advertising billboards, etc. the easy days will be over.


Being an oligarch for the government is not always easy and comes at a cost. Essentially these are the successors to the private siloviki–mutri force of the 1990s.  At the time, the dissident or non-performers got killed. Today they are kept on a short leash.


To remain “afloat”, current oligarchs must constantly seek and find relatively legitimate ways to take out of balance sheets significant cash that is needed to oil the wheels in the power vertical. In fact, at present there is hardly any major Bulgarian company that can afford to not dedicate a significant workforce and top management time to government relations, which often eclipse transactions of dubious nature and logistic operations, involving the ‘mighty’ of the day.


Few if any would believe that Mr. Domuschiev has ignored the message in the general prosecution move to open an investigation against his companies, which strangely coincides with the timing of the final touches of the arrangements on sharing the benefits of the lobbying operation in the National Parliament. Ever since, he has remained tight-lipped throughout the recent imbroglio, realizing that every part of his business is under the control of the Grand Supervisors – the Puppeteers. Today he might be an oligarch, tomorrow, equally likely, he could be another Tsvetan Vassilev in Belgrade. In fact, the analogies between Khodorkovsky and Vassilev are more than one. The Borsissov-Peevsky tandem has managed to discipline the oligarchs. Today no one dares to challenge them.


A sizeable part of big business tried to get out of Bulgaria, go international and diversify their portfolio. Few have succeeded as their acumen is specific and mostly dependent on a steady flow of public funds. With time, most realized that their powerbase is confined to Bulgaria, always contingent on their ability to engage politicians with a “cash and vote” act.


None of the recognizable faces in the present ruling coalition in Parliament have bothered to uphold the standards of good governance and due legislative process when adopting the privatization amendments. There is no trace of general or specific impact assessment studies and no checks for legal and regulatory compliance, as the changes imply retroactive action, which is unconstitutional.


That is not to mention an overall cost-benefit analysis, accounting for the fact that inflicted damage to the budget goes far beyond the specific privatization cases of Mr. Peevsky and Mr. Domuschiev. There is no place for illusion – the CEIBG president has no power to call to arms the deputies in Parliament and secure their votes behind the amendments. While Peevsky is fully capable of mobilizing support across party lines, he is equally concerned with his faltering public image after such brazen legislative acts. Therefore, he needs Domuschiev’s sacrifice as a lightning rod to public anger.


Judged by the attained degree of arrogance, the Peevsky-Domuschiev amendment serves to recall its closest analogue during the tenure of Oresharski’s short-lived government – the nomination of the Peevsky to chair the State Agency for National Security.


The fact is that the effect of these amendments will inevitably be disruptive, ending up in possible total negative effect on the republican budget that can be measured into hundreds of millions of leva. This comes at a time when the top politicians claim their actions are meant to shrink the grey sector in the economy and raise the proceeds countering contraband. Yet, strangely enough, there is no one indicted or convicted?!


Ultimately the whole model is subordinate to two main groups of puppeteers – the group of the politicians acting on behalf of party corporations, on one hand, and the oligarchs’ group, which redistributes cash flows to the different branches of power – the legislative, the executive and the judiciary.


The power pyramid is becoming more misbalanced with fewer people having real decision-making powers and a growing number dissatisfied with the government and national parliament, as well as the media and judiciary.


This is the classic definition of “revolutionary situation”.


After 29 years of transition, we are back to square one. Radio Free Europe returns to non-free Bulgaria.


By Ilian Vassilev

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