In March 2024, the intergovernmental agreement for the construction and operation of the new North-South transport corridor, which will connect Greece and Romania via Bulgaria, is expected to be signed, in order to start – with the prospect of completion in 2028 – a project of exceptional importance for the freight flows, in a period of intense problems in the Black Sea, but also of Bosphorus congestion.
Based on the recent joint declaration of the prime ministers of the three countries, the relevant Memorandum of Understanding (MoU) aims to be signed by the end of 2023, so that the official agreement will follow next March, as he announced in an interview with the Athens/Macedonian News Agency and Alexandra Guta, the Minister of Finance of Bulgaria, Assen Vassilev, who was in Thessaloniki on the occasion of the 1st Southeast Europe Connectivity Forum.
Mr. Vasilev still talks to APE-MPE about the next steps and timetables for Bulgaria’s entry into the Eurozone, about the enlargement of the Schengen area, which the neighboring state is expected to join in December, but also about the conflict in the Middle East , the possible synergies with Greece on the reconstruction of Ukraine, the Burgas-Alexandroupoli pipeline and the Bulgarian tax on Russian gas.
In more detail, speaking about the North-South corridor, Mr Vasilev notes: “I think that building this North-South connection, from Alexandroupolis, through Bulgaria, to Romania and from there to Moldova and Ukraine, is extremely important for our two countries and for the development of Greek ports. And also very important to reach (the rest of) Europe, especially with the accession of Bulgaria and Romania to Schengen, which will hopefully happen next December. Then we will have no real borders but only signs welcoming Bulgaria, Greece and Romania (…), there will be no current border and customs control, which will make the movement of trains and buses, trucks much easier Bulgaria has already decided to invest 6 billion euros in the Bulgarian part of the project. And depending on the intergovernmental agreement and the needs, we can potentially finance other parts of the project, outside of Bulgaria.” To the question of when the relevant intergovernmental agreement is expected to be signed, he answers: “in the declaration, we had set the goal of the end of this year for the general MoU and then the signing of the official agreement by March 2024.”
What remains to be done for Bulgaria to enter the Eurozone in January 2025?
Mr. Vasilev still expresses the belief that Bulgaria will enter the eurozone in January 2025, as the only relevant criterion that remains to be met is that of inflation. Otherwise, Bulgaria meets the financial conditions. (…) The positive effect that Bulgaria’s entry into the Eurozone will have on the economic relations with Greece is obvious: “We have many Greek companies that do business in Bulgaria and many Bulgarian companies, but also tourists who visit your country. (…) I hope that this will give a boost to bilateral trade, because it will “disappear” all the queues at the border and the transaction fees related to the foreign exchange. It will generally become much easier to do business together. Can you imagine Germany and France having borders and different currencies? What would this mean for trade in Europe?’ asks Mr. Vassilev, who has a degree in Economics from Harvard University and has served as deputy prime minister in Kirill Petkov’s government.
On oil prices, the crisis in the Middle East and the tax on Russian gas
Regarding the crisis in the Middle East and its possible impact on oil prices and the economies of the countries of South-Eastern Europe, Mr Vasilev notes that there are two scenarios being worked out by the Bulgarian side: “One is obviously for a much larger conflict and unrest, with oil prices rising. But I still think this is the least likely scenario. What we see right now is that global markets are relatively calm (…) Economically, the scenario we see as the most likely is that we have a conflict of limited magnitude and no major disruption to oil markets and trade in the region in general (…)
In any case, we need to be prepared for both scenarios, so that if something starts to happen, we have preplanned and are ready to react,” says Mr. Vassilev, adding that his country always leaves reserves in its budget so that to be able to mitigate risks that are likely to arise.
Asked about the tax – transit fee – imposed on Russian gas passing through the Bulgarian pipeline network to other countries in Europe and what impact it is expected to have, Mr Vasilev replies: “(The tax) does not affect the companies and consumers, because Russian natural gas prices are usually quoted at the point of entry into a given country. And it only applies to Russian gas, so obviously the tax doesn’t apply if the gas isn’t Russian. The only thing it (the tax) does is reduce Gazprom’s profits from the gas flowing through Bulgaria. We heard the European Commission essentially saying that this is a completely national matter (…) and that there is no problem with European regulations or European legislation, which is normal – tax policies are determined by each individual country.” Asked to comment on Bulgarian President Rumen Radev’s appeal to the country’s Constitutional Court against the tax, Mr Vasilev stressed: “There are certain circles in Bulgaria, including the President, who do not consider this a good decision and referred the subject to the Constitutional Court. But, there is no constitutional issue. And the President had the ability to veto the law (to impose the transit fee) but he didn’t, so in that sense I think it’s more of a political act and it doesn’t stop the collection of the tax, nor the operation of the law ».
The Burgas-Alexandroupoli pipeline, FSRU and natural gas storage in Chiren
At the beginning of 2023, Greece and Bulgaria signed two memoranda of cooperation in the energy sector. How is the cooperation between the two countries expected to develop? What are the next steps for the Burgas-Alexandroupoli pipeline and how is the cooperation developing around the FSRU (floating liquefied natural gas storage and regasification unit) in Alexandroupoli, but also around the natural gas storage in Chiren, in the north-west of Bulgaria? “As you know, Bulgaria is a 20% shareholder in the FSRU, we support this project and will start using it as soon as it is completed. We have also already agreed to increase the capacity of the interconnector from three to five bcm (billion cubic meters), which is only about new compressor stations, not new pipelines, so, from that point of view, this should be done relatively quickly and relatively easily. We have also started the construction of the expansion of the gas storage facility at Chiren, in which as part of the memorandum, Greece can use part of the capacity for storage. All these things go on. Regarding the Burgas-Alexandroupolis pipeline, we have had discussions about the route it will take, ie whether we can use the right of way of the existing natural gas interconnection. Chances are there is already a right of way and the environmental studies have been done(…) so we are looking at both options and I know the energy ministries are talking to each other. For our part, we are ready to finance the project and ensure that it is built, because we consider it important to have oil outside the Black Sea.”
Referring in general to the interconnection between the two countries, the Bulgarian minister recalled that in addition to the natural gas interconnection, the electricity interconnection has now doubled. These interconnections are mutually beneficial, he notes and explains: “When Greece needed electricity we could export, and when Bulgaria needed natural gas (because Gazprom cut the supply), we could use the connectivity with Greece. So we see that interconnection helps a lot. So, in addition to further increasing energy connectivity, we now need to ensure that we also build the necessary roads and railways so that we can also make the flow of business and goods much easier. Especially after the Schengen enlargement, this will be really seamless.”
“When the war in Ukraine ends at some point, the country will need to rebuild and will have huge needs, for example, in building materials. Do you see scope for cooperation between the two countries to serve these needs”? is the last question for Mr. Vasilev. “Of course I see. I believe that Bulgaria, Greece and Romania will contribute a lot to the reconstruction of Ukraine. There are currently, as you know, two land corridors to get to Ukraine. One is through Romania-Bulgaria and Greece and the other is through Poland. I think that from this point of view, it is very important to achieve connectivity between the three countries, so that we can open the land corridors, to serve the needs, beyond what passes through the Bosphorus and the sea in general” concludes the Mr. Vassilev.