The issue on the relations with Russia will take the central spot in the agenda of the EU summit in Brussels on March 19 – 20. At the recent informal meeting in the Gymnich format of EU foreign ministers, held in Riga Bulgaria’s top diplomat Daniel Mitov stated that Sofia would uphold a new round of sanctions against Moscow in case it was proved that the latter was violating the peace agreement for East Ukraine. To what a degree do those restrictive measures affect the Bulgarian economy? According to Kancho Stoichev, one of the Made in Bulgaria Union’s founders, the losses in the sectors of food and export of fruits and vegetables are not that big.

“The main blow on Bulgarian producers comes from the import from the other EU member-states,” he says. “Pretty large quantities of dairies, tomatoes and apples that have been diverted from Russian markets, entered Bulgaria in an uncontrolled manner. We support the sanctions, but we should have stated at the negotiations with the EU that additionally subsidized production should not be imported into Bulgaria. Polish and Dutch people managed to take European compensations. Our stores have been flooded with their cheap goods. The Commission for Protection of Competition didn’t react, surprisingly, since the law here bans the sale of goodsbelow their cost price. Luxurious cheese varieties can be found across shops at the price of EUR 2,5 – 3, as their price is half the one of Bulgarian brands. Thus this country’s milk sector collapses, bringing huge problems to stock breeders as well.”

Georgi Minchev, deputy chair of the Bulgarian–Russian Trade and Industrial Association points to the damage inflicted on other sectors:

“We have 100 percent losses, as far as the sales of real estate properties to Russian citizens across the resort zones are concerned – as of the autumn of last year. No reviving is observed for the forseable future, even in case of the sanctions are dropped,” he said. “Then come the losses in the machine building sphere. The direct contracts lost in some energy projects, in transport engineering and in cooperated supplies are not that huge. Sanctions against Russia have been imposed in the energy sector, the defense industry, as well as for goods and technologies with possible dual use. Russia responded with undeclared sanctions in the sectors of machine building by abruptly suspending supplies to the tune of dozens of billions of euros and coming from major West-European concerns like Siemens, Alstom, Mannesmann or ThyssenKrupp. Our engineering companies were their subcontractors. We are talking here not only of current damage, as the contracts were long-term ones. The Russian segment of the future high-speed cross-Siberian Beijing – Kazan – Moscow – Berlin railway was envisaged for construction by Siemens and Alstom.The volume of the investment exceeded EUR 300 billion. Now China courts Russia and the price has been reduced significantly. If Western machine building companies loose such a contract, another contract of that kind can be expected in 50 – 60 years’ time, then the next generation of railways comes to life and the currently operating one should be replaced.In this respect damage will be huge not only for Bulgaria, but for the entire EU.”

According to Mr. Martin Vladimirov, an analyst from the Center for the Study of Democracy, sanctions may have alsoa beneficial effect, and that is when theaverage consumer is concerned. Agriculture is a really small part of this country’s overall economy sector with a tendency to decline even further. In this way consumers here benefit more, compared to the losses of producers. In the words of Martin Vladimirov the long-term losses are huge, since Russia is a vast market. At the same time we win, as the ceasing of some energy projects puts an end to a closed cycle of the control of large Russian companies over Bulgarian subcontractors and,via corruption practices,also over Bulgarian institutions.

English version: Zhivko Stanchev