Bottom Line: Bulgaria’s scrapping of a Russian pipeline deal to carry Russian and Caspian oil to Greece is a response to the government’s collapse in February over energy prices that demonstrate how energy giant Russia can bring down a government.
Analysis: Just days after the Bulgaria government collapsed over bloody protests triggered by rising energy prices, the outgoing Bulgarian parliament voted to scrap a pipeline deal to carry Russian oil to Greece. The pipeline deal dates back to 2007 and would have seen 280 kilometers of pipeline carry Russian and Caspian oil from the Bulgarian Black Sea port of Burgas to the northeastern Greek port of Alexandropoulos. The government claims that the financial conditions are not viable for Bulgaria. The project would have cost $1.5-2 billion. The deal came as no real surprise, as Bulgaria has been talking about it for over a year, but was dragging its feet over a unilateral pullout.
On 21 February, the Bulgarian government of Prime Minister Boyko Borisov resigned amid mass protests that turned into bloody clashes with police. The situation came as a surprise to most observers because the government had so far done fairly well at implementing austerity measures in budgetary terms. However, the austerity measures also bankrupted almost 50% of companies across sectors and led to a sudden surge in unemployment and poverty. The biggest trigger of protests was the rise in electricity prices and the public knowledge that the country’s energy distribution systems are fully controlled by oligarchs—the most notable of them from Russia. Bulgaria has long been bullied by Russia, which uses its influence to force Bulgaria into Russian-led energy projects. The protests are more than anything about this and the Bulgarian government’s move last month to scrap the Russian-led nuclear project (Belene) and this week to scrap the Bulgaria-Greece pipeline is a direct response to this public disillusionment.
Recommendations: Look to more Russian energy projects going offline in Bulgaria. Any incoming Bulgarian government will also have to deal with the public’s anger over Russian bullying, and the next major project that could be targeted is the South Stream gas pipeline, signed into effect by Bulgaria and Russia only late last year.