Bulgarian PM acknowledges Hungarian blackmail over Schengen

Bulgarian Prime Minister Nikolay Denkov acknowledged on Thursday (14 December) that Budapest had warned his country it would veto its Schengen accession unless Sofia lifted a tax that made it more expensive for Hungary to import Russian gas via Bulgarian territory.

Speaking to the press ahead of the EU summit mostly dedicated to the continued EU support for Ukraine, Denkov was asked why Bulgaria had canceled the new tax on Russian gas imports transiting through Bulgarian territory it had recently decided to introduce.

Gazprom cut its gas supplies to Bulgaria soon after Russia invaded Ukraine on 24 February 2022. However, Russia continues to supply gas to Serbia, North Macedonia, and Hungary via the Balkan Stream gas pipeline running through Bulgaria. The Balkan Stream brings to Europe Russian gas arriving in Turkey via the Turk Stream pipeline under the Black Sea.

In October, Bulgaria announced the introduction of a higher transit fee for Russian gas, a move decried by Serbia and Hungary.

Budapest and Belgrade both said that the Bulgarian gas tax would increase gas prices by 20%, to which Sofia replied that Gazprom should bear the cost.

But on Monday (11 December), Bulgaria announced it would cancel the tax, with sources suggesting Sofia was fearing a veto on its Schengen accession bid. Both Austria, which had previously blocked Bulgaria, and Hungary are Schengen members with veto power.

Denkov seized the occasion to dispel the doubts.

‘For the record’

“For the record: Hungary has sent an official, albeit low-level message, that if we don’t remove the gas fee, they will veto Schengen. So we decided that there was no need at this point to create hurdles,” he said, referring to Bulgaria’s ambition to join Schengen.

Diplomatic sources told Euractiv that the “low-level” message came during an EU ambassadorial-level meeting last week.

An EU diplomat told Euractiv that Budapest was using “Iran-style” blackmail both in the case of Ukraine’s bid to start accession negotiations, as well as vis-à-vis Bulgaria’s Schengen bid.

Reportedly Austria still stands in the way of Bulgaria and Romania’s Schengen accession, while a solution with the Netherlands seems likely in the very short term.

Austria has listed a number of conditions to allow Bulgaria and Romania to enter Schengen only with their aerial borders, with full membership, covering the land borders, to come at a later stage. Sofia’s initial response was not enthusiastic.

One of Austria’s conditions is the strengthening of the border between Bulgaria and Romania, which raised eyebrows in Sofia, because if both countries joined Schengen, this internal border should become irrelevant.

Asked by Euractiv if such condition might suggest a partial solution whereby only Romania would join with its land borders, Denkov said:

“There are no discussion of separating Bulgaria from Romania. I hear from time to time that the Romanian authorities mention this option, but it has never been discussed, neither at the bilateral level nor at the level including the European Commission.”

Denkov said that if the strengthening of the Bulgaria-Romania border was a temporary measure, akin to the temporary border controls between Austria and Germany, this should not be a problem for Sofia.

Tension with Romania?

Romanian leaders, including the Prime Minister Marcel Ciolacu, have said that they would consider decoupling Bucharest from Sofia if this would lead to Romania’s accession to the EU border-free space. Such statements, according to diplomats, have irked Sofia.

Asked by Euractiv how he would describe the Bulgaria-Romania relations, which appear to be at a low point, Denkov said:

“There is a substantial positive development in the bilateral relations, the brightest illustration of which was the trilateral meeting in Euxinograd”.

Euxinograd, a former palace of the Bulgarian monarchy near Varna, hosted a meeting of the prime ministers of Bulgaria, Romania, and Greece on 9 October, during which, according to sources, Greek Prime Minister Kyriakos Mitsotakis urged Denkov and Ciolacu to solve bilateral issues through a special committee.

The sources said the case of Euroins insurer in particular was at the centre of this special committee. Euroins, a Bulgarian company, was the leader on the Romanian car insurance market until it was stripped of its license, which the Bulgarian company decried as hostile takeover.

Denkov said other Bulgarian firms had also issues with the Romanian authorities.

“I wouldn’t say that only Euroins is concerned. There are a number of firms complaining of a certain pressure. But I wouldn’t go as far as saying that this is pressure at political level,” the prime minister said.

[Edited by Zoran Radosavljevic]