site.btaMedia Review: March 5

PRESIDENT ZELENSKY'S STATEMENT AFTER US PAUSE MILITARY AID FOR UKRAINE

Ukrainian President Volodymyr Zelensky has proposed an immediate air and sea truce if Russia accepts the same, Bulgarian media report on Wednesday.

On X he wrote: “I would like to reiterate Ukraine’s commitment to peace. None of us wants an endless war. Ukraine is ready to come to the negotiating table as soon as possible to bring lasting peace closer. Nobody wants peace more than Ukrainians. My team and I stand ready to work under President Trump’s strong leadership to get a peace that lasts.”

The first stage of ending the war would be the release of prisoners and an air truce, a halt to the use of long-range missiles and drones, the bombing of energy and civilian infrastructure, and a truce in the sea.

Zelensky also said that he wanted to "right things" with Donald Trump and wanted to work under the "strong leadership" of the US president to ensure lasting peace in Ukraine.

In his X post, he also thanks Washington for its support against the Russian invasion.

EU'S RESPONSE

“We are living in dangerous times. Europe‘s security is threatened in a very real way. Today I present ReArm Europe. A plan for a safer and more resilient Europe,” European Commission President Ursula von der Leyen wrote on X.

On March 4, Ursula von der Leyen unveiled EU's new defence strategy, ReArm Europe, which includes a plan for EUR 150 billion in low-interest loans for military investments. The strategy also proposes temporarily suspending fiscal rules to facilitate the supply of military equipment to Ukraine and strengthen European defence, as well as reallocating cohesion funds to the defense sector.

EU leaders are set to discuss the strategy at a special European Council meeting on Thursday. The plan, however, is already facing resistance from countries with high levels of debt. Despite this, the majority of EU member states have welcomed the strategy and the urgent measures to bolster defence. Von der Leyen said that an investment of EUR 500 billion in defence is necessary over the next decade to generate EUR 800 billion invested in Europe’s security.

PRIME MINISTER CONVENES SECURITY COUNCIL

"Bulgaria cannot afford to be placed, actively or passively, in a position where it must choose between different stances on the [Ukraine] war taken by the EU and the United States. We regard both as NATO allies and as guarantors of our national security," said Prime Minister Rosen Zhelyazkov on Tuesday after a meeting of the Security Council at the Council of Ministers. The meeting lasted for more than two and was convened after it emerged that the US had paused military aid for Ukraine. The leaders of all parliamentary groups were invited to participate in the meeting.

"Just and lasting peace can be achieved as peace through security for Ukraine and the EU," Zhelyazkov said after the meeting. He also thanked all participants for the constructive tone, as they all expressed the understanding that Bulgaria’s national security is a shared responsibility of all political forces "That is why all the decisions that Bulgaria will defend are based on the decisions of the National Assembly," the Prime Minister said.

Zhelyazkov noted that discussions focused on the risks to Bulgaria’s national security under different scenarios: the continuation of the war, its resolution, and the potential implications of U.S. involvement or withdrawal from various forms of support.

"We also examined the opportunities presented by the European Commission’s ReArm initiative," he said, explaining that these include funding mechanisms to support the reindustrialization of Member States’ military industries, the potential activation of the escape clause for defence investments, and utilizing the Cohesion Fund alongside other EU resources.
 
Russia is currently creating 15 more divisions - 2 armies, increasing its military potential to 1.5 million people, Defence Minister Atanas Zapryanov, later said in a televised interview.
 "Bulgaria is interested in preserving NATO unity and the US presence in ensuring security in Europe as a key task. It is difficult for anyone to replace the Americans entirely with their help," the minister added.

He said the EU believes that military aid to Kyiv should not be suspended until peace talks are reached. "Otherwise, Kyiv will lose its defence capabilities and Putin will have no need for negotiations. There is no threat to our national security or emergency. However, there are dynamic changes in the international environment, which is why the Security Council had to meet - given the whole approach to the war in Ukraine. We also looked at other conflict zones around Bulgaria, such as the Middle East and the Western Balkans," Zapryanov said. 

He said much more should be spent on defence. "NATO is the cornerstone of European security and defence. The EU believes that peace in Ukraine should be negotiated between Kyiv, Moscow, the EU bloc and the US to find a common solution. There must also be guarantees in the long term," he said.

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Speaking on Bulgarian National Radio, former foreign minister Nadezhda Neynski said that Ukraine and Europe cannot agree to any terms for peace without clear conditions. 

She emphasized that the primary concern is Ukraine's security, noting that while the desire for peace is universal – particularly for Ukraine and President Zelensky, whose people are facing daily attacks and casualties on the front lines – it is crucial to define what kind of peace is being sought. 

Neynski highlighted that the main concern is ensuring that this conflict does not reignite in the future. She said that the focus must be on establishing guarantees to prevent the military conflict from being 

Neynski said that Europe’s main concern is that Ukraine is the first in a broader process of revising events that followed the fall of the Berlin Wall. She noted that discussions are now openly focusing on a second pillar for the European project and the idea of a common European defence. Neynski noted a significant shift in EU's mindset, with defence spending increasing by over 30% from 2021 to 2024.

She also reminded of Turkiye's clear stance in the conflict, supporting Ukraine’s territorial integrity and sovereignty. Neynski believes that Turkiye’s support for European efforts is an opportunity for the country to demonstrate its principled position, emphasizing that the key word in this context is "trust."

The former foreign minister warned that the future of the EU is currently at stake. She pointed out that the worst-case scenario for Bulgaria would be instability in Europe arising from an unjust Russian peace settlement for Ukraine.

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Europe currently lacks the capacity to provide the necessary support for Ukraine, and Ukrainian President Zelensky has no viable options at the moment, said former Deputy Prime Minister and former head of Bulgaria's State Agency for National Security Agency, Tsvetlin Yovchev. 
 
Speaking on the morning programme of bTV, Yovchev stated that it is naive to think that fulfilling Putin's ambitions would lead him to stop. Instead, he warned it would encourage Russia to continue its invasion further west. 
 
He also noted there is a growing sentiment for a peaceful resolution in Ukraine, but so far, no clear plan has been presented by the US and Europe. He emphasized the importance of the aspects that any future agreement would entail, pointing out that a ceasefire could be possible, but it would not end the war. 
 
Yovchev further mentioned that if the US makes serious investments in Ukraine, it would likely attempt to protect those investments. He also added that former US President Donald Trump may be willing to make concessions to Putin. Yovchev emphasized the importance of Europe rearming.

Yovchev also commented on the recently convened Security Council meeting with the Bulgarian government. He stated that after the meeting, Rosen Zhelyazkov made the right statement.

According to Yovchev, it is difficult to find a unified position that is supported by everyone. He added that Bulgaria must maintain its relations with the United States, while also stressing the need for Europe to strengthen its defense capabilities.

Yovchev said that Bulgaria must urgently develop an adequate defence doctrine in response to new threats and evolving methods of warfare. He emphasized the increasing military risks and the broader challenges facing Europe, noting that the current situation demands a crisis-oriented approach. 
 
Yovchev pointed out that the risks are high, and at present, Bulgaria cannot afford to create a long-term strategy for the next 5 to 10 years. Instead, the country must focus on crisis management. He also highlighted the need to strengthen the capabilities of the Ministry of Foreign Affairs, and of the intelligence and counterintelligence services, to effectively address the growing security challenges.

ECONOMY

Interviewed by 24 Chasa, Petar Ganev, chief economist with the Institute for Market Economics discusses how recent international developments will affect Bulgaria’s push to adopt the euro. Ganev says that though not a purely political decision, there are political moments, but there are also clear economic criteria. And it's one thing to be on the edge and have a window of reflection, it's another if you deviate dramatically. “The fact that we are meeting the criteria and that we have gone down this path since 2018 with the commitments with our entry into the ERM mechanism, are things that, if you do them in the right way, they cannot be hidden. And now logically we are at the finish line. Yes, the date has been postponed several times, but because we ourselves knew, that we didn't meet the criteria.

The report of the European Commission and the European Central Bank, which will be released in early June, will assess inflation by the end of April. The bigger question is what the fiscal policy will be. Politicians need to show common sense when adopting the budget. The opinions of institutions and experts clearly show that expenditures are inflated. So the issue of the fiscal balance has not been addressed and there will be probably tax increases. Social security is already scheduled to go up in the coming years. Bulgaria has an unfortunate track record of debt-financing state-owned companies, mainly in the energy sector, and especially the Bulgarian Development Bank. Raising the debt by BGN 7.2 billion to supposedly pursue a budgetary policy in the shadows, is very questionable.

The ruling coalition in Bulgaria is divided on the issue of adopting the euro, raising questions about its stability. Ganev believes that despite the differences, it appears the coalition will hold, at least for now. Even if the coalition faces challenges, it is not expected to automatically affect the euro adoption process. A negative report could delay progress, while a positive one would lead to technical steps toward the final stage. However, political tensions remain high. Even if the current ruling coalition collapses, there are alternatives, such as forming a minority government with temporary support, especially with the second-largest party, Continue the Change-Democratic Bulgaria, prioritizing euro adoption.

Ganev also discusses a possible revival of the idea of a "Europe of multiple speeds, which now has both political and economic dimensions. Economically, Bulgaria and other Central and Eastern European countries are growing faster than Western Europe, leading to discussions about creating various coalitions around different issues, not just the eurozone or Schengen. The recent shifts in US-Ukraine relations further emphasize the need for stronger European unity, particularly in defense. Europe, as a whole, is poised for a greater push toward unity and competitiveness, although this will not come without cost. Now the focus is on defence, where we need to be up to speed, and maybe that will happen. Europe is not in a bad position when all the signals are about unity and competitiveness.

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2025 will see the last sizable pay rise, with wage growth expected to reach 9.1%, due to an increase in the minimum wage from the beginning of the year and wage increases across the public sector, writes TrudNews.bg, referring to Bulgaria’s National Medium-Term Fiscal and Structural Plan (NMFSP), which has been sent to the European Commission. The document sets out the main priorities of the government's governance programme.

Income growth will slow down in the coming years, with growth of up to 5% expected for 2026. Between 2027 and 2028, wage increases are expected to slow to 4% and 3.5%, respectively, the document says. The next larger wage increase could possibly come in the event of another major crisis accompanied by high inflation. But so far, the analysis does not point to such a risk.

The Plan states that the introduction of the euro is among the main priorities of the Bulgarian government. This priority is also enshrined in the Governance Agreement between the three parties that formed the current regular cabinet, as well as in the Government's Governance Programme. Bulgaria is at the final stage in the process of joining the euro area, and the intensive work on preparing the country for the introduction of the euro will continue until its successful completion.

Average annual inflation is expected to slow to 2.4% in 2025, from 2.6% at the end of January. The leading contributing factor will be the rise in the prices of services, influenced by the increase in labour costs. Annual average inflation will slow further to 2% in 2028, mostly on the back of expected weak international price developments.

Economic growth is forecast to reach 2.8% in 2025, supported by government spending. In 2026, the improvement in external demand will lead to an increase in exports and overall GDP growth will rise to 3%. In the period 2027-2028, GDP growth will slow to 2% due to the exhaustion of the positive effect of the National Recovery and Resilience Plan (NRSP) investments, a slowdown in household consumption growth in line with income growth and a slowdown in export growth in line with external demand.