Government Officials Meet Rheinmetall: Bulgaria Must Be at the Centre of All EU Defence Initiatives

Prime Minister Rumen Radev met with representatives of Rheinmetall’s management at the Council of Ministers on July 23.

The meeting was also attended by Deputy Prime Minister and Minister of Economy, Investment and Industry Alexander Pulev.

Alexander Pulev, Deputy Prime Minister and Minister of Economy, Investment and Industry: "Germany is a strategic foreign trade partner and a leading investor in Bulgaria. A key priority of the Bulgarian government is to strengthen Bulgaria's position in Europe's reindustrialisation and to develop a high value-added economy. German investment makes a significant contribution to this goal. The government's ambition is for Bulgaria not to remain on the periphery – Bulgaria must be at the heart of all EU defence initiatives," Pulev said.

He also outlined the background to Bulgaria's relations with Rheinmetall.

"At President Radev's initiative, a dialogue was established with Rheinmetall, a global leader in the defence industry. Responsibility for the negotiations was subsequently transferred to the Borisov government, but the findings to date are not encouraging. The Bulgarian government is ready to promote expert-level dialogue in order to overcome a number of structural shortcomings. A comprehensive restructuring process is needed to make this critical and strategically important project viable.

We have identified a number of problems with the overall project framework. First, the legal structure. There is no founding agreement. There is no joint venture between VMZ and Rheinmetall. Second, funding for this large-scale project was never included in the budget. Despite the generous promises made by the Borisov government, no funding was allocated in the central budget. Third, there are no financial calculations or economic justification. There is no rationale and no analytical assessment. Fourth, our predecessors not only failed to secure funding but also initiated direct negotiations with construction companies without public procurement procedures. Direct negotiations were held with Hidrostroy and Glavbolgarstroy. Fifth, the proposed site for the project is unsuitable. Such an undertaking requires an industrial site with adequate water supply and energy infrastructure. There is no water there – only forest. The land allocated is part of the state forest fund."

Pulev then outlined what had been agreed during the latest discussions.

"So far we've talked about what is missing. Let me now tell you what we do have. We have a strong political commitment from this government to work in the interests of Bulgarian citizens, to strengthen our economic partnership with a key investor such as Germany, and to continue the dialogue in order to find the right framework with Rheinmetall, a global industry leader. Together we aim to achieve our shared objectives: modernising the Bulgarian Armed Forces, upgrading Bulgaria's industrial capacity and enabling technology transfer so that our economy can move forward and become one of Europe's leaders."

Pascal Schreier, Chief Executive of Rheinmetall's Energetic Materials Division: "When we discussed the establishment of a joint company in Bulgaria last autumn, our primary strategic objective was to support the local industry by providing propellant components that are currently unavailable on the global market. That strategic objective remains fully valid.

The second objective was to provide propellant manufacturing technology for the national armed forces, thereby strengthening Bulgaria's national security through the production of NATO-standard ammunition and equipment.

The third objective is to enable the Bulgarian company VMZ to become part of Rheinmetall's global value chain by creating jobs, including highly skilled positions, helping Bulgaria become an important participant in Rheinmetall's commercial network as well as in the international ammunition market.

We have agreed to meet regularly in the future to discuss all outstanding issues. We also agreed that there is scope to expand our cooperation through new projects, and we are grateful to have had the opportunity to discuss those possibilities as well."