Bulgaria’s Tax on Russian Gas: A Shift Away from Russian Control in the Balkans
On Friday, the 13th of October, Bulgaria passed a punitive tax on Russia, immediately to come into effect, that would impose a charge of 20 Bulgarian Lev (£8.91) per megawatt-hour of Russian natural gas transiting through Bulgaria. The effect would make Russian-owned oil and gas operations less profitable and force European buyers to seek options for energy non-dependent on Bulgarian transports, while allowing Bulgaria’s government to generate an expected £1 billion in revenue from the tax. More generally, the tax will not only further exclude Russia from the European market but lessen the historical grip the Kremlin has aimed to maintain in Balkan politics and affairs, a grip that has been diminishing in recent years.
Bulgaria has not consumed Russian gas for its own energy needs since August of 2022, soon after Russia’s invasion of Ukraine when Russia’s largest state-owned energy cooperation, Gazprom, suspended gas supply to both Bulgaria and Poland when the two nations refused to meet Russia’s demands of paying for the company’s gas in Russian rubles. Despite Bulgaria being completely cut off from Gazprom shipments, its pipeline network continues to transport Russian fuel from Turkey through the Balkan Stream route and supply gas to Serbia, Hungary and other areas of southern Europe. The intention behind the Bulgarian government’s decision to impose the tax is to make Russian gas less profitable and force two of the continent’s most pro-Russian governments, Serbia, and Hungary, to seek energy reliance elsewhere.
The decision sparked protest from the effected countries, with Hungary’s foreign minister Péter Szijjártó criticizing the gas transit tax increase as an “unacceptable…law with an unclear background” and “another attempt to undermine Hungary’s energy security and energy co-operation between Hungary and Russia.” Serbia’s President Alexander Vucic, meanwhile, stated that the tax will “lead to a drastic increase in the price of gas by an additional €100 per 1,000 cubic metres of gas,” and described it as an “appalling increase” and a decision that “should not be valid for Serbia.” Venko Sabreutev, a Member of Parliament from Bulgaria’s majority ruling Centrist party, We Continue the Change, told the public broadcaster BNT that “Bulgaria decides on its own what fees to introduce for the transit of gas through its territory,” and that “Hungary and Serbia should look for an alternative [energy supply].” He went on to describe the tax as “a pan-European policy to reduce Russia’s income from the sale of natural gas, petroleum products,” adding that Bulgaria is “part of the big European family that does not want the war in Ukraine to continue. We must use economic measures to stop Russia.” The introduction of the energy tax represents important turning points for the country, and the Balkan region as whole, towards more integration with European standards, a statement against Russian aggression, and a shift away from Russia’s grip on the region.
Historically, Russia has strategically positioned itself to play a balancing role in supporting its Balkan allies, especially amidst the power competitions the region has experienced for centuries. This role dates back to the Russian Empire, which developed close political, cultural, and religious ties to the Balkans during a time when the region’s power had been contested by the Islamic Ottoman Empire and Catholic Western powers. Russia aimed to present itself as a paternal-like, protective figure toward its Balkan allies, especially acting as a patron of Orthodox Christian Slavs, specifically in Bulgaria, Serbia, and Romania. In recent decades, however, the objective of this role has focused on maintaining close relations with Balkan states in order to forestall NATO and EU expansion into the region, which Putin views as a Western ploy to undermine Russian authority. As more Balkan countries have recently sought to align themselves more with European standards and integrate with the EU and NATO, Moscow’s desperate attempts to shepherd Balkan nations away from Western institutions have only incited the pushback of Balkan nations from Russia.
Bulgaria, up until the recent decade, was closely aligned with Moscow and was reluctant to reduce its reliance on Russian fuel. Since becoming party to both the EU and NATO, the country has integrated itself more with democratic and EU standards. Despite its close historical ties with Russia, Sofia has made clear its strong stance against Russia’s aggression towards Ukraine. Since the onset of the war, Bulgaria has sent weapons and ammunition to support Ukrainian independence efforts, in addition to rejecting Moscow’s demand to pay for its gas imports in rubles, which led to Bulgaria being cut off from Russian gas deliveries, the first EU country to be so. The recent introduction of the tax only further highlights how Russia’s critical, longstanding sphere of influence in the Balkans is diminishing, especially as Bulgaria, with its new pro-European government that came into power last May, is shifting its policies more towards being aligned with EU principles and goals for the future. Bulgaria’s decision will hopefully act as a precedent for other Balkan states to follow in taking initiatives against Russian aggression and dismantling Moscow’s sphere of influence in the region.
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The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the wider St. Andrews Foreign Affairs Review team.
