site.btaUPDATED Bulgaria Will Use SAFE Instrument to Fund Its Share in Joint Venture with Rheinmetall - Deputy PM

Bulgaria will fund its equity participation in the new joint venture with German defense giant Rheinmetall through a long-term, low-interest loan under the EU’s "Security Assistance for Europe" (SAFE) instrument, Deputy Prime Minister and Minister of Innovation and Growth Tomislav Donchev said during a parliamentary Q&A session on Thursday.

The project will help Bulgaria shift its defense industry away from Soviet-standard 122/152mm ammunition to NATO-standard 155mm rounds. The production will primarily be export-oriented, though also serving the needs of the Bulgarian Armed Forces, the Minister added.

He added that according to expert assessments, it will take five to ten years to fully stock the necessary ammunition reserves.

"This investment is an opportunity for Bulgaria to improve its technological capacity," Donchev told lawmakers from the Velichie group, who asked him why Bulgaria does not use existing production capacity in the northeastern town of Targovishte instead of borrowing money for new plants.

Donchev emphasized that the military-industrial sector will remain relevant for at least the next decade, making the investment both timely and strategic. He rejected the notion that the new Rheinmetall plant would render existing state-owned defense facilities obsolete.

"On the contrary, their production capacity should be increased," he said.

He mentioned a TEREM plant, which is set to assemble Stryker armored vehicles, as an example of the ongoing modernization and expansion of Bulgaria’s defense manufacturing.

The Deputy PM also stressed the importance of moving from importing finished defense products to creating more added value domestically by engaging Bulgarian industry in higher-value parts of the production chain.

When asked about Bulgaria's potential role in repairing equipment from the conflict in Ukraine, Donchev said the main issue was logistical, due to the large distance involved.

He said, however, that with "wise leadership", the Ministry of Defense could find an economically viable role for the underutilized facility in Targovishte, which still retains industrial capacity despite a reduced workforce. "This capacity must be mobilized," he concluded.

Speaking to the press outside the plenary chamber, Velichie leader Ivelin Mihaylov said that Terem – Han Krum military factory in Targovishte has huge potential, but "most likely they want to bankrupt and plunder it". "Previously, 5,000 people worked there. It has incredible capacity. They have the full cycle for repair, overhaul, and modernization of military equipment – tanks, heavy and light armored vehicles. In one enterprise, the hardest thing is to find and hire a large number of people who, along with their families, will relocate to a certain place and start developing an business. From 5,000 people, thanks to this government, only 100 or so remain, and now they want to put them on part-time work. At the same time, [GERB leader] Boyko Borisov is speaking about Bulgaria taking out a 1 billion loan to build a gunpowder factory, which is a highly polluting production. 51% will be owned by a foreign company, which means the profits will go outside Bulgaria again," he added.