Negotiations between Bulgarian government and Germany’s Rheinmetall to start from scratch

Negotiations between the Bulgarian government and Germany firm Rheinmetall, a leading international systems supplier in the defence industry, are starting from scratch.

This became clear from statements by Bulgarian Deputy Prime Minister and Minister of Economy, Investments and Industry Alexander Pulev on July 23, following a meeting in Sofia between Prime Minister Roumen Radev, Pulev and Pascal Schreyer, CEO Business Unit Energetic Materials at Rheinmetall.

As The Sofia Globe reported at the time, Bulgarian arms plant VMZ – Sopot and Rheinmetall signed on October 28 2025 a contract on an investment worth close to a billion leva to build a gunpowder and ammunition plant in Bulgaria.

That took place at the time of the government headed by Rossen Zhelyazkov of Boiko Borissov’s GERB-UDF, while there was a public tussle between Borissov and then-president Radev about which of them deserved credit for the investment.

After Prime Minister Radev’s government took office in May 2026, Pulev called the deal into question, saying that there was no financing for it.

Pulev, speaking after the talks to reporters on July 23 at a briefing from which Radev was absent, said that a number of problems had been identified with the overall mechanism of the project with the German company.

“There is no founding agreement, there is no joint venture between VMZ-Sopot and Rheinmetall,” Pulev said.

He added that the financing of the project was not provided for in the Budget in spite of “the generous promises of the Borissov cabinet.”

“There are no calculations and financial justification, no argumentation, no analytical skills. The terrain for implementing the project is not optimal,” Pulev said.

Germany is a strategic foreign trade partner and a leading investor in Bulgaria, he said.

“A main priority of the Bulgarian government is to consolidate Bulgaria’s place in the process of industrialisation of Europe and to develop an economy with high added value. Investments from Germany have a significant contribution to this goal. The government’s ambition is for our country not to be a periphery, Bulgaria must be at the centre of all EU defence initiatives,” Pulev said.

He said that “at the initiative of President Radev, a dialogue was established with Rheinmetall – a leader in the defence industry at a global level”.

“The initiative for negotiations was transferred to the Borissov cabinet, and the findings to date are not positive,” Pulev said.

“So far we have heard what is not there. Let me tell you what is there,” he said.

“There is a very strong political will for us, with our government, to work in the interest of Bulgarian citizens, to strengthen relations in terms of our economic partnership with a critical investor such as Germany, and to continue the dialogue, to find the right formula with Rheinmetall – a leading leader, so that we achieve the common, jointly shared goals – namely the modernisation of the Bulgarian army, Bulgarian production and technology transfer, so that our economy can move forward and be one of the leaders in Europe,” Pulev said.

Schreyer told the briefing that when Rheinmetall had discussed establishing a company in Bulgarian in autumn last year, the strategic goal was primarily to support the local industry by providing gunpowder components that are not available on the world market.

This strategic goal remains fully valid, Schreyer said.

The second goal was to provide propellant production technology to the national armed forces and thus contribute to strengthening Bulgaria’s national security through the acquisition of Nato-standard ammunition and Nato-standard weapons, he said.

Schreyer said that the third goal was also to enable the Bulgarian VMZ enterprise to become part of Rheinmetall’s global value chain, creating jobs and high-tech jobs that will help Bulgaria become a significant player in Rheinmetall’s sales network as well as in the ammunition market.

“We decided to meet regularly in the future to discuss all issues that need to be discussed,” Schreyer said.

“We also agreed that there is an opportunity to expand the scope of our cooperation with new future projects and we are grateful that we had the opportunity to discuss this as well,” he said.

(Photo: Clive Leviev-Sawyer)