Interview | Bulgaria is an attractive destination for German companies

Mr. Seiler, do you see signs of recovery in the German economy?

The German economy is strongly focused on exports. In 2023, the most important export markets for Germany shrank by 0.1%. In 2024, these markets are growing by 3.2% and the same growth is forecasted for 2025. Once this growth materializes again into imports from Germany, our economy should recover. Currently, our expectation is a 0.3% growth for 2024 and a 1% growth for 2025.

I believe this is also an important message for the Bulgarian economy: most of what is produced in Bulgaria and exported to Germany will not stay in Germany. Therefore, I believe that for Bulgaria it is much more important to look at the state of the world economy – especially China and the United States – than to look at Germany, despite Germany being Bulgaria’s largest trading partner.

But please allow me to make a quick comment on the word “recovery”, because there has been a lot of doom and gloom around Germany’s economy lately. To give you some perspective: in 2023, Germany climbed from fourth largest to third largest economy in the world. We had a trade surplus of almost 226 billion US dollars, ranking second in the world, just trailing China and leaving behind natural resource giants and tax havens. The German stock index Dax – and the stock market is always looking towards future earnings – has reached one record after another this year. I don’t want to sugar coat the structural challenges we are facing in Germany, but I remain firmly convinced: Germany is and will continue to be an economic powerhouse.

One of the big problems of the German economy at the moment is expensive energy. How are you working to solve this problem and how do you see the future of energy transformation in Bulgaria?

Energy prices in Germany are now lower than they were before Russia’s full-scale invasion into Ukraine and the subsequent energy crisis. Germany has been hit extremely hard by this crisis, because we were so dependent on Russian gas. We never again want to see that kind of dependence. And this shock motivates us to speed up the transition to renewables. Energy from wind and sun will help us to achieve long-term low energy prices. Yes – at the moment, we have to invest heavily into modernizing our entire energy infrastructure, but in the long run, variable costs for renewables are much lower than for fossil fuels, including nuclear. Wind onshore has a production cost of 3.9-8.3 ct/kWh, solar/PV is at 3.1-11 ct/kWh, while lignite coal is at 10.4-15.4 ct/kWh and hard coal is at 11-20 ct/kWh.

What is the result of all that? Last year, almost 60% of electricity in Germany was produced from renewables.

From what I hear, Bulgaria’s coal-fired power plants halved their electricity output last year. Solar production has increased by 141%. So, the energy transformation in Bulgaria seems to be in full swing.

Three observations: one, the development I just outlined obviously entails huge structural change. In Germany, we continue to experience a similar process for more than fifty years and it is difficult. But: Bulgaria and Germany, we are not alone in this. Bulgaria received 1.2 billion Euro from the EU Just Transition Fund and is set to receive a total of 5.7 billion Euros in grants out of the EU’s Recovery and Resilience Facility. Two, German copper processor Aurubis – biggest company in Bulgaria – just started to invest 800 million Lewa to upgrade its production site in Pirdop. Their CEO Tim Kurth told the media that Aurubis is investing that money not despite the green transition, but because of it! Three, I think there is huge potential for Bulgaria to further benefit from the energy transition. North East Bulgaria is one of the windiest regions in Europe and perfect for on- and offshore wind energy. A German investor has shown interest in investing one billion euro into a floating photovoltaic power plant. The only thing necessary: less bureaucratic obstacles and swift permissions.

How do you see the development of the German economy in the next 5-10 years, and hence the future of its relations with Bulgaria?

The German Council of Economic Experts, the main economic advisory council of the Federal government, has identified the shrinking volume of labor as main challenge for Germany’s growth in the next ten years – a problem which is quite familiar to Bulgarians, I believe. The good thing: we can tackle this challenge. For once, we can establish more pathways for legal migration. But we can also further utilize the existing potential workforce. In Bulgaria, for instance, 70% of all women are working. In Germany, it is only 55%. Germany needs to learn from Bulgaria. In Bulgaria, in contrast, 72% of young female and 55% of young male Roma are unemployed. This is a great labor reservoir that is waiting to be activated. One big German investor in Bulgaria is working persistently with local NGOs to promote higher education among the Roma community and integrate members of the community into the labor market

What measures can be taken by the Bulgarian side to facilitate and encourage the activities of German businesses in the country?

The biggest private company in Bulgaria is German. 30 out of the 100 largest investors in Bulgaria are German companies. 3 out of the 10 largest employers in the country are German. I think it is fair to say that Bulgaria is an attractive investment destination for German companies.

However, I want to point your attention to an open letter which the biggest bilateral chambers sent to leading Bulgarian politicians July. In this letter, the chambers call on – quote – “all political parties and leaders for dialogue, constructiveness, and clear priorities in forming a government. The business expects stability and predictability, which can only be achieved through joint efforts and compromise.” Nothing to add from my side.

On a different note: during my summer vacation I also attended the Christopher Street Day parade in Berlin and the corporate involvement was just massive. There were trucks forming the parade from companies like Siemens, Allianz, Commerzbank to name just a few. On the Mercedes-Benz sponsored truck, you could see their CEO dancing and celebrating. Supporting the LGBTIQ community is by now deeply enshrined in German corporate culture. Therefore, I fear that discussions like the one on amending the Pre-school and School Education Act may potentially have an adverse effect on investment decisions by German companies. These companies are looking for investment destinations where diversity is seen as an asset, not a threat.

With the adoption of the euro in Bulgaria, do you expect trade relations to deepen and why?

Germany very much appreciates the commitment of the current government as well as the previous governments to introduce the Euro and, hence, to further Bulgaria’s integration into the European Union. As the Bulgarian Lew is already pegged to the Deutsche Mark since 1997 and later to the Euro, I would not – maybe with the exception of tourism – expect immediate massive effects on trade relations. However, adopting the Euro means a reduction of transaction costs for businesses operating in Germany and Bulgaria, which especially affects businesses that did not engage in German-Bulgarian trade so far. As none of Bulgaria’s neighbors – with the exception of Greece – is a member of the Eurozone, such a reduction of transaction costs could well translate into investment decisions that benefit Bulgaria. This could also boost the establishment of global value chains that include Bulgaria and Germany.

What are the solutions to the problem of the shortage of personnel in Bulgaria and what practices from Germany can be used in our country?

As mentioned before: I believe this is a problem both our economies have in common. One thing, however, I fail to fully understand: on the one side, shortage of personnel is always mentioned by businesses as one – if not the biggest – challenge they are facing. On the other side, there is fear of mass unemployment in the coal regions, Bulgaria has the longest maternal leave and the lowest rate of flexible work positions in the European Union. Hence, there should be ample opportunity to counter the problem of labor shortage. One example: German prothesis manufacturer and global market leader Ottobock built a plant in Blagoevgrad and took over around 100 workers from a company that was shutting down – completely different industry – , retrained them for half a year and is now successfully operating a 90 minute drive away from Sofia with its tight labor market. What do I want to say: why not consider the current shortage of labor as an opportunity to integrate or reintegrate people into the labor market for whom that is currently not so easy?

What is the place of artificial intelligence in education? What is the example of this in Germany?

AI is the key technology of the 21st century. It is a huge opportunity and has enormous potential, for example in education, research and business. Our ministry of education has drafted an action plan that shows how and with what measures we can succeed in eleven fields of action, from research to use in schools. Particularly important are the further strengthening of the research base, the expansion of the AI ​​infrastructure, the use of AI in education and the better transfer of AI into applications.

One concrete example is the AI campus, an open and interoperable digital learning platform on artificial intelligence. The AI ​​Campus’s education offerings are available free of charge to anyone interested: universities, vocational training institutions, companies or private individuals. In addition to the digital learning platform, the advantages of digital learning platforms are combined with the practical relevance and impact of local educational ecosystems by establishing regional hubs. For example, teachers or teacher training students will find a suitable offer on the AI ​​campus to impart knowledge about artificial intelligence in school lessons in a practical and clear way, for example with the courses “School makes AI” or “School makes data”.

What is the area in which Bulgaria has the greatest potential to become a leader on the European map?

Please allow me to try to answer your question through the prism of some of Germany’s foreign policy priorities: First, Ukraine must not lose the war against the Russian aggressor. Second, we have to fight climate change. Third, we follow a feminist foreign policy approach aiming at equal representation, rights, and resources for everyone. Now – where is the link to Bulgaria’s potential? On defence: Bulgaria’s support for Ukraine, especially regarding ammunition, has shown the great potential of Bulgaria’s defence industry. I have attended a number of events hosted by the Ministries of Defence, Economy and Innovation on the development of Bulgaria’s defence industry and I am convinced that Bulgaria can take a leadership role in this sector. On decarbonization: in Q1 of 2024, Bulgaria has reduced its CO2-emissions more than any other EU member state. And there is opportunity for more: Bulgaria has great hydropower resources that are not yet fully exploited. Plus, there are ambitious plans for the development of a hydrogen-based industry in former coal regions. On feminism: Bulgaria has the highest share of ICT professionals in the European Union – 29.1%. At the same time, the European Commission ranks Bulgaria last in using the ICT skills of women for employment. Now imagine what happened if you unleashed this hidden super power?

What must we do to reach this place of leadership?

Bulgaria has been and continues to successfully use EU funding to develop these sectors. However, there is room for more, especially considering that Bulgaria has until now only fulfilled the preconditions for the first tranche of its recovery and resilience plan. I am also convinced that Bulgaria can make good use of the newly introduced EU and NATO funding mechanisms in the defence sector.

What is your biggest passion – something you are ALL IN on?

Next to my family – and this might sound a little bit boring – I am really ALL IN on my job. In diplomacy, you get to work on so many different issues that sooner or later impact people’s lives. I have the chance to contribute to the representation of a fantastic country – home of Beethoven and BMW – in a country which is, as I just laid out, crucial to achieve our shared policy goals. To me, ALL IN means never stop thinking about how to create additional value out of our bilateral relations as well as our partnership in the European Union and in NATO.