In a dramatic parliamentary session on Monday, Bulgarian lawmakers made the decision to eliminate the country's exemption to EU sanctions ahead of schedule. The move comes in response to growing concerns that the exemption has been inadvertently aiding Russian President Vladimir Putin's war efforts in Ukraine, allowing millions of barrels of Moscow's oil to reach a Russian-owned refinery in Bulgaria.

The controversy surrounding this exemption came to light last month when POLITICO revealed that Bulgaria's leniency was generating substantial funds for the Kremlin's war machine. The Russian-owned refinery, operated by Lukoil, was exporting refined fuels to various EU countries, generating an estimated €983 million for the Kremlin through levies and export duties since February. Additionally, Lukoil garnered nearly €500 million in profits from this arrangement.

The previous exemption, which was implemented to protect Bulgarian consumers from soaring fuel prices, was set to expire on October 31. However, Bulgarian lawmakers agreed to a proposal on Monday to end the opt-out in March, six months earlier than planned. Furthermore, they voted to suspend export quotas from the Lukoil-owned refinery starting January 1.

Despite these measures, a second loophole remains open, allowing Bulgaria to import unprocessed Russian crude above the $60 per barrel price limit set by the EU and its G7 allies. This loophole has enabled an additional €430 million in direct taxes to flow into the Kremlin's coffers between August and October. Kiril Petkov, a key figure within the ruling coalition, has vowed to pressure the government to address this issue as well.

However, Bulgarian Prime Minister Nikolay Denkov stated on Friday that the government will not specifically address the price cap loophole. Denkov believes that the most effective way to close this legal gap is to terminate Bulgaria's special sanctions exemption early. By doing so, the country could potentially raise another €150 million for Putin before the exemption ends in March, according to a new analysis by the Center for the Study of Democracy.

While some argue that ending the exemption early would result in lost tax revenues of €700 million for the government, Petkov remains committed to closing the loophole and preventing further financial gains for Putin's regime.

The decision to scrap the exemption has sparked both praise and criticism within Bulgaria. Pro-Russian politicians from the Revival party clashed with MPs and disrupted the parliamentary session, highlighting the divisive nature of the issue. Diplomatically, there have been calls for Bulgaria to take action, but the prime minister has indicated that the focus will remain on ending the exemption, leaving the price cap loophole unresolved.

As the deadline for the exemption looms, Bulgaria finds itself at a crossroads, balancing the need to protect its economy and consumers with the international pressure to cut off financial support for Putin's war efforts. As the situation continues to develop, the outcome will undoubtedly have far-reaching implications for Bulgaria, Russia, and the ongoing conflict in Ukraine.