San Marino Denies €60M Settlement with Bulgaria in Banking Dispute Blocking EU Deal

San Marino's government has firmly denied reports of a €60 million out-of-court settlement with Bulgaria to resolve the ongoing banking dispute blocking its EU association agreement, amid escalating tensions over a potential €150 million arbitration claim.

Secretary of State for Foreign Affairs Luca Beccari dismissed the claims as "absolutely false" when questioned about negotiations linked to the so-called "Bulgarian case" involving Starcom Holding and businessman Assen Christov. In a statement, San Marino's executive categorically rejected any financial compromise of that amount, describing the reports as irresponsible distortions of parliamentary proceedings aimed at political instrumentalization. The government warned of legal action against defamatory conduct and highlighted the damage to the microstate's international reputation.

The denial follows a parliamentary interpellation by the Motus Liberi group, which sought clarification on a possible international arbitration case before the World Bank's ICSID in Washington. Starcom is seeking at least €150 million in damages, lost profits, and other claims stemming from the blocked acquisition of Banca di San Marino and the freezing of funds—initially reported at €15 million—in Italian courts. The dispute, which arose after 2023 negotiations on the EU deal but before signing, centers on allegations that San Marino's actions breached a 2007 bilateral investment treaty with Bulgaria. Domestic remedies exhausted, Starcom has pursued arbitration, though the tribunal is not yet constituted.

San Marino's Socialist Party has criticized the government's handling of the EU process as erratic, likening it to a "Penelope's web" of delays and reversals exacerbated by the Bulgarian issue and related cases like Starcom and BSM. The party praised Andorra's more cautious approach, including no provisional application and a planned referendum, as a model for democratic legitimacy.

Against this backdrop, former Bulgarian foreign minister Solomon Passy reiterated his call in an open letter to decouple Andorra's EU agreement from San Marino's. He proposed allowing Andorra to proceed independently while conditioning San Marino's entry on resolving the litigation, warning that the unresolved funds—described as arbitrarily frozen—could derail the deal under the EU's unanimity rule. Passy noted no concerns over Andorra's financial sector, citing its EU-aligned reforms endorsed by the European Parliament.

Andorra's Secretary of State for European Affairs, Landry Riba, rejected decoupling as unfeasible under the current text. The agreement, after EFTA discussions, now heads to Coreper under the Cypriot presidency to clarify its likely mixed legal nature, potentially requiring European Council approval, an Andorran referendum, Council General vote, and ratification by all 27 EU parliaments.