The situation that the steel behemoth known as Kremikovtzi finds itself in is proof that, in some respects, Bulgaria's politicians are firmly stuck in the same mindset as two decades ago. There is nothing wrong with the state protecting its stake as a minority shareholder, but the Cabinet, with the very helping hand of the judiciary, is long past the line that separates defending its interest from using all available means to regain control of Kremikovtzi.

It was not in the least surprising that the court in Sofia ruled to declare the steel mill insolvent as of December 31 2005, sidestepping the claims of the hedge funds that hold the bulk of the bonds issued by Pramod Mittal in 2006. At that time, the Government had no qualms accepting a big chunk of the 325 million euro raised by Mittal as payment for Kremikovtzi's outstanding debts to the state budget and state-owned companies.

Then again, it was hardly news that the future of the steel mill lay in the hands of politicians, rather than the owners of the bonds, for which Kremikovtzi's shares and assets were used as collateral. After all, for months now, neither of the two suitors for Kremikovtzi has paid much attention to the bondholders and concentrated nearly exclusively on persuading the Cabinet that they were the right choice to turn the mill around. The court only confirmed the de facto situation.

The mill's creditors will meet next month to decide what to do next with Kremikovtzi. The bondholders have vowed to take the Bulgarian state to court if their claims are ignored and it looks increasingly likely that Kremikovtzi will follow the path of other industrial assets - Balkankar, Varna Shipyard and the Plama refinery - where the state re-asserted its ownership, albeit after prolonged legal battles.

But there is a potential twist that could make this particular legal battle a lot different to the previous ones, and that is the possibility that the European Commission would invoke at some point in the near future the safeguard clause in Bulgaria's European Union accession treaty, which would withdraw the automatic recognition of decisions by Bulgarian courts in other EU member states. Figuring out which court decisions will matter when it comes to settling a dispute like the Kremikovtzi one would be a legal first that both Brussels and Sofia have good reasons to avoid.

Bulgaria's Economy Minister Petar Dimitrov, he of the rose-tinted glasses, welcomed the court's insolvency decision earlier in August, saying that it would "give Kremikovtzi the opportunity to resume within a short period of time operations at full capacity". Not much was said how exactly that would be accomplished, nor what the state, as the biggest creditor, had in mind for Kremikovtzi.

Instead, as Bulgarian politicians have done for years, negotiations will likely be confined to back rooms behind closed doors, contracts will be signed and never made fully public - all of which will offer little help to dispel the image of wheeling-and-dealing that is surely starting to take root across Europe when talking about Bulgaria. And while quite a few investors might be willing to wheel-and-deal their way into Bulgaria's economy, it is but hardly a fact Bulgaria would want to advertise at this point in time.

It would take a lot of boldness to actually back up constant talk about transparency with corresponding actions. Kremikovtzi's extensive assets are still, according to financial data being bandied about, greater than the sum of its debts by several hundred million leva and simply selling them piecemeal in public would send a strong message, but it seems that the force of habit is hard to break. Not that anyone is showing a great deal of effort.