Russia and Turkey are fighting for control over an obscure but powerful ethnic-Turkish political party in Bulgaria – a country that was once the Soviet Union's closest foreign ally and has since periodically had to fend off allegations that it is a Russian "Trojan horse" in NATO – in a proxy battle in their wider conflict.

The fight threatens to destabilize further the European Union's southern border.

Bulgaria expelled a Turkish diplomat for interfering in domestic affairs early this week, and Turkey responded by expelling a Bulgarian diplomat stationed in Istanbul, a spokeswoman for the Bulgarian Ministry of Foreign Affairs confirmed to The Globe and Mail on Wednesday following several days of official silence and intense speculations in local media. (Neither she nor her Turkish counterparts at the Ministry of Foreign Affairs in Ankara would comment on the row.) This comes after the Bulgarian parliament last Friday set up a special committee to probe alleged Russian and Turkish meddling in domestic politics.

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At root is a colourful scandal that experts say is heavily laced with political corruption and domestic intrigue – yet this nation of seven million, sandwiched between Turkey to the south and Russia across the Black Sea to the east, is on track to become the latest battleground in a rapidly expanding conflict between the two regional heavyweights.

What started as a disagreement between Moscow and Ankara over Syria exploded last November when Turkey shot down a Russian Su-24 bomber jet that it claimed had violated its air space. Since then, their confrontation has reportedly contributed to rising tensions between Armenia and Azerbaijan, in Cyprus, parts of Central Asia, and now the Balkans.

Analysts say that Turkish expansionism is partly to blame.

"These events revealed a broader picture of systematic attempts on the part of the Turkish state to gain influence over the Turkish and the Muslim minorities in Bulgaria, and especially on the religious communities of the Muslims," said Ognyan Minchev, a professor of political science at Sofia University and the executive director of the Institute for Regional and International Studies in Sofia.

Prof. Minchev added that the decision to expel a Turkish diplomat stationed in the southeastern city of Burgas was a "mild" Bulgarian reaction and a form of "damage control" for a country whose best option was to remain neutral in the quarrel between its neighbours.

Sitting on the EU's external border with Russia and Turkey, and right in the middle of a popular route refugees take to enter Europe, Bulgaria could easily find itself sucked into a crisis that it cannot easily control.

Not only is it far smaller than its powerful neighbours, but wounds here are still healing after an ethnic conflict with religious undertones that saw hundreds of thousands of members of the Turkish minority violently expelled during the late 1980s. (Today, ethnic Turks number approximately 8 per cent of the total population, though there are a few smaller Muslim minorities in the predominantly Christian country which have also been caught up in the crisis.)

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The diplomatic row with Turkey came as the latest chapter of a drama involving the Movement for Rights and Freedoms (MRF), a party which has provided crucial votes that have made or broken numerous governments since 1990, and which also claims to hold the key to ethnic and religious peace in Bulgaria.

Add to the mix rampant corruption – a bane for successive governments in the country, according to the European Commission – and you have a perfect storm that has brought memories of the Cold War back to life for many here.

The opening shots late last December recalled a miniature version of a Stalinist putsch: Lyutvi Mestan, the leader of the MRF, denounced as a foreign agent by party honchos at an opulent New Year's banquet and ousted shortly afterward, ran to the Turkish embassy for protection. The Bulgarian Prime Minister Boyko Borisov later complained on TV that both the Turkish President Recep Tayyip Erdogan and Prime Minister Ahmet Davutoglu had called him persistently at 1 a.m., seeking unsuccessfully to intervene.

Since then, Mr. Mestan has attempted a comeback by founding an alternative minority-focused party to challenge the MRF, reportedly supported by the Turkish government. His nemesis, Ahmed Dogan, the founder and retired leader of the movement who organized the putsch, has found himself banned from entering Turkey.

Analysts say that at play in the conflict between the two men are shadowy but powerful business interests that are considered a hallmark of Russian hybrid warfare strategy – and have recently become a tool in the hands of the Turkish government as well.

"Despite its Turkish support base, the MRF is closely associated with pro-Russian business interests," Lora Chakarova, a Bulgaria expert at the London-based analysis firm IHS, said in an e-mail. "Mestan's oust[er] was a reassertion of the power vertical in the party and its implicit links to pro-Russian business and political interests, as opposed to pro-Turkish ones, as the latter have intensified in recent years."

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The MRF is widely believed to control major chunks of Bulgaria's economy including a vast media empire, and has been at the centre of several major scandals in recent years. (It is hardly known for transparency and its spokespeople, alongside those of the Bulgarian government, failed to respond to requests for comments for this article.)

In 2013, the appointment of a controversial businessman and parliamentary deputy from the party, Delyan Peevski, as all-powerful national security chief sparked a major wave of almost daily protests in front of parliament that went on for six months, despite his swift resignation.

In the middle of all this, Prime Minister Borisov, leader of the centre-right GERB (Citizens for European Development of Bulgaria), has recently struggled to implement effective judicial reform, as demanded by Brussels, and even to keep his ruling coalition together.

Mr. Borisov's challenges are compounded by powerful foreign influences, which experts say are not limited to Russian and Turkish meddling.

"What worries me [more] is that up to now Bulgaria was developing under the guidance and pressure of the stable European institutions and a stable NATO," said Daniel Smilov, a senior political expert at the Centre for Liberal Strategies, a prominent think tank in Sofia.

He cautioned that spiralling tensions inside the EU could throw Bulgaria further off course from much-needed reforms and dampen the currently strong pro-European sentiments in the country.

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"The main impact of the refugee crisis is that it weakened [German Chancellor Angela] Merkel, who is the biggest proponent of the EU and the natural leader of the union in these difficult times," Dr. Smilov added.

"Perhaps she will be able to deal with this crisis as well … but right now the situation is quite dramatic."

Some, nevertheless, see a silver lining for the country in a potential closer relationship with Russia, and say that could aid the country's hopes of becoming a regional energy hub. Many Bulgarians, in addition, harbour warm sympathies for Russia, which they credit with liberating them from the Ottoman Empire back in 1876.

"The cautious way the government is handling the diplomatic crisis with Turkey, without making any statements, indicates to me that it is seeking to warm up to Russia rather than to upset Ankara very much," said Veselin Avraamov, a political analyst with ties to a smaller leftist party which is sympathetic to Russia.

"I expect to see benefits for the country from this approach this year, for example an increased flow of Russian tourists, who are boycotting Turkey, to the Bulgarian Black Sea resorts," added Mr. Avraamov.

"In the longer-term future, the ouster of Mestan, who opposed [the] South Stream [gas pipeline project] could pave the road for resuming that project in some form, as well as for other major energy projects in co-operation with Russia."