Readout on FM Gul's Visit to Bulgaria: Energy

UNCLAS ANKARA 003288

SIPDIS


SENSITIVE


E.O. 12958: N/A
TAGS: ETRD ENRG EINV BG TU
SUBJECT: Readout on FM Gul's Visit to Bulgaria: Energy
Trade and Investment Key Issues

Ref: (A) Sofia 867 (B) Ankara 3190



1. (SBU) Summary: MFA characterized FM Gul's recent
visit to Bulgaria as a success. Turkish investment in
Bulgaria and trade in energy were key subjects of
discussion during the Gul visit. MFA told us that the
agreement to buy electricity from Bulgaria may not be
commercially sensible for Turkey at this point, but it
would like to find an accommodation with Sofia to
maintain good relations. End Summary.



2. (U) Econoff met with Mehmet Gucuk, MFA Deputy
Director for Bilateral Affairs, to discuss Turkish FM
Gul's May 12 and 13 visit to Bulgaria. Gucuk, who
traveled in Gul's delegation, characterized the visit as
successful overall. He stated that bilateral political
relations were excellent, and that Turkish investment in
Bulgaria buttressed that political relationship.
However, Bulgarian electricity exports to Turkey and
offsetting construction contracts for Turkish firms
remain an issue.



3. (U) Investment: Gucuk highlighted Turkish firms'
strong presence in Bulgaria, with investment of about
USD 500 million. This is set to rise with a USD 200
million investment by Pasabahce, a Turkish glassware
producer, and, if Koc Group/Turk Telecom win the bid for
privatization of Bulgarian telecoms, a further USD 500
million investment in telecoms over the long term.
Gucuk estimated that Turkish companies now account for a
quarter of Bulgarian FDI.



4. (SBU) Energy: Turkey's suspension of electricity
imports from Bulgaria (apparently in connection with the
Koc/Turk Telecom bid - see ref A) was discussed during
the visit, but without coming to closure on whether to
revise or continue implementing the Turkish-Bulgarian
bilateral agreement in this area. Gucuk stated that the
agreement committing Turkey to import power from
Bulgaria made little commercial sense (for Ankara),
given a current surplus of power supplies for Turkish
industry. He maintained that Turkey had nevertheless
continued to take and pay for Bulgarian electricity for
several years, even though the GOB had balked at giving
Turkish companies contracts for highway and dam
construction in Bulgaria, which Gucuk maintained was an
essential element of the agreement. Gucuk said that the
GOT was sensitive to the fact that it was Bulgaria's
leading customer in its leading export and wanted to
arrive at some accommodation with the GOB. He said
Bulgaria's Energy Minister would visit Turkey later in
May to discuss this subject further.
Pearson