UNCLAS SOFIA 001217

SIPDIS


SENSITIVE

E.O. 12958: N/A
TAGS: PGOV BU
SUBJECT: BULGARIAN COALITION TALKS STALL AS SIMEON TRIES TO KEEP
HIS PM JOB; NEW PARLIAMENT TO CONVENE 11 JULY

Ref: (A) SOFIA 808, (B) SOFIA 1036, (C) SOFIA 1134


1. (SBU) SUMMARY: The Bulgarian Socialist Party (BSP), which won a
plurality in the June 25 general elections, so far is struggling to
hammer out a coalition deal to form the new government. The
Socialists say the best option for a stable government is a three-
party coalition including the defeated party of PM Simeon Saxe-
Coburg and the ethnic Turkish Movement for Rights and Freedoms
(MRF). Talks regarding the large coalition, however, are stuck due
to the ex-king's continued demand to retain the PM post. President
Georgi Purvanov has put additional pressure on the parties to
quickly forge a deal by announcing he will convene the first
session of the new parliament on July 11. The Socialists are
determined to form a government with or without Simeon, and say
they have secured the needed votes for a slim majority with just
the MRF and a handful of individual MPs from other parties. Such a
government, however, would be unstable and is unlikely to enjoy
popularity at home or abroad. An eleventh-hour deal with Simeon is
still possible, but, as always, his moves are difficult to predict.
Bulgaria needs to quickly form a government and race to meet EU
requirements if it wants to join the EU in 2007. END SUMMARY


2. (U) The June 25 election gave the Socialists 34 percent of the
vote, which translated into 82 seats in the 240-seat parliament
(Ref. A, C). That forced the BSP to seek support in forming a
government from the MRF and the PM's National Movement for Simeon
II (NMSS). The third-place MRF, a junior coalition partner in the
outgoing government, said outright that they were ready to join the
Socialists and have backed the PM nomination of 39-year-old BSP
leader Sergei Stanishev. The Socialists see a three-party
coalition, including Simeon's party, as the most stable option from
a domestic point of view and most appealing for the EU process. In
apparent solid coalition with the MRF, which has 34 parliamentary
votes, the BSP is just five votes short of the 121 needed to form a
coalition government. The BSP has been holding talks for 10 days
now to bring the NMSS aboard the coalition in order to strengthen
the government, but intense horse-trading has not produced concrete
results.

WHAT TO DO WITH THE KING?

3. (SBU) The key issue preventing a coalition deal between the BSP,
the NMSS and the MRF revolves around what to do with Simeon. Four
years ago he became Europe's first former monarch to regain power
as PM, and he clearly wants to hold onto the job despite being
rejected by 80 percent of Bulgarian voters. In contrast with his
pre-election statements, Simeon hinted that he is willing to cut a
deal with the BSP. But his demand to stay as PM in the new
coalition government is the key obstacle preventing a three-party
deal. A much-awaited meeting of the three party leaders July 6
failed to bring a breakthrough. The Socialists have firmly ruled
out allowing Simeon to keep the PM job. "This is impossible.
There is no political logic to have the candidate for prime
minister come from a party that lost the election", Socialist
leader Stanishev said. The Socialists have reiterated publicly
that their leader should hold the PM post. BSP officials, however,
told us privately they were ready to withdraw Stanishev's
nomination and consider a three-party government headed by a
consensus figure, as long as it is not Simeon.

THE CLOCK IS TICKING


4. (SBU) President Purvanov put further pressure on the main
political parties to forge a deal by scheduling the first session
of the new parliament for July 11. A strong supporter of a three-
party coalition, Purvanov said any weak coalition that could lead
to early elections would be "fatal" for Bulgaria's EU accession,
and urged the parties to map out a coalition agreement before the
parliament is convened. The Socialists say they plan to approve a
coalition agreement July 10. The European Commission has also
appealed for a quick formation of the new cabinet to tackle reforms
needed for EU accession. Any delay in forming the government may
endanger Bulgaria's 2007 entry bid, delaying it by a year.
Purvanov will most likely waste no time, and as early as next week
may give the Socialists a mandate to form a government (Ref. B).
They then have seven days to present him the government line-up,
meaning that if the BSP succeeds in meeting the timeline nd
secures parliamentary backing, Bulgaria's newgovernment could be
sworn in this month. If theSocialists fail, Purvanov will let the
second bigest party, Simeon's NMSS, try to form a government
which some say is what the former king is hopin for.


5. (SBU) The Socialists are determined toform a government,
although the BSP and the MRF ogether control only 116 seats in the
240-seat parliament and are still short of a majority. The
Socialists might have to rely on support by individual MPs from
other groups, and sources close to the party have told us they have
already secured more than the 121 MPs needed for the government to
be approved. The most likely donor of votes is the Bulgarian
People's Union, the only center-right group to have held post-
election consultations with the BSP. However, the complex
situation may force the BSP to accept the support of left-leaning


MPs from the extreme nationalist group Ataka, which emerged as the
fourth-largest force in parliament after a surprise election
victory. Under this scenario, Ataka would not enter a coalition
with the BSP, but members would support the BSP-led government in
an anonymous vote. That makes the reformist Socialist leadership
nervous, since the party has distanced itself from Ataka, and
Stanishev has blasted the group saying its xenophobic and overtly
racist views are incompatible with Bulgaria's drive to join the EU.


6. (SBU) COMMENT: The ex-king holds the key to the formation of a
large coalition, seen by the international community as the best
option for domestic stability and timely EU accession. Simeon's
unwillingness to step aside has, however, stalled coalition talks,
and his stubbornness is the key factor preventing a three-party
deal. Overall, the Socialists are in a stronger position. Having
secured a deal with the ethnic Turks, they appear able to form a
government without Simeon. However, even if it wins parliamentary
approval, a minority BSP-MRF government is unlikely to be strong
enough politically to push through major changes ahead of EU
accession. The convening of parliament next week is likely to
intensify coalition bargaining, and all eyes will be on Simeon to
see whether he will blink. It is unclear whether Simeon is playing
hardball in order to secure the PM spot again, wants to burnish his
legacy as a leader who fought hard but went out gracefully for the
good of the country, or if he is trying to obtain maximum leverage
to get more ministerial or material benefits for himself and his
party. END COMMENT


7. (U) TABLE: Distribution of seats in the new parliament.
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Party MP seats
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Bulgarian Socialist Party (BSP) 82
National Movement for Simeon II (NMSS) 53
Movement for Rights and Freedoms (MRF) 34
Ataka 21
Union of Democratic Forces (UDF) 20
Democrats for Strong Bulgaria (Kostov's group DSB) 17
Bulgarian People's Union (Sofianski's coalition BPU) 13
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Majority in the 240-seat parliament is 121 MPs