BULGARIA SIGNS EU ACCESSSION TREATY, BUT MUCH WORK

UNCLAS SOFIA 000780

SIPDIS


E.O. 12958: N/A
TAGS: PGOV PREL ECON SOCI BU
SUBJECT: BULGARIA SIGNS EU ACCESSSION TREATY, BUT MUCH WORK
REMAINS

SENSITIVE


1. (SBU) SUMMARY: Bulgaria signed the EU Accession Treaty
on April 25 paving the way to join the Union on January 1,



2007. The Bulgarian government plans immediate submittal of
the treaty to Parliament for ratification prior to the late
May election recess. Despite Bulgaria's solid progress and
early completion of negotiations, the EU continues to
emphasize its problems in the areas of rule of law,
corruption and organized crime. The Commission will likely
be watching Bulgaria closely and has reserved the right to
delay entry if its accession commitments are not met. There
is strong domestic political consensus, however, on
Bulgaria's EU accession, and political parties have agreed
to push forward necessary reforms. The only point of
contention on the Bulgarian side remains Bulgaria's
unpopular commitment to a portion of the Kozloduy Nuclear
Power Plant as a condition of entry. END SUMMARY.

EU ACCESSION TREATY SIGNED IN LUXEMBOURG: WHAT'S NEXT?


2. (SBU) Following the assent of the European Commission,
Bulgaria signed the EU Accession Treaty on April 25, 2005,
in Luxembourg. Prime Minister Simeon Saxe-Coburg Gotha,
President Georgi Purvanov and the Foreign Affairs and
European Affairs Ministers all signed the Treaty, which
provides for accession on January 1, 2007, and sets out the
terms and conditions of Bulgaria's membership. PM Saxe-
Coburg hopes the landmark event will boost the ruling
party's chances in the June general elections, for which
polls show the ex-king's party trailing the opposition
Socialists.


3. (SBU) Bulgaria and the current EU states must ratify the
treaty before January 1, 2007. The Bulgarian Parliament has
said it will do so before the June general elections. This
self-imposed deadline is for domestic political purposes
only, although it could help kick off the process for other
Member States. While some EU member countries -- Luxembourg
and Cyprus -- have declared their intention to ratify the
Treaty as soon as it is signed, the entire process could
take up to a year. The government has talked about holding
a referendum in Bulgaria on the country's EU accession, but
disagreements regarding the timing of a referendum have so
far blocked any decision.

CHALLENGES AHEAD, BUT ACCESSION DELAY SEEMS UNLIKELY


4. (SBU) The underlying work needed for Bulgaria's
accession in 2007 is not yet complete. The EU has
identified the lack of judicial reform as the greatest
threat to successful accession, saying that the Bulgarian
government must make solid efforts to reform the judiciary
and step up the fight against corruption and organized
crime. In view of this shortcoming, the government's top
priority is the approval of a new Penal Procedure Code that
will increase the effectiveness of criminal investigations,
clarify the pre-trial phase and speed up penal procedures.
This is unlikely to occur before Parliament dissolves in
late May for the general elections. However, this and other
laws related to EU accession will top the agenda of the next
Parliament, which must act in time for the November
Comprehensive Monitoring Report.


5. (SBU) If Bulgaria does not fulfill its accession
commitments, the Commission may invoke the safeguard clauses
provided for in the Treaty. If accepted unanimously by the
Council, this could delay accession by one year. Despite EC
and Member State officials' threats to invoke the safeguard
clause if conditions are not met, there is no indication at
this point that Bulgaria's accession is in danger of delay.


6. (SBU) To ensure compliance with accession commitments,
the Commission has started an intensive, rolling monitoring
exercise through peer reviews and committees. This should
culminate in the Comprehensive Monitoring Report, to be
issued by the Commission on November 9th. The report will
assess progress made up to September 30 this year and
highlight remaining shortcomings, if any. The European
Parliament has reserved the right to participate in the
monitoring process.


7. (SBU) While publicly fairly confident Bulgaria will
enter as scheduled, Meglena Kuneva, Minister for European
Affairs, privately told us she is concerned outside factors
could affect Bulgaria's chances. First is overall
enlargement fatigue, which is growing within the EU,
especially in Germany. Second is the unspoken understanding
within many EU states that neither Bulgaria nor Romania are
especially desirable countries, coming with economic and
structural problems that will burden the EU for many years.
Third, delaying Bulgaria's (and Romania's) entrance would
send a very effective message to Croatia and Turkey that the
EU is serious about maintaining its standards. Finally,


Bulgarian officials also fear the EU might link their entry
to Romania's, and any delay of reforms north of the Danube
would also prejudice Bulgaria's entry.

ADVANTAGES AND DISADVANTAGES TO BULGARIA


8. (SBU) Bulgarian officials maintain that strengthening
the rule of law, joining a bigger and more integrated
market, improving the regulatory environment, and removing
trade barriers will contribute to economic growth and spur
greater foreign investment. An open border with Greece will
be one of the most visible, immediate benefits. Another
boon for Bulgaria will be the EU's financial assistance.
Bulgaria will receive much more money from the EU budget
than it will pay: 4.5 billion euros between 2007 through
2009, while its annual contribution to the EU is estimated
at 300,000 euros for the same period.


9. (SBU) On the economic front Bulgarian companies are
unlikely to withstand competition from Western European
firms. Bulgarian business representatives voice concerns
over the EU's "impossible-to-meet" standards and
requirements. In particular, meeting environmental
standards could prove daunting. Equally important, local
farmers will be hurt by the EU's agricultural policy.
Another negative effect associated with the EU accession is
the possibility of ever-greater inflation of already-rising
real estate prices as richer EU citizens push up demand for
properties in Bulgaria. Regardless of EU membership,
experts project Bulgaria will continue to experience
demographic problems: decreasing birth rate, growing
mortality rate, economic migration, and shortage of quality
labor.

PUBLIC FAVORS EU ACCESSION


10. (SBU) Bulgarian opinion about the EU is predominantly
positive, in part due to Minister Kuneva's six month EU-
Accession campaign in small cities and towns, but is
expected to slump a bit as citizens become more aware of
membership obligations. The April survey conducted by the
International Republican Institute indicates 76 percent are
in favor of Bulgaria's EU membership. A survey conducted by
the parliamentary National Center for the Survey of Public
Opinion shows that 61 percent believe EU membership will
help Bulgaria improve its standard of living.


11. (SBU) The survey also finds unrealistic expectations:
--SALARIES: 36 percent believe salaries will increase
substantially after Bulgaria joins the EU. One in two
Bulgarians expect that the minimum monthly salary will
quickly exceed 250 euro, from the current 77 euro level.
--PENSIONS: 34 percent expect higher pensions;
--UNEMPLOYMENT: 38 percent say unemployment will drop,
while six in 10 are confident they will not have to leave
Bulgaria to work in another EU country after 2007.


12. (SBU) The survey also shows that Bulgarians have only
limited knowledge of the EU and Bulgaria's accession
obligations. Forty-seven percent don't know whether
Bulgaria has completed EU negotiations and 75 percent are
not familiar with EU obligations.


13. (SBU) On the negative side, ordinary Bulgarians are
upset about the forced closure of Kozloduy Nuclear Power
Plant as a condition of entry. Bulgarians see Kozloduy as a
sign of the country's technological prowess. In addition,
the plant employs a large number of people in one of the
most depressed areas of the country. The issue is being
used as a political football in the current election season,
and it is far from clear whether Bulgaria could be
successful in reversing this decision.


14. (SBU) COMMENT: Acceding to the EU on January 1, 2007,
is Bulgaria's top foreign policy objective. Despite the
seriousness of the outstanding rule of law issues, it is
unlikely the EU will delay Bulgaria's accession. Bulgarian
political parties have teamed up to push forward reforms and
implement accession commitments. The government of PM Saxe-
Coburg Gotha capitalized on the date for signing the treaty
just two months ahead of the general elections in order to
boost its election profile and ride the positive public
opinion about the EU. Leading members of his party are
holding celebrations of the signing in their election
districts today. Average Bulgarians may be over-optimistic
about what the EU can do for them, but it is clear that
despite the many problems that remain here, the country is
heading in the right direction -- in large part due to the
EU Accession process. END COMMENT.