Identifier
Created
Classification
Origin
06SOFIA1677
2006-12-18 14:30:00
CONFIDENTIAL
Embassy Sofia
Cable title:  

MOSCOW TIGHTENS SCREWS AS BULGARIA PREPARES FOR EU

Tags:  PREL PGOV ETRD RU BU 
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DE RUEHSF #1677/01 3521430
ZNY CCCCC ZZH
O 181430Z DEC 06
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2967
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 001677 

SIPDIS

SIPDIS

STATE EUR/NCE FOR MARC NORDBERG

E.O. 12958: DECL: 12/18/2018
TAGS: PREL PGOV ETRD RU BU
SUBJECT: MOSCOW TIGHTENS SCREWS AS BULGARIA PREPARES FOR EU
MEMBERSHIP


Classified By: CDA Alex Karagiannis for reasons 1.4 (b) and (c)

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 001677

SIPDIS

SIPDIS

STATE EUR/NCE FOR MARC NORDBERG

E.O. 12958: DECL: 12/18/2018
TAGS: PREL PGOV ETRD RU BU
SUBJECT: MOSCOW TIGHTENS SCREWS AS BULGARIA PREPARES FOR EU
MEMBERSHIP


Classified By: CDA Alex Karagiannis for reasons 1.4 (b) and (c)


1. (C) SUMMARY: During his first official visit to Moscow,
Foreign Minister Kalfin discussed several unresolved
bilateral issues, including arm sales to Georgia, the
production and sale of weapons under outdated Soviet
licenses, and efforts to trim Bulgaria's ballooning trade
deficit with Russia. Apart from refocusing the
Bulgarian-Russian relationship now that Bulgaria is joining
the EU in 2007, one of Kalfin's goals was to lay the
groundwork for a future visit by Prime Minister Stanishev.
Our Foreign Ministry contacts characterize the visit as
"positive" and non-confrontational while the press has
portrayed it as "chilly" and contentious. Foreign Minister
Kalfin told the Ambassador that the Russians were
heavy-handed. END SUMMARY.

BULGARIA NOT BENDING ON ARMS SALES (FOR NOW)


2. (U) During his December 6-8 trip to Moscow, Kalfin met
with Russian Foreign Minister Lavrov, the co-chair of the
Bulgarian-Russian Inter-governmental Committee, Sergey
Narishkin, Moscow's Mayor Yuri Luzhkov, and business
representatives from the energy sector. Kalfin also traveled
to the Russian republic of Tatarstan and met its president
Minitimer Shaymiev.


3. (C) XXXXXXXXXXXX
described the visit to us on December 15 as "positive" and
mainly focused on economic issues. XXXXXXXXXXXX admitted Bulgaria's
sale of arms to Georgia was discussed in the broader context
of arms licenses, but suggested the GOB has no plans to stop
these sales. "Russia knows our position" on the issue, XXXXXXXXXXXX
said, and "does not like it." He emphasized that these sales
are closely "controlled" by the GOB and directed only to the
Georgian government. Russian officials, however, continue to
voice concerns that the arms will be used to settle the
region's conflict "militarily" and fear the Georgian
government is transferring the weapons to other roups.


4. (C) XXXXXXXXXXXX told us the two countries till remain very
much divided over the Bulgarian roduction and sale of

weapons under old Soviet lcenses, specifically Kalishnikov
automatic rifle. Moscow regards Bulgarian-produced
Kalishnikov as "counterfeit" and believes Bulgarian
produces should be paying part of their profits to the
Rssin producer, Rosoboronexport. Russia further carges
that Bulgaria is selling its military hardare at "dumping"
prices and crowding out Russiancompetition. XXXXXXXXXXXX indicated
that no progress o the issue was made during the visit and
that sigificant "differences still exist" between the
contries. He said, "the Russians, of course, want t settle
the issue their way," but that the two sdes agreed to leave
the topic to the experts for now. According to XXXXXXXXXXXX,
Bulgarian arms producers would be forced out of business if
they had to yield part of their profits to Russia.

MEAT IS MURDER (ON BILATERAL RELATIONS)


5. (C) Despite its focus in the press, XXXXXXXXXXXX said the topic
of Bulgarian meat exports--and Moscow's concerns over
Bulgaria's veterinary standards--was not discussed during the
visit. According to XXXXXXXXXXXX, Lavrov mentioned the issue for
the first time during the press conference following his
meeting with Kalfin. XXXXXXXXXXXX said Russia views this simply as
a "technical" issue. Bulgarian leaders undoubtedly were
stung by Russia's threat to ban all animal products from the
EU based on concerns over poor hygiene and animal health in
Bulgaria and Romania. Kalfin, before his visit, called
Moscow's fears "ungrounded"--a sentiment echoed by EU
Enlargement Commissioner Ollie Rehn. Lavrov has subsequently
characterized the dispute as a "misunderstanding" and says
Russia is merely adhering to EU veterinary standards rather
than punishing Bulgaria or Romania.


6. (C) Interestingly, XXXXXXXXXXXX noted that a ban on Bulgarian
meat exports by Russia would have an insignificant economic
impact on Bulgaria since Russia imports only a small amount
(around 50 tons this year) of Bulgarian meat. Concerning EU
accession, XXXXXXXXXXXX said Russian officials expressed no
dissatisfaction whatsoever with Bulgaria's imminent EU
membership or its likely effects. Bulgaria's new status will
require the two countries to renegotiate a number of trade
and economic agreements however.

ENERGY ISSUES


7. (C) The two sides also discussed energy, according to
XXXXXXXXXXXX. Differences reportedly still exist over the
Burgas-Alexandropolis (B-A) pipeline, but XXXXXXXXXXXX did not
elaborate. Experts met in Moscow last week on the issue and
are planning to meet again soon. We hear from other sources
that the GOB is preparing its response to the Russian-drafted
Inter-governmental Agreement for B-A. Bulgaria is also
renegotiating a gas contract with Gazprom, which is reported
to guarantee that Gazprom will supply the core of Bulgaria's
gas until 2030. XXXXXXXXXXXX noted that Russian officials still see
Bulgaria as a good transit location for energy, particularly
to places such as Macedonia and Serbia.


8. (SBU) Kalfin in a press interview during the visit said
Bulgaria supported Brussels efforts to develop a common
energy policy. He further emphasized that "it would be
better for our economy" to develop alternatives sources of
energy to end Bulgaria's dependency on Russia, but that
Bulgaria will continue its cooperation with Russia "for
securing our market and for transit of energy resources."

CLOSING THE GAP ON BULGARIA'S TRADE DEFICIT WITH RUSSIA


9. (C) A major priority for Sofia is to reduce its negative
trade balance with Russia, which reached roughly 3 billion
USD this year (mainly from energy imports). One initiative
to help close the gap, which was discussed during the visit,
is the establishment of a "direct transit link" between
Russia and Bulgaria. Commerce between the two countries
currently goes by rail via Romania, Moldova and Ukraine or by
boat across the Black Sea. XXXXXXXXXXXX told us these routes are
fraught with delays and problems, particularly linked to
Ukraine. The GOB believes that bilateral trade would be
enhanced by initiating new infrastructure projects that would
better connect the two countries. One area the two sides are
investigating is the better utilization of the Black Sea and
the river system for increased trade. According to XXXXXXXXXXXX,
Russia supports the idea of creating new infrastructure but
worries that there still will not be enough goods to trade,
even with the new infrastructure. The one Bulgarian export
to Russia that has been expanding is wine, noted XXXXXXXXXXXX, but
that is hardly making a dent in the massive deficit.

RUSSIA WANTS RESULTS BEFORE ANY VISIT BY THE PM


10. (C) Asked about Prime Minister Stanishev's possible visit
to Russia, XXXXXXXXXXXX said Moscow is insisting that any future
visit be "results-oriented" and would first like to see
progress on the outstanding issues between the two countries
before giving the green light to any future visit. XXXXXXXXXXXX
said the trip certainly would not happen until the expert-led
Russian-Bulgarian Inter-government Committee meets again
sometime early next year. But the hope is that it could take
place sometime in the first half of 2007. When asked the
same question about a possible trip by Stanishev by the
press, Kalfin said it would take place as soon "as there were
enough topics to discuss with the Russian side."


11. (C) COMMENT: Kalfin's stratchy meetings and Russian
brusqueness colored his visit there. Other than the complex
and layered energy relationship, and Russia's ham-fisted
attempts to leverage influence, several additional issues
currently divide Sofia and Moscow. It is not only on arms
sales and meat that the two countries do not see eye-to-eye,
but also on the establishment of U.S.-Bulgaria joint training
facilities in Bulgaria and the GOB's acceptance of Kosovo's
eventual independence. This suggests that the fears of some
that Bulgaria will act as Russia's "Trojan horse" in the EU
are overblown. Bulgaria's public opinion is more positive to
Moscow than other newer members such Poland or Romania, but
the two countries are also moving in different directions
with Bulgaria becoming more firmly anchored now in the West.
XXXXXXXXXXXX said in the future Bulgaria intends to deal with Russia
largely in the framework of the EU, suggesting Sofia may
follow Brussels' cue on many questions concerning Moscow.
We, of course, will work so Sofia follows the U.S. lead. END
COMMENT
KARAGIANNIS