Identifier
Created
Classification
Origin
06SOFIA372
2006-03-14 11:30:00
CONFIDENTIAL
Embassy Sofia
Cable title:  

BULGARIANS DISCUSS IRAQ, JOINT BASES,

Tags:  PREL MARR ECON KCRM KDEM LY IZ BG 
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VZCZCXRO7953
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSF #0372/01 0731130
ZNY CCCCC ZZH
P 141130Z MAR 06
FM AMEMBASSY SOFIA
TO RUEHGB/AMEMBASSY BAGHDAD PRIORITY 0090
RUEHC/SECSTATE WASHDC PRIORITY 1588
INFO RHEHNSC/NSC WASHINGTON DC PRIORITY
RHMFISS/CDR USCENTCOM MACDILL AFB FL PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHMFISS/CDR USEUCOM VAIHINGEN GE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
REUHTRO/USLO TRIPOLI
C O N F I D E N T I A L SECTION 01 OF 04 SOFIA 000372 

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/13/2016
TAGS: PREL MARR ECON KCRM KDEM LY IZ BG
SUBJECT: BULGARIANS DISCUSS IRAQ, JOINT BASES,
CRIME/CORRUPTION, AND DEMOCRACY PROMOTION


Classified By: Ambassador John Beyrle, reasons 1.4(b) and (d).

C O N F I D E N T I A L SECTION 01 OF 04 SOFIA 000372

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/13/2016
TAGS: PREL MARR ECON KCRM KDEM LY IZ BG
SUBJECT: BULGARIANS DISCUSS IRAQ, JOINT BASES,
CRIME/CORRUPTION, AND DEMOCRACY PROMOTION


Classified By: Ambassador John Beyrle, reasons 1.4(b) and (d).


1. (U) This is an action request, please see para 4.

SUMMARY AND ACTION REQUEST
--------------


2. (C) EUR DAS Mark Pekala met March 9-10 with Bulgarian
officials to discuss, inter alia, Bulgaria's follow-on
mission in Iraq, ongoing negotiations on the use of Bulgarian
military bases by U.S. forces, Washington's concern about
organized crime and corruption, and efforts to promote
democracy in the Black Sea region. Pekala's contacts
included Foreign Minister and deputy Prime Minister Kalfin,
Interior Minister Petkov and Chief Prosecutor Velchev, as
well as deputy ministers of defense and finance, the deputy
governor of the central bank, the AmCham president, and
members of the parliamentary Defense and Foreign Affairs
Committees. Kalfin said Bulgaria's ambassador-designate
would travel to Baghdad March 14-23 to present his
credentials and search for new premises. He also said the
Bulgarian follow-on mission in Iraq would be ready to deploy
to Camp Ashraf in mid April.


3. (C) On the joint military bases, Pekala's contacts in both
the government and the center-right opposition expressed
strong willingness to conclude an agreement, but Kalfin noted
that there were still sensitive issues to be overcome.
Newly-appointed Chief Prosecutor Boris Velchev spoke frankly
about the problems of organized crime and high-level
corruption, and outlined credibly his intention to confront
both. Pekala's counterparts responded positively to his
message that Bulgaria could play an important role in helping
to "move the frontiers of freedom eastward" in the Black Sea
region. He also assured Bulgarian officials and MPs that the
U.S. would continue to work for the release of the Bulgarian
nurses imprisoned in Libya. END SUMMARY.


4. (C) Action request: Kalfin asked for USG support for
ambassador-designate Valeri Ratchev's trip to Baghdad March

16-23. We understand that secure transportation and lodging
have been arranged through CENTCOM channels. We request that
the Department seek through Embassy Baghdad and appropriate
U.S. military channels to support Ratchev's effort to find a
suitable location in the Green Zone for the Bulgarian
embassy. We also request Department support for
appropriate-level meetings with Embassy Baghdad and U.S.
military officials to help Ratchev gain a better
understanding of the context in which he will be working.
Ratchev is a former army colonel who was most recently the
deputy commandant of the Bulgarian military academy. He can
be reached in Baghdad by satellite phone at 00882 16211 57051.


PARTNERS, ALLIES AND FRIENDS
--------------


5. (C) In each of his meetings, DAS Pekala described Bulgaria
as a good friend, a valued ally and a strong partner. He
said that the U.S. strongly supported Bulgaria's entry into
the European Union on January 1, 2007, because the inclusion
of Bulgaria and Romania will be good for the countries
involved, good for the region, good for the U.S., and good
for Europe. Pekala outlined the Administration's focus on
promoting democracy and explained how Bulgaria could play an
important role in the Black Sea region. He thanked the
Bulgarians for the difficult political decisions to re-deploy
military forces to Iraq, double the size of their contingent
in ISAF later this year, and negotiate an agreement on the
presence of U.S. forces in Bulgaria.


6. (C) Kalfin noted that these and other decisions, while
politically difficult because of limited public support, were
being taken on the basis of Bulgaria's "strategic
partnership" with the U.S. He noted that the Bulgarian
Socialist Party (BSP) had run on a platform of immediate
withdrawal from Iraq, but Bulgarian soldiers were
nevertheless currently training with U.S. military police in
preparation for deployment to Camp Ashraf next month. Pekala
agreed and added that the only dark cloud on the horizon was
the Bulgarian government's perceived inability or
unwillingness to deal with the problems of corruption and

SOFIA 00000372 002 OF 004


organized crime. The U.S. wanted to bring its economic and
commercial relationship up to the same level as its political
and strategic relationship, but the prevalence of organized
crime and corruption made this more difficult than would
otherwise be the case.

JOINT BASES
--------------


7. (C) Kalfin professed to have been surprised by what he
described as the "last-minute" inclusion of five additional
facilities and a significantly higher troop ceiling in the
latest U.S. draft of the proposed Defense Cooperation
Agreement. He described the resulting problem as mainly one
of public presentation rather than substance, but said the
U.S. requests went well beyond the Bulgarian negotiator's
original mandate and so would require approval by the Council
of Ministers (COM). He said that he hoped the COM would
approve Ambassador Ivanov's new mandate at its next meeting
on March 16. "We can finalize the talks within a few days
after the government decision," Kalfin averred.


8. (C) Of the remaining issues, "freedom of action" appeared
to be the most prominent; Kalfin argued that the agreement
must include a commitment to "consult with" or "take into
consideration the views of" the Bulgarian government when
deploying forces for a combat missions in a third country.
Pekala noted in this context that any agreement will respect
Bulgarian law and sovereignty, as well as the principles of
the UN Charter and the international obligations of both
countries. In response to the popular impression that
"Bulgarians will be on the outside looking in," Pekala said
any public diplomacy effort must stress that U.S. activities
on these Bulgarian bases will be transparent to the Bulgarian
authorities.


9. (C) Kalfin said Bulgarian officials understand that the
joint facilities are not intended ever to host nuclear
weapons, but the issue is still a sensitive one for the
Bulgarian public. Both Kalfin and deputy Defense Minister
Yankulova stressed the need to work jointly on the public
affairs aspect of the proposed agreement, and to involve
Bulgarian NGOs and local-government officials as well.
Ambassador Beyrle briefly described his meetings the previous
week in Sliven and Yambol, near the two major facilities
under discussion. Officials and residents near the location
of the proposed joint bases wanted to know "how soon" the
U.S. could begin deploying forces. The trick, according to
Pekala's contacts, will be to expand this support into other
areas of the country.


10. (C) Yankulova acknowledged that the GOB "did not make
good use of previous opportunities" to explain the basing
issue to the public, and she argued for an approach using
popular language and concrete examples of how an agreement
will benefit Bulgaria. One of the MPs who had participated
in FM Kalfin's testimony the previous day put it more
strongly: Kalfin's answers to legislators' questions were
compelling, but the coverage in the next day's media was "a
disaster" because the testimony was closed and only opponents
of the agreement spoke to the press afterwards.

CRIME AND CORRUPTION
--------------


11. (C) Pekala described the overall bilateral relationship
as excellent, pointing to a number of "real and practical"
areas of cooperation. He noted, however, that one issue
stands in the way of reaching an even higher level of
partnership and cooperation: the government's failure to deal
with the problems of organized crime and corruption.
Kalfin's response focused on judicial reform, saying that
constitutional amendments now being undertaken would help.
Interior Minister Petkov acknowledged the problem, but blamed
political interference and lack of internal coordination for
the absence of results. He cited as evidence of corruption
the case of recently-murdered Ivan Todorov (AKA, The Doctor),
information about whom "was stored in the safe of a
high-ranking official" of the National Service for Combating
Organized Crime. In the corruption case involving the
director of the Bulgarian Red Cross, Petkov said he had
difficulty finding anyone willing to finalize the

SOFIA 00000372 003 OF 004


investigation because of the director's close ties to one of
the governing coalition partners.


12. (C) Petkov also reiterated his request for an agreement
on exchange of information between the MoI and its U.S.
law-enforcement counterparts. While assuring Pekala that the
current close cooperation with U.S. law enforcement would
continue, Petkov again expressed concern that without a
bilateral agreement, some of the information-sharing
currently undertaken by the MoI could be considered illegal
under Bulgarian law. He again raised the possibility of
creating a regional training center in Sofia focused on
border control and anti-smuggling efforts, including
trafficking in persons, drugs, arms, and WMD.


13. (C) Petkov said the current case against a member of
parliament from the National Movement Simeon II (NMSS) was "a
litmus test" of the Coalition's willingness to take on
high-level corruption. Petkov presented the case, involving
alleged misappropriation of more than USD 10 million when the
MP was the director of Bulgaria's only nuclear power plant,
to the Chief Prosecutor on March 6. Chief Prosecutor Velchev
confirmed this, and added that he would soon request lifting
the immunity of "six or seven additional MPs" currently under
investigation. In a matter of weeks, Velchev said, he would
also have the results of the investigations of two senior
members of the judiciary. He said he would reassign a number
of department heads -- senior prosecutors whom he cannot
legally fire -- in order to replace them with people
untainted by Velchev's notoriously corrupt predecessor.
Velchev also indicated that he would soon create a special
department consisting of hand-picked prosecutors charged with
handling cases of high-level government corruption. Velchev
said that the overall professionalism of the prosecution
service was better than he had expected before taking office.



14. (C) Unlike other officials, the recently-appointed Chief
Prosecutor made no excuses for the lack of progress against
organized crime. "Corruption and organized crime are
related," he said, "organized crime exists because state
officials are not immune to corruption, and anyone who denies
this is not doing a service to Bulgaria." He promised to be
"very proactive," and said that he would not wait for the
police to bring cases to him. Addressing the Ambassador, he
said he would appreciate learning directly about any cases in
which Bulgarian officials had solicited bribes from American
companies.

PROMOTING DEMOCRACY
--------------


15. (C) Pekala outlined the USG's four-part strategy for the
expansion of freedom in the Black Sea basin: democracy
promotion, with countries on the west side of the Black Sea
assisting those to the north and east; soft security,
including law enforcement and border security, emergency
management, and environmental protection; energy security,
focused on diversifying the sources of supply and transport;
and Euro-Atlantic integration, with Bulgaria and Romania
acted as bridges to NATO and the EU for countries such as
Georgia, Moldova and Ukraine. On the Western Balkans, the
U.S. appreciates Bulgaria's efforts to build confidence
between Serbs and Kosovars and would welcome bilateral
consultations.


16. (C) Kalfin said Bulgaria viewed the Black Sea region
through the lens of NATO; he was somewhat dismissive of the
"Black Sea Harmony" concept pushed by Turkey and Russia.
Nevertheless, he took the point that building confidence
among the Black Sea littoral states was a step-by-step
process. On Kosovo, Kalfin said that whatever the outcome of
the final status talks, "the international community -- not
just the EU -- must be present for a long time." In both the
Western Balkans and the Black Sea region, Kalfin agreed that
the prospect of eventual NATO and EU membership is a major
incentive for reform and must be kept open.

ECONOMIC ISSUES
--------------


17. (C) Pekala told his counterparts that the U.S. would like

SOFIA 00000372 004 OF 004


to see many more investments in Bulgaria of the type recently
announced or agreed to by AES, Hewlett-Packard and Nu Image.
One incentive will be the completion of negotiations on
double-taxation treaty (DTT). Deputy Finance Minister Kadiev
was optimistic that parliament would pass the necessary
changes to the bank secrecy law, and the that DTT could be
completed this year. The president of the American Chamber
of Commerce noted, however, that widespread corruption, an
inefficient and opaque bureaucracy, and an unreformed
judiciary were drags on U.S. investment. Large companies
could factor these risks into their investment decisions, but
small and medium-sized firms would rather go elsewhere.
While agreeing with this assessment, Kadiev said that the
government recognized the need to attract foreign investment,
which was one of the reasons it had proposed a law that would
give Bulgaria the second-lowest corporate tax rate in Europe.


18 (C) As tax rates fall, Kadiev said he expects compliance
to increase because the costs inherent in cheating begin to
outweigh the benefits. Nevertheless, tax fraud -- especially
involving value-added tax (VAT) -- continues to be major
drain on the revenue side. Organized crime groups are behind
large-scale schemes involving fraudulent reimbursement of
hundreds of millions of dollars in VAT every year. Kadiev
attributed the problem to a corrupt tax administration, the
absence of a specialized tax police, the existence of a
"political umbrella," and the fact that VAT fraud is not a
criminal offense under Bulgarian law. The Finance Ministry
loses a comparable amount of money every year from the sale
of duty-free fuel, liquor and cigarettes along the country's
borders, again largely to the benefit of organized crime
figures such as Vasil "The Skull" Bozhkov.


19. (C) The deputy governor of the central bank, Tzvetan
Manchev, noted Bulgaria's low inflation, stable currency and
falling unemployment. He said the Bulgaria's current account
deficit -- currently running at about 14 percent of GDP --
was driven by the capital account rather than consumer
spending. The central bank would therefore not fight this
trend, but was concerned about its sustainability. Manchev
said he expected the current account deficit to fall in 2007.
In the longer term, additional structural reforms are
needed. Manchev singled out greater flexibility in the labor
market, the development of the non-banking financial sector
(for which Bulgaria could use additional technical
assistance),and reform of the education and health-care
sectors.


20. (U) This message has been approved by DAS Pekala.


21. (U) Tripoli minimize considered.
Beyrle