C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000565

SIPDIS

SIPDIS

FOR THE SECRETARY FROM AMBASSADOR BEYRLE

E.O. 12958: DECL: 04/20/2016
TAGS: PREL PGOV MARR ENRG EINV OVIP EUN LY IZ BG
SUBJECT: SCENESETTER FOR YOUR BILATERAL PROGRAM IN SOFIA


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


1. (C) SUMMARY. All of Bulgaria -- and many others in the
region -- will be watching April 27 as you and Foreign
Minister Kalfin sign in Sofia the Defense Cooperation
Agreement (DCA), which gives U.S. military forces access to
Bulgarian bases. The long-awaited agreement will be the
highlight of your bilateral agenda and a major milestone in
our relations with this consistently reliable ally. Bulgaria
is working hard to get into the European Union on January 1
and, with troops in Iraq, Afghanistan and the Western
Balkans, is boxing above its weight on the world stage. The
government has asked for and deserves our active support on
behalf of their on-time membership in the EU. They are also
looking for your help in casting the DCA as a victory, and in
putting the military aspects of our relationship in a larger
overall context that includes close political and economic
cooperation. Your overall message should be that Bulgaria is
a valued partner in the security sphere and across the full
range of U.S. interests.


2. (C) Passivity in the face of corruption and organized
crime has been the weak point not only in this government's
record, but its predecessors' as well. This may be starting
to change under pressure from the EU and with the appointment
of a respected new Chief Prosecutor. The government's
ability to actively promote democracy in the Western Balkans
or Black Sea region has been hampered by its near-total focus
on EU membership, but it is ready in principle to play a
role. In the longer term, we should encourage Bulgaria to
wean itself from over-dependence on Russian energy. As for

domestic politics, the pro-American coalition headed by
Socialist Prime Minister Sergei Stanishev, whom you will
meet, is stable in the near term, but is held together
primarily by the quest for EU membership. President Purvanov
will seek this November to be the first Bulgarian President
re-elected since the collapse of communism. END SUMMARY.

PUTTING THE "BASE AGREEMENT" IN CONTEXT
--------------


3. (C) The signing of the Defense Cooperation Agreement is a
monumental event for Bulgaria. The Agreement, which gives
the U.S. access to two air bases and an army training area,
will lay the remaining foundation for the brigade-sized
Eastern European Task Force, which will have its headquarters
in Romania. The negotiations have been the subject of
widespread -- and more often than not, inaccurate -- coverage
in the local news media. Many Bulgarians oppose the idea of
"foreign bases" on their soil, fear the United States will
use Bulgaria as a launching pad to attack Iran, or believe
that the U.S. presence will make Bulgaria a target for
terrorists. Polls show that the more people learn about the
proposed U.S. presence, the less they oppose it, but the
government still needs to do more to explain the agreement to
the public.


4. (C) It is important for the government and the public to
hear from you that Bulgaria is a valued and equal partner,
not just in the security sphere, but across the entire
spectrum of our relationship. There is a strong basis for
that judgment. The DCA comes on the heels of a government
decision to send troops back to Iraq after campaigning last
year on a platform of immediate withdrawal, and coincides
with the ramping up of its presence in Afghanistan, where
Bulgaria will soon take over security for Kabul airport.
Consequently, the government is seeking to shift some of the
focus of public discussion away from the military aspects of
our relationship and toward the political and economic. Here
too, we have a good story to tell. Huge U.S. investments are
in the pipeline, including a 1.4 billion dollar power plant
built by AES and a Hewlett-Packard call-service center that
will create some 1000 knowledge-based jobs. We still lag
behind our EU partners in terms of direct foreign investment,
but Bulgarian audiences need to hear that we will not be
satisfied until we are number one.

ENERGY DIVERSIFICATION
--------------


5. (C) AES' investment in a new, clean coal-fired power plant
will help Bulgaria diversify its dependence on Russian
energy, but only marginally. Bulgaria buys 88 percent of its
gas and 73 percent of its oil from Russia, resulting as well
in a huge bilateral trade deficit. This energy dependency

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was brought home in December when, in a near-replay of events
in Ukraine, Gazprom Vice Chairman Medvedev personally
threatened Stanishev with a cut-off of Russian supplies if
Bulgaria did not agree to renegotiate the terms of its
current gas contract. The crisis was eventually defused, but
the bottom line is that Bulgaria is paying 35 percent below
market prices for its gas, affording Moscow significant
potential leverage over Sofia. Helping Bulgaria to avoid
putting all its eggs in one basket is a long-term project,
but one in which we should remain engaged.

EU ACCESSION AND RULE-OF-LAW PROBLEMS
--------------


6. (C) The current government is understandably focused on
getting into the EU on time. Brussels is sending mixed
signals, in part to keep Bulgaria's feet to the fire on
reform. Current thinking appears to be that Bulgaria will
join the Union as scheduled, but with at least a Justice and
Home Affairs (JHA) safeguard clause and continued EU
monitoring in that area. The Bulgarians are concerned by
rumors the EU may be designing additional monitoring
mechanisms for Bulgaria even after accession that could
affect the flow of structural funds. President Purvanov has
just sent a personal plea to President Bush asking for
support of Bulgaria's EU accession. They will likely
reiterate this request in their meetings with you.


7. (C) Bulgaria's problems with Brussels are primarily in the
area of rule of law. Successive governments have shown
little inclination to deal forcefully with the problems of
corruption and organized crime, preferring instead to pass
new laws and showcase relatively minor enforcement successes.
Your message should be that there is no daylight between the
U.S. and the EU on this issue: Bulgaria needs to prosecute
organized crime bosses cum "businessmen," as well as corrupt
politicians. It needs to clean up its system of public
procurement, which is plagued by kickbacks and sweetheart
deals. And it needs to break the dependence of political
parties on cash financing from favor-seeking business
interests.

NURSES IN LIBYA, FLOODS AND KOSOVO
--------------


8. (C) Last but not least, Bulgarians want to hear that we
are working hard to secure the release of the five nurses
unjustly imprisoned in Libya since 1999. Depending on how
the situation develops over the next week, you should also be
prepared to express condolences for flood losses along the
Danube. And you should privately encourage Bulgarian leaders
to continue playing a constructive role on the margins of the
Kosovo final status talks by helping to build confidence
between the two sides. On that issue, the government seems
to accept that Kosovo will gain its independence, but is
concerned about a possible spill-over effect, especially in
neighboring Macedonia.

THE POLITICAL SCENE
--------------


9. (C) You will be arriving in a relatively stable political
environment, although President Purvanov is already looking
at nearly every issue through the lens of the November
presidential elections. The three-party coalition led by PM
Stanishev has a comfortable majority in parliament. The
government easily survived a perfunctory vote of
no-confidence on April 19 by a margin of 161 votes to 61.
Events on the horizon, however, could begin to pull the
disparate coalition partners in different directions. These
include the November presidential election and the conditions
linked to EU membership. If Bulgaria gets into the Union on
January 1, the raison d'tre for this coalition will no
longer be present, but inertia and the desire to avoid
hanging separately may keep the partners together. If
accession is delayed, the desire to shift blame among the
parties will exert a stronger centrifugal force. Finally,
the extreme nationalist Ataka party plans to protest the
signing of the DCA during your visit. The protests may draw
media attention if for no other reason than that Ataka is
such a circus, but we do not believe they can distract from
your message.

Beyrle