Identifier
Created
Classification
Origin
06SOFIA968
2006-07-11 12:06:00
SECRET
Embassy Sofia
Cable title:  

ONE YEAR AFTER ELECTIONS, STANISHEV EXCEEDING

Tags:  PREL MARR ECON PGOV IZ BG 
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VZCZCXRO5331
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV
DE RUEHSF #0968/01 1921206
ZNY SSSSS ZZH
P 111206Z JUL 06
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC PRIORITY 2204
INFO RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHMFISS/CDR USEUCOM VAIHINGEN GE
S E C R E T SECTION 01 OF 03 SOFIA 000968 

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/10/2016
TAGS: PREL MARR ECON PGOV IZ BG
SUBJECT: ONE YEAR AFTER ELECTIONS, STANISHEV EXCEEDING
EXPECTATIONS

REF: A. SOFIA 926

B. SOFIA 827

Classified By: CDA Jeffrey Levine, reasons 1.4(b) and (d).

S E C R E T SECTION 01 OF 03 SOFIA 000968

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/10/2016
TAGS: PREL MARR ECON PGOV IZ BG
SUBJECT: ONE YEAR AFTER ELECTIONS, STANISHEV EXCEEDING
EXPECTATIONS

REF: A. SOFIA 926

B. SOFIA 827

Classified By: CDA Jeffrey Levine, reasons 1.4(b) and (d).


1. (C) Summary. After ten months in office, the coalition
government led by Socialist (BSP) Prime Minister Sergei
Stanishev has surprised observers with its consistently
pro-U.S. foreign policy, conservative fiscal policy and
relative internal stability. Stanishev's government quickly
reversed its campaign pledge of immediate withdrawal from
Iraq and then accepted our preferred follow-on mission at
Camp Ashraf. It more than doubled its forces in Afghanistan
to take over the operation of Kabul airport under NATO
auspices. And it has squarely confronted public opinion on
the issue of stationing U.S. forces in Bulgaria, taking the
lead in explaining the agreement's benefits. Even in the
troublesome rule-of-law area, Stanishev's government seems
recently to be taking meaningful action against corruption.
Were it up to the Prime Minister alone, progress against
organized crime and corruption might have been even stronger,
but Stanishev is burdened with a controversial Interior
Minister whose influence within the BSP rivals his own. This
illustrates the biggest dilemma for the 40-year old Prime
Minister: despite his pro-Western views and aura of
incorruptibility, Stanishev does not always have the
political weight to impose his will on the sometimes-unruly
cabinet. Continued support from the U.S. will strengthen
Stanishev's position and pay long-term dividends on the
issues we care most about. END SUMMARY.

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A SURPRISINGLY PREDICTABLE PARTNER
--------------


2. (S) The three-party coalition government that emerged from
the inconclusive June 2005 elections has shown itself to be a
predictable partner for the U.S. in the ten months it has
been in office. In fact, the continuity of this government's
policies, following on those of its predecessor, has been
remarkable. Despite pre-election fears, Bulgaria's
Socialist-led government is still in Iraq, it has signed and

ratified a Defense Cooperation Agreement with the U.S., and
Stanishev -- despite having been born in the Soviet Union and
having a Russian mother -- appears no closer to Moscow than
was Simeon Saxe-Coburg Gotha. Add to this a strengthened
commitment in Afghanistan, a relatively robust military
presence in the Western Balkans and continuing strong
intelligence cooperation -- especially in the GWOT -- and the
sum total is a government that has defied expectations -- and
to some extent its own electoral base -- to prove itself a
worthy international partner.


3. (C) The government's economic policies have also remained
quite liberal. Stanishev's government negotiated with the
IMF an extension of the Stand-By Agreement that will carry
Bulgaria though its planned EU accession in January 2007. It
did not scrap the Currency Board, as some had feared, leaving
its monetary policy de facto in the hands of the European
Central Bank. And it continues to run a budget surplus,
despite squeals from the Left for more social spending.
Though more dependent on Russian energy than any other
post-communist state in Europe, this government recognizes,
at least in principle, the need for diversification.


4. (C) This continuity in foreign affairs and macroeconomic
policy is in part due to the presence in the current
government of the former ruling party as well as its junior
coalition partner. The participation of the centrist
National Movement Simeon II (NMSS) and the mainly
ethnic-Turkish Movement for Rights and Freedoms (MRF) has
undoubtedly had a stabilizing influence on coalition
policies. But the performance of the government shows
clearly that the Socialist Party itself has also changed: a
new generation of young technocrats has begun to replace the
older generation of aparatchiks left over from the Bulgarian
Communist Party. Stanishev personifies this reform-minded
wing of the BSP. Especially on economic policy, the
Socialists have also had to accommodate themselves to the new
realities of globalization; they simply cannot afford a
repeat of disastrous policies of the previous BSP government,
which ten years ago led the country to the brink of economic
ruin. As Stanishev told us before the election, the
Socialists "cannot afford another failed government."

-------------- -
STANISHEV: A NEW BREED OF BULGARIAN POLITICIAN
-------------- -

SOFIA 00000968 002 OF 003



5 (C) Stanishev himself is unpretentious. He spent less on
travel this year than any of his ministers, requesting a
total reimbursement of USD 48 for meals and incidental
expenses in the first quarter of 2006. His personal wealth
consists of an 1800 square-foot apartment where his mother
lives and "a one-sixth share of a 1986 Mazda" left by his
father. His income for 2005 was approximately BGN 20,000
(USD 13,000). Even his harshest critics do not question his
personal integrity or his intelligence. Stanishev's
knowledge of the EU accession process and its implications
for Bulgaria is encyclopedic. This familiarity with European
institutions and policymakers has given him credibility in
Brussels, allowing him to push back when he felt the
Commission was unfairly holding Bulgaria to a higher standard
than the ten previous new members. Nor should Stanishev's
political skills be underestimated. He has used the
accession process to bind together his three-party coalition
and push needed reforms through parliament. His decision to
appoint as Finance Minister Plamen Oresharski, a technocrat
closely associated with the opposition Union of Democratic
Forces, took political courage and showed that he was capable
of putting Bulgaria's interests above the interests of his
party.

--------------
AREAS FOR IMPROVEMENT
--------------


6. (C) Organized crime and political corruption are the
government's Achilles heel. Faint progress has been made
against either over the last ten months. Interior Minister
Rumen Petkov is often blamed for this lack of progress, in
our view deservedly -- his gaffe-prone performance and weak
administrative skills mark him as a provincial leader who
still looks out of his league at the national level. But the
problems go deeper than any one individual. Political
parties are dependent for financing on unregulated cash
donations. Many of the richest people in the country -- and
therefore the main patrons of political parties -- made their
money through organized crime or misuse of public resources.
Add to this a judicial system that is inefficient and subject
to corruption, and you have an "iron triangle" of corruption,
criminality and judicial inefficiency that is extremely
difficult to break. Chief Prosecutor Boris Velchev, who
began his seven-year term in February and is independent of
the government, has shown signs that he is serious about
tackling the problem (ref A). Velchev, however, has his work
cut out for him and will need all the support he can get from
the government.


7. (U) Some support has already been forthcoming, though it
is still to early to assess results. Responding in large
measure to pressure from Brussels, the government announced
in early June a series of measures aimed at combating
corruption and organized crime (ref B). Draft legislation
will require financial disclosure statements filed by
government officials and members of the judiciary to be
posted on the Internet, and political parties will be subject
to stricter financial reporting requirements. Parliament on
June 21 approved amendments to the money-laundering law that
bring Bulgaria into compliance with international best
practices and EU acquis (septel). Perhaps more
significantly, the government has dismissed 53 civil servants
accused of corruption, including the head of the State
Reserve Agency, and has filed indictments against 24 senior
officials and magistrates in the first six months of 2006.


8. (C) Interior Minister Petkov's apparent inability or
unwillingness to reform his own agency and vigorously pursue
major organized crime figures highlights another of PM
Stanishev's problems: the perception that he is not fully in
control of his cabinet. In fact, the Bulgarian constitution
posits a consensus-based decision-making process within the
Council of Ministers, making it difficult even for a strong
personality to impose his or her will. Stanishev carries the
additional burden of being a relative newcomer to high-stakes
politics, having been plucked from near obscurity by former
BSP leader Georgi Parvanov when Parvanov won the 2000
presidential election. In contrast, Petkov and Economy and
Energy Minister Rumen Ovcharov -- both of whom at various
times in the past were seen as coveting the premiership --
are experienced political operatives. Beyond his own party,
Stanishev must also manage the competing personal and
political interests of his coalition partners.

--------------
COMMENT: WHAT THE FUTURE HOLDS

SOFIA 00000968 003 OF 003


--------------


9. (C) If we could choose the face of Bulgaria's future
political leadership that would best serve U.S. interests,
Sergei Stanishev would be at or near the top of the list. In
spite of the burdens placed on him by his own party and a
political system that seemingly can be changed only at
glacial speed, Stanishev has shown himself to be a capable
leader and a dedicated reformer. He has successfully kept
his government focused on its top priority of early
membership in the European Union, with all of the complex
internal changes that goal entails. Once this is achieved,
Stanishev will have more time to devote to building his
government's domestic legacy. This is likely to include
addressing major social issues such as education and health
care, both of which are in or near crises. He will also have
to work harder to keep his coalition together after the
"glue" of EU accession starts to weaken. Yet the coalition
is probably stable in the medium term, if for no other reason
than that the two junior partners have nowhere else to go
right now. In short, further USG investment in Stanishev
will likely pay dividends for some time to come. His
government represents stability and continuity in foreign
policy, and he personally represents the young, reform-minded
Bulgarian politician of the future. To the extent we are
able support him and others like him, U.S. interests in
Bulgaria will be strengthened.
Levine