BULGARIA AMENDS EXPORT CONTROL LAW, FOR BETTER AND

S E C R E T SECTION 01 OF 02 SOFIA 000188 SIPDIS SIPDIS DEPT FOR ISN/CATR, EUR/PRA, EUR/NCE, PM/WRA, L/NP E.O. 12958: DECL: 02/13/2017 TAGS: PARM PREL MASS ETTC BU SUBJECT: BULGARIA AMENDS EXPORT CONTROL LAW, FOR BETTER AND FOR WORSE REF: A. 06 STATE 71303 ¶B. SOFIA 177 ¶C. 03 SOFIA 1773 Classified By: DCM Alex Karagiannis, for reasons 1.4 (b) and (d). ¶1. (S) SUMMARY: A new export control law passed by the Bulgarian parliament will rework Bulgaria's export control regime, with important implications for U.S. counterproliferation interests. Prompted by the need to incorporate the EU common policy on arms brokering and peer review recommendations, the revised law will increase transparency in some areas, but may decrease the influence of foreign policy considerations on exports by eliminating the ability of the MFA to veto proposed sales. END SUMMARY. For better... -------------- ¶2. (C) In late 2006, experts at the Ministry of Energy and Economy (MoEE -- the lead agency on Bulgaria's inter-ministerial Export Control Commission) were tasked with drafting a revised export control law to implement the recommendations of the Ministry's EU peer review -- namely, compliance with the EU's 2003 Common position on the control of arms brokering. Under Bulgaria's previous export control regime, arms brokers were required to possess a license for trade in arms or dual-use items, but the export control regime itself was strictly territorial. Government permission was required if goods were to be imported to or exported from the territory of Bulgaria, but arms brokers were not required to seek permission for third-country deals that did not involve controlled items crossing Bulgarian territory. (NOTE: Third-country arms deals by Bulgarian brokers typically involve procuring weapons from the former Soviet Union for sale in Africa, the Near East, and South Asia.) ¶3. (C) In accordance with the EU common position on arms brokering, Bulgaria's new export control law closes this loophole by requiring permission from the country's Export Control Commission for each brokered transaction -- including deals brokered between third countries. This positive change should increase transparency and accountability while ensuring that Bulgaria-based brokers abide by UN sanctions and Bulgaria's international commitments. The law may have the unintended effect of driving some Bulgarian brokers offshore. ...for worse -------------- ¶4. (S) In addition to EU-mandated changes, the MoEE experts who drafted Bulgaria's new law introduced another shift by changing the Export Control Commission from a consensus body to one that operates by qualified majority voting (two-thirds). While this change has received little attention, it eliminates one of the structural safeguards in the previous law -- the ability of any ministry on the commission to block a proposed sale. In practice, this usually means the Ministry of Foreign Affairs. ¶5. (S) The composition of the Export Control Commission is determined by the Council of Ministers; it currently includes the MFA, MoEE, Ministry of Defense, and Ministry of Interior. It generally falls to the MFA to provide a "political risk assessment" of each proposed deal, taking into account such subjective factors as Bulgaria's reputation and bilateral relationships. The MoD and MoEE, on the other hand, view themselves as responsible for promoting the Bulgarian defense industry, and sometimes favor approval of controversial arms deals (e.g. to countries in the Caucasus and Near East) so long as they are not illegal. As a result of the ministries' divergent viewpoints, deliberations on controversial deals have often ended with the MFA exercising its veto to reject a proposed sale. This dynamic has been useful to us in the past (as when the MFA held up the sale of thermobaric RPGs to Yemen on our request -- ref A) but has also reportedly been manipulated by others (industry representatives portray working-level MFA officials as eager to capitulate to Russia and ban arms sales to Georgia -- ref B). ¶6. (S) The MFA's willingness to say "no" has earned it enemies in the Bulgarian defense industry. In a recent SOFIA 00000188 002 OF 002 meeting, Nikolai Ibushev, General Director of Bulgarian arms manufacturer Arsenal, railed against the MFA, portraying its officials as ineffectual bureaucrats. He suggested that many at the MFA were uncomfortable with advocating on behalf of the industry because it was viewed as controversial, stating that "they want to be able to go to Europe and say 'we don't have a defense industry'" and that "when we don't work, they are happy." What will it mean? -------------- ¶7. (S) Blessed with the mantle of "EU approval," the new law encountered almost no opposition in parliament and has attracted little attention outside of a small community of counterproliferation experts. Industry representatives like Ibushev see the elimination of the MFA's veto as a wholly positive change. Others, such as Robert Parker of the UK-based NGO Saferworld (protect),welcome the additional accountability and transparency measures in the law, but worry that elimination of the consensus principle will lead to an erosion of Bulgaria's export control regime. According to Parker, MFA Export Control Director Maria Atanasova complained to him that the new law would lead MFA objections to be overruled by ministries that were more concerned with making money than with Bulgaria's legal and political obligations. In direct meetings with us, Atanasova has not been so fatalistic, declining to predict the impact of the new law and emphasizing that the MFA would continue to inform the commission's deliberations with the best analysis it could provide. Comment: -------------- ¶8. (S) In the last five years, Bulgaria has made substantial progress towards ending gray arms sales and instituting an effective export control regime. While Bulgaria's new export control law contains many improvements, we are concerned about the implications of removing the consensus principal as well as the non-transparent way in which this change was introduced. Ultimately, we agree with Atanasova that it will take time before the full impact of the law becomes clear. In the meantime, we will continue to advocate the importance of a strong and responsible export control regime to contacts throughout the GoB and the Bulgarian defense industry. We also encourage the Department to share USG concerns with the Bulgarian Embassy in Washington. BEYRLE