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