PM SACKS PARTY LEADERSHIP, MOVES DECISIVELY

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000678

SIPDIS

SIPDIS

DEPT FOR EUR/NCE M NORDBERG

E.O. 12958: DECL: 06/04/2017
TAGS: PGOV KCOR BU
SUBJECT: PM SACKS PARTY LEADERSHIP, MOVES DECISIVELY
AGAINST TAINTED MINISTER

REF: A. SOFIA 582

B. SOFIA 643

Classified By: DCM Alex Karagiannis, reasons 1.4 (b) & (d)


1. (C) SUMMARY: In a decisive move aimed at curbing
corruption and re-asserting his authority, Bulgarian Prime
Minister Sergei Stanishev accepted June 2 the resignation of
Economy and Energy Minister Roumen Ovcharov, whom he had
previously sent on a forced leave due to his involvement in a
high-profile corruption scandal (reftel). A day later,
Stanishev took aim at his conservative opponents within the
Socialist Party (BSP) and, in an unprecedented move,
dismissed the entire BSP leadership while calling an
extraordinary party congress for June 16. The PM also
announced plans for structural changes in the government that
would clip the wings of his powerful Interior Minister by
bringing the domestic intelligence service (NSS) under the
PM,s authority as part of a new National Security Agency. A
second change would remove the lucrative forestry portfolio
-- a major source of graft -- from the Ministry of
Agriculture, which is controlled by Stanishev,s coalition
partner, the predominantly-Turkish Movement for Rights and
Freedoms. END SUMMARY


STRONGMAN OVCHAROV LEAVES GOVERNMENT


2. (C) One of the most influential figures in the government
and the BSP, Ovcharov was forced to resign after becoming the
center of a high-profile corruption scandal that rocked
Bulgaria's establishment and contributed to the Socialists'
poor showing in the May 20 elections for European Parliament.
"This is how it is done in the European Union countries when
there is suspicion and lack of trust," Stanishev told a news
conference June 2. (Although critics had accused the Prime
Minister of appearing weak and acting indecisively by putting
Ovcharov on an initial leave of absence, a more generous
interpretation is that Stanishev had been laying the
groundwork for a more concerted change.)


3. (C) Prosecutors are investigating Ovcharov for alleged
obstruction of justice with regard to an ongoing corruption
case concerning the Sofia heating utility firm. Stanishev
also released Justice Minister Georgi Petkanov, a member of
the third party in government, who tendered his resignation
last week citing fatigue and poor health. (Petkanov appeared
to be missing in action at this and his previous Interior
ministry post. Widely reputed to be an alcoholic, he will
not be missed in government.)


4. (C) Stanishev did not stop with moving the two ministers
out. In line with government's stated priority of
strengthening the rule of law, Stanishev said he would submit
legislation creating a new National Security Agency charged
with fighting corruption and organized crime. The new body
will consolidate existing structures currently operating
under the Ministry of Interior, Defense Ministry and Finance
Ministry. The PM did not reveal details, but the new agency
is likely to include the domestic intelligence service and
military counter-intelligence (a mix that may be an odd
match),as well as the Financial Intelligence Agency that
tackles money laundering and terrorist finance. The key
issue here is control of the domestic intelligence service,
now under another influential figure in the BSP, Minister of
Interior Roumen Petkov (Ovcharov's principal rival). At
first glance, the new agency would clip Interior's (and
Petkov's) wings. It would also boost the PM's stature as he
would oversee the new agency, creating at least a perception
of symmetry since the external intelligence services report
directly to the President.


5. (C) The PM also proposed creation of a new Forests Agency.
The move would sheer off a significant and lucrative piece
of the current Ministry of Agriculture and Forests, the
stronghold of the ethnic-Turkish Movement for Rights and
Freedoms (MRF),a junior partner in the coalition.
Stanishev's moves come just weeks ahead of the June 27
European Commission report on Bulgaria's progress in the
fight against corruption and reform of the judicial system.
In short, Stanishev is cutting different operators down in
size and influence.

STANISHEV TO OVERHAUL PARTY LEADERSHIP


6. (C) If that were not enough, in an unprecedented move that
came as a surprise to both BSP officials and the public,
Stanishev asked for the resignations of all 20 members of the
BSP Executive Bureau. He called a party congress for June 16
to discuss the future policies of the party, currently

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divided by infighting among rival lobbies. Stanishev said
the congress was needed to consolidate the party in the wake
of its poor showing in the May 20 MEP elections and ahead of
the more decisive local elections in the fall. "We have to
decide whether we gather under the BSP flag and work for the
party's principles, or act as a holding company comprised of
various lobbies," Stanishev told a dramatic party meeting
June 3. Stanishev will also seek wider party backing for the
policies of the ideologically disparate three-party
coalition, which have been unpopular with the Left wing of
his party. Party insiders told us Stanishev will also use
the congress to make some changes in the party's Supreme
Council, a 183-member parliament-like body that will elect
the new party leadership proposed by Stanishev after the
congress.


7. (C) COMMENT: Stanishev's move to dismiss the entire party
leadership and call a party congress is a declaration of war
by the young PM on the hard-liners who have sought to
undermine him ever since he was elected party leader in 2001.
One of Stanishev's confidants told us the congress will make
or break the BSP leader -- he will either follow in the
footsteps of former BSP PM Zhan Videnov, another young
Socialist leader who was ousted by his own party comrades, or
will finally assert his authority, putting an end to the
widespread perception that more powerful figures can override
him. Stanishev has moved more cautiously regarding changes
in the government in order to maintain the stability of the
three-party coalition. If he consolidates his position in
the BSP, he will be in a much stronger position to take on
his coalition partners, whose electoral support seems to have
peaked (in the case of the MRF at around 15 percent) or is
slumping (in the case of the center right NMSS) but whose
continued support is essential if the coalition is to avoid
premature elections. END COMMENT
Beyrle