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 SOFIA 00000678 002 OF 002 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