BULGARIAN PARLIAMENT APPROVES CABINET RESHUFFLE; REASSURING

UNCLAS SECTION 01 OF 02 SOFIA 000862

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SENSITIVE
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DEPT FOR EUR/NCE MNORDBERG

E.O. 12958: N/A
TAGS: PGOV EFIN ECON KIPR KJUS BU
SUBJECT: BULGARIAN PARLIAMENT APPROVES CABINET RESHUFFLE; REASSURING
FACES TAKE OVER ENERGY-ECONOMY AND JUSTICE

Ref: (A) SOFIA 582, (B) SOFIA 678

SOFIA 00000862 001.2 OF 002



1. (SBU) SUMMARY: Bulgaria's Parliament approved July 18 two new
ministers as part of the first reshuffle of the Socialist-led
three-party coalition government which assumed office nearly two
years ago. Petar Dimitrov, a Socialist MP who chaired Parliament's
budget committee, was confirmed as the new Minister of Economy and
Energy, replacing fellow party member Roumen Ovcharov, who was
forced to resign in June amid a high-profile corruption scandal
(reftel). Miglena Tacheva, an experienced judge who served as
Deputy Justice Minister under the previous government, takes over
the Justice Ministry, traditionally under the purview of Simeon
Saxe-Coburg's centrist party. Dimitrov and Tacheva, both good
contacts of the Embassy, enjoy a favorable reputation, and their
appointment is seen as an improvement. At the same time, Parliament
also removed the lucrative forestry portfolio - a major source of
graft - from the Ministry of Agriculture, controlled by the Movement
of Rights and Freedom. The split aims to curb the influence of the
Socialists' junior coalition partner. END SUMMARY


2. (SBU) The Parliament, where the ruling center-left coalition
enjoys a stable majority, easily passed the changes proposed by
Prime Minister Sergei Stanishev. With 157 votes in favor and 57
against, the MPs approved Stanishev's nominations for Petar Dimitrov
as new Minister of Economy and Energy and Miglena Tacheva as
Minister of Justice. Former Economy and Energy Minister Roumen
Ovcharov, one of the most influential figures in the government, was
forced to resign last month after becoming the center of a major
graft scandal that rocked Bulgaria's establishment and contributed
to the Socialists' poor showing in the May elections for European
Parliament(Refs A and B). Former Justice Minister Georgi Petkanov
resigned in May, quoting poor health and fatigue. With 152 votes in
favor and 57 against, the MPs also backed the PM's proposal for
removing the forestry portfolio from the Ministry of Agriculture,
controlled bythe ethnic Turkish Movement for Rights and Freedom
(MRF). The Parliament created a new Agency for orestry, which will
be under the Prime Minister' authority. The personal and
structural changesvoted July 18 are the first since Stanishev's
goernment took office in August 2005. Below is biogrphical
information about the two new ministers.

3. (SBU) Petar Dimitrov, 58, is a senior member o the ruling
Bulgarian Socialist Party (BSP) who ntil now was the chair of the
Parliament's Budge and Finance Committee. A reliable economist,
Dmitrov often has been referred to as "the economic otor" of BSP
and is one of the authors of the ruing party's economic program.
He has been a voca proponent of the "no-left-turn" economic policyof the Socialist party, arguing tha the BSP-led government should
remain committed to fiscal discipline despite pressure by the
party's hard-line wing. As chair of the Budget and Finance
Committee, Dimitrov has backed tight fiscal policies and favored
further fiscal reforms that would stimulate business. His reformist
ideas have triggered criticism by the BSP's more conservative
electorate. Dimitrov chairs the BSP branch in Varna and appears to
be one of a few prominent "white hats" in this Black Sea city
largely controlled by the TIM organized crime group. A fourth-time
Socialist MP, Dimitrov is an associate professor at the Economic
University in Varna and its Deputy Dean. He has been a member of
the BSP Supreme Council since 1990 and was recently re-elected in
the party leadership.


4. (SBU) Miglena Tacheva, 47, is a career magistrate and former
Deputy Justice Minister in the government of Simeon
Saxe-Coburg-Gotha, the leader of the current coalition partner NMS.
Tacheva is known as an open-minded and energetic person, however her
determined style, often classified as stubbornness, has brought her
a number of enemies. During her term as Deputy Justice Minister
Tacheva was in a deep conflict with the then Minister of Justice
who, however, was unable to procure her dismissal due to Tacheva's
strong political backing. Although Tacheva is not formally
associated with any of the lobbies within the NMS she enjoys the
support of the party's leader, who in 2004 appointed her to lead the
investigation into the sensitive case involving the purchase of
apartments at below-market prices by high-level government
officials. Tacheva has extensive background in the NGO sector and
immediately following her nomination as Justice Minister pledged to
strengthen the dialogue between the government and the civil sector
in the rule of law arena. She has participated in programs at the
National Center for Judges in Nevada, at the National Center for
State Courts in Williamsburg and has been a long-term partner in
USAID programs.


5. (SBU) COMMENT: Both appointments appear to be good news for the
U.S. The more significant impact on U.S. interests comes from the
exit of Ovcharov, a powerful government member with close ties to
Moscow, who had almost entirely monopolized supervision of energy
projects. A respected politician and a good embassy contact,
Dimitrov is likely to be more open than Ovcharov. The downside is

SOFIA 00000862 002.2 OF 002


his lack of experience in the energy sector, but his capable deputy,
a good Embassy contact, is poised to bring him up to speed quickly.
Tacheva also is seen as an improvement upon her predecessor, who was
dubbed "the non-existent minister" for his aloofness and lack of any
action in the critical and closely-watched area of Justice Affairs.



6. (SBU) COMMENT CONTINUED: From a domestic-policy perspective, the
new appointments appear to reinforce the Socialist-led government's
short-term stability. The government reshuffle, however, falls
short of public expectations; some of the most unpopular ministers -
Health, Social Policy, and Environment -- retained their offices.
We hear from BSP insiders that the PM, who also faces internal
opposition, was unwilling to make drastic government changes ahead
of the autumn local elections, during which the Socialists will face
a strong challenge from the new populist GERB party. More
government changes could come after the local elections, expected to
take place in October. END COMMENT
BEYRLE