SCENESETTER FOR YOUR VISIT TO SOFIA

C O N F I D E N T I A L SECTION 01 OF 03 SOFIA 000443

SIPDIS

FOR THE SECRETARY

E.O. 12958: DECL: 06/29/2018
TAGS: OVIP PGOV PREL MARR BG
SUBJECT: SCENESETTER FOR YOUR VISIT TO SOFIA

Classified By: Charge d'Affaires Alex Karagiannis for reasons
1.5 (b) and (d).


1. (C) The Bulgarians are delighted to host you and bestow
their highest honor, the Stara Planina award, for your help
in freeing the Bulgarian nurses wrongly held by Libya for
eight years. Public support for the nurses has faded since
their emotional homecoming last July 24, and relations
between the nurses and the government have soured, in both
cases over issues of compensation. Appreciation for your
role in the nurses' release remains quite strong, tribute to
our principled diplomacy in dealing with Qaddafi.


2. (C) Your arrival will come 13 months after the
President's very successful Sofia visit and three weeks after
PM Stanishev's Oval Office meeting. In the last year we have
made steady, appreciable progress on our agenda. With
President Parvanov, PM Stanishev and FM Kalfin teaming well
together, Bulgaria has steadfastly remained with us on key
international security issues -- notably Iraq, Afghanistan
and Kosovo. But the Parvanov-Stanishev relationship has
recently evolved from mentor-protg to become more
problematic. The two have papered over public differences on
major party and governance issues, but few observers expect
more than an uneasy truce between them for the duration of
this government's mandate.


3. (C) You will find Parvanov thoughtful, low-key, and
measured. Stanishev will be more engaging and open.
Optimistic and pragmatic, he is Bulgaria's best international
face. The Foreign Minister is a pivotal figure; he is close
to both Stanishev and Parvanov, and as Deputy PM oversees the
Defense Ministry and its inexperienced, young Minister. He
will be instrumental in shaping and executing foreign and
security policy as the President and PM increasingly focus on
legacy issues and the future of their governing but divided
Socialist party as it heads to elections that must be held by
June 30, 2009. Each is determined that Bulgaria burnish its
international and transatlantic credentials. We look to them
to make a more compelling public case for the strategic
importance for Bulgaria's security cooperation with NATO and
the United States to reverse stubbornly high disapproval
(over 70 percent) of Bulgarian overseas deployments and a
U.S. defense presence in Bulgaria.

International Security
--------------


4. (C) Bulgaria has quietly sustained its Iraq and
Afghanistan commitments. The government quadrupled forces in
Afghanistan last year, and added 50 more this year to a
Kandahar mission. We believe it has the capacity and
political space to do still more. We have urged the
government to take on two OMLTs; a strong word from you will
drive that process. In Iraq, Bulgaria agreed to transfer its
mission at Camp Ashraf to Camp Cropper at our request, and
has committed to remaining in place through 2008. It is open
to extending its deployment into 2009, possibly even taking
on training missions, provided there is an UNSCR or an opt-in
to a U.S.-Iraq SOFA. Your reassurance on this point would be
valuable. In fall 2007 Bulgaria negotiated an innovative
cash payment agreement as part of a USD 3.5 billion Iraqi
debt-forgiveness settlement. Bulgaria is to receive USD 360
million from Iraq on July 1.


5. (C) This summer we will conduct the largest-ever joint
exercises (over 900 Americans and 100 Bulgarians) and will
start construction of the permanent training facilities at
Bulgarian bases (authorized under the Defense Cooperation
Agreement you signed in 2006),which will inject economic
dynamism into depressed rural areas. The government looks to
us for advice and leadership as it undertakes military
modernization, especially on obtaining multi-role fighters
for its badly aging and Russia-dependent Air Force.
Following PM Stanishev's meeting with Secretary Gates, DOD
will send a team to advise the Bulgarians on their
modernization plans and procurement priorities, leading, we
expect, to the purchase of U.S. aircraft. Emphatic support
for deployable, NATO inter-operable forces will help Bulgaria
avoid budget-busting (European and Russian) systems that do
not add to NATO capabilities and missions.


6. (C) Bulgaria has played a stabilizing but not overtly
assertive leadership role in southeastern Europe, the Black
Sea and Caucasus. It supports Macedonia's NATO membership,
staying mostly clear of the name dispute with Greece. It
favored MAP for Ukraine and Georgia (and has large arms deals

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with Tbilisi) but tries to keep a low profile in deference to
Russia. Sofia supports Missile Defense, emphasizing the need
for NATO systems that would cover Bulgaria as well. Bulgaria
was in the second wave in recognizing Kosovo and joined the
ISG in May. It has consistently and quietly encouraged
Kostunica and other hard-line Serbs to temper emotions and
has promoted Serbia's European integration. Bulgaria
recently joined Norway to train Kosovar diplomats. Your
hosts will be intensely interested in your assessment of
Russian policy regarding European and trans-Atlantic
security.

Russia And Energy
--------------


7. (C) Bulgarians romanticize Russia's nineteenth century
role in its liberation from the Ottoman Empire, and much of
the population retains fond memories even of the Soviets. A
generation of Moscow-trained and Moscow-leaning officials has
yet to make a true attitudinal change, accounting for
Russia's 70 percent approval ratings (neck and neck with the
EU and outpacing the United States by 20 points). The
government keeps a wary eye on Russia, concerned that Moscow
casts a long and deep shadow here. Russian energy dominance
(it provides over 90 percent of Bulgaria's oil and natural
gas and 100 percent of nuclear energy) and eight Putin
meetings with Parvanov have enabled Moscow to exert
tremendous influence.


8. (C) While Bulgarian officials resent Russian pressure
and heavy-handed tactics, they do not have ready answers.
They wobbled during Putin's January visit to sign a South
Stream gas pipeline deal that is technically and commercially
questionable and strengthens Russia's stranglehold over
energy supplies to eastern Europe. Since then Bulgaria has
talked up interest in diversification, including Nabucco and
gas from Azerbaijan, from the Turkey-Greece-Italy
inter-connector, from Egypt via Turkish pipelines and in
reaching out to North African, Gulf and central Asian
countries. Bulgaria has touted itself as a possible energy
hub, and recently dialed up the decibel level on Nabucco.
The Government now needs genuine action -- to diversify
energy sources, develop alternative energy, increase energy
efficiency and actively push for and help define a coherent,
robust EU energy strategy.

Rule of Law -- A Glaring Shortcoming
--------------


9. (C) The Bulgarian economy is doing quite well at the
macro level, and it continues to attract considerable foreign
investment. U.S. firms increasingly look here for
opportunities, and the largest single investments are
American. Still, Bulgaria can do a better job in
transparency and accountability. This is part of a much
larger problem of public integrity and systemic
underperformance in the rule of law. Judicial delays are a
critical problem; prosecutors were forced to dismiss more
than 20,000 cases in 2007 due to the statue of limitations.
Widespread corruption, serial scandals in multiple ministries
(with precious few arrests, let alone indictments or trials),
the forced resignation of the previous Interior Minister,
over 125 unsolved contract murders, and a seeming culture of
impunity for shady but politically powerful businessmen has
fed public cynicism and EU ire.


10. (C) Stanishev appointed a new, honest Interior Minister
and gave him a mandate to thoroughly overhaul the Ministry.
The new Minister reached out to us for expertise to help in
the reform process. Stanishev also got the parliament to
close duty free shops (expected by July 9) that were
notorious fronts for smuggling and money laundering. Earlier
in the year he created, with our help, a new, independent
domestic security agency, which already proved its value,
helping uncover Interior Ministry corruption.


11. (C) These steps, while welcome, do not adequately
address U.S. and EU concerns over deep-seated institutional
weaknesses. With its poll numbers already sagging, the
government is bracing for a very negative (July 23) EU report
on its rule of law performance and ability to handle EU
funds. The EU may strip Bulgaria of billions of Euros in
accession funds owing to massive shortcomings in accounting
for both national and EU-supported projects. It could even
impose safeguard clauses or other sanctions, sapping public
confidence in Bulgaria's ability to live up to its EU
commitments. The possibility of a cabinet reshuffle cannot

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be discounted. The government is busily cultivating key
leaders (Stanishev and Parvanov will visit France on July 4
and July 12-14 respectively) to build a firewall. Even if
the EU pulls its punches, Bulgaria needs immediate, concrete
results -- cleaning house, closing banking sector loopholes
that facilitate money laundering, convicting corrupt
officials -- to regain full credibility with its own public,
international partners and foreign investors.

Still Upbeat
--------------


12. (C) Though Bulgaria is encountering some air pockets,
we are convinced it can play a greater leadership role in the
region and also take more substantial and effective rule of
law measures. Our support will encourage the government to
build its international security capacity, deploy forces
overseas, modernize its military, promote energy diversity,
fight money laundering and upgrade public integrity and
accountability. During the PM's visit, we signed a VWP
declaration and two non-proliferation agreements, and also
announced FAA category 1 status for Sofia airport, which
tremendously boosted our already vibrant relationship. Your
meetings will energize your hosts to gain additional momentum
on our shared objectives.
Karagiannis