BULGARIA: POLITICAL MANEUVERING INTENSIFIES,

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000633

SIPDIS

E.O. 12958: DECL: 09/18/2018
TAGS: PGOV PREL BU
SUBJECT: BULGARIA: POLITICAL MANEUVERING INTENSIFIES,
RAISES PROFILE OF US ENGAGEMENT

Classified By: ambassador nancy mceldowney for reasons 1.4 (b) and (d).


1. (C) SUMMARY: Bulgaria's three party ruling coalition is
limping through its last year, gasping to complete its five
year mandate. Smelling blood, the opposition is hounding the
government through joint protests and calls for early
elections. Suffering from low ratings and growing domestic
and international criticism, the government hopes to shore up
its base with populist spending from the budget surplus and
convince the EU -- and the public -- that it is seriously
tackling corruption. Internal tensions within both the
Bulgarian Socialist Party (BSP) and the coalition hamper
government maneuverability. The 2009 budget, viewed as an
informal vote of confidence in the government, will further
test coalition unity. Bracing for a tough legislative slog
and even more daunting elections, the government still
reaches out to us and is open to what we want to accomplish
with overseas deployments, military cooperation and
modernization, support for Georgia and rule of law. Though
the country,s attention will increasingly turn toward
domestic issues, all players are pushing to profile their
engagement with us. END SUMMARY.


2. (C) Bulgaria's impressive economic gains over the past
four years, EU entry, and a stable currency have not much
helped the governing coalition. Voters have pocketed all good
news. And while Bulgarians are talking a good game, they are
bracing for fallout from the U.S. economic condition. For
the government, any economic shock would be damaging.
Favorable ratings for the government are in the 20's; and
while PM Stanishev outpolls his party, he badly trails his
main contender, Sofia mayor Borissov. Gearing up for a nasty
mudfest, BSP has tarred Borissov, virtually ignoring other
parties, calculating that BSP will likely finish second and
is shooting to close the gap. The divided center-right
opposition parties are meanwhile pounding the wobbly ruling
coalition and calling (though not truly meaning it) for early
elections. Their calculus is to bleed the BSP, gain some
altitude themselves, beat the barrage threshold to get into
Parliament, and leverage votes to join a coalition led by
Borissov,s GERB. Their tactical gamesmanship now consists
of feints and jabs and misdirection in the jostle for the end
run.


3. (C) At most risk is ex-king Simeon's NMSS, which has
sunk below the margin of polling error. To boost its
visibility, it will exploit the 2009 budget battle for
partisan purposes. The budget shapes up as a de facto vote
of confidence, where small missteps can undermine government
cohesiveness. Coalition partners are drawing battles lines
over distribution of 1.22 billion levs from an expected
surplus. BSP plans to use the surplus for social benefits,
including one-off social payments and a 10 percent pension
raise. The opposition blasts the plan as "legal vote buying"
and accuses the government of fueling inflation with lavish
spending. The inside bets are that the coalition will
survive, but with so many deals and sub-deals that voters
will be further alienated. Between now and elections, which
must be held no later than July 2009, we are likely to
experience much domestic sound and fury, distracting and
pre-occupying the political class. With voter turnout
predicted to be at historic lows, and political survival at
stake for many MP's, the parties are lurching to get their
campaigns in order.


4. (C) Beyond this din, some things to look for. First,
the battle for the future of the BSP is underway. President
Parvanov and PM Stanishev have papered over personal and
policy differences, but the underlying rift remains. With a
voter base that is elderly, rural and poor, BSP needs to
transform itself for the coming battle. A particularly
contentious issue is a plan supported by Parvanov to amend
the country's proportional representational system to allow
people to vote for personalities rather than fixed,
rank-ordered lists of party candidates. The issue sharply
divided the BSP, which has yet to adopt an official party
position. The technocratic, modernizing, social democrat
Stanishev will face a make or break November party congress.
Stanishev's success in pushing his reform agenda is no
foregone conclusion as powerful old-line party barons and
Presidential loyalists line up against him. Compromise and
dead of night deals lurk.


5. (C) Second, as Borissov's GERB is considered the party
to beat, the fight will be personal and negative. With the
Sofia mayor tainted by allegations of corruption and shady
connections to 1990's organized crime groups, BSP strategists
look to cast the elections as a "referendum on Borissov."
Meanwhile Borissov keeps up steady attacks on the government,
calling for early elections, and staging joint protest
actions with the center-right opposition parties -- Union of
Democratic Forces (UDF) and Democrats for a Strong Bulgaria

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(DSB) -- to keep the pressure on. The trade unions have for
the time being resisted invitations to join in the protests,
but could add their numbers at any time, likely if the price
is right. But, don,t expect BSP to go completely overboard.
GERB,s vote totals will determine the shape of a future
coalition and likely ministerial line up, so there is already
debate within the BSP whether to seek a possible
"cohabitation partnership."


6. (C) Third, the EU will exert tremendous, if unwanted
influence. Its damning report on Bulgaria's misuse of EU
funds rocked the government in July. Stanishev's government
is at pains to show it is taking real steps to address the
criticism ahead of February's EU's report on justice and home
affairs. Senior Socialists tell us the fight against
corruption is a double-edged sword and the PM must move
carefully. The public can interpret successful prosecution
of corrupt government officials as evidence of the party's
corruption and further dim the BSP's electoral chances.
Heading to February, the government will reach out to key EU
member states to soften the follow-on EU report. And, both
BSP and the center-right opposition parties will touch their
ideological brethren in Europe (especially for the
Euro-parliamentary elections) for electoral advice and
backing.


7. (SBU) Fourth, and most important for us, Bulgarians ) in
and out of government ) look to the U.S. for guidance and
support. At the Prime Minister,s invitation, we are helping
with reform of the intelligence agencies, overhaul of the
Ministry of Interior, reform of the prosecutorial service,
and Defense Ministry reform and military
modernization/procurement. Bulgaria has come through on
deployments to Iraq and Afghanistan, Kosovo recognition, and
a host of other security related matters. Our engagement
will be instrumental in defining Bulgarian policy on Russia
and energy. With SPE Gray coming in early October and the
largest ever joint military exercises concluding in
mid-October, we will shape Bulgarian decision-making. As
Bulgaria enters a hot political autumn and even hotter
political spring, it will not be business as usual
internally. On foreign and security policy, our access and
influence will be undiminished as Bulgaria looks to bolster
its international and transatlantic image.
McEldowney