BULGARIA AND RUSSIAN INFLUENCE: SHIFTING

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000738

SIPDIS

E.O. 12958: DECL: 10/20/2018
TAGS: PREL PGOV ENRG BU
SUBJECT: BULGARIA AND RUSSIAN INFLUENCE: SHIFTING
TRENDLINES

Classified By: Ambassador Nancy McEldowney for reason 1.4 (b) and (d)


1. (C) Summary: Bulgarian public opinion is consistently
positive toward Russia for several reasons: shared culture,
language and religion; a popular mythology about Russia
"liberating" Bulgaria from Ottoman Turkey; and shady business
connections. Russia also wields influence with a generation
of old-think officials and, more worrisome, with
Moscow-trained cadres in the intelligence services. At the
same time, Bulgaria's strategic orientation as a NATO and EU
member and developing market economy is increasingly driving
society in another direction. Ordinary Bulgarians are voting
with their feet -- westward. Business, trade, travel, and
education are all trending to the EU and the United States.
We have many tasks ahead here to help Bulgaria complete its
post-communist transition, but the younger generation
overwhelmingly looks to Europe and the United States for
Bulgaria's future. End Summary.


2. (C) Unlike other former east bloc nations, Bulgaria never
suffered a Soviet military invasion or occupation. That
fact, combined with gratitude for Czarist Russia's help in
Bulgaria's liberation from the Ottoman Empire, prompt
Bulgarians to give Russia high marks. In a recent opinion
poll, Russia (75 percent positive rating) ran neck to neck
with the EU (78 percent),out-pacing the United States (53
percent, still high in comparison elsewhere in Europe).
However, as this post communist society continues its
transition, there are significant trendlines that are
shifting westward.

EDUCATION
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3. (SBU) During the Cold War, Bulgarians consistently sought
academic degrees from Russian institutions. That was then.
Today, Bulgarians are overwhelmingly choosing to study in the
West. In the 2006-2007 school year there were over 13,000
Bulgarians studying in Germany and 3,500 studying in the
United States. Considerable numbers study in France (3,000)
and the UK (800). By contrast, only 400 Bulgarian students
chose to study in Russia in 2006-2007. In 2007, over
650,000 young Bulgarians were learning English as a second
language, while only 185,000 were studying Russian. Over
12,000 high school students are enrolled in Junior
Achievement and an average of 10,000 participate in summer
work and travel in the United States each year. For the
young, the west is the place to be.

TOURISM AND IMMIGRATION
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4. (C) Bulgaria's demographic trends are dire; Eurostat
figures indicate that the population will shrink dramatically
over the next 20 years. Reduced from more than 10 million in
the 1980's to about 7.6 million today, Bulgaria has a
relatively large diaspora which has chosen west over east.
According to the Bulgarian Embassy in Washington, there are
more than 300,000 Bulgarians living in the United States.
Another 300,000 Bulgarians live in Turkey (mostly ethnic
Turks),230,000 live in Greece, 180,000 in Canada and 114,000
in Spain. By contrast, according to the last Russian census
(2002),there were only 32,000 Bulgarians living in Russia.
Bulgarian tourists also choose points west over east:
between 25,000 and 30,000 Bulgarians visit the United States
each year. Taking advantage of visa-free travel, many more
visit European destinations. In 2007 about 20,000 Bulgarians
visited Russia, ranking it only 19th among the most visited
places. Many Russians visit here (187,000 visas issued in
2007) taking advantage of warm beaches and cheap prices (when
Russia was flush with petro-rubles),but it is western
Europeans that are the coveted real estate investors and
visitors, with "ugly Russian" images often prevalent given
the boorish and over-bearing behavior.

TRADE AND INVESTMENT
--------------


5. (C) Russia has a stranglehold on Bulgaria's energy
sector. Seventy percent of all energy resources, including
nearly 100 percent of Bulgaria's gas, oil and nuclear fuel,
come from Russia, resulting in a lopsided trade deficit.
But, putting aside energy, statistics show a weak Russian
performance elsewhere in the Bulgarian economy. Russia ranks
behind Germany, Italy and Turkey as a trade partner, and its
product mix is nearly non-existent -- in 2007 energy and
metals accounted for more than 90 percent of Russian exports
to Bulgaria. In other words, trade ties between Russia and
Bulgaria may be a mile deep in the energy field, but they are

SOFIA 00000738 002 OF 002


only an inch wide in the economy as a whole. Bulgarian
manufacturers are increasingly gearing their products -- and
business relationships -- to the West.


6. (C) When it comes to retail impact, Russia lags far
behind. Greek firms dominate in banking and financial
services; U.S., German and UK firms dominate in the IT
sector; Greek and U.S. firms dominate in retail electronics;
European firms dominate clothing, grocery, construction goods
and supply centers. Japanese, U.S., and German firms have
huge swaths of commercial and industrial machine tools,
construction equipment, and manufacturing. When one adds the
13 billion or so Euros that Bulgaria could receive in EU
funds through 2013, the scope and depth of Bulgaria's slow
integration in Europe's economy will increase.

COMMENT:
--------------


7. (C) The indicators above, coupled with the sheer
gravitational pull of EU and NATO-originated demands on
Bulgarian time and resources, will draw Sofia's attention
towards Brussels and beyond. The estimated USD 13 billion in
EU funds that Bulgaria is scheduled to receive by 2013 (if it
can overcome persistent rule of law issues) will further
focus Bulgaria westward. The positive influence that those
transatlantic relationships will have on Bulgarian society
over time -- from improving rule of law to offering more
economic opportunity -- may end up luring back a tide of
Bulgarians who "voted with their feet" and moved west.
Bulgaria made a strategic decision to follow the
transatlantic path when it joined NATO and the European
Union. So while Russia still holds an allure for the
elderly, uneducated and rural poor, Bulgarians increasingly
look, travel, and work with an eye on the West and educate
their children accordingly. Through greater engagement in
areas where the trendlines are in our favor, we can help
ensure Bulgaria does not look back.

McEldowney