BULGARIA: THE BORISSOV GOVERNMENT AT SIX MONTHS

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000047

SIPDIS

E.O. 12958: DECL: 01/18/2020
TAGS: PREL PGOV ECON ENRG BU
SUBJECT: BULGARIA: THE BORISSOV GOVERNMENT AT SIX MONTHS

Classified By: CDA Susan Sutton for reasons 1.4 (b) and (d).


1. (C) Summary: Nearly six months in office, Prime
Minister Boyko Borissov's government has started to make good
on its promises on rule of law and the economy, winning kudos
(and funds) from the European Commission in the process.
Although it appears to be backtracking on its initial
anti-Russian bluster on energy, the government has otherwise
pursued a forward-looking, trans-atlantic agenda, including
probable acceptance of a Guantanamo detainee, increased
support for Afghanistan, and eager interest in hosting
missile defense assets on Bulgarian soil. Five seats short
of a majority in Parliament, Borissov has managed his
"floating majority" with a deft hand, while exacting strict
party discipline from his GERB MPs. With no real opposition
to worry about, the biggest challenge Borissov has faced is a
lack of an experienced and qualified cadre. End Summary.



2. (C) Former bodyguard and Sofia mayor Boyko Borissov took
power July 27, 2009, with a promise to clean up endemic
organized crime and corruption, eliminate the culture of
impunity within which previous governments and connected
business interests operated, and restore Bulgaria's
reputation within the EU. On rule of law, the government has
started to deliver the goods. It is investigating possible
criminal activity of seven former ministers, two of whom have
been formally charged. It passed legislation to reform the
Ministry of Interior and the State Security Services (DANS)
to eliminate overlapping roles and improve interagency
cooperation. It established interagency organized crime task
forces and implemented new measures against money laundering.
The government's initial, dramatic moves on corruption and
organized crime, and its success in breaking up two large and
infamous organized crime rings (one involving kidnapping and
another auto theft) has kept Borissov's public approval
rating high. The government's efforts have won kudos from
the EU, which has unfrozen nearly USD 300 million in
pre-accession funds partially as a result.


3. (C) It is the economy that required even more of the
government's attention in its first six months. Inheriting
what it described as an 11 percent budget deficit after a
spending-spree by the out-going Socialist-led government, new
Deputy Prime Minister and Finance Minister (and former World
Bank executive) Simeon Dyankov immediately set about putting
the fiscal house in order. It hasn't been easy or pain free.
Dyankov suspended payments on most government contracts, and
subsequently slashed public administration and defense
spending in his near-balanced 2010 budget. Bulgaria's
unemployment rate has increased from 6.3 percent in December
2008 to 9.1 percent in December 2009, and is projected to hit
11.4 percent in 2010. On the bright side, Bulgaria has
managed to avoid IMF assistance, and will probably be the
only EU country to meet the Maastricht criteria in 2010.


4. (C) Borissov has kept his Trans-Atlantic orientation and
empowered the most pro-U.S. members of his cabinet (including
Deputy Ministers Tsvetanov and Dyankov and Defense Minister
Mladenov, whom the PM tapped January 20 to take over as
Foreign Minister). Despite very tight budgets, he has
increased Bulgarian deployments to Afghanistan and made
investments in the U.S.-Bulgaria joint training facilities.
Bulgaria has taken a strongly supportive stance on U.S.
Missile Defense plans in the region, and has offered to host
M.D. assets. When asked to consider accepting a Guantanamo
detainee, the Prime Minister and Minister of Interior
Tsvetanov moved quickly to make it happen, expending
political capital to gain the support of opposition parties.
(Formal approval by the Council of Ministers on Bulgaria's
acceptance of a detainee is expected in January.)


5. (C) On energy Borissov has shown less resolve. After
promising a complete review of each large energy project to
which the last, Moscow-friendly government entered into with
Russia, it appears all of these projects still have some life
left in them. The Bulgarians are proceeding with South
Stream (but trying to get the best deal possible at each
stage),while the Burgas-Alexandroupolis oil pipeline is in a
holding pattern. On the Belene Nuclear Power Plant, which
has become synonymous with non-transparency and graft, we are
hearing disturbing rumors that -- seeing no way to get out of
the project and with no means to finance it -- the government
is considering giving a stake of the project to their Russian
partners.


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MANAGING A "FLOATING MAJORING" AND A TOOTHLESS OPPOSITION
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6. (C) Domestic analysts widely viewed Borissov's decision
last July to form a minority government as an irresponsible
gamble. Now most agree it was a stroke of genius. GERB's
MPs are young and inexperienced, but they show absolute party
discipline and loyalty. Our contacts confirm they are
improving over time. Borissov continues to depend on the
reliable support of the ultra-right party Ataka and the
center-right Blue Coalition to garner the additional five
votes he needs in Parliament. Relations with the third party
in Borissov's "floating majority" -- the center-right Order,
Law and Justice -- have disintegrated, but with little
consequence for GERB's ability to get things done in
Parliament.


7. (C) The real opposition in Parliament, the Bulgarian
Socialist Party (BSP) and the ethnic Turkish party Movement
for Rights and Freedoms (MRF) are in internal disarray after
their stinging electoral defeat in July. Focused on internal
power struggles and rebuilding, they represent little
resistance to GERB initiatives. Into this void stepped
President Georgi Parvanov, the BSP's former head, who has
openly and personally criticized Borissov for his handling of
the economy and energy policy, and refused for some time to
approve the government's sought recall of its ambassadors to
the United States and Turkey. The Borissov-Parvanov rift has
healed somewhat in recent weeks just as Borissov has warmed
up to certain of Parvanov's pet energy projects with Russia.

COMMENT
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8. (C) This government has shown the political will to bring
real change. Its Achilles' heel is lack of an experienced
cadre. Human capital first became an issue during government
formation, when Borissov couldn't find a single, sufficiently
untainted energy professional to take over what the PM hoped
would be a newly-created Ministry of Energy. Instead, the
colossal Ministry of Economy and Energy never underwent
reform and now neither the economy nor energy get the
attention they need. Borissov's shallow bench was further
highlighted by the embarrassing, failed candidacy of
Bulgarian EU Commissioner nominee Rumiana Jeleva. With
Jeleva's badly damaged reputation preventing her return to
her previous position as Foreign Minister, Borissov had no
acceptable replacement except the well-regarded Minister of
Defense Mladenov (see septel). With so few people to turn
to, Borissov is taking on more and more himself. (We
understand Borissov even toyed with the idea of naming
himself Foreign Minister upon the first signs of trouble for
Jeleva's EC nomination.) Outside the rule of law and defense
portfolios, where, at least until now he has had a capable
team in place, Borissov has turned into micro manager
extraordinaire. His iron grip on Parliament combined with
his centrality within the government have not only spread him
thin and weakened hopes that the GERB party would develop
into something more than a vehicle for its founder, but also
have opened Borissov up to accusations that he is developing
a Russian-style, authoritarian state. But so far such
criticisms have resonated little with average Bulgarians, who
still want their plain-talking, tough-guy Prime Minister to
succeed.
SUTTON