This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 SOFIA 001561 
 
SIPDIS 
 
CODEL 
 
STATE FOR H, PASS TO SENATOR HAGEL 
 
E.O. 12958: DECL: 08/30/2015 
TAGS: PGOV OVIP PREL OREP ENRG MARR EINV LY BU
SUBJECT: SENATOR HAGEL MEETS NEW BULGARIAN GOVERNMENT 
 
REF: SOFIA 1460 
 
Classified By: AMB. BEYRLE FOR REASONS 1.4 B&D 
 
ACTION REQUEST PARA 9 
 
¶1. (C) SUMMARY:  Senator Hagel was the first Washington 
official to meet the new government after the June elections. 
 He stressed energy and investment issues, Bulgaria's 
strategic importance as an ally in the region that extends 
eastward, and Bulgaria's need to improve its investment 
climate by addressing government corruption and regulatory 
roadblocks.  Bulgarian officials stressed their desire for 
increased U.S. investment.  They also proclaimed Bulgaria a 
loyal partner of the U.S. in NATO, Afghanistan and Iraq, and 
said they were looking at ways to continue participation in 
Iraq after their end-of-year withdrawal.  END SUMMARY 
 
BULGARIAN GOVERNMENT MEETING PARTICIPANTS 
 
¶2. (U) President Georgi Purvanov 
Minister of Defense Veselin Bliznakov 
Minister of Economy and Energy Rumen Ovcharov 
Speaker of Parliament Georgi Pirinski 
MP and Deputy Foreign Minister-designate Gergana Grancharova 
Deputy Foreign Minister Lyubomir Kyuchukov 
Member of Parliament, Foreign Affairs Committee, Christian 
Vigenin 
 
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POLITICAL-MILITARY ISSUES 
------------------------- 
 
BULGARIAN-AMERICAN RELATIONS 
 
¶3. (C) Purvanov stressed that relations between Bulgaria and 
the U.S. are the best in history.  Bulgaria is a serious and 
predictable strategic partner which is firmly with the U.S. 
in the Global War on Terrorism (GWOT).  Purvanov - whose 
position was not up for election in the June ballot - 
believes this support will continue in the new 
administration.  He pointed to the continuity of foreign 
policy under the new government as proof of the strength of 
the relationship.  Bliznakov said his goal is to stabilize 
and strengthen Bulgaria's relationship with NATO countries - 
particularly the U.S.  Purvanov and Pirinski were grateful 
for the prompt and generous assistance the USG provided for 
flood-stricken areas. 
 
¶4. (C) Senator Hagel described the purpose of his visit to 
Bulgaria and the region, explaining the strategic importance 
to the U.S. of the "arc" of countries from Bulgaria and 
Romania across the Black Sea and Caspian Sea to the Caucuses 
and Urals.  Grancharova said it was important to get 
congressional members to Bulgaria.  She pointed to the need 
to prove to the Bulgarian public the benefits of the 
relationship with the U.S.  The public mainly sees the "bad 
news" out of Iraq and the relatively small amount of 
U.S.-origin foreign direct investment.  Pirinski described 
his visit to the U.S. in September as an opportunity to meet 
Senator Lugar and prepare for the visit of Purvanov. 
 
GWOT: IRAQ/AFGHANISTAN 
 
¶5. (C) Purvanov looks forward to meeting President Bush in 
October, where he hopes the two can discuss the format under 
which Bulgaria can continue to participate in the coalition 
in Iraq.  He said Bulgaria has an idea of how to reinforce 
its presence in Iraq, but did not elaborate.  Bliznakov said 
Bulgaria takes its Iraq commitment very seriously and will 
stay until the end of the year.  All withdrawal preparations 
will be coordinated with the U.S. and other partners.  The 
GOB is discussing alternate ways to participate in future 
missions in Iraq in order to preserve stability, Bliznakov 
said.  The military is also preparing for 2006 when Bulgaria 
will assume responsibility for the airport in Kabul.  Ten 
percent of the Ministry of Defense budget is allocated to 
participation in missions abroad.  Bliznakov reiterated 
Bulgaria's commitment in the war on terror, and supports the 
U.S. goal of addressing terrorism in the regions that foment 
it.  He said there is currently no threat of fundamentalism 
in Bulgaria, but the MOD will create an interagency team on 
the issue.  The only potential threat here is due to 
Bulgaria's profile as a participant in anti-terror operations 
worldwide, said Bliznakov. 
 
U.S. BASES 
 
¶6. (C) The U.S. and Bulgaria will now have to step up 
negotiations on the U.S. presence here, which were slowed by 
the elections, Purvanov said.  He pointed to a clear 
political will in parliament and in the country across all 
major parties in support of the bases, but noted some details 
would have to be ironed out.  Vigenin, the Socialist 
parliamentarian, said Bulgarian officials need to work with 
voters to convince them of the benefits of the basing.  Local 
residents already support the plan, but that view does not 
extend across the country.  Vigenin said almost all parties 
in parliament understand the need for a strategic partnership 
with the U.S., the only opposition on this issue comes from 
the extreme nationalist group Ataka. 
 
DEFENSE ISSUES 
 
¶7. (C) Bulgaria will strive to be an active member of the 
NATO alliance, and will strike a balance between its own 
self-interest and the needs of the allies, said Bliznakov. 
He said Bulgaria after NATO entry was a stabilizing factor in 
the Balkans, and the country is helping prepare regional 
states for eventual NATO membership. 
¶8. (C) According to Purvanov, Bulgaria wants to play a 
stabilizing role in the Balkans.  He hopes the U.S. and 
Bulgaria can cooperate to modernize the military so Bulgaria 
can be a more reliable NATO partner.  Bliznakov said Bulgaria 
will expand upon its current military achievements 
domestically and in operations abroad, and modernize its 
forces.  He thanked the U.S. for the military assistance we 
provide.  Bliznakov outlined a plan through 2015 for 
modernizing the military.  Some of the highest 11 priority 
areas - out of 35 -  have already begun.  Problems are 
primarily due to lack of resources, not will.  Ovcharov 
called for increased cooperation between U.S. and Bulgarian 
defense companies, including the need for offsets. 
 
¶9. (C) Minister Bliznakov requested a meeting with the 
Secretary of Defense at the Berlin Defense Ministerial 
 
SIPDIS 
September 13-14.  (Post comment: We strongly support this 
request believing that such a meeting could influence 
Bulgaria's decision to take on a new mission in Iraq and/or 
increase its military presence in Afghanistan.) 
 
BULGARIAN MEDICS IN LIBYA 
 
¶10. (C) Purvanov extended his personal gratitude to the Bush 
Administration for its consistent support of the imprisoned 
medics in Libya.  He said this issue is a more painful one 
for Bulgarians than Iraq or Balkan problems, and mentioned 
that settlement of the issue would go a long way to "calming 
the situation here."  Pirinski said Bulgaria is concerned 
about the upcoming November 15 court decision regarding the 
death sentence of the medics. 
 
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ECONOMIC ISSUES 
--------------- 
 
AMERICAN BUSINESS COMMUNITY 
 
¶11. (SBU) Senator Hagel met with members of the American 
Chamber of Commerce to learn about U.S. business issues.  The 
businessmen see the environment improving and noted both an 
increase in business activity and a decrease in the amount of 
corruption and regulatory inefficiencies.  However, they 
stressed that Bulgaria has a long way to go to become a 
transparent destination for U.S. capital.  Government 
corruption - primarily at the mid-to-lower levels - is still 
"prevalent."  Deliberate slow-downs and selective enforcement 
of the regulatory framework have worked against some 
investors, presumably at the behest of competitors. 
Investors feel the business climate overall will improve with 
accession to the EU, but are concerned about Bulgaria's 
capacity to absorb large amounts of assistance.  MFA 
officials agreed on the need for Bulgaria to improve its 
ability to absorb the EU funds.  The energy sector is a major 
opportunity for investors, including possibilities in the 
nuclear sector with the new plant at Belene, and with the two 
pipeline projects, AMBO and Bourgas-Alexandropolous.  AmCham 
officials also raised the continued importance of a Double 
Taxation Treaty to assist U.S. investors. 
 
U.S. INVESTMENTS 
 
¶12. (C) Purvanov stressed the need to increase the level of 
bilateral trade between our countries, saying he was not 
satisfied with the current $760 million, or the $560 million 
in U.S. direct investment.  He said this amount was smaller 
than neighboring countries with much smaller economies. 
Senator Hagel agreed with the importance to both countries of 
increased U.S. investment here, but stressed to all GOB 
officials the concerns of American investors regarding 
government corruption.  He also raised the need for the 
regulatory authorities to transparently and fairly manage 
their sectors so as not to impede U.S. investors considering 
Bulgaria as a destination. 
¶13. (C) Purvanov agreed the criticism was warranted and 
elaborated on the issue, saying Bulgaria had to improve the 
efficiency of the judiciary and Bulgaria's administrative 
capacity.  He and Ovcharov pointed to constitutional changes 
and legislation that will improve the judiciary and 
investment regimes.  But Purvanov stressed that the 
implementation phase is where real efforts will be needed. 
 
¶14. (C) Ovcharov said the government needed to start more 
public-private partnerships similar to those in the U.S. and 
improve conditions for small and medium-sized enterprises. 
Purvanov said both the finalization of a Double Taxation 
Treaty with the USG and a roadmap for facilitating Bulgaria's 
inclusion in the visa waiver program would help improve 
investment.  Senator Hagel raised the privatization of the 
Bulgarian film studios with the officials.  Kyuchukov said 
the government would not reverse the process, but the deal 
could be challenged in the courts. 
 
¶15. (C) Ovcharov said he wants to see more investment by U.S. 
companies in the fields of information technology, automotive 
technology, defense industries, mining, agriculture 
(particularly organic), the chemical and pharmaceutical 
industries, wine and energy.  He said existing U.S. projects 
are good ones and should continue to be supported by the GOB, 
despite some minor problems. 
 
ENERGY 
 
¶16. (C) Senator Hagel noted the success of current U.S. 
investments in the energy sector and suggested an increase in 
the fields of nuclear, geo-thermal and hydro development.  He 
said the U.S. would like to work closely with Bulgaria to 
further develop its energy sector and strengthen the economy. 
 Purvanov stressed the desire to continue building nuclear 
power so as to increase its electricity exports in the 
region.  Ovcharov said the government must promote 
investments, particularly in energy infrastructure projects 
such as the Nabucco gas pipeline and the 
Burgas-Alexandropolous and AMBO oil pipelines. 
 
BULGARIA'S EU ACCESSION 
 
¶17. (C) Pirinski said parliament is focused on passing 
legislation necessary for entry in the areas of Justice and 
Home Affairs, agriculture, environment, trade and commercial 
law, the latter to improve investment climate, intellectual 
property rights. 
 
¶18. (C) EMBASSY COMMENT: Bulgarian officials were clearly 
pleased to welcome Senator Hagel as their first Washington 
visitor after the elections.  They took pains to stress the 
continuity of the close relationship that the previous 
government had worked hard to develop.  GOB officials laid 
out what they wished to accomplish in the short-to-medium 
term - from EU accession to improved foreign investment and 
continued participation in the GWOT.  Senator Hagel's 
meetings began what will be a period of intensive engagement 
with Bulgaria and its new government.  The Senator's visit 
will be followed by a series of high-level introductory calls 
by the new U.S. Ambassador, a possible meeting between MOD 
Bliznakov and SecDef Rumsfeld at the informal NATO Defense 
Ministerial, FM Kalfin's possible meetings on the margins of 
UNGA, and Finance Minister Oresharski's planned bilats during 
the World Bank/IMF meeting.  This period of intensive 
engagement will culminate with the meeting between the two 
Presidents in Washington on October 17.  END COMMENT 
 
THIS CABLE WAS CLEARED BY SENATOR HAGEL'S PARTY 
BEYRLE