VZCZCXRO7921
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV
DE RUEHSF #0252/01 0571512
ZNY SSSSS ZZH
P 261512Z FEB 07
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC PRIORITY 3281
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

S E C R E T SECTION 01 OF 02 SOFIA 000252 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR ACTING E / DANIEL SULLIVAN; 
STATE PASS TO USTR; 
COMMERCE FOR DEPUTY SECRETARY SAMPSON; 
ENERGY FOR A/S HARBERT 
 
E.O. 12958: DECL: 02/25/2017 
TAGS: ENRG ECON PREL OVIP BU
SUBJECT: CONTROVERSIAL ECONOMY/ENERGY MINISTER GOES TO THE 
U.S. SEEKING INVESTMENT 
 
REF: A) 06 SOFIA 1691 B) SOFIA 217 
 
Classified By: Ambassador John Beyrle for reasons 1.4 (b) and (d) 
 
¶1.  (S)  Bulgaria's Minister of Economy and Energy Rumen 
Ovcharov heads to Washington and several other U.S. cities on 
February 27 for an eleven-day road trip to drum up investor 
interest in Bulgaria.  His meetings at State, Commerce, 
Energy and USTR will give us an opportunity to press for 
stronger efforts against corruption and intellectual property 
piracy, a streamlined regulatory environment, government 
transparency, and diversity of energy supplies.  Ovcharov is 
an enigmatic and 
controversial figure - linked to corruption and Russian 
energy interests, but also to a more liberal economic policy 
than many of his Socialist colleagues would support.  He has 
the political and mental juice to match the best players at 
the table, but keeps his cards close to his chest.  In 
face-to-face meetings, he can be both charming and 
off-putting. 
 
¶2.  (S)  Our concerns about Ovcharov's dark side were 
sufficient for us to recommend against meetings with his 
counterparts at the cabinet level.  "Conflict of interest" 
would be the most charitable way to describe his relationship 
with the private sector, both Russian and Bulgarian. 
However, unlike some ministers in this government, we have no 
reports of Ovcharov's involvement in corruption directly 
affecting U.S. companies.  To the extent that he has 
benefited personally from his government 
position, it appears to be primarily due to his cozy 
relationship with various Russian energy interests and 
Bulgarian middlemen involved in putting together large deals. 
 
¶3.  (C)  Paradoxically, as the man responsible for attracting 
outside investment, Ovcharov understands clearly that 
corruption, and the perception that it is widespread, hurts 
his country's economy.  The Ambassador stressed to him on 
February 23 that corruption - specifically in the Ministries 
of Environment and Agriculture, but by extension in the 
government as a whole  - is the number one impediment to 
increased U.S. investment.  His Washington interlocutors 
should emphasize that in order to attract 
American investors, Bulgaria needs more than an educated and 
low-cost work force.  It needs transparency in business and 
government.  It needs courts that will decide legal disputes 
fairly and expeditiously, and it needs to promote itself more 
effectively with foreign investors.  Even now, Bulgaria is 
not a bad place for savvy American investors; the level of 
corruption varies from sector to sector, big players have it 
easier than small players, and the further you get from 
certain government ministries, the more level the playing 
field. 
 
¶4.  (C)  Ovcharov is a key player in several areas of 
importance to the U.S.: energy policy, IPR, investor support, 
industrial offsets, arms-export licensing, and privatization, 
to name a few.  In the energy sphere, Bulgaria is far too 
dependent on Russia, but has few other options in the short 
term.  Ovcharov knows this, but nevertheless concluded a 
23-year deal with Gazprom.  On the surface the terms of the 
deal do not seem onerous: benefits include gradual price 
increases over seven years to reach market prices and the 
removal of a "take-or-pay" clause that burdened Bulgaria with 
a high minimum payment under the old contract.  The length of 
the commitment, though, and the secrecy with which the deal 
has been struck have led many to question what Bulgaria 
really gave up for this deal.  The answer is almost certainly 
the construction of the new nuclear power plant at Belene on 
the Danube, awarded to a Gazprom-owned consortium. 
 
¶5.  (C)  Washington policy-makers will also want to raise 
IPR.  Bulgaria has made tremendous strides in the past year 
or so, but there are still holes in enforcement, particularly 
against Internet piracy, and the courts.  Ovcharov and some 
of his colleagues should be commended for backing efforts to 
improve legislation, cooperating on regulatory and police 
actions, and getting the word out publicly that piracy is 
illegal, wrong, and just plain bad for the economy.  We would 
nominate Bulgaria for the Special 301 "Most Improved" award, 
if such a thing existed.  Nevertheless the government needs 
to show more results arrests and convictions, shut down 
several Internet sites, and demonstrate that it will continue 
to follow through once it gets off the Watch List. 
 
 
SOFIA 00000252  002 OF 002 
 
 
¶6.  (C)  We were pleased to learn that Ovcharov will meet 
with the Assistant Trade Representative.  EC Trade 
Commissioner Mandelson apparently asked Ovcharov to meet with 
USTR to discuss the Doha round.  While we have no illusions 
that Bulgaria will be the key to resolving U.S.-EU trade 
differences, Ovcharov's generally liberal outlook on markets 
and Bulgaria's newness as a EU Member State give us a perfect 
opportunity to start moving them into our corner. 
 
¶7. (C) Bulgaria is a close NATO ally with troops on the 
ground in Iraq, Afghanistan and Kosovo.  Our Defense 
Cooperation Agreement, signed by Secretary Rice in 2006, will 
allow the deployment of U.S. forces to Bulgarian military 
bases.  And, as a new member of the EU, Bulgaria does not 
carry all of the antagonistic baggage of our trade 
relationship.  It is a potential market for U.S. exporters 
looking for a low-cost foothold in the EU, and for U.S. 
investors willing to accept low-to-moderate risks, depending 
on the sector.  By actively engaging Ovcharov now and 
challenging him to improve Bulgaria's image, 
Washington policy-makers will help expand our already strong 
bilateral relationship, and encourage Bulgaria to address 
what is perhaps its greatest remaining weakness: endemic 
political corruption and lack of economic transparency. 
BEYRLE