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PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV
DE RUEHSF #1122/01 2611353
ZNY SSSSS ZZH
P 181353Z SEP 07
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC PRIORITY 4298
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHMFISS/HQ USEUCOM
RUEHBS/USEU BRUSSELS
RUEHNO/USMISSION USNATO 0940

S E C R E T SECTION 01 OF 02 SOFIA 001122 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 09/17/2017 
TAGS: MARR PREL BU
SUBJECT: SHIP DEAL WITH FRANCE TO DERAIL BULGARIAN MILITARY 
MODERNIZATION? 
 
Classified By: DCM Alex Karagiannis for reasons 1.4(b) and (d). 
 
¶1. (S) Summary:  Several Bulgarian defense officials 
expressed concern over a plan, currently in its final stages, 
to purchase four Corvette class ships from France at a cost 
of over one billion dollars.  Such a large expenditure for 
ships that do not fill an operational need would, according 
to our sources, threaten to derail all other priority 
modernization projects.  This plan is viable solely because 
of political pressure to present a deliverable to President 
Sarkozy during his early October visit.  Although at least 
one Ministry of Defense official believes that the sale will 
go through unless the United States intervenes, Ilko 
Dimitrov, the Deputy Head of the Defense Committee in 
parliament is confident the deal will be abandoned or at 
least delayed by several years.  As the Bulgarians grapple 
with military modernization, we and NATO can help keep 
Bulgaria focused on priorities, practicalities and fiscal 
realism.  End Summary. 
 
Possible new purchase threatens to break the bank( 
 
¶2. (S) French President Sarkozy's planned early October visit 
has ignited a run on possible deliverables, especially given 
France's role in freeing the Bulgarian nurses in Libya. 
Among the flurry of possible, mega-sized deals is one 
involving defense procurement.  XXXXXXXXXXXX 
expressed deep concern over a plan by the 
Bulgarian Ministry of Defense to purchase four French 
Corvettes.  According to XXXXXXXXXXXX 
there is no operational need 
for these ships and the purchase is not in line with 
Bulgaria's defense modernization priorities.  Although he did 
not quote a dollar figure, other sources have estimated that 
the deal would cost more than one billion dollars, not 
including armaments.  (By comparison, Bulgaria's defense 
budget for 2007 is between 640 and 700 million dollars.)  In 
addition to the large initial price tag, XXXXXXXXXXXX said he feared 
that follow-on costs associated with this purchase would be 
significant and would force massive cuts elsewhere in the 
armed forces in coming years. 
 
¶3. (S) According to a different source connected with the 
Ministry of Defense, the French shipbuilding company Armaris 
will be awarded the contract during French president 
Sarkozy's visit.  As an offset, a French shipyard will place 
orders for the construction of 15 combat vessel hulls from 
the Flotsky Arsenal Ship Repair Yard in Varna.  This source, 
like XXXXXXXXXXXX, was not convinced that the strategic 
benefits of the purchase were worth the cost. 
 
¶4. (S) A third source, XXXXXXXXXXXX, 
also confirmed that this deal is underway and 
lamented that it appears to be going forward despite not 
being one of the official force goals for Bulgaria.  His 
assessment was that such a large naval purchase would have 
serious adverse consequences on the modernization efforts of 
the other Bulgarian services. 
 
Possible Timelines 
 
¶5. (S) In addition to political factors outlined above, a 
clearly concerned XXXXXXXXXXXX hinted that some highly placed 
officials in the Ministry of Defense would stand to benefit 
from the deal.  He stopped short of asking the U.S. for any 
kind of assistance in this matter, but said he feared that 
the deal would go through, unless "powers higher than the 
Minister of Defense" were engaged on the matter. 
 
¶6. (S) Ilko Dimitrov, Deputy Chair of the Defense Committee 
in Parliament, differed with XXXXXXXXXXXX on the likelihood 
of the deal being concluded.  According to Dimitrov, the 
document set to complete the tender with Armaris has been 
drawn up and that negotiations with the French are in the 
"final stage."  But he believes the project is almost certain 
to be abandoned or at least delayed several years.  While the 
Bulgarian Navy and certain players within the Ministry of 
Defense are still pushing hard for the purchase, the price 
tag is simply too large and it will never pass through the 
Defense Committee in parliament.  Dimitrov noted that the 
French government and Armaris both had strong lobbies in 
Bulgaria.  He believes that Sarkozy will push hard for the 
project during his visit to Sofia, and that either Prime 
Minister Stanishev or President Parvanov will have the 
difficult task of explaining why Bulgaria will have to back 
out on the project at this late stage. 
 
A military rationale? 
 
SOFIA 00001122  002 OF 002 
 
 
 
¶7. (S) Although nearly all our interlocutors agreed that the 
purchase of the French Corvettes was not a strategic 
priority, they all admit that design and construction of 
Multi-Purpose Corvette (MPC) Class ships is listed as one of 
Bulgaria's defense priorities in the 2015 Modernization Plan 
approved in 2004.  While the United States supported the 
intent of the 2015 plan, we have also focused on its flaws, 
namely that Bulgarian planners did not attempt to prioritize 
new programs between the military services and did not 
balance program costs against a realistic annual budget.  The 
2015 plan is a compilation of each service's wish lists for 
new procurements.  Within the Ministry of Defense, the plan 
is widely seen as defunct, and its imminent reform is a 
recurring hope.  Nevertheless, champions of a Corvette 
purchase can point to the 2015 plan as justification, 
irrespective of its comparative merits. 
 
¶8. (S) To solve this lack of priority focus and to prevent 
similar ones in the future, Dimitrov suggested the 
advisability of NATO assistance in crafting a revised 
modernization plan to replace the current one.  An impartial 
evaluation by NATO of the strategic merits of Bulgaria's 
upcoming modernization programs would be key to maintaining a 
budgetary balance between the services and to keeping 
Bulgarian military modernization on track. 
 
¶9. (S) Comment:  The juxtaposition of high-level politics and 
massive defense sales have stirred the pot here.  While the 
Corvette issue has elements of garden-variety inter-service 
squabbles over funding, the sheer size of this potential 
purchase, has generated friction inside the Ministry of 
Defense and beyond.  Bulgaria has a history of reaching large 
deals and then backtracking or even canceling them.  From 
Dimitrov's comments it sounds as though cooler heads will 
prevent this sale from proceeding to conclusion.  We will 
pulse -- and encourage -- decision-makers to focus on genuine 
NATO priorities and fiscal realities.  To do that we will 
work with NATO to help Bulgaria craft a more forward-looking 
and more realistic modernization plan.  End Comment. 
Beyrle