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S E C R E T SECTION 01 OF 03 SOFIA 000033 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
PASS TO EUR/NCE BULGARIA DESK OFFICER MARK TURNER 
 
E.O. 12958: DECL: 01/16/2033 
TAGS: ENRG PGOV PREL BU
SUBJECT: BULGARIA:  PUTIN'S VISIT TO BULGARIA:  ENERGY 
FOCUSED 
 
REF: A. 07 SOFIA 1396 
     ¶B. SOFIA 0023 
 
Classified By: CDA Alex Karagiannis for reasons 1.4 (b) and (d). 
 
¶1.  (C//NF)  SUMMARY:  Bulgarian leaders have publicly stated 
they hope Russian President Vladimir Putin's two-day official 
visit to Bulgaria January 17-18 will lead to improved, more 
pragmatic bilateral relations, but Putin's "all business" 
agenda and the Russians' heavy-handed negotiating style are 
becoming irritants.  Putin's delegation--which includes high 
level government ministers and the chiefs of Russia's major 
energy companies--will sign a number of agreements, 
especially in the energy field, including on the 
Burgas-Alexandropolous oil pipeline (BAP), the Belene Nuclear 
Power Plant (NPP), and, possibly, the South Stream gas 
pipeline (refs A and B).  The sheer weight of Russia's 
economic presence here will continue to sustain Moscow's 
influence in business and political life, no matter how much 
the Bulgarians chafe at Russian strong-arming in the lead-up 
to the visit.  END SUMMARY. 
 
¶2.  (SBU)  Russian President Putin and his wife Lyudmila will 
arrive on a two-day official visit to Sofia, January 17 at 
the invitation of Bulgarian President Georgi Parvanov.  This 
will be Putin's first visit to Bulgaria since 2003.  Upon 
arrival, Putin and his wife will attend a gala concert at the 
National Palace of Culture to officially kick-off 2008 as the 
"Year of Russia" in Bulgaria.  The formal part of the visit 
will begin January 18 with a welcoming ceremony for the 
Presidential couple at St. Alexander Nevsky Square.  Putin 
will then hold a one-on-one meeting with Parvanov, to be 
followed by talks between the two official delegations. 
Parvanov and Putin will also visit a Bulgarian-Russian 
exhibition at the National History Museum, dedicated to the 
130th anniversary of Bulgaria's liberation from Ottoman rule. 
 Later in the day Putin is scheduled to hold meetings with 
Prime Minister Sergei Stanishev and Parliamentary Speaker 
Georgi Pirinski.  The Russian delegation accompanying Putin 
is expected to include Foreign Minster Sergey Lavrov, 
Minister of Industry and Energy Victor Khristenko, Minister 
of Transportation Igor Levitin, Moscow Mayor Yuri Luzhkov, 
and Putin's heir apparent Dmitri Medvedev.  The CEOs of 
Gazprom, the Unified Energy System of Russia RAO, and 
Atomstroyexport complete Putin's entourage. 
 
---------------------------------------- 
ENERGY DEALS DOMINATE PUTIN'S TO DO LIST 
---------------------------------------- 
 
¶3.  (C)  Energy will be high on the Putin agenda.  During the 
visit, the CEOs of the Bulgarian, Russian and Greek companies 
involved in the Burgas-Alexandropolous pipeline project will 
sign a shareholders agreement setting up an international 
project company that will be registered in The Netherlands. 
Representatives of Bulgaria's National Electric Company (NEK) 
and Russia's Atomstroyexport will sign an agreement on 
Russia's construction of the Belene Nuclear Power Plant 
(NPP).  Deputy Prime Minister and Education and Science 
Minister Daniel Valtchev and his Russian counterpart are 
expected to sign a bilateral agreement on cooperation on the 
import of spent nuclear fuel from Bulgarian nuclear research 
reactors to the Russian Federation.  Under the terms of this 
agreement, Russia will agree to accept the highly enriched 
uranium (HEU) and take responsibility for its transport 
inside Russian borders.  (Note:  The United States is working 
to complete a related bilateral agreement with Bulgaria later 
this month under which the United States will agree to 
orchestrate and fund the removal of the HEU from the reactors 
and transport it to the Russian Federation.) 
 
¶4.  (C/NF)  Russian pressure on Bulgaria to sign an 
Intergovernmental Agreement (IGA) on the South Stream gas 
 
SOFIA 00000033  002 OF 003 
 
 
pipeline is unrelenting.  According to our sources, 
negotiations between Bulgaria and Russia on South Stream 
ended January 9 with no agreement on key IGA issues.  On 
January 10 the Bulgarian side, against the advice of its 
newly-hired South Stream legal counsel, made proposed 
concessions that did not meet Russian demands.  After a 
January 11 phone call between Putin and Bulgarian PM 
Stanishev, the Russians decided to send additional South 
Stream negotiators to Sofia on January 14 in an attempt to 
make Bulgaria give up its self-declared red-lines, including 
majority ownership of the pipeline on Bulgarian territory. 
On January 13, the Prime Minister's chief of staff told the 
Ambassador that it was increasingly unlikely that Bulgaria 
would agree to sign the IGA during Putin's visit.  The 
Russian and Bulgarian negotiators hit a January 15 impasse, 
and the Russian delegation is scheduled to return 
empty-handed to Moscow.  But we can anticipate another 
Russian push to test Bulgaria's resolve. 
 
¶5.  (C)  Other than energy, Russia and Bulgaria will also 
discuss Kosovo, relations with NATO, the CFE treaty, and 
missile defense.  Bulgaria's highly unbalanced foreign trade 
deficit, which, in 2006, represented 46 percent of Bulgaria's 
entire trade deficit, is another likely topic of discussion. 
Putin and members of his delegation are primed to sign 
several non-energy agreements, including a deal for a new 
ferryboat connection between Bulgarian and Russian Black Sea 
ports and agreements in the areas of culture, science and 
technology, labor, and anti-organized crime cooperation. 
Contrary to expectations, the hot topics of Russian arms 
licenses and Moscow's property claims will not be discussed, 
(though lowerlevel delegations have, in fact, held intense 
talks). 
 
------------------------------------- 
A "DIFFICULT BUT PREDICTABLE PARTNER" 
------------------------------------- 
 
¶6.  (C/NF)  In the lead-up to Putin's arrival, Bulgarian 
leaders have publicly called for a more pragmatic approach to 
Bulgarian-Russian relations, noting Bulgaria's NATO and EU 
membership should not prohibit good ties with Moscow.  In a 
January speech, PM Stanishev stated Bulgaria would like to 
see "a more well intentioned, intensive and pragmatic pursuit 
of dialog" between the two countries as well as a 
reinvigoration of economic ties.  President Parvanov--who has 
a good personal relationship with Putin (Ref A)--has 
described the Russian leader as "a difficult but predictable 
partner."   But despite public statements about hopes for 
pragmatic relations, Bulgarian leaders have begun to chafe at 
Russia's bullying negotiating style and Putin's 
"all-business" approach to this visit.  Bulgarian officials 
are disappointed that Moscow is putting the focus of the 
visit on Russian-tilted deliverables while ignoring the 
presentational and public aspects of the visit that are 
essential to selling it as a joint success.  Putin refused 
Bulgaria's suggestion to visit landmarks related to 
Bulgarian-Russian historical ties such as the Shipka memorial 
in central Bulgaria (an important battle site in the 
Russo-Turkish War which led to Bulgaria's liberation) and the 
Monument of the Soviet Army in Plovdiv.  Putin apparently 
turned down an invitation to go skiing with Parvanov.  These 
snubs, as well as Russia's intense pressure on South Stream 
have all been leaked to the press. 
 
--------------------------------------------- 
PUBLIC ATTITUDES:  GREAT, MORE ROAD CLOSURES 
--------------------------------------------- 
 
¶7.  (C/NF)  While Russia does well in Bulgarian pubic opinion 
polls, Putin's impending visit is not generating overwhelming 
public interest.  Media coverage has been lighter than that 
seen in the lead-up to President Bush's June 2007 visit, 
 
SOFIA 00000033  003 OF 003 
 
 
although there have been articles highlighting Putin's 
political and personal life and focusing on bilateral 
relations and Bulgarian-Russian energy projects.  The 
Bulgarian media has noted that unlike the other new 
post-communist EU states, such as Poland, Romania, and the 
Baltics, Bulgaria's relations with Russia seem to be on the 
rise, as Bulgaria seeks to boost its economic ties with 
Russia. 
 
¶8.  (SBU)  Center-right opposition, environmental and human 
rights groups have said they plan to demonstrate in downtown 
Sofia against Putin's policies, Russian-related projects, and 
Bulgaria's growing dependency on Russia.  A number of 
environmental groups have urged Bulgarians to protest against 
the Belene Nuclear Power Plant (NPP) and the 
Burgas-Alexandropolous oil pipeline.  The Democrats for 
Strong Bulgaria (DSB), led by the staunchly anti-Moscow 
former PM Ivan Kostov will protest Putin's visit.  Kostov 
stated Putin's "imperial policies pose a direct threat to the 
Bulgarian national interest," and added "the visit will 
accelerate large scale energy projects which turn Bulgaria 
into a Trojan horse of Putin's oligarchy in the EU."  None of 
these protests is likely to be remarkable in size.  For most 
residents of Sofia, Putin's visit is simply another 
high-profile arrival of a foreign dignitary whose security 
measures will likely include street closures and blockades 
that will add congestion to a city with poor infrastructure 
and already-heavy traffic. 
 
¶9.  (S//NF)  COMMENT:  Putin's visit is important 
economically and politically for the Bulgarian Government. 
It is also a key moment to advance Bulgaria's national 
interests and break the old instinct not to antagonize 
Moscow.  The Russians have not helped themselves by snubbing 
the "feel good" aspects of the visit.  But even if Sofia 
manages to resist Russian pressure to sign an unfavorable IGA 
on South Stream, the sheer weight of Russia's economic 
presence will continue to press on Bulgarian business and 
politics.  We will maintain high-level engagement with senior 
Bulgarian officials willing to stand up to Russia, bolstering 
their instincts to seize and use the options available--such 
as expert legal counsel--to resist Russian pressure.  As 
Bulgaria gains greater self-confidence and is further 
integrated in the Euro-Atlantic partnership, it will find it 
easier to protect and advance its--and our--interests.  END 
COMMENT. 
Karagiannis