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UNCLAS SECTION 01 OF 03 SOFIA 000512 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: OVIP BG
SUBJECT: SCENESETTER FOR VISIT OF CODEL BORDALLO 
 
¶1.  (SBU)  SUMMARY. Delegate Bordallo, Representative Wilson 
and Representative Sanchez, Embassy Sofia warmly welcomes you 
and looks forward to a very successful visit.  Your visit 
comes one month after Secretary Rice's consultations in Sofia 
and two months after Prime Minister Stanishev's meeting with 
President Bush in the Oval Office.  Bulgaria remains a 
battle-tested ally and a reliable supporter of key U.S. 
foreign policies.  With the completion this year of all 
implementing arrangements under the 2006 Defense Cooperation 
Agreement, our already deep bilateral security cooperation 
enters a new phase.  You will visit the joint training 
facilities at Novo Selo, where this summer we will conduct 
the largest-ever joint exercises (over 900 Americans and 100 
Bulgarians).  In Sofia, you will meet with the highest 
ranking officials in the Bulgarian government.  The Embassy 
and your Bulgarian hosts, the Parliamentary Foreign Affairs 
Committee and Ministry of Foreign Affairs, are lining up 
office calls with the Prime Minister, the Defense Minister, 
the Parliamentary Speaker, the President's Chief of Staff and 
the Deputy Minister of Foreign Affairs.  Throughout your 
trip, your official Bulgarian host will be Solomon Passy, the 
Chairman of the Parliamentary Foreign Affairs Committee. 
 
¶2.  (SBU) The ruling coalition is now working its way through 
a very critical report from the European Commission on its 
progress in fighting corruption and promoting rule of law. 
You should emphasize to Bulgaria's leadership the importance 
of immediate action leading to concrete results -- cleaning 
house, closing banking sector loopholes that facilitate money 
laundering, convicting corrupt officials -- to regain full 
credibility with its own public, international partners, and 
foreign investors.  We are also encouraging top Bulgarian 
officials to make a more compelling public case for the 
strategic importance for Bulgaria's security cooperation with 
NATO and the United States to reverse stubbornly high 
disapproval (over 70 percent) of Bulgarian overseas 
deployments and the U.S.-Bulgaria joint training facilities. 
END SUMMARY. 
 
Security Cooperation 
 
¶3.  (SBU)  Bulgaria has quietly sustained its Iraq and 
Afghanistan commitments, despite public opposition.  The 
government quadrupled forces in Afghanistan last year, and 
added 50 more this year to a Kandahar mission, bringing its 
total to approximately 470.  In Iraq, Bulgaria agreed to 
transfer its 152-soldier mission at Camp Ashraf to Camp 
Cropper at our request, and has committed to remaining in 
place through 2008.  In fall 2007, Bulgaria negotiated an 
innovative cash payment agreement as part of a USD 3.5 
billion Iraqi debt-forgiveness settlement.  Bulgaria also has 
troops deployed as peacekeepers or observers in Kosovo, 
Bosnia, Chad, Liberia and Ethiopia. 
 
¶4.  (SBU)  You will visit Novo Selo on Wednesday, 6 August. 
This is one of four Bulgarian bases identified as a Joint 
Training Facility under the Defense Cooperation Agreement. 
On 8 Feb 2008, DoD secured permission to construct a U.S. 
Forward Operating Site (FOS) on the Novo Selo Training Area 
(NSTA).  At present, a Temporary Forward Operating Site 
(TFOS), consisting primarily of tent-structures, has been 
built on the site to accommodate this summer's exercises. 
Construction on the permanent site is expected to begin in 
spring 2009, (with the contractor to be awarded in September 
2008.)  This construction has been eagerly anticipated by the 
local community for the economic dynamism it will inject into 
depressed rural areas.  You are scheduled to meet with local 
government officials and visit the site of one of U.S. Army 
Europe's humanitarian assistance projects at a kindergarten 
in the nearby village of Mokren. 
 
Partnership in Military Modernization 
 
¶5.  (SBU)  The Bulgarian Armed Forces are in a period of 
transformation and modernization.  Total force strength stood 
at approximately 40,000 in June 2007, but beginning in 2008 
the conscription system was abolished and the total number of 
service members will be reduced to approximately 32,000. 
Defense spending in 2007 was between 2.4 and 2.55 percent of 
GDP. While greater as a percentage of GDP than that of many 
NATO Allies, 2.55 percent of the Bulgarian GDP is a 
relatively small amount -- only USD 680 million in 2007 -- 
and the military struggles to simultaneously modernize, 
professionalize, and deploy on this amount.  The 2008 budget 
has been reduced to 2.1 percent of GDP, with a further 
reduction likely in 2009. 
 
 
SOFIA 00000512  002 OF 003 
 
 
¶6.  (SBU)  The government looks to us for advice and 
leadership as it undertakes military modernization, 
especially on obtaining multi-role fighters for its badly 
aging and Russia-dependent Air Force.  In late July, a 
DOD-sponsored team of experts met with the Bulgarians to 
offer advice and assistance in reforming their defense 
planning systems and reshaping procurement priorities. 
Ultimately, we expect this process to lead to the purchase of 
U.S. aircraft.  The Bulgarian Land Forces have benefited 
significantly from the donation of U.S. armored HMMVWs and 
from their operational experience working and fighting 
alongside coalition and NATO forces in Iraq and Afghanistan. 
The Bulgarian Navy actively participates in NATO exercises 
and will upgrade its capabilities through the purchase of two 
used Belgian frigates.  Our regular refrain with the 
Bulgarian leadership is to advocate additional resources to 
increase the deployablity and NATO interoperability of 
Bulgarian forces while avoiding budget-busting (European and 
Russian) systems that do not add to NATO capabilities and 
missions. 
 
¶7.  (SBU)  Since 1994, we have provided approximately $150 
million in FMF and IMET assistance (around $10 million per 
year, a very modest sum given the scale of transformation at 
stake.)  Bulgaria has also received $18 million through the 
Coalition Solidarity Fund to help defray the costs of 
missions in Afghanistan and Iraq, and complement FMF efforts 
to modernize forces and improve interoperability with U.S. 
forces.  Our Mission Strategic Plan foresees continued 
support from these funds to achieve parity with NATO 
standards. 
 
Economics and Rule of Law 
 
¶8.  (SBU)  Bulgaria became an EU member in January 2007 
amidst stern warnings from the EU to continue progress in 
judicial reform and in the fight against corruption and 
organized crime.  Several streams of EU funding were recently 
suspended due to concerns over corruption and mismanagement. 
Bulgaria's economy continues to expand following a 1996 
economic collapse, growing more than five percent per year 
for the past seven years.  Still, Bulgaria is the poorest EU 
member, and while EU accession has brought benefits, it has 
also spurred inflation as high as eight percent.  Bulgaria's 
biggest and most urgent challenge remains strengthening the 
rule of law.  While most credible international indices show 
Bulgaria making incremental progress overall, the suspension 
of $765 million in EU funding and the very critical July 23 
EC report highlights how grave a threat corruption remains to 
the health of the Bulgarian state and economy. 
 
¶9.  (SBU)  U.S. investments are growing; we are the only 
non-EU country among the top 10 foreign investors during the 
period 1992-2007.  EU membership, a corporate tax rate of 10 
percent, and the signing of a treaty to avoid double taxation 
(which still must be ratified by the U.S. Senate) have all 
helped pique U.S. investor interest.  U.S. firms also help 
push for an improved business climate, better IPR enforcement 
(Bulgaria got off the Special 301 watchlist in 2007), and 
better business ethics.  Bulgaria is increasingly attractive 
to U.S. high-tech firms; we have an active and successful 
trade promotion effort.  Problems remain in some key 
ministries, especially those dealing with environmental 
issues, which pose obstacles rather than offer solutions to 
foreign investors. 
 
¶10.  (SBU)  Internationally, Bulgaria continues to balance 
the reality of a bright future integrated with Europe and the 
United States with the darker legacies of its historical ties 
as a loyal member of the Warsaw Pact.  Bulgarians have 
romanticized Russia's nineteenth century role in its 
liberation from the Ottoman Empire.  Sizeable cohorts of the 
population retain fond memories even of the Soviets, and a 
generation of Moscow-trained and Moscow-leaning officials 
have yet to make a true attitudinal change, accounting for 
Russia's 70 percent approval ratings (neck and neck with the 
EU and outpacing the United States by more than 20 points). 
Moscow casts a long and deep shadow here given Russian energy 
dominance (it provides over 90 percent of Bulgaria's oil and 
natural gas and 100 percent of nuclear energy). 
 
 
¶11.  (SBU) COMMENT:  Although the government faces 
significant challenges on corruption and domestic reform 
issues, Bulgaria can play a greater leadership role in the 
region and take more substantial and effective rule of law 
measures.  Our support will encourage the government to build 
 
SOFIA 00000512  003 OF 003 
 
 
its international security capacity, deploy forces overseas, 
modernize its military, promote energy diversity, fight money 
laundering and upgrade public integrity and accountability. 
Your visit to the Joint Training Facilities at Novo Selo will 
highlight our robust and deepening security relationship and 
advance our larger strategic cooperation with Bulgaria, on 
regional stability as well as on rule of law. 
Karagiannis