VZCZCXRO1480
OO RUEHAG RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSF #0631/01 2691338
ZNY CCCCC ZZH
O 251338Z SEP 08
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5414
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000631 
 
SIPDIS 
 
DEPARTMENT ALSO FOR INL 
 
E.O. 12958: DECL: 09/22/2018 
TAGS: ECON PREL BU
SUBJECT: EUROPEAN COMMISSION PONDERS NEXT STEPS ON BULGARIA 
 
REF: A. SOFIA 499 
     ¶B. SOFIA 573 
 
Classified By: Ambassador Nancy McEldowney for reasons 1.5 (b) and (d) 
 
 ¶1. (C)  Summary:  The European Commission is concerned 
Bulgaria won't be able to show sufficient progress on 
organized crime and corruption in the upcoming February and 
July monitoring reports and is considering next steps. Report 
drafters fear member states ultimately will not approve 
safeguard clauses against a fellow member state and they 
expect a fight from Sofia when the Commission attempts to 
extend the monitoring mechanism past its December 2009 end 
date.  Meanwhile, the European Anti-Fraud Office (OLAF) is 
keeping a hard line on Bulgaria, urging it to go after one or 
two well-connected organized crime figures.  OLAF is in 
Bulgaria for the long-haul and will do "whatever it takes" to 
help the few reformers here "get it right."  End Summary. 
 
 
COMMISSION SCRATCHING HEAD... 
----------------------------- 
 
¶2.  (C)  Representatives from the Directorate General for 
Justice Liberty and Security (JLS) and the Commission's 
Secretariat General told us September 16 there is growing 
exasperation with Bulgarian inability to make progress on 
high level corruption and organized crime.  The Commission 
representatives responsible for drafting the harsh July 23 
report (ref A) expressed bitterness that the Bulgarians 
seemed to put more effort into getting the report watered 
down than addressing the criticisms in the report itself. 
The Bulgarian lobbying effort -- coming in the weeks leading 
up to the report's release -- focused on delinking the 
monitoring mechanism with any other EU-Bulgaria relationship. 
 Specifically, the Bulgarians managed to remove wording 
suggesting Bulgaria's inability to fight organized crime and 
corruption would negatively impact the country's ability to 
join Schengen and ERM-II.  The Bulgarians are also trying to 
prevent the Commission from extending the monitoring period, 
originally scheduled to end in December 2009. 
 
¶3.  (C)  The Commission is impressed with the 80 point plan 
recently issued by EU Affairs Minister Gergana Grancharova to 
address the issues raised in the July report.  For the first 
time, our Brussels-based contacts noted, the Bulgarians have 
attached timelines to their intended reforms.  Unfortunately, 
in the Commission's (and our) opinion, the Bulgarians have 
set themselves up for failure by trying to achieve so many 
reforms -- both small and large -- by the end of December. 
Instead, the Commission has been stressing the need to 
achieve a few, large-scale indicators of success, such as the 
conclusion of one high-profile organized crime/corruption 
case.  The Commission is pondering its next steps on 
Bulgaria.  Bulgaria-watchers are gearing up for an interim 
monitoring report, to be released in February.  They hope to 
cite progress, since a negative review will put the 
Commission in uncharted territory -- the need to use 
safeguard clauses against one of their own.  At a minimum, 
the report drafters are likely to push for an official 
extension of the monitoring mechanism after next summer's 
report, something that will be fiercely fought by Sofia. 
 
 
....WHILE OLAF KEEPS UP THE PRESSURE 
------------------------------------ 
 
¶4.  (C)  The European Anti-Fraud Office (OLAF) is determined 
to maintain its hard line on Bulgaria.  According to Thierry 
Cretin, OLAF Director of Investigations and Operations, OLAF 
is committed to long-term engagement with Sofia.  "We will 
not back down," he said, because OLAF head Wolfgang Hetzer 
has decided to make an example of Bulgaria and has dedicated 
significant resources to "getting it right."  According to 
Cretin, Bulgaria has to do two things to answer OLAF's 
concerns: 1) recover EU money improperly taken or spent in 
the various fraud schemes, and 2)  prosecute, and, if 
possible, convict, those responsible for criminal acts 
associated with the misuse of EU funds.  OLAF is aiming high. 
 Cretin said most of his organization's investigations 
eventually lead to one man - Vasil Bozhkov, aka "the skull," 
-- an extremely wealthy and influential businessman with 
known OC ties and links to many high-level politicians.  "If 
Bulgaria brings down Bozhkov, that would be progress," said 
Cretin. 
 
SOFIA 00000631  002 OF 002 
 
 
 
¶5.  (C)  The Bulgarians are going to have a tough time 
showing such progress, specifically due to the close 
connections between politicians and organized crime.  The 
weak judicial system only serves to hide political 
connections to the large fraud schemes.  Cretin has serious 
doubts about the ability of Prosecutor General Boris Velchev 
to get the job done.  Velchev can only be judged by results, 
and so far he has little to show for his efforts.  Cretin 
said the judicial system is designed to avoid responsibility 
-- it allows prosecutors to dismantle cases into tiny pieces 
to hide the inevitable links between cases and it encourages 
a "formalized approach" to the law which is  "used only by 
those wishing to escape responsibility."  Cretin further 
criticized Velchev for naming an "extremely unhelpful" 
Prosecutor in Sofia as OLAF liaison.  The prosecutor, Stefka 
Krastanova, is so uncooperative that Cretin's subordinates 
refer to her as "the snake." 
 
COMMENT 
------- 
 
¶6.  (C)  Without question the Commission's monitoring 
mechanism has been the most important propeller of reform in 
Bulgaria since accession.  We sense, on one hand, continued 
frustration on the Commission's part about Bulgaria's lack of 
progress.  Our contacts feel strongly that the EU must 
maintain its hard line.  The report drafters noted the 
overwhelming support given them by other member states during 
the drafting of the July report.  At the same time, OLAF 
aside, we sense a growing case of "Bulgaria fatigue" in the 
Commission.  The report drafters were clearly disheartened 
that Bulgaria's lobbyists managed to water down their report 
in July and they worry that member states ultimately will not 
be willing to take the most drastic steps, including 
safeguard clauses, against a fellow member-state next year. 
 
McEldowney