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DE RUEHSF #0162/01 0931705
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R 031705Z APR 09
FM AMEMBASSY SOFIA
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C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000162 
 
SIPDIS 
 
E.O. 12958: DECL: 04/02/2019 
TAGS: PREL PGOV ENGY BU
SUBJECT: BULGARIAN FM KALFIN'S WASHINTON MEETING WITH THE 
SECRETARY, APRIL 8 
 
Classified By: Charge Alex Karagiannis for reasons 1.4 (b) and (d). 
 
¶1.  (C)  SUMMARY: FM Kalfin arrives just after his sprint to 
Ashgabat and the NATO and U.S.-EU Summits and just two 
weeks before Bulgaria's April 24-25 Energy Summit on 
natural gas.  Anxious for a successful summit, Bulgaria is 
struggling to confirm high-level attendance and thread the 
needle that can balance EU skeptics of its initiative, 
Russian strong-arming on South Stream and the U.S. 
strategic focus on principles -- transparency, diversity, 
market rules -- rather than simply on projects and 
pipelines.  Kalfin is determined to deliver.  Smart, savvy, 
sensible, and honest, he has President Parvanov's ear and 
PM Stanishev's confidence, testament to his skills given 
their increasingly prickly personal and political 
relationship.  As the government stumbles towards summer 
parliamentary elections, its commitments to us on 
Afghanistan and regional security in South Eastern Europe 
and the Black Sea remain firm, but its capacity to deliver 
is shrinking.  Kalfin is above the political fray and is 
positioned to remain influential.  Your meeting will help 
secure positive decisions from a government that looks for 
a U.S. boost.  END SUMMARY. 
 
Electoral Politics at Center Stage 
---------------------------------- 
¶2.  (C)  Kalfin will accompany President Parvanov to the 
NATO Summit and PM Stansihev to the U.S.-EU Summit.  He 
will be instrumental in defining and implementing policy as 
the two leaders manage their increasingly testy 
relationship.  The government is staggering to the end of 
its five year term with notable achievements, especially 
in economic growth, but now overshadowed by world conditions. 
A cynical public is worried about job losses and poor social 
services; it is frustrated and angry over rampant corruption, 
high-profile scandals, and EU funds withheld over 
mismanagement. The political season is in full swing as the 
country heads to summer elections; risk averse political 
survival instincts are taking hold.  But Bulgaria's 
pro-Atlantic orientation is set; it has supported us in 
Iraq, Afghanistan, Kosovo, NATO membership issues, and MAP 
for Georgia and Ukraine.  Bulgarians look to the U.S. as 
they set policy courses. 
 
ENERGY SECURITY 
--------------- 
¶3.  (C)  Over 95 percent dependent on Russian gas, Bulgaria 
suffered dearly from the two-week Russian-Ukraine gas 
dispute and cut-off in January.  It now looks to build 
interconnectors with neighbors.  More strategically, it is 
determined to showcase its long-planned April 24-25 energy 
summit and help bring greater energy security to Europe. 
At our urging, Bulgaria has proposed an agenda based on the 
principles of transparency, diversification, market-based 
decision making and best business practices.  The Russians 
are now leveraging Putin,s possible participation to 
pressure Bulgaria to highlight its South Stream project. 
The Bulgarians are resisting any multilateral signings or a 
bilateral deal on their part, but cannot guarantee what 
other countries (or companies) might do.  They know their 
credibility is at stake with us, the EU, and Central Asian 
and Caspian countries that they cultivated for alternative 
supplies and routes.  They are working closely with us on 
the declaration and are eager to hear who will represent 
the U.S. 
 
AFGHANISTAN 
----------- 
¶4.  (C)  Despite public opposition to overseas deployments 
and though saddled with a limited capacity military, 
Bulgaria has come through on Afghanistan when presented 
with specific, targeted requests.  It withdrew 153 soldiers 
from Iraq (at GOI request), and we have requested an 
equivalent number be shifted to Afghanistan.  Specifically, 
we have requested modest increases (two more OMLTs, medical 
teams, civilian experts, and consolidation of forces in the 
South) all well within Bulgaria's capacity.  With an eye on 
elections, some here want the decision left to the new 
government.  A clear message to Kalfin will help get a 
positive decision now. 
 
¶5.  (C)  We have worked hard to improve Bulgarian military 
capacity, making it more deployable and more NATO 
inter-operable.  We have proposed an F-16 deal, but the 
erratic and weak Defense Minster threw a spanner in 
the works, stalling the process and forcing us to wait 
until a new government is in place.  We still believe it is 
in our mutual interest to end Bulgarian dependence on Russian 
MiG's that are ineffective and very costly to maintain (over 
$100 million a year).  An investment in U.S. aircraft would 
lock the Bulgarians into a long-term relationship with us and 
transform their military, ending decades of Russian 
influence and graft-induced military procurements. 
 
SOFIA 00000162  002 OF 002 
 
 
 
ECONOMY 
------- 
¶6.  (C)  After five years of impressive growth, Bulgaria is 
now feeling the effects of the global financial crisis. 
Fortunately, strict fiscal conservatism has left the 
country with sufficient buffers to avoid the financial 
turbulence seen in many of its neighbors, at least for 
now.  But Bulgaria's small, open economy is vulnerable to 
potential outside shocks including restricted lending by 
its mostly foreign-owned banking sector and the shrinking 
of its European export markets.  The Socialist-led government 
is loath to look for outside help as elections loom and has 
ruled out a precautionary agreement with the IMF or ECB 
assistance.  Bravado is no substitute for prudent planning; 
Bulgaria must prepare for a potential economic rough ride. 
 
CORRUPTION/RULE OF LAW 
---------------------- 
¶7.  (C)  Within the EU, Bulgarians have the least 
confidence in their public institutions; confidence in 
police, prosecutors, and judges is shockingly low at less 
than 20 percent.  Serial scandals in multiple ministries, a 
culture of impunity for venal and corrupt public officials, 
organized crime rackets, and EU withholding of funds for 
mismanagement have rocked the political establishment. 
Reforms to date have not made an appreciable dent in 
systemic problems.  But there is some incremental progress, 
thanks to U.S. and EU pressure.  Our word counts especially 
heavily.  A firm U.S. message on the integrity of the 
electoral process and on successfully prosecuting suspected 
criminals will resonate quite well here with a public that 
values our leadership. 
 
¶8.  (C)  COMMENT:  The U.S. enjoys high public approval. 
Bulgaria prides itself on being a predictable and reliable 
partner. It wants to burnish its international reputation, 
in concert with support for U.S. policies.  Prime Minister 
Stanishev and President Parvanov are committed to start on 
the right foot with President Obama.  Your meeting and 
public remarks will set the tone and parameters for a 
renewed relationship. Kalfin will come back galvanized to 
get things done.  END COMMENT. 
 
Karagiannis