VZCZCXRO8534
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHSF #0674/01 3291430
ZNY CCCCC ZZH
O 251430Z NOV 09
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6502
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000674 
 
SIPDIS 
 
FOR SPE MORNINGSTAR 
 
E.O. 12958: DECL: 11/23/2019 
TAGS: ENRG PGOV PREL BU
SUBJECT: SCENESETTER FOR SPE MORNINGSTAR'S DECEMBER 4 VISIT 
TO BULGARIA 
 
Classified By: CDA Susan Sutton for reasons 1.4 (b) and (d). 
 
¶1.  (C) Summary:  Bulgaria has experienced a profound change 
in leadership and outlook since your visit in April.  July 
national elections ushered in a reformist center-right 
government focused on fighting organized crime and corruption 
and putting the country's fiscal house in order.  On energy, 
Prime Minister Borissov and his team want to break Sofia's 
traditionally-cozy relationship with Moscow and focus on 
diversification, transparency, and those projects with clear 
economic rationale.  This has not been easy.  The new 
government is facing entrenched domestic energy lobbies, weak 
institutional capacity and bureaucratic reluctance to carry 
out change and, in Russia, an irritated former partner that 
still supplies nearly 100 percent of Bulgaria's gas and 
nuclear fuel.  PM Borissov seeks U.S. advice and support as 
he develops and implements his bold agenda.  An update on 
Bulgarian energy issues is being sent via septel.  End 
Summary. 
 
¶2.  (C) When PM Borissov swept to power in July his energy 
team immediately began to question Bulgaria's participation 
in the large-scale, Russian-proposed energy projects, 
including South Stream, the Belene Nuclear Power Plant and 
the Burgas-Alexandroupolis pipeline.  In September Borissov 
told Russian PM Putin he would announce whether Bulgaria 
would proceed with these projects after an evaluation of 
whether they were in the Bulgarian national and commercial 
interest.  While an announcement is likely to be made in 
December, it is clear that Belene is dead, at least for now, 
and the present government has little interest in 
Burgas-Alexandroupolis. 
 
¶3.  (C) South Stream is another issue.  Upon taking office, 
the new government clearly wanted out of South Stream, seeing 
it as a Russian-dominated project with little economic 
rationale.  The Russians put on a full court press to 
reaffirm Bulgarian participation, including a Putin-Borissov 
telcon and meeting and outreach by Russian Energy Minister 
Schmatko.  When Borissov sought EU advice, it came in the 
form of pro-South Stream lobbying by Berlusconi and a steady 
stream of news of additional EU country participants in the 
project.  In the face of this pressure (and with no one of 
Putin or Berlusconi's stature arguing otherwise) the 
Bulgarians began to view South Stream not as a Russian, but a 
European project, and this government did not want to be left 
out.  We fully expect Bulgaria to continue as a participant 
in South Stream, but its participation will be low key. 
 
¶4.  (C) As one of the most energy-dependent countries in the 
region and the one hardest-hit by the January gas crisis, 
Bulgaria is also keenly focused on diversification. 
Strategies include Nabucco, interconnectors (Bulgaria will 
ask your help in securing EU funding for a Bulgarian spur to 
the TGI interconnector), and nuclear sector diversification, 
including possible participation in new reactor deployment. 
It is on the nuclear side that we have can have the most 
immediate impact.  U.S. companies are lined up to offer 
alternative nuclear fuel supplies and domestic spent fuel 
storage capabilities, options that are quick, economical and 
high impact in terms of diversification. 
 
 
YOUR MEETINGS 
------------- 
 
¶5.  (C) You will meet with Bulgaria's senior leadership, the 
American business community, and key officials from the 
Ministry of Economy and Energy and Bulgarian Energy Holding 
tasked with carrying out the new government's energy policy. 
Your outreach to the local media will help us answer the 
Government's continued request that we express public support 
(and political cover) for Borissov's bold energy moves. 
 
Prime Minister Boyko Borissov:  The 50-year-old former mayor 
of Sofia is also a former bodyguard with a black belt in 
karate and an equally flamboyant personality.  Instinctively 
and explicitly pro-U.S., he is a self-described 
man-of-the-street.  Your visit is partial answer to 
Borissov's September letter to President Obama asking for 
U.S. advice and engagement as the new government develops and 
implements its bold, new energy policy. 
 
President Georgi Parvanov:  The only representative of the 
old regime remaining in office, Parvanov is struggling to 
assert influence over a government that sees him as a 
 
SOFIA 00000674  002 OF 002 
 
 
representative of everything that was wrong with the former 
government.  Before Borissov came to power, Parvanov 
effectively managed energy policy and brokered an ever-closer 
relationship with Russia (although that relationship soured 
somewhat after the January gas cut-off).  Parvanov is openly 
critical of Borissov's new energy policy, saying it exposes 
Bulgaria as an unreliable partner. 
 
Minister of Economy and Energy Traycho Traikov:  The 
39-year-old Traikov was a complete unknown when Borissov 
named him Economy and Energy Minister (after a long search 
that proved nearly impossible to find an energy sector 
specialist not beholden to the various Bulgarian energy 
lobbies).  A former financial manager in the electrical 
distribution sector, Traikov is quiet and keeps his own 
counsel.  Although he seemed to lack weight and influence in 
his first couple of months in office, he has since displayed 
bureaucratic savvy and good instincts.  However, we believe 
all important energy decisions are still made by the Prime 
Minister with some input from Deputy Prime Minister and 
Finance Minister Simeon Dyankov. 
 
 
OUR MESSAGE 
----------- 
 
¶6.  (C) Your visit is an opportunity to show support for the 
new government's energy policy, urge even greater 
transparency in the energy sector, and explain U.S. energy 
policy for the region, especially as it relates to how we 
will work with the EU on issues of diversification and 
relations with Russia.  You may wish to emphasize the 
following points: 
 
--  Washington supports the Bulgarian Government's commitment 
to enhanced energy security, diversification and transparency 
in the energy sector; 
 
--  Bulgaria's large-scale energy projects should be judged 
on transparency, commercial-viability and diversification, 
not on political considerations; 
 
--  If Bulgaria continues its participation in South Stream, 
we hope it will rely on its Washington-based legal counsel to 
ensure the country's interests are protected; 
 
-- Nabucco and interconnectors are essential to breaking 
Gazprom's monopoly supplier position; and 
 
-- American companies are eager to help the Bulgarian nuclear 
sector through alternative nuclear fuel supplies and spent 
fuel storage capabilities -- these are quick, tangible and 
economically-attractive options to increase Bulgaria's energy 
security. 
 
 
 
 
 
 
SUTTON