Cablegate: Scenesetter for Visit of Codel Bordallo

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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.

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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

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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

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