[08SOFIA33] PUTIN’S VISIT TO BULGARIA: ENERGY FOCUSED

Published by Wikileaks & Bivol.bg
S E C R E T SECTION 01 OF 03 SOFIA 000033    SIPDIS    NOFORN  SIPDIS    PASS TO EUR/NCE BULGARIA DESK OFFICER MARK TURNER    E.O. 12958: DECL: 01/16/2033  TAGS: ENRG, PGOV, PREL, BU  SUBJECT: BULGARIA:  PUTIN'S VISIT TO BULGARIA:  ENERGY  FOCUSED    REF: A. 07 SOFIA 1396       B. SOFIA 0023    Classified By: CDA Alex Karagiannis for reasons 1.4 (b) and (d).    1.  (C//NF)  SUMMARY:  Bulgarian leaders have publicly stated  they hope Russian President Vladimir Putin's two-day official  visit to Bulgaria January 17-18 will lead to improved, more  pragmatic bilateral relations, but Putin's "all business"  agenda and the Russians' heavy-handed negotiating style are  becoming irritants.  Putin's delegation--which includes high  level government ministers and the chiefs of Russia's major  energy companies--will sign a number of agreements,  especially in the energy field, including on the  Burgas-Alexandropolous oil pipeline (BAP), the Belene Nuclear  Power Plant (NPP), and, possibly, the South Stream gas  pipeline (refs A and B).  The sheer weight of Russia's  economic presence here will continue to sustain Moscow's  influence in business and political life, no matter how much  the Bulgarians chafe at Russian strong-arming in the lead-up  to the visit.  END SUMMARY.    2.  (SBU)  Russian President Putin and his wife Lyudmila will  arrive on a two-day official visit to Sofia, January 17 at  the invitation of Bulgarian President Georgi Parvanov.  This  will be Putin's first visit to Bulgaria since 2003.  Upon  arrival, Putin and his wife will attend a gala concert at the  National Palace of Culture to officially kick-off 2008 as the  "Year of Russia" in Bulgaria.  The formal part of the visit  will begin January 18 with a welcoming ceremony for the  Presidential couple at St. Alexander Nevsky Square.  Putin  will then hold a one-on-one meeting with Parvanov, to be  followed by talks between the two official delegations.  Parvanov and Putin will also visit a Bulgarian-Russian  exhibition at the National History Museum, dedicated to the  130th anniversary of Bulgaria's liberation from Ottoman rule.   Later in the day Putin is scheduled to hold meetings with  Prime Minister Sergei Stanishev and Parliamentary Speaker  Georgi Pirinski.  The Russian delegation accompanying Putin  is expected to include Foreign Minster Sergey Lavrov,  Minister of Industry and Energy Victor Khristenko, Minister  of Transportation Igor Levitin, Moscow Mayor Yuri Luzhkov,  and Putin's heir apparent Dmitri Medvedev.  The CEOs of  Gazprom, the Unified Energy System of Russia RAO, and  Atomstroyexport complete Putin's entourage.    ----------------------------------------  ENERGY DEALS DOMINATE PUTIN'S TO DO LIST  ----------------------------------------    3.  (C)  Energy will be high on the Putin agenda.  During the  visit, the CEOs of the Bulgarian, Russian and Greek companies  involved in the Burgas-Alexandropolous pipeline project will  sign a shareholders agreement setting up an international  project company that will be registered in The Netherlands.  Representatives of Bulgaria's National Electric Company (NEK)  and Russia's Atomstroyexport will sign an agreement on  Russia's construction of the Belene Nuclear Power Plant  (NPP).  Deputy Prime Minister and Education and Science  Minister Daniel Valtchev and his Russian counterpart are  expected to sign a bilateral agreement on cooperation on the  import of spent nuclear fuel from Bulgarian nuclear research  reactors to the Russian Federation.  Under the terms of this  agreement, Russia will agree to accept the highly enriched  uranium (HEU) and take responsibility for its transport  inside Russian borders.  (Note:  The United States is working  to complete a related bilateral agreement with Bulgaria later  this month under which the United States will agree to  orchestrate and fund the removal of the HEU from the reactors  and transport it to the Russian Federation.)    4.  (C/NF)  Russian pressure on Bulgaria to sign an  Intergovernmental Agreement (IGA) on the South Stream gas    SOFIA 00000033  002 OF 003      pipeline is unrelenting.  According to our sources,  negotiations between Bulgaria and Russia on South Stream  ended January 9 with no agreement on key IGA issues.  On  January 10 the Bulgarian side, against the advice of its  newly-hired South Stream legal counsel, made proposed  concessions that did not meet Russian demands.  After a  January 11 phone call between Putin and Bulgarian PM  Stanishev, the Russians decided to send additional South  Stream negotiators to Sofia on January 14 in an attempt to  make Bulgaria give up its self-declared red-lines, including  majority ownership of the pipeline on Bulgarian territory.  On January 13, the Prime Minister's chief of staff told the  Ambassador that it was increasingly unlikely that Bulgaria  would agree to sign the IGA during Putin's visit.  The  Russian and Bulgarian negotiators hit a January 15 impasse,  and the Russian delegation is scheduled to return  empty-handed to Moscow.  But we can anticipate another  Russian push to test Bulgaria's resolve.    5.  (C)  Other than energy, Russia and Bulgaria will also  discuss Kosovo, relations with NATO, the CFE treaty, and  missile defense.  Bulgaria's highly unbalanced foreign trade  deficit, which, in 2006, represented 46 percent of Bulgaria's  entire trade deficit, is another likely topic of discussion.  Putin and members of his delegation are primed to sign  several non-energy agreements, including a deal for a new  ferryboat connection between Bulgarian and Russian Black Sea  ports and agreements in the areas of culture, science and  technology, labor, and anti-organized crime cooperation.  Contrary to expectations, the hot topics of Russian arms  licenses and Moscow's property claims will not be discussed,  (though lowerlevel delegations have, in fact, held intense  talks).    -------------------------------------  A "DIFFICULT BUT PREDICTABLE PARTNER"  -------------------------------------    6.  (C/NF)  In the lead-up to Putin's arrival, Bulgarian  leaders have publicly called for a more pragmatic approach to  Bulgarian-Russian relations, noting Bulgaria's NATO and EU  membership should not prohibit good ties with Moscow.  In a  January speech, PM Stanishev stated Bulgaria would like to  see "a more well intentioned, intensive and pragmatic pursuit  of dialog" between the two countries as well as a  reinvigoration of economic ties.  President Parvanov--who has  a good personal relationship with Putin (Ref A)--has  described the Russian leader as "a difficult but predictable  partner."   But despite public statements about hopes for  pragmatic relations, Bulgarian leaders have begun to chafe at  Russia's bullying negotiating style and Putin's  "all-business" approach to this visit.  Bulgarian officials  are disappointed that Moscow is putting the focus of the  visit on Russian-tilted deliverables while ignoring the  presentational and public aspects of the visit that are  essential to selling it as a joint success.  Putin refused  Bulgaria's suggestion to visit landmarks related to  Bulgarian-Russian historical ties such as the Shipka memorial  in central Bulgaria (an important battle site in the  Russo-Turkish War which led to Bulgaria's liberation) and the  Monument of the Soviet Army in Plovdiv.  Putin apparently  turned down an invitation to go skiing with Parvanov.  These  snubs, as well as Russia's intense pressure on South Stream  have all been leaked to the press.    ---------------------------------------------  PUBLIC ATTITUDES:  GREAT, MORE ROAD CLOSURES  ---------------------------------------------    7.  (C/NF)  While Russia does well in Bulgarian pubic opinion  polls, Putin's impending visit is not generating overwhelming  public interest.  Media coverage has been lighter than that  seen in the lead-up to President Bush's June 2007 visit,    SOFIA 00000033  003 OF 003      although there have been articles highlighting Putin's  political and personal life and focusing on bilateral  relations and Bulgarian-Russian energy projects.  The  Bulgarian media has noted that unlike the other new  post-communist EU states, such as Poland, Romania, and the  Baltics, Bulgaria's relations with Russia seem to be on the  rise, as Bulgaria seeks to boost its economic ties with  Russia.    8.  (SBU)  Center-right opposition, environmental and human  rights groups have said they plan to demonstrate in downtown  Sofia against Putin's policies, Russian-related projects, and  Bulgaria's growing dependency on Russia.  A number of  environmental groups have urged Bulgarians to protest against  the Belene Nuclear Power Plant (NPP) and the  Burgas-Alexandropolous oil pipeline.  The Democrats for  Strong Bulgaria (DSB), led by the staunchly anti-Moscow  former PM Ivan Kostov will protest Putin's visit.  Kostov  stated Putin's "imperial policies pose a direct threat to the  Bulgarian national interest," and added "the visit will  accelerate large scale energy projects which turn Bulgaria  into a Trojan horse of Putin's oligarchy in the EU."  None of  these protests is likely to be remarkable in size.  For most  residents of Sofia, Putin's visit is simply another  high-profile arrival of a foreign dignitary whose security  measures will likely include street closures and blockades  that will add congestion to a city with poor infrastructure  and already-heavy traffic.    9.  (S//NF)  COMMENT:  Putin's visit is important  economically and politically for the Bulgarian Government.  It is also a key moment to advance Bulgaria's national  interests and break the old instinct not to antagonize  Moscow.  The Russians have not helped themselves by snubbing  the "feel good" aspects of the visit.  But even if Sofia  manages to resist Russian pressure to sign an unfavorable IGA  on South Stream, the sheer weight of Russia's economic  presence will continue to press on Bulgarian business and  politics.  We will maintain high-level engagement with senior  Bulgarian officials willing to stand up to Russia, bolstering  their instincts to seize and use the options available--such  as expert legal counsel--to resist Russian pressure.  As  Bulgaria gains greater self-confidence and is further  integrated in the Euro-Atlantic partnership, it will find it  easier to protect and advance its--and our--interests.  END  COMMENT.  Karagiannis