Published by Wikileaks & Bivol.bg
 date: 4/29/2005 13:06 refid: 05SOFIA808 origin: Embassy Sofia classification: CONFIDENTIAL destination: 04SOFIA2054 header: This record is a partial extract of the original cable. The full text of the original cable is not available.   C O N F I D E N T I A L  SOFIA 000808    SIPDIS      E.O. 12958: DECL: 04/29/2015  TAGS: PREL, PGOV, ECON, MARR, IZ, BU  SUBJECT: BULGARIA'S SOCIALIST PARTY: SOCIAL DEMOCRATS OR  CLOSET COMMUNISTS?    REF: 04 SOFIA 2054    Classified By: Ambassador James Pardew, reasons 1.4(b) and (d).     1. (C) SUMMARY.  If opinion polls are correct, the Bulgarian  Socialist Party (BSP) is likely to play a leading role in the  next government.  Street protests drove the last BSP  government from power in 1997 amid hyper-inflation and the  collapse of the banking system.  More than eight years later,  many still question whether the BSP is truly reformed or has  sufficient qualified personnel to run the government.   While  the rhetoric of the party leadership is pro-European and  pro-NATO, polls show that much of the party rank and file is  suspicious of both NATO and the United States.  That said,  the BSP is unlikely to make any abrupt changes in Bulgarian  foreign and economic policy if the party comes to power.  They will, however, be more difficult for us to work with  than the current government, looking to Brussels and European  Socialists rather than Washington for guidance on most  issues.  On economic policy, the BSP is hemmed in by an IMF  stand-by agreement, a currency board and impending membership  in the European Union.  Political relations with Russia will  likely become warmer in a BSP government, and Russian  economic interests may gain ground. END SUMMARY.    ------------------------------  SOCIALISTS AHEAD, BUT HOW FAR?  ------------------------------    2. (SBU) Polls show the Bulgarian Socialist Party winning 22  to 27 percent of the popular vote in the June 25 election,  which under Bulgaria's proportional system will give them at  least a plurality in the next National Assembly.  If the  actual vote is toward the high end of this range and overall  turnout is low, the Socialists could win an absolute majority  in the 240-seat parliament.  However, at this point in the  campaign, most observers say the Socialists are unlikely to  win an absolute majority.  A somewhat more likely outcome is  for the Socialists to fall short of a majority and seek to  form a center-left coalition government with one of the two  parties currently in power:  the National Movement Simeon II  (NMSS) or the mainly ethnic-Turkish Movement for Rights and  Freedoms (MRF).  A third possible scenario -- a center-right  coalition built around the NMSS -- is less likely, but still  possible if the right does better than current polling  indicates (septel).    3. (SBU)  The victory of former king Simeon Saxe-Coburg  Gotha's centrist NMSS in the 2001 election shattered what had  become a de facto two-party system in Bulgaria pitting  ex-Communists against anti-Communists.  The latter,  symbolized by the once-powerful Union of Democratic Forces  (UDF), is currently riven by infighting that risks making it  irrelevant in the coming elections.  At the same time, a weak  party organization and the tendency of the Bulgarian  electorate to punish the incumbent will make it extremely  difficult for Simeon to pull off a repeat of his 2001  performance.  Taken together, uncertainty about voter  turnout, disarray within the right, and the unpredictable  nature of support for the ex-king make it difficult to  foresee the outcome of these elections.    ------------------  A BIFURCATED PARTY  ------------------    4. (C) Critics of the BSP assert that the current moderate  leadership of the party is simply a front for hard-liners and  former members of the Communist-era security services.  While  both are certainly present within the BSP, most neutral  observers believe their influence is exaggerated by the  party's opponents.  Georgi Purvanov, the previous leader of  the BSP and now Bulgaria's President, turned the party  decisively toward the West when he was in charge.  Though no  longer formally a member, his influence over the party  continues to be strong.  Purvanov's protege and current party  chairman, 38 year-old Sergei Stanishev, epitomizes the  reformist wing of the party.  The economic policies outlined  in his keynote speech to the annual party congress closely  mirror current policies:  a more favorable business climate,  continued economic restructuring, low budget deficits, zero  taxes on dividends, and maintaining the currency board.  Yet  even as he laid out his economic policy,  Stanishev  repeatedly referred to the Congress delegates as "comrades."    5. (C) Stanishev's use of the term "comrade" illustrates the  bifurcated nature of the Bulgarian Socialist Party.  Many of  its core supporters are elderly pensioners who have lost  ground economically since the fall of communism.  Moreover,  unlike similar parties in Poland and other central European  countries, the Bulgarian Communist Party never split into  separate social democratic and communist organizations; it  simply changed its name.  While the social democrats appear  to have the upper hand in the BSP, it is still a "big-tent"  party that must please its hard-line faction, if only by  addressing them as "comrades."  An equally serious split  exists between young technocrats and older professional  politicians, leading many Bulgarians to question the  competency of the BSP to run a 21st-century government on the  verge of EU membership.  "The BSP simply does not have enough  trained personnel to govern alone," is a frequently heard  refrain.    ------------------------  IMPACT ON U.S. INTERESTS  ------------------------    6. (C) Bulgaria is firmly in NATO and on the path to  membership in the European Union.  The leadership of the BSP  supports a U.S. military presence in Bulgaria in principle,  although negotiations of a U.S. presence will be much tougher  with a BSP-led government.  On the economic side, the  Socialists have said they will stick to the IMF stand-by  agreement and maintain the currency board.  In short,  Bulgaria's general strategic orientation toward the West is  clear and unlikely to change.  Yet within these broad  confines, the Socialists -- if elected -- will likely be far  more difficult for us to work with than the current  government.  The party's Jurassic minority will oppose U.S.  interests, but it would be wrong to overestimate their  influence on the current leadership and especially President  Purvanov.  Yet even the most reform-minded members of the  leadership take their cues not from Washington or London, but  from Brussels, Strasbourg, Berlin and Moscow.  Stanishev  himself looks almost reflexively to the Socialist  International and the Party of European Socialists for  developing his party platform and drafting major policy  speeches.  There are, unfortunately, few true Atlanticists in  the BSP.    7. (C) On Iraq, Stanishev has told his electorate that he  will pull Bulgarian troops out of Iraq as soon as the BSP  takes power.  However, some of the most powerful insiders in  the party, including those around Purvanov, dismiss  Stanishev's promise as pre-election hyperbole.  They say that  there will be no abrupt pullout after the election.  Instead,  Purvanov's position -- and that of the current government --  that Bulgaria should withdraw its forces at the end of the  year will prevail.  According to these sources, the BSP  cannot afford to begin its mandate with an act that would be  widely perceived as irresponsible.  On the contrary, the BSP  needs to demonstrate that it is a responsible and predictable  actor on the international stage.    8. (C) Russia's influence over the BSP is hard to gauge.  Out  of habit, most BSP leaders probably feel more at home with  Russians than with Americans.  But this is as much due to the  limited contact between the BSP and the U.S. prior to the  reformists' ascent than to any lingering ideological affinity  for Russia.  We now have excellent contacts within the BSP at  all levels.  Nevertheless, for historical as well as cultural  reasons, there are far more Russophiles in Bulgaria than  there are in, for example, Poland or the Czech Republic.  On  the political level, relations with Russia would likely  become warmer.    9. (C) The one area where Russia's influence is likely to  grow if the BSP takes power is in the economy.  Most  Bulgarian companies with Russian business ties are aligned  with the BSP, especially in the energy sector.  The Bulgarian  subsidiary of LukOil -- which pays some 20 percent of all the  taxes collected in Bulgaria -- is reportedly a BSP sponsor.  Similarly, Risk Engineering, the leading Bulgarian firm in  the nuclear power sector, is closely tied in with Russian  business interests.  Beyond this, there are a whole series of  "Red businesses" whose owners became wealthy by stripping the  assets of state-owned industries during the previous  Socialist government, and who still owe a debt of gratitude  to the BSP.    10. (C) A Socialist government will not resolve corruption  issues in Bulgaria and could make matters worse as old habits  die hard.  However, pressure from the European Union will  almost certainly lead to some kind of judicial reform,  regardless of who wins the election.  The Socialist have made  judicial reform and the fight against organized crime a  center-piece of their campaign, but it is difficult to judge  their sincerity.  In any case, we doubt there will be a  dramatic change in either direction under a BSP-led  government.    11. (C) The Socialists appear to have learned from the  economic mistakes of the Videnov government, when street  protests drove the Socialists from power after they ran the  economy into the ground.  Under a BSP-led government, there  would likely be a greater emphasis on social welfare and  state-sector solutions to social problems, but still within  the confines of stable fiscal and monetary policies.  Privatization of the few remaining state-owned companies  might slow, but fiscal reality should prevail in the long run  -- the government simply cannot afford to keep money-losing  companies on the books forever.  Stanishev has emphasized to  us that the BSP can not afford another failed government.    -------  COMMENT  -------    12. (C) If the Socialists come to power, a radical shift in  the direction of the country is unlikely, although promotion  of U.S. policy in Bulgaria will become far more difficult  with a BSP-led government.  The U.S. can influence the  outcome of the current election campaign only at the margins.   We are funding a get-out-the-vote campaign by the National  Democratic Institute (NDI), which many believe will primarily  assist the center-right.  We are also looking for ways to  demonstrate that the current government's close relations  with the U.S. have paid off (reftel), and thereby help  improve its results on election day.  Regardless of these  efforts, the NMSS may well be the underdog on election day.  However, if the Socialists end up forming a coalition  government with the NMSS -- a scenario that many Bulgarians  believe is likely --  the participation of the ex-king's  party will have a moderating effect on the any BSP-led  government.  Beyond this, we will continue to engage the  moderates around Stanishev and the President and try, to the  extent we can, to isolate the hard-liners within the BSP.  

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