Cablegate: European Commission Ponders Next Steps On Bulgaria

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C O N F I D E N T I A L SECTION 01 OF 02 SOFIA 000631

SIPDIS

DEPARTMENT ALSO FOR INL

E.O. 12958: DECL: 09/22/2018
TAGS: ECON PREL BU
SUBJECT: EUROPEAN COMMISSION PONDERS NEXT STEPS ON BULGARIA

REF: A. SOFIA 499
B. SOFIA 573

Classified By: Ambassador Nancy McEldowney for reasons 1.5 (b) and (d)

1. (C) Summary: The European Commission is concerned
Bulgaria won't be able to show sufficient progress on
organized crime and corruption in the upcoming February and
July monitoring reports and is considering next steps. Report
drafters fear member states ultimately will not approve
safeguard clauses against a fellow member state and they
expect a fight from Sofia when the Commission attempts to
extend the monitoring mechanism past its December 2009 end
date. Meanwhile, the European Anti-Fraud Office (OLAF) is
keeping a hard line on Bulgaria, urging it to go after one or
two well-connected organized crime figures. OLAF is in
Bulgaria for the long-haul and will do "whatever it takes" to
help the few reformers here "get it right." End Summary.

COMMISSION SCRATCHING HEAD...
-----------------------------

2. (C) Representatives from the Directorate General for
Justice Liberty and Security (JLS) and the Commission's
Secretariat General told us September 16 there is growing
exasperation with Bulgarian inability to make progress on
high level corruption and organized crime. The Commission
representatives responsible for drafting the harsh July 23
report (ref A) expressed bitterness that the Bulgarians
seemed to put more effort into getting the report watered
down than addressing the criticisms in the report itself.
The Bulgarian lobbying effort -- coming in the weeks leading
up to the report's release -- focused on delinking the
monitoring mechanism with any other EU-Bulgaria relationship.
Specifically, the Bulgarians managed to remove wording
suggesting Bulgaria's inability to fight organized crime and
corruption would negatively impact the country's ability to
join Schengen and ERM-II. The Bulgarians are also trying to
prevent the Commission from extending the monitoring period,
originally scheduled to end in December 2009.

3. (C) The Commission is impressed with the 80 point plan
recently issued by EU Affairs Minister Gergana Grancharova to
address the issues raised in the July report. For the first
time, our Brussels-based contacts noted, the Bulgarians have
attached timelines to their intended reforms. Unfortunately,
in the Commission's (and our) opinion, the Bulgarians have
set themselves up for failure by trying to achieve so many
reforms -- both small and large -- by the end of December.
Instead, the Commission has been stressing the need to
achieve a few, large-scale indicators of success, such as the
conclusion of one high-profile organized crime/corruption
case. The Commission is pondering its next steps on
Bulgaria. Bulgaria-watchers are gearing up for an interim
monitoring report, to be released in February. They hope to
cite progress, since a negative review will put the
Commission in uncharted territory -- the need to use
safeguard clauses against one of their own. At a minimum,
the report drafters are likely to push for an official
extension of the monitoring mechanism after next summer's
report, something that will be fiercely fought by Sofia.

....WHILE OLAF KEEPS UP THE PRESSURE
------------------------------------

4. (C) The European Anti-Fraud Office (OLAF) is determined
to maintain its hard line on Bulgaria. According to Thierry
Cretin, OLAF Director of Investigations and Operations, OLAF
is committed to long-term engagement with Sofia. "We will
not back down," he said, because OLAF head Wolfgang Hetzer
has decided to make an example of Bulgaria and has dedicated
significant resources to "getting it right." According to
Cretin, Bulgaria has to do two things to answer OLAF's
concerns: 1) recover EU money improperly taken or spent in
the various fraud schemes, and 2) prosecute, and, if
possible, convict, those responsible for criminal acts
associated with the misuse of EU funds. OLAF is aiming high.
Cretin said most of his organization's investigations
eventually lead to one man - Vasil Bozhkov, aka "the skull,"
-- an extremely wealthy and influential businessman with
known OC ties and links to many high-level politicians. "If
Bulgaria brings down Bozhkov, that would be progress," said
Cretin.

SOFIA 00000631 002 OF 002

5. (C) The Bulgarians are going to have a tough time
showing such progress, specifically due to the close
connections between politicians and organized crime. The
weak judicial system only serves to hide political
connections to the large fraud schemes. Cretin has serious
doubts about the ability of Prosecutor General Boris Velchev
to get the job done. Velchev can only be judged by results,
and so far he has little to show for his efforts. Cretin
said the judicial system is designed to avoid responsibility
-- it allows prosecutors to dismantle cases into tiny pieces
to hide the inevitable links between cases and it encourages
a "formalized approach" to the law which is "used only by
those wishing to escape responsibility." Cretin further
criticized Velchev for naming an "extremely unhelpful"
Prosecutor in Sofia as OLAF liaison. The prosecutor, Stefka
Krastanova, is so uncooperative that Cretin's subordinates
refer to her as "the snake."

COMMENT
-------

6. (C) Without question the Commission's monitoring
mechanism has been the most important propeller of reform in
Bulgaria since accession. We sense, on one hand, continued
frustration on the Commission's part about Bulgaria's lack of
progress. Our contacts feel strongly that the EU must
maintain its hard line. The report drafters noted the
overwhelming support given them by other member states during
the drafting of the July report. At the same time, OLAF
aside, we sense a growing case of "Bulgaria fatigue" in the
Commission. The report drafters were clearly disheartened
that Bulgaria's lobbyists managed to water down their report
in July and they worry that member states ultimately will not
be willing to take the most drastic steps, including
safeguard clauses, against a fellow member-state next year.

McEldowney

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