WikiLeaks: Bulgaria's Ex Economy Minister Rumen Ovcharov Controversial, Charming

Socialist Rumen Ovcharov, Bulgaria's former Energy and Economy Minister, left the previous government in May 2007 in the wake of a corruption scandal. Photo by BGNES

Diplomatic cables of the US embassy in Sofia, dated February 26, 2007, has been revealed on WikiLeaks and provided to the project for investigative journalism www.bivol.bg, bringing out new details about the dark side of Bulgaria's former Minister of Economy and Energy Rumen Ovcharov, a member of the Socialist Party.

The text in English has also been published at the Balkanleaks site, an analogue of the notorious whistle-blowing WikiLeaks.

date: 2/26/2007 15:12

refid: 07SOFIA252

origin: Embassy Sofia

classification: SECRET

destination: 06SOFIA1691|07SOFIA217

header:

VZCZCXRO7921

PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV

DE RUEHSF #0252/01 0571512

ZNY SSSSS ZZH

P 261512Z FEB 07

FM AMEMBASSY SOFIA

TO RUEHC/SECSTATE WASHDC PRIORITY 3281

INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY

RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY

RUEHZL/EUROPEAN POLITICAL COLLECTIVE

S E C R E T SECTION 01 OF 02 SOFIA 000252

SIPDIS

SIPDIS

STATE FOR ACTING E / DANIEL SULLIVAN;

STATE PASS TO USTR;

COMMERCE FOR DEPUTY SECRETARY SAMPSON;

ENERGY FOR A/S HARBERT

E.O. 12958: DECL: 02/25/2017

TAGS: ENRG, ECON, PREL, OVIP, BU

SUBJECT: CONTROVERSIAL ECONOMY/ENERGY MINISTER GOES TO THE

U.S. SEEKING INVESTMENT

REF: A) 06 SOFIA 1691 B) SOFIA 217

Classified By: Ambassador John Beyrle for reasons 1.4 (b) and (d)

1.  (S)  Bulgaria's Minister of Economy and Energy Rumen Ovcharov heads to Washington and several other U.S. cities on February 27 for an eleven-day road trip to drum up investor interest in Bulgaria.  His meetings at State, Commerce, Energy and USTR will give us an opportunity to press for stronger efforts against corruption and intellectual property piracy, a streamlined regulatory environment, government transparency, and diversity of energy supplies.  Ovcharov is an enigmatic and controversial figure - linked to corruption and Russian energy interests, but also to a more liberal economic policy than many of his Socialist colleagues would support. He has the political and mental juice to match the best players at the table, but keeps his cards close to his chest.  In face-to-face meetings, he can be both charming and off-putting.

2.  (S)  Our concerns about Ovcharov's dark side were sufficient for us to recommend against meetings with his counterparts at the cabinet level.  "Conflict of interest" would be the most charitable way to describe his relationship with the private sector, both Russian and Bulgarian. However, unlike some ministers in this government, we have no reports of Ovcharov's involvement in corruption directly affecting U.S. companies.  To the extent that he has benefited personally from his government position, it appears to be primarily due to his cozy relationship with various Russian energy interests and Bulgarian middlemen involved in putting together large deals.

3.  (C)  Paradoxically, as the man responsible for attracting outside investment, Ovcharov understands clearly that corruption, and the perception that it is widespread, hurts his country's economy.  The Ambassador stressed to him on February 23 that corruption - specifically in the Ministries of Environment and Agriculture, but by extension in the government as a whole  - is the number one impediment to increased U.S. investment. His Washington interlocutors should emphasize that in order to attract American investors, Bulgaria needs more than an educated and low-cost work force.  It needs transparency in business and government.  It needs courts that will decide legal disputes fairly and expeditiously, and it needs to promote itself more effectively with foreign investors. Even now, Bulgaria is not a bad place for savvy American investors; the level of corruption varies from sector to sector, big players have it easier than small players, and the further you get from certain government ministries, the more level the playing field.

4.  (C)  Ovcharov is a key player in several areas of importance to the U.S.: energy policy, IPR, investor support, industrial offsets, arms-export licensing, and privatization, to name a few.  In the energy sphere, Bulgaria is far too dependent on Russia, but has few other options in the short term.  Ovcharov knows this, but nevertheless concluded a 23-year deal with Gazprom.  On the surface the terms of the deal do not seem onerous: benefits include gradual price increases over seven years to reach market prices and the removal of a "take-or-pay" clause that burdened Bulgaria with a high minimum payment under the old contract.  The length of the commitment, though, and the secrecy with which the deal has been struck have led many to question what Bulgaria really gave up for this deal.  The answer is almost certainly the construction of the new nuclear power plant at Belene on the Danube, awarded to a Gazprom-owned consortium.

5.  (C)  Washington policy-makers will also want to raise IPR.  Bulgaria has made tremendous strides in the past year or so, but there are still holes in enforcement, particularly against Internet piracy, and the courts.  Ovcharov and some of his colleagues should be commended for backing efforts to improve legislation, cooperating on regulatory and police actions, and getting the word out publicly that piracy is illegal, wrong, and just plain bad for the economy. We would nominate Bulgaria for the Special 301 "Most Improved" award, if such a thing existed. Nevertheless the government needs to show more results arrests and convictions, shut down several Internet sites, and demonstrate that it will continue to follow through once it gets off the Watch List.

SOFIA 00000252  002 OF 002

6.  (C)  We were pleased to learn that Ovcharov will meet with the Assistant Trade Representative.  EC Trade Commissioner Mandelson apparently asked Ovcharov to meet with USTR to discuss the Doha round.  While we have no illusions that Bulgaria will be the key to resolving U.S.-EU trade differences, Ovcharov's generally liberal outlook on markets and Bulgaria's newness as a EU Member State give us a perfect opportunity to start moving them into our corner.

7. (C) Bulgaria is a close NATO ally with troops on the ground in Iraq, Afghanistan and Kosovo.  Our Defense Cooperation Agreement, signed by Secretary Rice in 2006, will allow the deployment of U.S. forces to Bulgarian military bases.  And, as a new member of the EU, Bulgaria does not carry all of the antagonistic baggage of our trade relationship. It is a potential market for U.S. exporters looking for a low-cost foothold in the EU, and for U.S. investors willing to accept low-to-moderate risks, depending on the sector. By actively engaging Ovcharov now and challenging him to improve Bulgaria's image, Washington policy-makers will help expand our already strong bilateral relationship, and encourage Bulgaria to address what is perhaps its greatest remaining weakness: endemic political corruption and lack of economic transparency.

BEYRLE

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