US embassy cable - 03ANKARA3288

UNCLAS ANKARA 003288 
 
SIPDIS 
 
 
SENSITIVE 
 
 
E.O. 12958: N/A 
TAGS: ETRD, ENRG, EINV, BG, TU 
SUBJECT:  Readout on FM Gul's Visit to Bulgaria:  Energy 
Trade and Investment Key Issues 
 
Ref:  (A) Sofia 867 (B) Ankara 3190 
 
 
1. (SBU) Summary:  MFA characterized FM Gul's recent 
visit to Bulgaria as a success.  Turkish investment in 
Bulgaria and trade in energy were key subjects of 
discussion during the Gul visit.  MFA told us that the 
agreement to buy electricity from Bulgaria may not be 
commercially sensible for Turkey at this point, but it 
would like to find an accommodation with Sofia to 
maintain good relations.  End Summary. 
 
 
2. (U) Econoff met with Mehmet Gucuk, MFA Deputy 
Director for Bilateral Affairs, to discuss Turkish FM 
Gul's May 12 and 13 visit to Bulgaria.  Gucuk, who 
traveled in Gul's delegation, characterized the visit as 
successful overall.  He stated that bilateral political 
relations were excellent, and that Turkish investment in 
Bulgaria buttressed that political relationship. 
However, Bulgarian electricity exports to Turkey and 
offsetting construction contracts for Turkish firms 
remain an issue. 
 
 
3. (U) Investment:  Gucuk highlighted Turkish firms' 
strong presence in Bulgaria, with investment of about 
USD 500 million.  This is set to rise with a USD 200 
million investment by Pasabahce, a Turkish glassware 
producer, and, if Koc Group/Turk Telecom win the bid for 
privatization of Bulgarian telecoms, a further USD 500 
million investment in telecoms over the long term. 
Gucuk estimated that Turkish companies now account for a 
quarter of Bulgarian FDI. 
 
 
4. (SBU) Energy:  Turkey's suspension of electricity 
imports from Bulgaria (apparently in connection with the 
Koc/Turk Telecom bid - see ref A) was discussed during 
the visit, but without coming to closure on whether to 
revise or continue implementing the Turkish-Bulgarian 
bilateral agreement in this area.  Gucuk stated that the 
agreement committing Turkey to import power from 
Bulgaria made little commercial sense (for Ankara), 
given a current surplus of power supplies for Turkish 
industry.  He maintained that Turkey had nevertheless 
continued to take and pay for Bulgarian electricity for 
several years, even though the GOB had balked at giving 
Turkish companies contracts for highway and dam 
construction in Bulgaria, which Gucuk maintained was an 
essential element of the agreement.  Gucuk said that the 
GOT was sensitive to the fact that it was Bulgaria's 
leading customer in its leading export and wanted to 
arrive at some accommodation with the GOB.  He said 
Bulgaria's Energy Minister would visit Turkey later in 
May to discuss this subject further. 
Pearson