Traykov Event


  • Frederick Kempe, President and CEO, Atlantic Council
  • Traycho Traykov, Minister of Economy, Energy, and Tourism of Bulgaria

FREDERICK KEMPE:  Greetings.  Like to welcome you all to this roundtable with Minister Traykov.  This Eurasia discussion series has been a venue to discuss the key aspects of energy and economic security in the region.  It’s part of the Patriciu Eurasia Center, of which the Black Sea energy and economic forum is the flagship.  We had it in Bucharest last year.  We’ll have it in Istanbul this year from September 29th to October 1st. 

It’s absolutely my delight to also have with us today – his first event at the Atlantic Council – Ambassador Ross Wilson, who has taken over as director of the Patriciu Eurasia Center, former ambassador to Turkey, former ambassador to Azerbaijan and many other important stops along the way as well.  And Ross, I hope you’ll correct me whenever I say anything absolutely foolish, which is going to be part of your job in your new position.

But we’re absolutely delighted that Ross is going to take over this initiative.  This has become one of the most important initiatives of the Atlantic Council.  And looking at the Black Sea, Caspian, Central Asian regions as a platform for people coming from the region in Washington to reach an audience here, but then in a platform in the region to put together the major players from the region on energy and economic issues with people from outside the region who are interested in the region.  So this is one of the most exciting things that we’ve started in the last couple of years.  And we’re just thrilled to have Ross join us to lead the initiatives. 

This event is going to be on the record and a transcript afterwards is going to be on the Web.  That being said, to give Minister Traykov as much freedom as he can, some of your specific questions, he’ll feel free to go off the record and so he’ll be free to do that.  And so I think we do want to get an idea on the record of where you think certain things are going, but I also know that there may be certain specific questions on issues of individual interest to some of you where it may be more appropriate to go off the record. 

Minister Traykov, aside from being a brilliant speaker at our Bucharest forum last year, came to the Bulgarian government from the management of the Austrian-owned company EVN Bulgaria, which is the electricity provider for southeast Bulgaria; born in Sofia, a graduate of one of the top Bulgarian high schools, first English language school in Sofia if I’m not mistaken.  Right?

MR. TRAYKOV:  Correct.

MR. KEMPE:  Later received a degree in international economic relations from the University for National World Economy in Sofia and has specialized in financial analysis and management in Austria and Germany and worked as a consultant on mergers and buyouts.  In 2006 he joined the team of EVN Bulgaria, which owns the electricity distribution companies in Blogdeven (ph), Stara Zagora.  And he was there as a legal adviser.  I invite Minister Traykov to share his views briefly to get us started on growth, energy and sustainability in Bulgaria and the region.  And then we’ll quickly get to questions. 

I also want to give my – Rasim (ph), where are you sitting?  There you are.  Sorry, Rasim.  I also want to give my personal thanks to Atlantic Council member Rasim Actogan (ph), who’s the CEO of Setgas and who is giving us support for this series and tonight’s event.  So Minister Traykov, let me turn over to you.

TRAYCHO TRAYKOV:  Thank you, Mr. Kempe.  Ladies and gentlemen, good afternoon.  Very glad to be here with you today.  I have to keep checking what’s – how exactly the topic of today’s conversation is formulated because energy, sustainability, growth and economy get so much mixed and going together in different combinations these days.  Now whenever there is energy, there is economy.  When there is economy, there is energy.  I myself am minister of economy, energy and tourism.  I don’t know – don’t ask me how tourism fits in, but it requires both energy and is a part of the economy. 

However, about energy these days everyone likes to talk.  The ministers of exteriors speak about energy at their meetings.  The ministers of environment speak about energy in their meetings.  The regional development, the transportation – they all have their fingers in energy matters.  So it is getting a hotly contest topic.  It’s two-thirds, if I’m not mistaken, of the EU’s strategy 2010 dwells on issues related to energy.  So I think that the way it is very cleverly put, the title of the topic:  growth, energy, sustainability – of what?  Of the growth and energy of both. 

Well, most of you I think have an exposure to Bulgaria know what’s going on there.  For those who don’t, allow me to make a brief review of what’s been happening there in the last few months.  In the last few years, Bulgaria had a stable growth, typical for the region but even in some years exceeding and outperforming the region of five and over 5 percent per year. 

We had one of the best ratios of FDI into the country, reaching between 20 and 30 percent in any given year.  Well, a lot of that was going to real estate, which got – became painfully clear when the real estate balloon collapsed.  But nevertheless, that was sizable investment which helped create wealth and jobs in Bulgaria. 

The crisis struck Bulgaria a bit later than other countries – well, at least it seemed a bit later because the alarm bell started ringing later and therefore, measures were a little bit delayed.  Nevertheless, when the new Bulgarian government took office in the end of July of last year, already the crisis was full blown. 

In those circumstances, our primary target which also dealt as an anti-crisis was keeping economic fiscal stability and prudence.  This is exactly what we did.  Bulgaria finished the year 2009 with the lowest budget deficit in the European Union – under 1 percent – for which we were commended by the EU. 

Of course, that comes at a price – the price of – moreover, Bulgaria has a currency board system, so not many fiscal instruments at hand for stimulating the economy.  For this year, we have planned keeping budget discipline.  The deficit is projected to be between one and 2 percent for the year of 2010 and we project also a small economic growth after the decline of almost 5 percent for last year. 

Now, what does this fiscal prudence mean?  It means that we are going and will have the possibility to keep the existing tax regime in Bulgaria.  And why this is important because the tax regime in Bulgaria is probably the most favorable in the EU.  We have a 10 percent flat rate on income tax and a 10 percent flat rate on corporate tax.  And so provided there is security in the investment community that we are going to be able to sustain those, I think that’s a pretty good message for the investment climate in the future. 

Apart from that, Bulgaria had quite a few challenges to deal with.  In almost every independent and EU review of the situation in Bulgaria, problems with the application of the rule of law have been put forward, plus the perception for corruption.  Now, this has started to change in a dramatic way. 

Since the end of last year, there has been a number of high-profile police actions related to organized crime and corruption, although Bulgaria by no means is the most corrupt country in the EU.  But we have decided this is a priority; we have to deal with it and that we have to be firm and consistent in that.  Also, changes in the procedural and penalty courts are being passed in the parliament that will also alleviate some of the concerns.  So these are the good things that are happening. 

Actually, the reports of reputable national and international think tanks, such as the Center for Study of Democracy in Bulgaria, which is a partner of the Center for International Private Enterprise at the U.S. Chamber of Commerce have shown swift decrease of corruption pressure from the administration and the decline in the country’s sizable shadow economy, which is a (premier ?).  

Another important achievement of our government was the unfreezing – so-called “unfreezing” of the EU funds that was mainly took the shape of certifying all the receiving for all the seven operative programs that are run in Bulgaria – the compliance certification.  One of the programs, namely the competitiveness of Bulgarian economy is administered and run by within our ministry. 

These are around 1.3 billion euro of funds which are available directly to companies for things like technological improvement, energy efficiency and so on.  These are real money that can go into companies, including foreign companies which have – which are operating in Bulgaria.

We have taken drastic measures in the government in the state administration.  Even though Bulgaria’s administration, when compared to other European countries, doesn’t look so overblown.  We have reduced the headcount and the costs by 15 percent in last autumn and we are going to have a further cut of 10 percent of costs this year. 

We have directed EU funds toward proactive investment promotion, tourism, advertisement and promotion.  We have restructured or started to restructure our main investment projects, including in energy, in a way that would make transparent and attractive to foreign investors. 

I have recently seen a presentation of Ernst & Young, who did a study among the Central and Eastern European countries, which, to some extent surprisingly, showed that Bulgaria, as just been perceived by potential and incumbent investors, ranks, almost on all counts, in the top three among the countries in the region. 

This has been backed by estimates of other analysts and publications, including the one that Bulgaria is one of the top most attractive outsourcing destinations or that competitiveness of the economy has improved a lot in 2009.  IMD and Switzerland ranked the country ahead of Spain, Brazil, Mexico, Poland, Hungary and Turkey.  Plus, it was also a bit interesting to me in terms of broadband access. 

Sofia ranks higher than Chicago and Chicago is the highest-ranking U.S. city.  Our costs are lower than most countries in the region.  Expatriates living in Sofia enjoy the way of life – well, we do not have cherry blossoms to compete with what I saw over the weekend here.  Very pleasant, really, but life in Sofia is getting better and better even though the potholes in the streets are still a problem and are indeed on the top of our government’s priorities.  I would like to put a post-up or a comma here and then continue with –

MR. KEMPE:  Yeah.  Mr. Minister, thank you.  I can only say, regarding the cherry blossoms, that a very close relationship with the Japanese helps in terms of the cherry blossoms, as well.  Let me start with one question from myself – maybe one or two – but catch my eye, put up your card, whatever way you think is most useful, and I’ll try to go roughly in the order that I see people.

Russia:  You have a great deal of reliance on Russia for energy deliveries, natural gas, a contract coming up this year.  I wonder if A, you could talk specifically about that and where you stand in your negotiations and how that may or may not be altered from past relationships with gas but also in general how you look at how the relationship is evolving with Russia in terms of the opportunities that that offers you and how you’re managing that.

MR. TRAYKOV:  Well, it’s hard to overestimate the degree to which Bulgaria is linked to Russia, energy-wise.  We’re importing 100 percent of the oil from Russia.  We’re importing 100 percent of the natural gas from Russia via one pipeline.  The only nuclear power plant that we have is Russian-designed, Russian-fueled.  The second nuclear power plant, which is, thankfully, being born, is supposed to be constructed by a Russian contractor, AtomStoyExports. 

What are the ways to react in this situation?  For us, the wake-up call came in the beginning of last year, when at 3:00 in the morning, the 6th of January, we were notified that as of now, the pressure in the gas pipeline in starting to decrease.  I don’t know if you can imagine how this looks in minus 15 percent of outside temperature.  So by that time, there was hardly any talk about diversification.  Nabucco was considered almost a curiosity that somehow involves Bulgaria. 

So since that time, many things have changed – not physically but as a way of thinking and actions that have been taken already.  Now, we have not one, not two but plans for possibly four gas interconnectors with neighboring countries.  We are discussing ways to supply CNG over the Black Sea or LNG to a terminal somewhere on the Aegean Sea.  We are thinking of ways to diversify the fuel base of the nuclear power plant or the solutions for storage of the spent fuel.  All these are measures that we are successively undertaking, not to say about the – I will wish to meet the target of 16 percent of renewable energy sources by 2020, which is our commitment in the EU framework, which will give us another measure of independence. 

We have been a very active supporter of the Nabucco project, even at times when voices in other countries had slowed down.  We have ratified, in the parliament, the intergovernmental agreements on Nabucco.  We are putting, on the EU level, the necessity and the idea that the EU should have a common energy policy and speak in one voice with third parties.  This is an issue which has been often raised but rarely acted upon, including at the Danube Meeting in Budapest a couple of months ago, when the Bulgarian prime minister very actively promoted this idea.  These are all steps that we are taking.  There will be others to come, of course.

MR. KEMPE:  Before I turn to Andersen, Matt, that unconventional gas – I’m not sure if you remember Dustin Hoffman from “The Graduate,” but he was being told, plastics, plastics, is the future and I keep being told, unconventional gas, unconventional gas.  And when I talked to one of the giant energy companies’ CEOs recently, at Davos, I said to him that I’m told that unconventional gas is going to – some people tell me unconventional gas will change geopolitics – might change geopolitics.  He turned to me – he said, unconventional gas will change geopolitics.  How do you look at that?

MR. TRAYKOV:  We are following these developments with a lot of interest.  Actually, at the last energy council in the EU, that was also a topic of discussion which came out of nowhere because before that, this was not taken into the equation.  So we know of the developments in this, the progress that the technology has made the United States – indeed, how dramatically it has changed the U.S. production and import of natural gas.  This is a phenomenon which is already easily felt if you talk to authorities in Middle East countries.  So it has worldwide implications.  We know that American companies are planning to bring this technology to Europe.  Bulgaria, so far, has not been a part of this development but we already hear signals about possible interests for prospecting also Bulgaria, for Shell Gas, and would be very willing and open to discuss these possibilities.

MR. KEMPE:  Andersen?

Q:  (Inaudible, off mike) – exchange rate regime now, in light of the financial crisis that you have essentially passed through.  Before the crisis, Bulgaria looked very vulnerable with a huge current account deficit of 22, 23 percent of GDP.  On the other hand, you had a big fiscal surplus which balanced you and right now, you look pretty good – that you have gotten through the crisis and you did not have all that much decline in GDP last year, as an average for Central Europe, and now you will get growth this year. 

How does this impact on the public view of your currency board regime?  What’s the view today of the euro?  You should be able to qualify for the euro by 2012 – are you interested in getting it then?  What is the impact of the Greek crisis on the policy-thinking in Bulgaria today?  Thank you.

MR. TRAYKOV:  Well, the currency board is a sacred cow in Bulgaria and the discipline and the prudence that it has instigated, luckily, has become, somehow, the normal behavior of Bulgarian policymakers.  Yes, we want to join the euro as soon as possible, at the current rate of the Bulgarian left versus the euro. 

You are completely right that the troubles in one country such as Greece have brought an additional degree of cautiousness in the eurozone countries and now we are witnessing some disturbing tendency towards tightening the rules for newcomers to the eurozone.  We think that this is not very fair and that each country should be judged based on its own qualities, achievements and deficiencies and not becoming victim to the troubles in other countries.  We want to join by 2013. 

MR. KEMPE:  By 2013 or by –


MR. KEMPE:  Matt?

Q:  My name’s Matt Bryza; I work at the State Department.  Just like to return to energy for a moment and your remark about diversification of energy supplies and natural gas and without asking you to divulge proprietary pricing information, how do you as a minister evaluate or predict the relative prices of natural gas that your country will have to pay or your consumers will pay, when you compare the import routes?  Let’s say, the interconnector with Greece versus Nabucco – if it happens – versus South Stream?  And also could you give us a little bit more of an update on the interconnectors:  both Bulgaria-Greece, also Bulgaria and into Romania and beyond and the Hungarian idea of this network.  Thank you.

MR. TRAYKOV:  Of course I cannot comment on the prices or how they will be bought in the future, but one thing is for sure:  When you have alternatives, then you have flexibility and the status is now that the interconnector with Greece is expected to be operational in the second half of 2012.  Same about Romania, the one with Romania:  These are the ones which already are under development.  There is a European cofinancing there to the degree of around 40 percent of the cost. 

Then with Serbia, this is starting a bit later but has a lot of potential to be ready by the same end date.  And with Turkey, for the time being, there are only conceptual options of which the best one has to be selected.

Q:  (Inaudible.)  Mr. Minister, can you tell us a few words more about Turkish-Bulgarian relations, especially the cooperation between two countries in the energy business? 

MR. TRAYKOV:  The relations with Turkey have traditionally been very strong in the economic field.  Now, there was a visit of a delegation led by the prime minister in January to Ankara where I signed a memorandum of understanding together with my Turkish colleague about cooperation in the energy field.  This was supposed to give a framework of what is largely already existing:  an intensive dialogue, a joint working group working together on projects like most notably Nabucco.

We are in discussions for sales of electricity to Turkey.  This is something which has not happened in the last 10 years or so but is about to happen soon.  So relations with Turkey are developing and evolving in any aspects you take. 

MR. KEMPE:  Just one second, so can you talk a little bit more about the sales of electricity to Turkey?  Where is it starting?  Where is it supposed to go?

MR. TRAYKOV:  I’m afraid I can’t say more but this is something which is going to happen within the next couple of months.

Q:  I’m Joseph Bader.  I was interested if you would give us some detail on what you consider to be the status of the two new VVER-1000s and whether you actually see them being completed and what the fuel supply situation would be if they’re completed.

MR. TRAYKOV:  Now, we have two VVER-1000s in operation in the existing nuclear power plant in Kozloduy.  Are these the ones you’re asking about?

Q:  No, the two new ones at Belene. 

MR. TRAYKOV:  Currently, we’re in the process of selecting an advisor who should prepare a tender for bringing a strategic investor in the project.  We have had six bidders in the first stage of the tender, and during the month of April, we’ll have a final selection of this.  An investment bank will advise us on the process of bringing a strategic investor.

Q:  Is that – is the strategic – I’m sorry.

MR. TRAYKOV:  The initial scheme of the plant envisaged a participation with 51 percent of the Bulgarian state.  This is something we said we cannot afford in the current stage.  Therefore, we would like to restructure the project in a way that Bulgaria, the state-owned entity, be it NEC another entity, gives a large minority stake and we have a strategic investor too and the remainder financed by financial investors.  If everything goes to schedule and we are successful, then construction could continue at the end of this year and the first electricity can be delivered to the grid somewhere in 2014. 

Q:  In terms of the fuel supply, you’re of technical necessity required to buy the first – the initial fuel loading from the Russians.  But beyond that, you have other opportunities to buy fuel from Westinghouse, for instance, who’ve supplied fuel for other VVERs.  Are you considering that? 

MR. TRAYKOV:  We are definitely considering diversification options for the fresh fuel of the nuclear reactors.

Q:  Including the uranium and disposal of the spent fuel?

MR. TRAYKOV:  Pardon?

Q:  Including the fresh uranium?

MR. TRAYKOV:  Yes, including fresh fuel for the nuclear reactors.

Q:  And also then would you still be bound to turn over the spent fuel, the used fuel, to the Russians or do you have plans for your own storage onsite?

MR. TRAYKOV:  We have already a storage facility – a dry storage facility – onsite.  Now, we have plans for expanding it and we are considering between different technologies, including American companies.

Q:  Thank you.

MR. KEMPE:  But it will be at this point a minority-Bulgarian stake-holding?

MR. TRAYKOV:  We are talking about the Kozloduy plant?

MR. KEMPE:  Right, right.

MR. TRAYKOV:  With the other spent fuel.

Q:  Mr. Minister, much has been said about the fight for transparency and for anticorruption measures that your government has taken and you need to be congratulated for that because it really has changed the view of Bulgaria in our view.  I’m with York Capital Management.  We’ve invested in Kremikovtzi and have been in Bulgaria for the last three or four years.  And Kremikovtzi is part of the new cycle these days with the drop in the rail business, the rail-cargo business; also, labor issues and so on.  How does your government look at Kremikovtzi going forward the next couple of years now that it’s basically a disabled business?

MR. TRAYKOV:  Kremikovtzi has been declared insolvent and we are awaiting final decision of the courts which would lead towards asset sale.  So we are planning to have an asset sale of the current site, the production facilities, everything together without liabilities somewhere in the next couple of months.  And we hope that there’ll be interested investors who could continue some production facilities on the side in the view of minimal with electric – (inaudible) – furnace and some downstream finishing capacities while using the rest of the equipment on the side as scrap metal.  This will be a model that would be possible to function at least for the next three years.  And then, the site would either be developed as an electrical facility or other purposes, whereas the minimal will still continue or not continue to operate.

Q:  Thank you, Mr. Minister.  Dmitri Zloder (ph) of TASS News Agency, Russia.  A couple of weeks ago, Russia and Bulgaria announced that they will create new company for allies in South Stream gas project.  When you plan to create such company and what this company will do, first of all?  Thank you. 

MR. TRAYKOV:  Whenever the shareholders’ agreement has been negotiated, we’ll form the company.

MR. KEMPE:  Mr. Minister, you had talked about expectations that the Bulgarian economy will resume growth in 2010, 2011 as you look forward after a tough year last year.  Could you talk a little bit about what you see as the sources of growth and how those – how your projections relate to what looks like a pretty difficult year in terms of foreign investment just given the global financial situation and the impact of the Greek crisis in Europe?

MR. TRAYKOV:  Well, regarding the sources of industry, I’ve been waiting for anyone giving forecasts to put his money on this and then we’d be willing to support it.  Mostly, we would like to keep the business climate favorable to business activity and I think we are quite successful in achieving that. 

I don’t very much believe in state involvement in economy.  But that having been said, we are strongly committed to supporting any variety of green or low-carbon economy, which is also coinciding with the European priorities.

Finally, we are in a team of better-developed, like-minded nations that are thinking together in terms of international clusters and common development of technology.  So any part of this low-carbon economy we will support.  We see quite a lot of promise in that because usually one only thinks about energy but this is a much wider variety.  These are, for example, special fertilizer for the agriculture or services. 

And saying services, services is another area.  Services suffered relatively little compared with other industries in Bulgaria last year, whereas industrial production declined by around 20 percent.  Services only went down by a single figure – three or 4 percent.  And even tourism – tourism didn’t lose much.  Actually, we had an increase of visitors but a slight decrease in revenues because of the pricing policy.

We have the traditional sectors for Bulgaria which are agriculture and food industries.  The industrial base that we have – and, as I said, which lost a lot during the crisis – it’s mainly export oriented.  And so whenever our big economic partners in the EU make a larger stride forward, then we expect this to recover as well – so maybe even starting with the second quarter of this year.  Yeah. 

MR. KEMPE:  If you’re looking at the impact of the financial crisis, it’s very obvious to all of us in the United States what the impact has been thus far and what it’s changed.  You can look at China, and it’s handled all of this in a certain way; Greece – clearly a different story.  For Bulgaria, if you look at the most important impact of the financial crisis for you, what is it?

MR. TRAYKOV:  Well, in Bulgaria, it is a bit stretching to say that there is a financial crisis as such.  The financial sector in Bulgaria is – has been – after the catastrophe in 1997 – has been very well regulated and conservatively managed.  And the financial institutions in Bulgaria have withstood very well and with no difficulties the crisis.  Even though one of the risk factors was the large representation of Greek banks in Bulgaria, this also proved to be a fake concern.

MR. KEMPE:  Yeah, 30 percent, or so, of the banks are Greek.

MR. TRAYKOV:  We were afraid that there might be sucking of funds back to the mothers in Greece, but this didn’t happen.  So the crisis in Bulgaria is much more economic and industrial than financial.  And my biggest concern, as an economic minister, is the functioning of the real sector, and the priority should really be job creation.  Yes, we have been disciplined, prudent, but for us, we’re not doing this – we’re doing this to an end.  We want this to be the basis for a good climate for investments and job creation.

And as a member of the government, I’m willing to try and influence our economic policy towards stimulus and incentives for new investments in job creation.

MR. KEMPE:  Please.

Q:  (Inaudible, off mike) – by EU energy policy.  And new EU energy commissioner indicated he’s quite interested to take a look at unbundling of politically integrated power and gas companies in Europe.  So my question is, what is the impact on Bulgaria?  Second part is, Bulgaria is one of highest energy intensity in EU, and how would you improve your efficiency in the energy market?  Thank you.

MR. TRAYKOV:  Bulgaria is in compliance, or heading towards compliance, with all the requirements for liberalization, including those in the third package.  Unbundling of electricity distribution and supply from transmission took place a few years ago. 

Since the 1st of July, 2007, the market is officially and theoretically the electricity market – completely liberalized – although in practice, we still have a very large regulated sector, aiming to protect so-called vulnerable consumers – households and small companies.  In the electricity sector, we still have to get the grid operator out of the national electricity company, and this is going to happen as soon as is feasible.

MR. KEMPE:  Time for one or two more questions, if anyone’s burning.  Please.

Q:  One of the things I’ve been interested in looking at is the degree to which you’ve come up with an energy security plan looking at the different possible means of providing energy.  And I’m very interested whether you’ve looked at the tradeoffs, whether you’ve looked at the – between different forms of energy, and also, the degree to which you’ve looked at energy efficiency. 

I mean, the cheapest power is the power you don’t have to produce.  And typically, when you’re an energy-intensive country, there’s good opportunity to reduce the intensity of use, in terms of consumption.  And I was interested to see whether – I looked – I mean, there have been past attempts to look at these types of things, but I haven’t seen a comprehensive plan, an integrated plan discussed or presented.

MR. TRAYKOV:  Yes, there are such integrated plans.  Thank you for bringing me back to the issue of energy efficiency, which I forgot to answer.  We place utmost priority, importance to the energy efficiency, because as you said, the potential there is enormous and cheap to achieve. 

From investments in energy efficiency in the last couple of years, the cost of around 200 million euro, we have spared the need to build a new capacity of 450 megawatts, which is very cost-efficient way.  We have calculated that if we improve the energy efficiency of the existing 75,000 concrete-block buildings in Bulgaria, this will save us the capacity – the need to install capacity of between two and 3,000 megawatts.  And this is almost a third of all installed capacity in Bulgaria.

We have envisaged improving the energy efficiency by 50 percent until 2020.  And this is a part of several integrated plans.  One is the energy strategy, which parliament has to vote, hopefully, until the end of the year – the middle of the year, this year.  Then we have – by the same time, we have prepared the national plan for development of the renewable energy sources.  We have passed updated regulations for – (inaudible) – biofuels, although that tends to be a more debatable topic.  But yes, this is the path that we are following.

MR. KEMPE:  Let me take one more and then I’ll close with a last question.  Please.

Q:  Thank you.  Alexander Gysuk (ph).  I’m a Russian journalist.  I’m from Rossiyskaya Gazeta, the leading Russian daily.  Mr. Traykov, could you tell me, Bulgaria is participating in both major energy projects in Europe – Nabucco and South Stream.  But it looks like Nabucco project faces more and more problems.  Do you believe that this project will ever be constructed?  Thank you.

MR. TRAYKOV:  Well, I think that Nabucco is a beautiful project, achieving every possible effect that is beneficial to the countries that it passes through.  The problems of Nabucco are not from today, not from tomorrow.  This is why I said that we have, at times, even taken the lead in talking about Nabucco when no one else does.  For South Stream, we are being extremely constructive partner in the talks with Gazprom, because we think both projects have their place and potential.  We would like to see both of them in operation, but if not, whichever proves itself and comes online first.

MR. KEMPE:  Let me close with a question of a more general nature.  And it’s sort of in two parts.  One of them is you, as a Bulgarian who’s lived through these dramatic changes – how have you seen the role of the United States change toward you during this period of time?  And then more specifically, what sort of advice are you giving your U.S. counterparts on this trip, or in general? 

We hear, from some of our Central European friends here in town that they feel, in some respects, a little bit neglected by the administration.  I’m just wondering if you feel any of that as well, and if so, in what respect?  And then to the more specific question, is, what sort of advice are you giving to U.S. counterparts in their engagement with your region at the moment?

MR. TRAYKOV:  Well, for some reason or another, there are realities in the energy sector, which are historically determined and which are facts of life.  Now, the states, even though we have no direct interface in vital energy issues, there is a great deal going on.  I can see here Mr. Lingault (ph) from AES, which is an American company with a large project portfolio in Bulgaria – a new thermal power plant of 670 megawatts – right – is coming online, connected to the grid in the course of this year.

Then there is the regional office of the department of energy in Bulgaria, with Mr. Awan heading it, which is giving us that forum of discussions and, you know, policy choices.  Of course, we would like to have a higher level of involvement of the U.S. in the Bulgarian energy sector.  How possible it is – obviously, the possible is the state which we have.

MR. KEMPE:  And so your advice is, engage with us.

MR. TRAYKOV:  Absolutely.

MR. KEMPE:  And are you satisfied with the level of engagement?

MR. TRAYKOV:  I am definitely not satisfied because I think the level of our economic cooperation and cooperation in energy by no means corresponds to the level of our political relations. 

MR. KEMPE:  Yeah.  And in other areas – you’re also responsible for other areas of investment in the economy as well?

MR. TRAYKOV:  Yes.  We do have some American investments.  They are not spectacular, but rank the highest outside of the non-EU countries.  One example that I can give is American Standard.  They invested in Bulgaria about 10 years ago, continuously expanded their operations – have been a model investor with profound effect on the town where the investment was made. 

And I think this is a very good success story.  And based on their experience, other companies can come.  And now, the situation is much, much better than the way when American Standard invested.  At that time, there was more corruption, more instability, no EU, higher taxes.  Now, on all these counts, we stand better.

MR. KEMPE:  Thank you, Minister Traykov.  Before I thank you on behalf of everyone here, let me just say that the Atlantic Council started this center to play two roles.  One of them was to be a forum and a platform for you, for people like you, in Washington – so in a sense, to help your story be heard a little bit better in Washington, where sometimes the immediate and whatever is top in the news overwhelms a lot of other things.

So this is just absolutely terrific that you’ve taken this time, and we look forward to continuing to work with you in Washington, and being able to work as well as we have with the Bulgarian embassy on all sorts of other issues.  The other, we demonstrated in Sofia not too long ago, where your prime minister gave a very important speech – and you participated in this conference as well – on Bulgaria’s energy policy.

And then, when we’re in the region, we’re actually not acting as an American institution at all.  We’re really acting as an aggregator and a convener – an organization that is trying to bring together the parties in the region with parties outside of the region to promote the region’s interests and to promote the region’s cooperation and integration, which we think, frankly, from listening to people in the region, has not gone far enough.  So we really hope to help you advance that, as well. 

So thank you for taking the time with us here, but also, we see this as the beginning of a relationship that we started in Romania last year, and a little bit before that.  And we look very much forward to working with you, with your ministry, with your government and with Bulgaria in general, in trying to – you know, everyone talks about the Black Sea region, but in many respects, it doesn’t yet really fully exist as a region.  And so whatever help we can give in terms of convening in the region and creating a platform in Washington, as well, we’re very much looking forward to doing it.

MR. TRAYKOV:  Thank you very much.

MR. KEMPE:  Thank you very much.  (Applause.)

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