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Reference ID Created Released Classification Origin
06MOSCOW868 2006-01-30 10:25 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #0868/01 0301025
R 301025Z JAN 06

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 000868 
E.O. 12958: DECL: 01/23/2016 
Classified By: Ambassador William J. Burns.  Reasons 1.4 (b and d). 
    1. (C) SUMMARY: On January 19 DRL A/S Barry Lowenkron, 
Ambassador Burns, and EUR DAS David Kramer met with State 
Duma International Relations Committee Chairman Konstantin 
Kosachev.  Defending the new NGO legislation, Kosachev 
insisted that it would clarify the role of NGOs in Russia, 
not limit their activities.  He conceded that implementation 
might be problematic, but said the Duma would intercede if 
GOR officials took any unlawful or arbitrary actions against 
NGOs.  Kosachev also defended recent political reforms -- 
switching to a party-list-only system, raising the election 
threshold from five percent to seven percent, and direct 
appointment of regional governors by the President )- 
arguing that they would strengthen political parties in the 
long run.  The West should not pressure Russia on democratic 
development, he argued, since it will take time for the 
country to reach Western levels of democracy.  On foreign 
policy issues, Kosachev expressed surprise at the West,s 
reaction to the recent Ukraine-Russia gas dispute, arguing 
that the U.S. unfairly sided with Kiev.  Lastly, he expressed 
hope that the G-8 summit would show the world that Russia was 
a worthy G-8 member with many positive initiatives to offer. 
NGO Law 
2. (C) A/S Lowenkron began the meeting with Kosachev by 
stressing that the Secretary, along with other senior 
officials and NGO representatives in the U.S. and abroad, was 
concerned that the new NGO law would have a negative impact 
on Russia's 2007-8 elections, particularly on pre-election 
training and monitoring efforts.  Kosachev replied that NGOs 
should not be involved in political activities, although 
electoral monitoring was acceptable.  In response, Lowenkron 
noted that 8political activities8 could be broadly 
interpreted and that some "political" activity was in fact 
apolitical.  He cited the example of National Democratic and 
International Republican Institutes offering training and 
support to all parties, as long as they respected democratic 
precepts and abided by the rules of the election process. 
3. (C) Kosachev argued that the text of the new legislation 
was not undemocratic -- it was the prospective implementation 
that made people nervous.  He explained that, previously, a 
group of foreigners could establish an NGO, be registered by 
the MFA, and then disappear without being held accountable 
for their actions.  The goal of the new law was not to limit 
the activities of NGOs but to regulate their role in Russian 
society.  Kosachev acknowledged that the new law was 
imperfect but hoped it would improve the NGO environment.  He 
suggested that people take a wait-and-see approach toward 
implementation, and that the Duma would be ready to intervene 
if illegal action were taken against an NGO. 
Political Reforms 
4. (C) Turning to broader political issues, Kosachev 
maintained that Russia,s main problem was that it still did 
not have real political parties, except for the Communist 
Party.  He said United Russia (YR) was trying to function as 
a political party, but was not yet a &true party.8  Most 
political organizations were simply built around strong 
individuals.  He then laid out the rationale behind recent 
reforms adopted by the Duma last year to strengthen parties: 
--Regarding the switch to a proportional party-list system, 
Kosachev noted that in the 2004 Duma elections, YR obtained 
only 37 percent of the vote but ended up with 306 (almost 
two-thirds) of the 450 seats.  This anomaly occurred, he 
said, when single-mandate independent candidates opted to 
join YR after they entered the Duma.  The proportional 
party-list system would fix that problem by reducing the 
difference between the percentage of votes received and the 
percentage of seats taken by a party. 
--Turning to the increased entry threshold for parties from 
five percent to seven percent, Kosachev asserted that such a 
change seemed undemocratic at first glance because neither 
the Union of Right Forces (SPS) nor Yabloko had reached the 
five percent threshold in the previous national elections 
(each received 4.5 percent in 2003).  As a result, he said, 
the Duma was currently unbalanced.  With ten percent of the 
population supporting those parties, democratic, liberal 
ideas, they should be represented in the Duma.  Neither SPS 
nor Yabloko was represented, however, because their leaders 
disliked each other and were unwilling to cooperate or 
otherwise join forces to overcome the entry barrier.  When 
the two parties temporarily joined forces in the December 
MOSCOW 00000868  002 OF 003 
2005 Moscow City election, which required a ten percent 
threshold for parties, several of their members were elected 
into the local Duma.  The national seven percent threshold, 
he argued, was beneficial because it forced such parties to 
form alliances. 
--Kosachev then addressed the elimination of the direct 
election of regional g
overnors.  He noted that of Russia,s 
89 regions, only twelve were economically self-sufficient. 
Of the other 77 regions, five received 90 percent and 35 
received 50 percent of their revenue from federal subsidies. 
The governors in these regions, Kosachev continued, had been 
directly elected by the people, partly because they had told 
voters they would be able to get money and other assistance 
directly.  The governors never actually did anything in the 
regions to stimulate the local economy, and Moscow was not 
able to demand accountability from them.  According to 
Kosachev, the new system made governors directly responsible 
to the President and regional legislatures, which would 
encourage them to work harder to improve the situation in 
their regions.  If they failed do so, the President could 
remove them for failure to perform. 
5. (C) Lastly, Kosachev addressed a recent legislative 
amendment that would give the party that won a regional 
election the right to nominate, for presidential 
consideration, a candidate for governor.  Arguing that such 
an arrangement was fair, he noted that any party, including 
communists or nationalists, could propose a candidate to the 
President if they won a regional election. 
Russia - Ukraine Gas Dispute 
6. (C) On foreign relations, Kosachev expressed surprise at 
Western reaction to the recent gas dispute between Russia and 
Ukraine.  No one in the West had tried to analyze Ukraine,s 
actions, he argued, and all attention had been focused on 
Russia, leading Moscow to believe that the West had sided 
with Kiev.  Kosachev maintained that Russia did not raise gas 
prices arbitrarily but simply instituted liberal market 
principles.  Ukraine had been receiving cheap gas from Russia 
(in effect propping up Ukraine,s less developed economy), 
while the West demanded that Russia raise its own domestic 
gas prices.  Kosachev said the U.S. was playing a global 
game, and sought to show that Moscow did not control the 
rules of that game. 
7. (C) Lowenkron responded that he did not see Ukraine as 
part of a global game to teach Russia a lesson.  What 
startled the West was the timing of the action and the method 
Russia had used, as well as the price Moscow initially set, 
Lowenkron continued.  DAS Kramer added that keeping an overly 
low price for gas was neither in Ukraine's nor Russia,s 
interest.  The U.S. had made clear to Ukraine that it should 
not continue to subsidize energy because that fed corruption 
and undermined conservation measures.  Nevertheless, going 
from USD 50 to USD 230 per cubic meter immediately was too 
abrupt and threatened to destabilize Ukraine,s economy. 
Kramer said a phased approach would be better. 
8. (C) Kosachev replied that the negotiation process had 
started last April.  Russia,s first proposal was USD 160, 
but in the subsequent eight months, Ukraine never responded 
to that offer.  Agreeing that USD 230 was steep, Kosachev 
argued that Russia had only encountered silence when Ukraine 
was informed of the January 1 deadline.  He complained that 
&all Russia hears is that they were to blame8 and that the 
West believes &Ukraine is a new democracy that should be 
treated as a special case.8 
9. (C) Kramer concurred that the Ukrainian government had not 
handled the situation well, but noted that at the end of the 
year Ukraine was offering USD 80-85 per cubic meter and 
ultimately agreed to USD 95.  He said the U.S. was concerned 
that what had begun as a bilateral issue between Russia and 
Ukraine had ballooned into a much wider politicization of gas 
supplies, which affected countries beyond the immediate area. 
 The U.S. favored strong Ukraine-Russia relations, and Russia 
should be commended for ultimately walking back from what 
could have been a very serious crisis, Kramer concluded. 
G-8 Relations 
10. (C) Thanking Kosachev for his frankness and willingness 
to discuss differences of views, Lowenkron asked about 
Russia,s plans for the G-8.  Kosachev answered that Moscow's 
chairmanship was a unique chance for Putin to show that &it 
is not an accident that Russia is part of the G-8,8 and that 
Russia could act as a global state with global 
MOSCOW 00000868  003 OF 003 
responsibilities.  He said there were some who wanted to use 
the G-8 as a platform for advancing nationalist issues, but 
it was important to avoid such politicization.  Kosachev 
added that Russia had several very good projects under 
discussion in energy, health care, demographics, and high 
technology.  Lowenkron stressed that Putin had two choices 
regarding how the global media would cover the G-8 meeting. 
The story could be how Putin is leading G-8 efforts to tackle 
global issues, or it could be that democracy is backsliding 
in Russia. 
Democracy, Labor, and Human Rights in Russia 
11. (C) Lowenkron noted the lack of formal bilateral 
U.S.-Russian discussions regarding human rights since 1997. 
Kosachev said cooperation in that sphere was hindered by the 
fact that the U.S. and Russia did not share similar 
standards.  He compared U.S.-Russian relations with those 
between the U.S. and EU.  Although the U.S. supported the 
death penalty and the European Union did not, for instance, 
such a difference had not hurt U.S.-EU relations and the EU 
did not try to force its standards on the U.S.  By contrast, 
Kosachev said, the EU and U.S. sometimes tried to force their 
views on Russia. 
12. (C) Kosachev claimed that Russia was pursuing a European 
model of democracy (i.e., a liberal economy, pluralist 
democracy, and government social welfare programs) rather 
than the more autocratic Asian or Chinese models of 
government.  Russia had not reached the level of democratic 
development of the EU or U.S. but was moving in that general 
direction.  Nations with well-developed democracies now 
focused on other concerns, such as the environment, while 
Russia was still working on developing the fundamentals of a 
sustainable democratic system. 
13. (C) Kosachev concluded by noting that the U.S. was more 
concerned about democracy in Russia than Russians were 
themselves.  The typical Russian was concerned about 
receiving his salary and pension on time or about the Chechen 
terrorist threat rather than the status of human rights in 
Chechnya or in Russia in general.  Kosachev said the ideals 
of freedom and liberty had become discredited in Russia since 
the harsh reforms of the 1990s, which in the end had achieved 
nothing but instability.  It would take time for Russia to 
reach the same level as the U.S., but pressuring Russia would 
not work. 
14. (U) A/S Lowenkron has cleared this cable. 


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