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Reference ID Created Released Classification Origin
06MOSCOW11994 2006-10-26 07:49 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #1994/01 2990749
R 260749Z OCT 06

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 011994 
E.O. 12958: DECL: 10/21/2016 
Classified By: POL M/C Alice G. Wells: 1.4 (b and d). 
1.  (C) SUMMARY:  Representatives of four U.S-based NGOs told 
EUR A/S Fried that they were trying to keep a low profile in 
light of the NGO law, approaching elections, and increasing 
GOR assertiveness, especially statist, in key economic 
sectors.  Although NGOs were under increasing scrutiny and 
the GOR had shown its ability to use pressure when it 
desired, NGO representatives said there were also some signs 
of better cooperation in their own relations with the GOR and 
in U.S.-Russian relations more broadly, but those would 
likely be more apparent after the selection of Putin's 
successor and the upcoming elections.  End summary. 
2.  (C) A/S Fried and the Ambassador on October 21 met with 
Carnegie Foundation Director Rose Goettemoeller, NDI Head of 
Office Mary O'Hagan, IRI Head of Office Joe Johnson, and 
AmCham Executive Director Andrew Somers.  All of their 
organizations have been re-registered by the GOR, with NDI 
and IRI receiving word of their approvals on October 20. 
3.  (C) A/S Fried began the meeting by noting that 
U.S.-Russian relations were mix, including areas where we 
cooperate well, where cooperation is mixed, and those where 
cooperation is difficult.  U.S. policy sought to strengthen 
cooperation but also to raise U.S. concerns on issues, and 
criticize the GOR when necessary, especially (e.g., on 
Georgia) where the U.S. had marked differences with Russia. 
The Ambassador said that we had welcomed the re-registration 
of all four NGOs, and noted that DFM Yakovenko personally had 
called October 20 with information that IRI and NDI had been 
re-registered.  He appreciated NGOs' patience and 
collegiality in working with the Embassy during the onerous 
registration process. 
4.  (C) Carnegie's Goettemoeller said that with elections 
approaching in Russia and the U.S., the political rhetoric 
would make it difficult to promote the positives in the 
bilateral relationship, and that NGOs and the U.S. would have 
to try to maintain a pragmatic relationship with the GOR 
until after the elections.   She hoped that the aftermath 
would create opportunities to then strengthen the 
relationship.  Carnegie staff had purposefully avoided public 
comments on the NGO law, she said, because it could have been 
counterproductive for its own application, which was approved 
earlier this month.  Carnegie was also trying to reach out 
more aggressively to high-level GOR officials and had some 
success, such as support for Carnegie's work by Chief of 
Defense General Baluyevskiy.  Human Rights Ombudsman Lukin 
had also been helpful. 
5.  (C) Carnegie's staff saw journalist Anna Politkovskaya's 
murder, and many of them knew her well, as a sign of a 
negative swing in the atmosphere in Russia, with the 
potential for intimidation and threats against government 
critics to become more prevalent, Goettemoeller said.  NDI's 
O'Hagan said that harassment of NDI and other NGOs showed 
that elements within the GOR could use selective enforcement 
of criminal and civil codes to threaten "unfriendly" or 
"excessively independent" NGOs and others with direct 
pressure sometimes placed on local staff by the Federal 
Security Service. 
6.  (C) IRI's Johnson noted that IRI had had little trouble 
in Russia, but of course it tried to keep a low profile, 
while still implementing its programs.  He suggested that IRI 
potentially could have problems, however, if the Republicans 
lost control of the Congress in the upcoming U.S. elections. 
He explained that there was a trend in Russia that equated 
power with protection.  If the Republicans lost power, then 
IRI might become targeted, while NDI in that case might 
suddenly enjoy a more constructive relationship with the 
authorities.  In any case, Johnson said, with Russian 
elections looming and no successor to Putin emerging, the 
uncertainty of the transition was likely contributing to 
increasingly sharp jockeying for power, both in Moscow and in 
the regions.  This could potentially lead to problems for 
NGOs that were seen as working in conjunction with "the 
Economic and Business Climate 
7.  (C) AmCham's Somers said that U.S. businesses continued 
to enjoy extraordinary annual growth in Russia and that this 
was a positive for the bilateral relationship.  There were 
further positive signs, such as a growing middle class and 
MOSCOW 00011994  002 OF 002 
the expansion of U.S. businesses outside Moscow.  There were 
also concerns that stemmed from the strong development of the 
Russian economy, such as a shrinking pool of talented 
managers and increasing wages.  AmCham had good relationships 
with several ministries, such as the Ministry of Economic 
Development and Trade, and the Ministry of Finance  It had 
even reached o
ut to the FSB to discuss import controls, which 
had been well received. 
8.  (C) However, the GOR was showing signs of increased 
intervention in strategic sectors, and the consolidation of 
power inside the GOR was making it more opaque.  It was now 
harder to determine why certain decisions were made or who 
might be a helpful ally on business and investment issues. 
He suggested that the use of Russia's strategic resources to 
further the GOR's influence in foreign affairs was one factor 
contributing to this interventionist approach, and another 
could be that some within the GOR were pushing greater 
government intervention and control for personal gain before 
there was a change in power. 
9.  (C) A/S Fried asked if businesses were under increasing 
scrutiny or pressure.  Somers said that until two years ago, 
none of AmCham's members had come to him about problems with 
corrupt officials.  Since then, there have been cases of 
attempts to collect bribes, which the companies had managed 
to resist.  Companies, regardless of their nationality, were 
also being subjected to tax audits following the Yukos 
affair, and these audits created certain pressure.  One of 
AmCham's concerns was the potential for those audits to lead 
to criminal cases, but overall, this had not been a problem. 
Likewise, when audits led to some claim for back taxes, 
companies were able to defend themselves as tax courts were 
increasingly professional and there was little corruption 
within them.  But even the generally better functioning tax 
courts were vulnerable to political pressure from GOR 
10.  (C) The NGO participants noted that the mixed (though 
troubling) picture they described reflected the broader (and 
mixed) character of Russia. They concurred that over the 
short term, with elections approaching and uncertainty over 
Putin's successor contributing to increased sensitivities 
toward NGOs, that keeping a low profile, patience, caution, 
and trying to build relationships with GOR interlocutors 
during a difficult period would likely be the best way 
11.  (U) A/S Fried has cleared this cable. 


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