06MOSCOW12764, RUSSIANS STILL CYNICAL ABOUT NATIONAL PRIORITY

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Reference ID Created Released Classification Origin
06MOSCOW12764 2006-12-04 03:47 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO4884
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #2764/01 3380347
ZNY CCCCC ZZH
P 040347Z DEC 06
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5630
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 012764 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS WARLICK 
NSC FOR TGRAHAM, TMCKIBBEN 
USDOC FOR 4231/IEP/EUR/JBROUGHER 
STATE PASS ELECTRONICALLY TO USDA FOR OSEC, TERPSTRA; 
 
E.O. 12958: DECL: 11/13/2016 
TAGS: EAGR ECON EFIN PGOV PREL RS POL
SUBJECT: RUSSIANS STILL CYNICAL ABOUT NATIONAL PRIORITY 
PROJECTS 
 
Classified By: EMIN Quanrud for reasons 1.5 (b) and (d) 
 
1.(C) SUMMARY. One year into a $13 billion dollar two-year 
endeavor aimed at shortcomings in health, education, housing 
and agriculture, President Putin's National Priority Projects 
have yet to impress the Russian people.  Polls indicate that 
the public is skeptical -- if not cynical -- of the 
administration's efforts to date.  Even supporters of the 
project do not expect to see tangible progress this early in 
the process, but some suggest it is possible that by this 
time next year, the projects could be making headway.  First 
Deputy PM Dmitry Medvedev, considered a leading presidential 
candidate, is in charge of the projects' implementation, and 
continuing public skepticism will certainly not enhance his 
political base.  End Summary. 
 
RUSSIANS - CYNICAL ABOUT 
THE "NATIONAL PROJECTS" 
------------------------ 
 
2. (SBU)  President Putin first rolled out his plan for the 
four National Priority Projects in the spring of 2005.  The 
reported goal was to spread to ordinary Russians the benefits 
of the energy-fueled economic boom of recent years and to 
begin to tackle some of Russia's most pressing social and 
economic needs.  Coming as it did in the wake of the botched 
implementation of the monetization of benefits, this effort 
was intentionally never billed as reform.  The GOR has 
allocated $13 billion to the projects, or 1.7% of GDP, over 
2006-2007.  Critics say the spending is cosmetic -- populist 
politics geared toward the next Duma and Presidential 
elections. Supporters say the projects are the first serious 
steps in remedying Russia's social ailments, and could soften 
the public to a new cycle of post-election reform. 
 
3. (SBU) Either way, the government is working hard to 
trumpet the success to date of the projects.  In November, 
Medvedev announced, "One thing is evident: the National 
Priorities that the Russian president formulated last year 
hit the spot...effective and fast solutions to the problems 
at hand are being found."  Unfortunately, Russian citizens 
beg to differ, according to Levada Center polling.  While a 
majority of respondents in a recent poll (58%) were familiar 
with the projects, they did not believe they would see any 
benefit, and more than one-quarter had never even heard of 
the undertaking.  Not only were informed respondents 
unimpressed by the effort, 77% believed the money allocated 
would be inefficiently spent or stolen. 
 
HEALTH - A CURE IN SIGHT? 
------------------------- 
 
4. (SBU) The GOR's main goals for the healthcare system are 
to improve the affordability, accessibility and quality of 
medical assistance and to develop disease prevention 
programs.  The federal allocation for the healthcare project 
in 2006 is $3.27 billion.  In a recent poll by VTsIOM, a 
majority (62%) of Russians considered the country's current 
healthcare situation "negative," and almost half of those 
polled claimed to have seen no change in the healthcare 
system since the beginning of the year.  On the positive 
side, one-quarter of those polled said they have started to 
see positive changes, and Russians seem generally optimistic 
that the health system's ills will be addressed at some 
level.   While Levada polling found that 42% believe the 
health project will lead to better healthcare, VTsIOM puts 
the number at 62%. 
 
EDUCATION -- A MEDIOCRE GRADE 
----------------------------- 
 
5. (SBU) The GOR's short-term education goals have been to 
provide grants and financing to outstanding students, 
teachers, and schools; develop schools focused on 
professional training; and provide necessary equipment and 
transportation - such as buses and internet access.  Slightly 
more than two billion USD will be spent on education reform 
in 2006-2007.  According to Levada, barely half of Russians 
believe the National Education Project will "probably" lead 
to an improved education system, and 39% of those polled 
doubt that the project will have any impact at all. 
Education improvements are not a lost cause, however. 
According to Levada's chief socio-economic analyst, the solid 
education legacy of the former USSR and the fact that the 
 
MOSCOW 00012764  002 OF 003 
 
 
education project has a clearly defined set of goals gives 
this project a greater chance of success. 
 
HOUSING -- FINDING A ROOF 
TO PUT OVER YOUR HEAD 
------------------------- 
 
6. (SBU) Earlier this fall, Medvedev spoke during a 
television interview about the need for affordable housing, 
noting that 80% of Russians believe that owning property is 
fundamental
 to their well-being.  By October of this year, 
nine months after the launch of the Housing Project, the GOR 
had built 26.5 million square meters of housing.  Its 
ambitious target is 50 million square meters by the end of 
the year.  Over the five-year life of the project, the 
government plans to spend $33.6 billion, build one million 
single family dwellings, and enable one-third of the 
population to buy a new apartment.  Despite arguably 
impressive results to date, the Russian public remains highly 
skeptical that they will personally benefit from this 
project. Sixty percent of those polled by Levada did not 
believe the project would improve access to decent housing. 
In Moscow the figures are no doubt much higher, given recent 
housing price trends. 
 
AGRICULTURE - 
NO TURNAROUND EXPECTED 
---------------------- 
 
7. (SBU) In agriculture, over the next two years the GOR 
hopes to accelerate livestock development; stimulate 
smallholder credit and activity; create credit cooperatives; 
provide rural housing for young agriculture professionals; 
and create investment incentives for the sector.  The 
Ministry of Agriculture has allocated slightly more than one 
billion USD for 2006-2007.  Analysts are encouraged by the 
government's focus on smallholders and recognition of the 
need for credit cooperative development and foreign imports 
(equipment and genetics).  Despite these upbeat observations, 
Russians themselves are the least sanguine of all about the 
agriculture project.  Slightly more than two-thirds of 
respondents in a Levada poll believed the national project 
would fail to change the sector's overall performance. 
Analysts say the negative sentiment can be attributed to the 
rather unambitious outlines of the project: how large can the 
impact be when only one billion USD over two years is spread 
across more than 16 million producers?  A second concern 
analysts cite is the very short timeline (two years) in which 
cash and imports are flooding into a sector that lacks the 
proper legislation, infrastructure, delivery channels, staff 
and management competency to integrate any radical changes. 
 
LOOKING FOR MORE FROM 
THEIR GOVERNMENT 
--------------------- 
 
8. (SBU) Polling data show that many Russians still look to 
the government to improve their situation.  According to 
Levada, nearly a quarter of the population wants more from 
their government, especially in the areas covered by the 
national priority projects.  It is notable that Russians are 
asking for more from their government, but not for more 
reform -- 80% believe current reforms are either not 
beneficial or are downright harmful. And it is not only 
soviet-era pensioners that are demanding more.  MEDT's 
Batkibekov tells us that the younger generation (16-18 years 
old) seem to share the sentiment, although it is fueled not 
by nostalgia for the Soviet system, but rather out of a 
growing awareness of how western governments (especially 
Western European governments) provide for their citizens. 
 
ON THE GROUND, SOME 
HEADWAY BEING MADE 
------------------- 
 
9. (SBU) Supporters of the National Priority Projects say 
that it is too early to expect tangible results.  Most 
projects were started less than nine months ago, and given 
the staggering challenges and deteriorated condition of the 
social system (particularly health and education), sudden 
breakthroughs are unlikely. MEDT's Batkibekov thinks benefits 
in the health sector should soon be most obvious, noting in 
particular that the year-long procurement process should soon 
be delivering to many hospitals and clinics state-of-the art 
 
MOSCOW 00012764  003 OF 003 
 
 
(or at least not obsolete) medical equipment. Higher salaries 
should slow as well the exodus of teachers and attract 
higher-qualified individuals, but that is a multi-year 
effort. Regarding housing, supporters and critics alike 
recognize that the GOR has made significant headway in 
increasing the supply of housing, though keeping prices 
within the reach of most Russians has proven far more 
difficult. 
 
COMMENT 
------- 
 
10. (C) The project's harshest critics continue to call it 
nothing more than ineffective populism, with a good dose of 
fiscal mismanagement (read: corruption) thrown in.  That may 
very well be true, but if it is, we will know soon enough. 
New medical equipment will either appear or not appear in the 
country's numerous polyclinics.  Teachers will either chose 
to stay in response to salary increases or not.  Housing 
units will be available (and prices start to soften) or not. 
And, as obvious as these changes will be to us, we are 
betting they will be even more obvious (or not) to the 
average Russian.  Medvedev says he is serious about the 
success of the projects, and they, in turn, have become a 
very public trial of his ability to govern effectively. 
BURNS

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