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Reference ID Created Released Classification Origin
06MOSCOW12897 2006-12-12 14:27 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #2897/01 3461427
P 121427Z DEC 06

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 012897 
E.O. 12958: DECL: 12/12/2017 
Classified By: Ambassador William J. Burns.  Reason:  1.4 (b, d) 
1. (C) Ambassador Burns traveled to the North Caucasus 
December 4-5 -- the first American Ambassador to visit the 
region in fifteen years.  In Kabardino-Balkaria he discussed 
with President Kanokov prospects for economic development and 
political reform.  Kanokov provided regional views on frozen 
conflicts with Georgia.  At a roundtable with Nalchik 
University students, the Ambassador stressed the need to seek 
areas of cooperation between Russian and the U.S., including 
exchanges -- an issue the students raised as well.  In North 
Ossetia-Alania, Republic Head Mamsurov castigated Georgia and 
urged the U.S. to drop its support for the neighboring 
country.  Ambassador visited Beslan School No. 1 and laid a 
wreath at the cemetery for victims of the 2004 terrorist 
attack.  End Summary. 
2. (SBU) The Ambassador visited Nalchik (Kabardino-Balkaria) 
on December 4 and Vladikavkaz and Beslan (North 
Ossetia-Alania) on December 5.  At events in both republics 
he noted that he visited the region more than ten years 
before when he was PolMinCouns.  The Ambassador stressed the 
importance of U.S.-Russian relations to both countries and 
the U.S. desire to play a role in North Caucasus relief and 
recovery efforts -- as exemplified by our USD 11 million 
assistance program for the region.  The Ambassador also 
highlighted the value of exchanges. 
Kabardino-Balkaria President Arsen Kanokov 
3. (SBU) Kanokov received the Ambassador for a long meeting, 
accompanied the Ambassador to a student roundtable at the 
university, and hosted the Ambassador to a lavish dinner. 
The dinner provided little opportunity for serious talk -- it 
was punctuated by numerous toasts and a variety of musical 
acts, including local singers, folkdancers and a xylophonist 
playing "Carmen."  Kanokov opened up afterwards when he drove 
with Ambassador from the restaurant to the Ambassador's 
hotel.  At the formal meeting and dinner Kanokov was 
accompanied by PM Andrey Yarin, Deputy PM Madina Dyshekova, 
Presidential Administration Director Albert Kachesarov, local 
MFA rep Leonid Filemonov, and Amcit of Kabardian heritage 
Ibrahim Vuch. 
4. (C)  Kanokov led off the conversation at the formal 
meeting by detailing the changes he had made to stabilize the 
country in the wake of the October, 2005 attack on Nalchik by 
local and Chechen extremists.  He stressed that economic 
development, with a concomitant increase in employment, is 
the primary task in creating stability.  Kabardino-Balkaria 
has progressed well in the national priority projects, though 
housing, as everywhere, is more difficult.  The K-B 
government has begun paying down its Rubles 60 billion debt, 
and hopes to liquidate it entirely within three years. 
Transfers from the federal center are up 24 percent, 
providing an extra 2.2 billion rubles to build schools and 
hospitals.  Kanokov claimed that ethnic and religious 
frictions are present but not serious.  The republic's 
problems boil down to one main issue:  unemployment.  Kanokov 
has been seeking investment as a way of creating jobs, but 
stereotypes of the North Caucasus have made potential 
investors reluctant.  Ambassador said he is willing to inform 
U.S. investors of any projects Kanokov thinks might be 
5. (C) Ambassador asked about Kabardino-Balkaria's external 
relations, leading to a discussion on South Ossetia, whose 
referendum Kanokov had just observed.  Kanokov thought 
tensions in the region are increasing, though he admitted 
that the departure of Georgian DefMin Okruashvili might mark 
a "slight change" in Georgian policy.  Ambassador reiterated 
the U.S. position in support of Georgia's territorial 
integrity and a negotiated solution achieved by peaceful 
6. (C) Later, in the one-on-one conversation on the drive to 
the hotel, Kanokov admitted to the Ambassador that he is 
struggling with the clan system in Kabardino-Balkaria.  Clan 
rivalries affect not only politics, but economic projects as 
well.  Clans and factions demand their cut of every project. 
Nalchik University Roundtable 
7. (SBU) After Rector Karamurzov gave the Ambassador an 
overview of the university and its physical sciences 
orientation, the Ambassador addressed 50 students and faculty 
many of them sitting around a conference table boasting a 
MOSCOW 00012897  002 OF 003 
computer monitor at each seat.  The Ambassador told the 
audience that Russia and the U.S. matter to one another not 
only in traditional security areas but also in facing 
together the challenges of the 21st century.  We should not 
let day-to-day frustrations cause us to lose sight of areas 
in which we gain by working together. 
8. (SBU) A number of questioners stressed the value of 
exchanges and lamented that programs such as Open World are 
no longer as active as they once were.  The Ambassador 
acknowledged the value of exchanges at all levels.  Other 
questioners were interested in the U.S. stance on Russian WTO 
accession, current American politics, and the Circassian 
communities in America and Jordan, where the Ambassador 
previously served. 
Vladikavkaz Meeting with Republic Head Mamsurov 
--------------------------------------------- -- 
9. (C) On December 5 the Ambassador traveled from Nalchik to 
Vladikavkaz, capital of North Ossetia-Alania, where he met 
with the republic's head, Teymuraz Mamsurov.  Mamsurov was 
accompanied by Larisa Khabitsova, Chair of the North Ossetian 
Parliament; Oleg Khatsayev, First Deputy PM (the PM had just 
been sacked) and Vladimir Tabolov, Chair of the republic's 
Foreign Relations Committee. 
10. (C) Mamsurov gave an often defensive overview of the 
situation in North Ossetia, saying that the republic, like 
the rest of the North Caucasus, is recovering from "mistakes 
made over the last ten years under the slogan of 'reform.'" 
He stressed the lack of land and the population density of 
the republic.  He touched on vodka production, denying that 
North Ossetia's preponderance in the field meant that 
Ossetians are drunkards.  To the Ambassador's question on 
relations with other republics, Mamsurov admitted that there 
are political problems with both Ingushetia and Chechnya, but 
asserted that these problems have economic roots. 
11. (C) The Ambassador's question on relations with Georgia 
opened the floodgates to an outpouring of nationalist 
rhetoric.  "In the 21st century" the Ossetian people must not 
be divided between two countries, "serving in two different 
armies," he said; "I cannot imagine my cousin serving in a 
NATO army."  He said charges that South Ossetia's economy is 
based on counterfeiting and other criminal activity are 
"shameful."  Mamsurov saved his harshest rhetoric for the 
Georgian leadership, which resorts only to "threats;" 
Saakashvili, "who has lived little in Georgia," lacks the 
wisdom and experience to serve his people well. 
12. (C) Mamsurov warned against accepting the "myth" of 
democracy in Georgia.  "They threw Shevardnadze out like an 
old dog," he said, "and Shevardnadze himself came to power 
the same way."  The Ossetians could not trust anything 
Saakashvili says, Mamsurov believed.  He criticized U.S. 
support for Saakashvili, and urged the U.S. to take Georgian 
rhetoric "more seriously."  The Ambassador said the U.S. 
supports Georgia's territorial integrity and an agreement 
between Georgia and the South Ossetians to resolve the 
conflict by purely peaceful means. 
UN Heads 
13. (C) Marie Spaak (OCHA), Jo Hegenauer (UNHCR), Pirita 
Vuorinen (UNDP), Khairiniso Najmetdinova (WFP), Rasheed 
Mustafa (UNICEF), Armen Mehrabyan (FAO) and Zoltan Birro 
(UNDSS) gave Ambassador their overview of the challenges they 
face in the North Caucasus, stressing the difficulties in 
promoting economic progress in the face of a brain drain and 
reluctance of investors to sink funds into the region. 
Adding to those difficulties are the lack of security, 
government pressure to give assistance in the form of 
infrastructure, not technical capacity-building, and 
government restrictions on movements and NGO registration. 
OCHA chief Spaak highlighted the demand by the Chechnya IDP 
committee that all UN agencies move their offices -- and 
warehouses -- to Chechnya.  UNHCR chief Hegenauer noted that 
UN humanitarian agencies must count on losing most of their 
funding and ability to operate in the region within the next 
few years as the focus shifts to development assistance. 
14. (C) U.S. funded NGO heads Amir Omanovich (International 
Rescue Committee), Zurab Koberidze (International Medical 
Corps), Siobhan Kimmerlee (World Vision) and Eva Raubisko 
(Danish Refugee Council) spoke of their difficulties with 
re-registration (IMC and DRC have been re-registered; IRC and 
WV are still caught up in the slow iterative process of re- 
MOSCOW 00012897  003 OF 003 
and re-re-submitting forms).  IRC said it has had to 
terminate 90 percent of its contracts while awaiting 
re-registration.  IMC's Koberidze said the reporting 
requirements are as onerous as those for re-registration. 
There is also a need to reconcile requirements under Russian 
NGO law with requirements under U.S. non-profit law. 
Ambassador urged the NGOs to consult with the Embassy's legal 
team, which has been advising NGOs in Moscow. 
15. (U) Before leaving North Ossetia-Alania Ambassador toured 
School No. 1, site of the terrorist attack in September, 
2004.  He laid a wreath at the nearby cemetery devoted to the 
hundreds of victims of the attack. 
16. (C) The North Caucasus has attracted international 
attention for over ten years as a source of instability for 
Russia and the region.  The security situation is improving, 
though that may prove elusive:  there are strong and violent 
extremist Islamist elements throughout the region, and they 
are becoming the main channel for opposition to corrupt and 
repressive regimes.  The last fifteen years of war and 
collapse have left the North Caucasus poorer and more 
isolated than before.  The U.S. value-added lies in 
continuing humanitarian assistance and widening exchanges to 
help reduce that isolation. 


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