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Reference ID Created Released Classification Origin
06MOSCOW12900 2006-12-13 06:51 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

DE RUEHMO #2900/01 3470651
O 130651Z DEC 06

C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 012900 
E.O. 12958: DECL: 12/06/2016 
Classified By: Pol/Min Alice G. Wells.  Reasons 1,4 (B/D) 
1.  (C) Summary.  Squeezed between China and the rest of 
Siberia and challenged with an oppressively harsh climate, 
Chita Oblast has historically served as a place of exile and 
remains one of Russia's poorest regions.  The break-up of the 
Soviet Union led to the collapse of the region's livestock 
and dairy farming, closure of military bases, and widespread 
looting of mineral extraction businesses -- depressing 
further the region's already low living standards.  Although 
Chita has so far not gained from Russia's economic growth, 
there are glimmers of hope.  Prospective unification with the 
Aginsk Buryat Autonomous Area and construction of new rail 
lines to transport the region's large deposits of minerals 
and gold hold out prospects for growth.  Rail and road 
connections between the capital, Chita, and the border town 
of Zabaikalsk serve as the main transport corridor between 
Russia and China.  China's booming economy has created envy 
among oblast residents, who hope that their region can become 
a prosperous gateway to China and beyond.  End summary. 
Survival Mentality:  A Special Breed 
2.  (C) Nikolay Korylyov, Deputy Head of the Chita Regional 
Department for Foreign Economic Relations, considered the 
imperative of "survival" the most important element in any 
Chita resident's psychology.  Despite the complicated ethnic 
composition of the region (over 120 groups), conditions in a 
harsh and distant landscape have forced residents to 
cooperate.  Except for a few recent isolated cases, there has 
been no notable ethnic discord, he said. Difficult natural 
conditions -- a short summer growing season and winter 
temperatures routinely dropping to minus 30-50 degrees 
(centigrade) -- coupled with chronic neglect by Moscow has 
created a "special" mentality, he added.  Marina Meteleva, a 
journalist with the largest-circulation regional daily 
"Zabaikalskiy Rabochiy," claimed that the Center always had a 
"just in case" attitude toward the Oblast: just in case this 
faraway border region fell into the hands of enemies, the 
Center did not want to lose any important industries, so none 
were located here. 
From Decembrists to Khodorkovskiy 
3.  (C) Moscow's lack of concern for the region's economy has 
historically been coupled with the practice of sending people 
here whom the government would like to forget.  Eighty-five 
Decembrists, who angered Tsar Nicholas I by planning an 
uprising to transform Russia and free her from serfdom, were 
exiled to Chita in 1825, and left behind a legacy of culture, 
education and the beautifully planned mini-St. Petersburg, 
that is the city of Chita.  Nicknamed by "Zabaikalskiy 
Rabochiy"'s chief editor Aleksandr Barinov, as "our 
Decembrist," Yukos Oil's Mikhail Khodorkovskiy is now serving 
a nine-year term in the Krasnokamensk prison, located 25 
miles from Zabaikalsk. 
Moscow Spoils Where China Helps 
4.  (C) All our interlocutors agreed that the biggest 
frustration for the region was the limited means available to 
promote development, despite Chita's location in an area rich 
in natural resources.  The Oblast budget is meager and Chita 
is heavily dependent on subsidies from Moscow.  Although 
almost every element in Mendeleev's table could be found 
somewhere in the Oblast, profits go to Moscow, stripping the 
area of a much-needed incentive to develop its economic 
potential.  The same is true of customs revenue from 
rapidly-increasing trade with China.  Chita has two Chinese 
clothing markets and two produce markets populated by a 
mixture of Chinese and Russian vendors (and a few Koreans 
from Northeast China.)  A quick survey of the markets showed 
that some Chinese vendors came from as far as Fujian 
Province.  In addition, over two million people cross the 
Zabaikalsk-Manzhouli (China) border each year and up to 
16,000 Chinese job seekers legally come to the Oblast each 
year to work, mostly in the construction industry.  Interfax 
Chita's Aleksandr Karpenko summarized the Chinese presence in 
Chita as "China feeds us, clothes us, and houses us.  We 
cannot survive without the Chinese." 
Charming City, But Where Are the Jobs? 
MOSCOW 00012900  002 OF 004 
5.  (C) Despite the sharply expanding trade with China, 
little seems to have changed in Chita itself.  Although we 
doubt the city will see an influx of tourists anytime soon to 
pump up the local economy, the town fathers make an effort to 
cultivate the romantic aura surrounding its exile history, 
spotlighting the impeccably p
reserved church (now a museum) 
that the Decembrists built.  Chita's politics are stuck in a 
time warp of their own.  United Russia (YR) controls 20 of 
the Oblast Duma's 42 seats.  The remainder are apportioned 
among the Communists (7), the Liberal Democratic Party of 
Russia (3), and the Agrarian Party (3).  The recently-formed, 
"second" pro-Kremlin party, "Just Russia," is still in its 
formative stages, while Yabloko is barely present.  Marina 
Meteleva described "Just Russia" to us as an opposition party 
that could not be taken seriously.  Yabloko's Igor Linnic 
claimed that citizens are too "apolitical" to be interested 
in his party, which he described as a "group of intellectuals 
oriented toward European democracy." 
6,  (C) Yuriy Kon, a YR oblast Duma member, seconded other 
interlocutors' belief that Moscow understood Russia only up 
to the Ural Mountains.  To resuscitate the economy, he argued 
that Chita needed to find a way to process rather than just 
export raw materials to China.  Aleksandr Shchvetsov, First 
Secretary of the Communist Party, contemptuously termed YR a 
"party of industrialists and bureaucrats."  He blamed the 
Putin government for engaging with China without first 
clarifying Russia' geopolitical and economic interests.  His 
party base draws from those who join because of a perceived 
lack of social justice in the society. 
7.  (C) For residents looking for employment, the China trade 
is both a source of hope and frustration.  Vasily Glazkov, 
who serves as an administrator in the border town of 
Zabaikalsk, gloomily reminisced about the days when residents 
of Manzhouli on the Chinese side of the border crossed to 
Russia in search of food and employment.  The tide turned 
rapidly when the Soviet Union collapsed, he said.  In the 
economic chaos that followed, oblast residents sold 
everything from scrap metal to timber to China.  Once 
prosperous metal processing factories now lay in ruins. 
Anything of value had been stripped and shipped to China. 
Journalist Meteleva lamented that every 20 minutes a 
trainload of timber, mostly illegally harvested, left 
Zabaikalsk for Manzhouli.  Nataliya Kovalyona of the Dauria 
Ecological Center, worried that the famous Russian taiga was 
steadily disappearing. 
Chita-Zabaikalsk: 304 miles of Hardship 
8.  (C) To get a closer look at what changes the cross-border 
trade was spurring in the oblast, we took the daily train 
from Chita to the Chinese border some 304 miles away.  The 
twelve-hour trip is a very slow ride.  (It takes only 6-8 
hours by car over a two-lane road).  Relatively well-to-do 
Russians and Chinese pay the equivalent of USD 50 for a berth 
in a four-person compartment with a simple dinner and tea. 
The monotonous view of the immense steppe is broken only by a 
handful of poor villages, small herds of animals, and 
numerous deserted military garrisons, which were pillaged 
after they were shut down.  (Note:  Border disputes between 
the USSR and PRC led to a heavy military presence up to the 
early nineties.  End Note.)  The region's farmers have 
suffered most from the collapse of the Soviet Union. "The 
farmers have nothing to do, so they drink," said Olga 
Kobzistaya of the Oblast Duma's Press Service.  Nikolay, a 
forty-year old taxi driver, told us that as a young boy, he 
saw large herds of sheep and cows on the steppe.  A uranium 
miner we ran into had bounced from Uzbekistan to Kazakhstan, 
then to Krasnokamensk as the region's uranium mines closed 
one after another. His father, after working 35 years in 
underground uranium mines, received a pension of a little 
under USD 100 each month.  His hands shook and he was deaf in 
one ear.  Nikolay described perestroika as "the worst thing 
that ever happened."  He dreamt of Russia with a 
Turkmenbashi-like leader.  Putin, he said, was the world's 
"biggest thief." 
--------------------------------------------- --------- 
Bright Lights of Manzhouli and Wasteland of Zabaikalsk 
--------------------------------------------- --------- 
9.  (C) Reaching the border, even the relative optimism felt 
in Chita seems very far away.  Zaibaikalsk, a city of 12,000, 
is located opposite the booming Chinese city of Manzhouli, 
which has a population of 90,000 (200,000 if the population 
of neighboring industrial city Heila is added, according to 
local officials).  While residents hope to tap into the 
border trade, these efforts have been stymied by failed 
MOSCOW 00012900  003 OF 004 
negotiations for a free economic zone, which we were told 
fell apart because of rigid Russian laws.  Russians noted 
that about five miles away in Manzhouli, on the Chinese side, 
a large shopping center had already been built on spec within 
the projected free economic zone and the city featured a 
"Matyushika Square," which had memorials dedicated to Russian 
heroes such as Peter the Great and Yuriy Gagarin to welcome 
Russian visitors.  In contrast, Zabaikalsk's border area is a 
desolate no-man's land with few buildings, and even those 
have been built and are operated by the Chinese.  The only 
places to eat are flyblown pirogiy stands; clean toilets and 
supermarkets are virtually non-existent  . 
10.  (C) Russian customs agent Marina, aged 43, told us she 
shops and vacations regularly in Manzhouli.  Marina is one of 
the 500 customs agents now posted to the border region, a 
number up sharply from the eight agents present when the 
border reopened in 1988.  Over seventy percent of Russian 
exports and imports to China transit Zabaikalsk and indeed 
the Chita-Zabaikalsk connection is the main Russian corridor 
to China and beyond.  Marina told us that on each of her 
trips across the border, she treats herself to good Chinese 
food, a massage, and a facial, items that are unavailable in 
Zabaikalsk.  In 2005, she managed to buy a USD 800 travel 
package (more than her monthly salary) for a 10-day stay in 
Hainan Island in southern China.  Noting that Manzhouli is 
chock-a-block with freshly-constructed western-style 
buildings, she told us that Manzhouli was everything 
Zabaikalsk wasn't. 
Can We All Get Along? 
11.  (C) While dismal economic conditions and disappointment 
over the lack of economic opportunities from the booming 
cross-border trade create a sour mood in Chita, the oblast 
has so far managed to avoid the ethnic tensions that have 
plagued other parts of Russia.  In addition to the most 
numerous minority group, the Buryats, there are up to 120 
other groups represented in the oblast.  Some of our 
interlocutors reflected on the varied ethnic mix in Chita, 
the lack of conflict among residents, and the permeability of 
borders.  For example: 
--Yuriy Kon (56) is an oblast Duma member.  Kon's father, a 
native of North Kyungsang Province, Korea, was sent to 
Sakhalin during the Japanese occupat
ion of Korea.  He left 
his wife, a son, and a daughter behind.  After the Korean 
War, Kon was not able to return to Korea.  He remained in 
Sakhalin and married a Japanese woman, Yuriy's mother. The 
family later moved to Chita.  Yuriy married a Russian-Finnish 
woman and has a son and a daughter.  His stepbrother (now 
deceased), then a member of the Korean Parliament, in 
searching for his father located Kon in Chita. The two 
families were reunited two years after his father's death in 
--Mrs. Kim (56) is a vendor in one of the two Chita Chinese 
clothing markets.  Her father, a native of South Kyungsang 
Province, Korea, fled to the Chinese northeast during the 
Japanese occupation.  Like Kon's father, he also could not 
return home following the end of the Korean war.  After 
making a few futile attempts to relocate to South Korea, Mrs. 
Kim moved north, to Chita, where she sells sweaters and makes 
USD 300-400 a month.  She plans to return to her family in 
Yanbian when she has saved enough money. 
--------------------------------------------- ---------- 
A Ray of Hope: from Oblast (Region) to Kray (Territory) 
--------------------------------------------- ---------- 
12.  (C) Despite the economic stagnation we saw, Stepan 
Zhiryakov, Director of Highland Gold Mining's Chita branch (a 
joint venture of Russia, Canada and the U.K.) was optimistic 
about the oblast's future.  According to Zhiryakov, the most 
promising project to be undertaken by the Center will be a 
new railway to connect Margutsek to Budyuzhan along the 
Chinese border.  The projected rail line would connect twenty 
mineral deposit sites, stimulating the reopening of closed 
mines.  There are also plans to construct a new railway to 
China between Kariymskoye to Zabaikalsk.  Chita residents are 
also counting on an administrative changes to spur economic 
prospects.  Like other regions -- Perm, Kransoyarsk, and 
Irkutsk -- which have successfully merged their oblast 
governmental structures with a neighboring autonomous area, 
Governor Ravil Geniatulin (an ethnic Tatar) is promoting the 
unification of the oblast and the Aginsk Buryat Autonomous 
Area.  The goal of the merger is to draw more resources from 
the Center.  The status of "kray" is more prestigious than 
oblast and should lead to more significant economic support 
MOSCOW 00012900  004 OF 004 
from Moscow.  A referendum on unification will be held on 
March 1, 2007. 
13.  (C) Never a favorite region of Russia's rulers, the 
oblast still struggles.  It is well situated to serve as the 
main gateway to China, and it is rich in natural resources. 
It lacks, however, the infrastructure necessary to capitalize 
on that potential and the Center's support.  The ruined 
agricultural system has created a wave of social problems, 
prominently alcoholism, in the villages and lack of liquidity 
has meant that many factories and housing compounds have 
deteriorated beyond repair.  Neighboring China is both a 
potential economic lever and a constant reminder of what 
could be if the right policies are put in place. 


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