Monthly Archives: April 2007

07MOSCOW1981, RUSSIA: AMBASSADOR’S APRIL 27 MEETING WITH DEPUTY

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1981.
Reference ID Created Released Classification Origin
07MOSCOW1981 2007-04-30 14:37 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO1273
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHRN RUEHROV RUEHSR
DE RUEHMO #1981/01 1201437
ZNY CCCCC ZZH
P 301437Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9813
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RUEHSS/OECD POSTS COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY 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 02 MOSCOW 001981 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS 
STATE FOR EB/IFD 
NSC FOR KLECHESKI AND MCKIBBEN 
TREASURY FOR BAKER 
USDOC FOR 4231/IEP/EUR/JBROUGHER 
 
E.O. 12958: DECL: 04/30/2017 
TAGS: ECON ETRD EINV PGOV PREL RS
SUBJECT: RUSSIA: AMBASSADOR'S APRIL 27 MEETING WITH DEPUTY 
PRIME MINISTER ZHUKOV 
 
REF: A. MOSCOW 1354 
 
     B. STATE 51895 
 
Classified By: Ambassador William J. Burns, Reasons 1.4 (b/d). 
 
Summary 
------- 
 
1.  (C) In an April 27 meeting with the Ambassador, Deputy 
Prime Minister Aleksandr Zhukov emphasized the GOR's strong 
interest in WTO accession, mentioning he hoped to have an 
opportunity to discuss the issue with USG officials 
participating in a May 21 conference on corporate governance 
in New York.  He said the GOR is also ready to begin taking 
steps toward OECD membership.  He outlined the transformation 
of the Stabilization Fund that President Putin had described 
a day earlier in his national address.  Zhukov downplayed the 
need for a financial markets mega-regulator, provided a 
bullish outlook on the growth of non-oil, non-gas sectors, 
and expressed strong hope that senior-level USG officials 
would participate in the St. Petersburg Economic Forum in 
June.  End Summary. 
 
WTO Accession 
------------- 
 
2.  (C) Deputy Prime Minister Aleksandr Zhukov told the 
Ambassador he had agreed to participate in the U.S.-Russia 
Roundtable on corporate governance and cross-border 
investment on May 21 in New York.  Zhukov said he hoped the 
conference, sponsored by the New York Stock Exchange and 
Russia's Council for Corporate Governance, would provide an 
opportunity to meet informally with USG officials to discuss 
issues related to Russia's WTO accession.  He said meetings 
on the margins of the May 21 conference could provide some 
much-needed perspective as Russia works toward this 
objective.  Like other GOR officials (Reftel A), he 
acknowledged in general terms the disagreements impeding the 
conclusion of the multilateral process, but he added that the 
problems were not "fundamental" and could be resolved "rather 
quickly."  He said WTO membership remained a priority and 
that the GOR wanted to finalize the process before 
parliamentary elections in December so that Russia could 
announce its membership on January 1, 2008. 
 
Upcoming OECD Vote 
------------------ 
 
3.  (C) Zhukov described the GOR's position supporting 
Russia's membership in the OECD.  He said Russia deserved 
positive consideration during the May 15-16 ministerial 
meeting, and that a vote in Russia's favor would signify 
support for the accession process to begin.  He suggested 
that, if the OECD approves the launching of talks, the May 21 
corporate governance conference would also allow for an 
informal dialogue with USG officials to begin Russia's OECD 
accession process. 
 
Too Early for Financial Mega-Regulator 
-------------------------------------- 
 
4.  (C) Responding to the Ambassador's question about a 
unified financial markets regulator, which has been the topic 
of much press speculation, Zhukov said that Russia may need 
such an institution in the future but that it had more 
pressing economic changes to pursue.  He acknowledged that 
the debate had resurfaced as a result of disappointment in 
some circles with the Central Bank.  Zhukov praised the 
Central Bank's reform-minded leadership, emphasizing the 
benefits that the deposit insurance program had rendered in 
terms of cleaning up the sector.  He said that removing the 
bank supervision function from the Central Bank would be 
disruptive with few benefits. 
 
Budget Changes 
-------------- 
 
5.  (SBU) Zhukov highlighted some of the changes in budget 
programs that President Putin had described a day earlier in 
his national address.  One of the most significant changes is 
 
MOSCOW 00001981  002 OF 002 
 
 
the transformation of the current Stabilization Fund into the 
Reserve Fund and the National Well-Being Fund.  Zhukov said 
that as the GOR reduces the budget's dependence on oil and 
gas revenues, transfers from the Reserve Fund to cover budget 
shortfalls in the early stages will probably be the same 
magnitude as budget surpluses in recent years.  In 2008, 
Zhukov said Reserve Fund transfers to the budget would 
probably equal 6.5 percent of GDP, declining to 3.7 percent 
of GDP soon thereafter. 
 
6.  (SBU) The National Well-Being Fund will consist of two 
components.  The first will support the GOR's pension reform 
efforts by encouraging investment.  Although Zhukov noted the 
rules were still being finalized, the plan calls for the GOR 
to match workers' contribution to private sector account, 
ruble for ruble.  The second component will support 
development objectives.  The fund will supply th
e seed 
capital for the government's Nanotechnology Corporation, the 
Russian Development Bank, and the Venture Fund. 
 
7.  (SBU) Zhukov observed that the dynamism among the sources 
of budget revenue have been diversifying away from oil and 
gas extraction and export taxes.  He said that in 1Q07, tax 
revenue from oil and gas extraction grew only 4 percent, 
compared to 14 percent for manufacturing.  Profit and 
personal income tax revenues grew more than 12 percent and 
revenue from import tariffs is expected to double in the next 
three years.  Zhukov noted that the composition of revenue 
from import tariffs was moving away from retail and consumer 
goods toward capital goods. 
 
St. Petersburg Economic Forum 
----------------------------- 
 
8.  (C) After providing a brief overview of Russia's recent 
economic achievements and efforts to improve its image as a 
destination for foreign direct investment, Zhukov made a 
strong, special request that senior-level USG officials 
attend the St. Petersburg Economic Forum in June.  He 
stressed that this year's event would have a higher profile 
than in recent years.  The Ambassador pledged to revisit the 
issue with Washington. 
 
Comment 
------- 
 
9.  (C) Zhukov exhibited his characteristic optimism as he 
talked about economic diversification and Russia's WTO 
accession timetable. He was especially intent upon 
emphasizing Russian interest in high-level USG participation 
in the St. Petersburg Economic Forum. End Comment. 
BURNS

Wikileaks

Advertisements

07MOSCOW1977, FORUM FOR THE FUTURE: MFA SATISFIED WITH CIVIL

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1977.
Reference ID Created Released Classification Origin
07MOSCOW1977 2007-04-30 13:15 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0016
PP RUEHWEB

DE RUEHMO #1977 1201315
ZNY CCCCC ZZH
P 301315Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9808
INFO RUEHAS/AMEMBASSY ALGIERS 0092
RUEHRL/AMEMBASSY BERLIN 1930
RUEHBS/AMEMBASSY BRUSSELS 1880
RUEHEG/AMEMBASSY CAIRO 0249
RUEHIL/AMEMBASSY ISLAMABAD 2169
RUEHLO/AMEMBASSY LONDON 1961
RUEHOT/AMEMBASSY OTTAWA 2052
RUEHFR/AMEMBASSY PARIS 1789
RUEHRB/AMEMBASSY RABAT 0115
RUEHRH/AMEMBASSY RIYADH 0271
RUEHRO/AMEMBASSY ROME 2815
RUEHYN/AMEMBASSY SANAA 0059
RUEHTV/AMEMBASSY TEL AVIV 2165
RUEHKO/AMEMBASSY TOKYO 4107
RUEHTU/AMEMBASSY TUNIS 0170
RUEHJM/AMCONSUL JERUSALEM 0320

C O N F I D E N T I A L MOSCOW 001977 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 04/30/2017 
TAGS: PREL KDEM KMPI ECON RS
SUBJECT: FORUM FOR THE FUTURE:  MFA SATISFIED WITH CIVIL 
SOCIETY PARTICIPATION 
 
REF: STATE 49586 
 
Classified By: A/POL Colin Cleary.  Reasons:  1.4(B/D). 
 
1.  (SBU)  We shared reftel message with MFA Middle East 
Peace Process Section Chief Sergey Kozlov, who has 
coordinated participation by Russian civil society in the 
Forum for the Future.  Efforts to contact the civil society 
leaders who attended the Forum were not successful in advance 
of reftel's reporting deadline. 
 
2.  (C)  Kozlov told us that he was aware of dissatisfaction 
among non-Russian civil society participants about the lack 
of movement on reform priorities.  He was dismissive, arguing 
that it was unlikely that the Arab governments attending the 
Forum would adopt civil society recommendations wholesale; 
having government representatives even listen to civil 
society was an important first step.  Kozlov said that 
Russian participants -- the Russian Academy of Science's 
Institute for Asian and African Studies, the Arab-Russian 
Business Council, and the St. Andrew the First Called 
Foundation -- were pleased with the Amman Forum and looked 
forward to participating in future events. 
 
3.  (C)  Kozlov was worried that the Germans were lagging in 
their preparation for the next Forum meeting.  He noted that 
by this time last year, the Russians had already scheduled a 
preparatory committee meeting in May and had shared their 
planning broadly.  He asked that the U.S. press the Germans 
to move forward on event scheduling, because coming to a 
consensus on agendas was likely to prove difficult. 
BURNS

Wikileaks

07MOSCOW1976, UNSC MINURSO MANDATE RENEWAL: RUSSIA ON BOARD

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1976.
Reference ID Created Released Classification Origin
07MOSCOW1976 2007-04-30 13:15 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0001
PP RUEHWEB

DE RUEHMO #1976 1201315
ZNR UUUUU ZZH
P 301315Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9807
INFO RUEHGG/UN SECURITY COUNCIL COLLECTIVE PRIORITY
RUEHAS/AMEMBASSY ALGIERS PRIORITY 0091
RUEHMD/AMEMBASSY MADRID PRIORITY 0725
RUEHRB/AMEMBASSY RABAT PRIORITY 0114

UNCLAS MOSCOW 001976 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV UNSC MO WI RS
SUBJECT: UNSC MINURSO MANDATE RENEWAL:  RUSSIA ON BOARD 
 
REF: STATE 56431 
 
(SBU)  We discussed the UNSC MINURSO mandate renewal with 
Petr Illichev, Senior Counselor in the MFA'S International 
Organizations Department, who told us that Russia, as a 
member of the Friends of Western Sahara, supported the 
Friends' text.  He said that Moscow was aware that South 
Africa might push for changes, but Russia was confident that 
the mandate would be renewed without difficulty. 
BURNS

Wikileaks

07MOSCOW1974, RUSSIAN SCIENCE: PUTI…

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1974.
Reference ID Created Released Classification Origin
07MOSCOW1974 2007-04-30 13:10 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow
Appears in these articles:
www.sovsekretno.ru

VZCZCXRO1129
PP RUEHHM RUEHPB
DE RUEHMO #1974/01 1201310
ZNY CCCCC ZZH
P 301310Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9804
INFO RUEHZN/EST COLLECTIVE
RUEHRL/AMEMBASSY BERLIN 1928
RHEBAAA/DEPT OF ENERGY WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC
RHEHAAA/WHITE HOUSE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 001974 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR STAS, EUR/RUS, EUR/ACE, OES/STC 
OSTP FOR MARBURGER 
BERLIN FOR HAGEN 
 
E.O. 12958: DECL: 04/30/2017 
TAGS: KIPR KPAO TBIO RS
SUBJECT: RUSSIAN SCIENCE: PUTI...
C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 001974 SIPDIS SIPDIS STATE FOR STAS, EUR/RUS, EUR/ACE, OES/STC OSTP FOR MARBURGER BERLIN FOR HAGEN E.O. 12958: DECL: 04/30/2017 TAGS: KIPR KPAO TBIO RS

Classified By: EST Counselor Daniel O'Grady for reason 1.4(d) 

1. (C) SUMMARY: During his April 26 address, President Putin announced an unprecedented GOR investment in a single scientific field -- 180 billion rubles (approximately seven billion USD) for nanotechnology to be disbursed over a four-year period. Putin had stressed his personal interest in the growing field last week when he visited the Kurchatov Institute, Russia's unofficial nanotechnology headquarters. Accompanied by First Deputy Prime Minister Ivanov and Minister of Education and Science Fursenko, Putin toured the Kurchatov facilities and emphasized that nanotechnology represents "the future" of Russian science. EST spoke with Dr. Oleg Stepanovich Naraikin, Deputy Director of the Kurchatov Institute, during an April 26 evening representational event at Spaso House. Beaming with pleasure, Dr. Naraikin accepted our congratulations on what is sure to be a windfall for the Kurchatov Institute in its role as scientific coordinator of the GOR's push to catch up in what Russian officials still demur from christening a "race." END SUMMARY. 

------------------------------ PUTIN THROWS DOWN THE GAUNTLET ------------------------------ 

2. (C) On April 18, Putin visited the Kurchatov Institute with Fursenko and Ivanov, the former in his capacity as the head of the GOR nanotechnology working group and the latter in his new role as Russia's science tsar. Putin used the visit to Kurchatov to display his knowledge of nanotechnology and lay the foundation for his April 26 funding announcement. While at Kurchatov, Putin waxed eloquent on the possibilities for defense-related innovation that nanotechnology represents, although Ivanov sought to downplay the military aspects by insisting that Russia was not intent on a starting a new arms race. On April 26, Putin dedicated the bulk of his science-related remarks to nanotechnology, dubbing nanotechnology the "locomotive" of international science. He equated nanotechnology's growing significance with that of nuclear science in the 1930s. (Note: The parallel holds special resonance for Russian scientists as the Kurchatov Institute was the cradle for the Soviet Union's nuclear physics program, much as its current leadership hopes to make it the birthplace for Russian nanotechnology. End note.) 

3. (C) Putin outlined the scope of GOR funding for nanotechnology, promising an investment of 180 billion rubles, much of which is to be financed through the Russian Academy of Sciences (RAS) and "a series of tenders." One hundred billion rubles of this will come from the Stabilization Fund and be funneled into a nanotechnology corporation; a further 30 billion rubles will be added to the corporation from other GOR sources. Yet another 50 billion rubles will be spent on nanotechnology outside of this framework. Putin demanded that the Duma draft and pass the necessary legislation as soon as possible, vowing that the state would provide all necessary resources to build the country's nanotechnology infrastructure. 

4. (C) Naraikin, who joined Kurchatov Director Dr. Mikhail Koval'chuk for lunch with EST recently, could not contain his delight at Putin's remarks on April 26. Confiding that he and his colleagues had anticipated the sum and scope announced by Putin, Naraikin commented that the President had demonstrated a detailed grasp of the Kurchatov Institute's work as well as strong opinions on which areas of nanotechnology offer the most potential for development when he had visited the Kurchatov Institute on April 18. Naraikin said he had participated in the roundtable discussion with Ivanov, Putin and Fursenko that had followed their tour of the Institute. When asked whether the 180 billion rubles represented the start of a competition that could rival the "space race" of the 1960s, Naraikin demurred from answering directly, instead offering that nanotechnology "is very fashionable right now" among scientists and officials of various countries. The huge sums involved, however, do MOSCOW 00001974 002 OF 002 represent a departure from Russia's earlier attempts to match the nanotechnology investments of other countries, Naraikin acknowledged. 

5. (C) Naraikin said he is confident that there is enough scientific capacity within Russia to consume the new funds. (NOTE: In comparison, President Bush sought 1.8 billion USD in FY2008 funding for the U.S. nanotechnology program, which is already well-established. END NOTE) Naraikin noted that the Kurchatov Institute, in its role as scientific coordinator, had a queue of more than 150 promising projects that required funding. While Russia's nanotechnology expertise may not yet boast the breadth or depth of other countries, it would rapidly rise to the challenge, he promised. Naraikin hastened to add that the Kurchatov Institute would not play any role in the financial management of Putin's promi
sed funding, but would instead set the scientific criteria for funding and judge research proposals. 

------------------------------------- COMMENT: ADRIFT IN A FLOOD OF FUNDING ------------------------------------- 

6. (C) Naraikin is overly optimistic in his assessment of Russian science's ability to use such enormous funds effectively. EST attended a national nanotechnology conference in March held in Nizhniy Novgorod; while the number of young scientists there was striking, few institutes have the required infrastructure -- or even the personnel with real expertise -- needed to make good use of the new money in the near future. Ivanov conceded on April 18 that Russia has no system in place to train specialists in nanotechnology. Putin's bountiful gift to Russian science will serve other purposes, however. He has anointed the field where Russia intends to place its bets, which will help attract young students to science. If, as he has promised, much of the funding goes to RAS institutes, that may help bring about generational change within the RAS over the next few years, as younger scientists, with their expertise in this relatively young field, move to the forefront with priority projects and research. Additionally, young scientists may be more inclined to stay within the RAS system than move to the private sector if the bulk of nanotechnology money goes to the RAS. 

7. (C) Also certain to benefit are those institutes conducting defense-related research. Ivanov, fresh from his service as Defense Minister, was prominently displayed on the Kurchatov Institute's website following the Presidential visit. Ivanov figured in nearly all the photos posted; Fursenko appeared in only one. Ivanov's assurance on April 18 that Russia is not looking to spur on a new arms race contradicts his general demeanor and comments with regard to the ties between Russian science and defense. On April 19, for instance, he enthusiastically told members of the military-industrial commission in Yekaterinburg that nanotechnology will "transform" warfare and that Russia must adapt, which is more in keeping with his other public remarks on science. Early signs of Ivanov's guidance on research point to a possible remilitarization of Russian science, following a decade of the RAS operating quite independently from GOR Ministries and priorities. BURNS

Wikileaks

07MOSCOW1967, RUSSIA’S BANKING SECTOR REPORT FOR 2007

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1967.
Reference ID Created Released Classification Origin
07MOSCOW1967 2007-04-30 10:57 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0023
PP RUEHWEB

DE RUEHMO #1967/01 1201057
ZNY CCCCC ZZH
P 301057Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9799
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L MOSCOW 001967 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS, EEB/IFD 
TREASURY FOR BAKER 
NSC FOR KLECHESKI AND MCKIBBEN 
USDOC FOR 4231/IEP/EUR/JBROUGHER 
 
E.O. 12958: DECL: 04/30/2017 
TAGS: EFIN ECON RS
SUBJECT: RUSSIA'S BANKING SECTOR REPORT FOR 2007 
 
REF: A. (06) MOSCOW 12569 
     B. MOSCOW 1528 
 
Classified By: ECON M/C Pam Quanrud, Reasons 1.4 (b/d). 
 
Summary 
------- 
 
1.  (U) Macroeconomic conditions of relatively low inflation 
and double-digit income growth have fueled another year of 
strong growth in Russia's banking sector.  Consumer appetites 
boosted aggregate assets, and increasing confidence in the 
sector's stability raised retail deposits.  Moreover, foreign 
capital participation exhibited considerable gains on the 
minority-, majority-, and wholly-owned fronts.  On the 
regulatory side, the assassination of Central Bank First 
Deputy Chairman Andrey Kozlov sparked a national debate on 
how to continue strengthening bank supervision in particular 
and market oversight in general.  The Central Bank (CBR) 
crafted new lending guidelines in defense of borrowers. 
Lenders will be required to disclose formerly "hidden" fees 
and commissions that had the effect of tripling or 
quadrupling the annual percentage rate on consumer loans. 
President Putin called on banks to enhance individuals' 
financial literacy and to extend more credit to the country's 
small and medium enterprises (SMEs).  Nevertheless, assets 
remain highly concentrated as well as geographically 
centralized; the state continues to play a dominant, albeit 
shrinking, role in the sector; and the transparency of 
financial statements is lacking.  This message supplements 
banking sector analysis that post's Economic Section will 
distribute via email to its Economic Weekly audience.  End 
Summary. 
 
2006: Another Year of Growth... 
------------------------------- 
 
2.  (U) Banks tapped into last year's favorable environment 
of single-digit inflation and swelling real disposable 
incomes (10 percent higher for the second year in a row) to 
continue spurring the boom in consumer goods.  As banks 
competed for market share, aggregate assets grew more than 
six times faster than the overall economy and deposits rose 
more than five times faster than GDP.  Loan values climbed 40 
percent, and consumer lending expanded more than 75 percent 
during the year.  Assets, however, remain concentrated, with 
the top five banks, four of which are state-controlled, 
holding more than 40 percent of total assets.  More than half 
of the country's 1,189 credit institutions are registered in 
the city of Moscow and Moscow region.  The regions, however, 
captured more than half of total banking sector assets by the 
end of 2006.  Russia is on target to meet the National 
Banking Strategy's goal of an assets-to-GDP ratio of 60 
percent by 2009. 
 
...With Room to Grow 
-------------------- 
 
3.  (U) Although increased consumer confidence boosted retail 
deposits almost 38 percent, the banking sector's financial 
intermediary potential was the focus of President Putin's 
November 2006 address to the State Council (Reftel A).  He 
called on banks not only to educate existing and prospective 
clients on savings and borrowing programs but also to offer a 
wider variety of loans to SMEs.  Putin supplemented the 
latter with proposed tax changes intended, among other 
things, to bring SMEs increasingly out of the grey economy. 
These changes would also facilitate more transparent 
accounting records and expanded access to credit financing. 
As a follow-up to the State Council address, the Finance 
Ministry is also developing a targeted federal project with 
the Ministry of Economic Development and Trade to make basic 
financial literacy programs available in educational, 
professional and social institutions. 
 
4.  (U) Mortgages enjoyed increased popularity during the 
year, growing fourfold to approximately USD 13.5 billion. 
Despite this dramatic rise, our banking and real estate 
contacts insist that mortgages finance only a small 
percentage of all housing sales.  Loan processing times, 
which include buying life insurance, in conjunction with 
registration requirements associated with transferring 
ownership often mean that prospective mortgage borrowers 
cannot provide needed funds to sellers as quickly as buyers 
paying with cash. 
GOR Reducing Share in Sector 
---------------------------- 
 
5.  (U) Sberbank conducted its secondary public offering 
(SPO) during 1Q07, a critical step in the process to reduce 
the government's participation in the banking sector.  The 
CBR's holdings dropped to just over 60 percent of Sberbank's 
common shares.  State-controlled Vneshtorgbank (VTB) will 
conduct an IPO soon to place just under 25 percent of its 
capital in private sector hands.  The stated objective of 
these share placements is to increase each bank's lending 
capacity.  The move will also increase competition among 
lenders, helping to achieve the plans of some of Russia's 
economic modernizers to sustain long-term growth. 
 
Regulatory Changes 
------------------ 
 
6.  (C) In the afterma
th of the September 2006 murder of CBR 
First Deputy Chairman Andrey Kozlov, President Putin restated 
his commitment to implementing the reforms Kozlov had 
championed to clean up the banking sector.  Duma deputies, 
banking association leaders, and government officials have 
contributed to the nationwide debate on the best means of 
achieving Kozlov's goal of strengthening the hand of the 
regulator and ridding the country's financial markets of 
shadow economy participants.  At the heart of this debate are 
allegations the CBR has been lax in its bank supervision 
responsibilities.  The main recommendations for continuing 
Kozlov's reforms, ironically, center on removing the banking 
supervision function from the CBR and relocating thatQauthority within a unified financial markets regulator.  CBR 
officials, however, have expressed confidence that the 
Central Bank will retain its bank supervision 
responsibilities.  (Reftel B.) 
 
7.  (U) This debate notwithstanding, the Central Bank 
continued to work during the year toward achieving greater 
transparency in the banking sector.  On behalf of prospective 
borrowers, First Deputy Chairman Gennady Melikyan drafted new 
rules requiring lenders to disclose all fees and commissions 
that comprise lending agreements.  Hidden charges raised the 
annual percentage rate on consumer loans as much as four 
times the advertized rate.  In an effort to enhance the 
reliability of banks' financial statements, for the third 
year in a row, the CBR is paying for its employees and 
banking sector accountants to become familiar with 
international financial reporting standards (IFRS). 
 
Comment 
------- 
 
8.  (C) The banking sector continues to make incremental 
progress toward fulfilling its financial intermediary role. 
Middle class indicators are on the rise, as evidenced by 
growth in retail deposits, credit card usage, as well as 
mortgage and automobile financing.  As this maturation 
process continued to unfold during the year, public and 
private sector observers began to question whether existing 
regulatory structures were adequate to manage the growth they 
hope the future will bring.  Sector analysts and officials 
began actively considering modifications to current banking 
supervision roles and responsibilities for managing 
heightened competition among lenders, mitigating the effects 
of an upswing in non-performing loans while ensuring full 
compliance with anti-money laundering governance.  Regardless 
of the outcome of the current debate, regulators will 
continue to face the dual challenge of spurring further 
development in the sector while enabling it to weather 
financial storms. 
BURNS

Wikileaks

07MOSCOW1960, RUSSIA: AMBASSADOR’S APRIL 26 MEETING WITH AUDIT

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1960.
Reference ID Created Released Classification Origin
07MOSCOW1960 2007-04-27 13:33 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO9443
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #1960/01 1171333
ZNY CCCCC ZZH
P 271333Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9789
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001960 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS FOR WARLICK, HOLMAN, AND GUHA 
STATE FOR EB/ESC/IEC GALLOGLY AND GARVERICK 
NSC FOR KLECHESKI AND MCKIBBEN 
TREASURY FOR BAKER 
DOC FOR 4231/IEP/EUR/JBROUGHER 
DOE FOR HARBERT/EKIMOFF/PISCITELLI 
 
E.O. 12958: DECL: 04/27/2017 
TAGS: ECON EPET ETRD PGOV PINR PREL RS
SUBJECT: RUSSIA: AMBASSADOR'S APRIL 26 MEETING WITH AUDIT 
CHAMBER CHAIRMAN STEPASHIN 
 
Classified By: Amb. William J. Burns. Reasons: 1.4 b/d 
 
1. SUMMARY (C) In an April 26 meeting with the Ambassador, 
Audit Chamber Chairman Stepashin remarked that the presence 
of former Presidents Bush and Clinton at the Yeltsin funeral 
will help improve U.S.-Russian relations.  He also said that 
problems with Iranian payments for Bushehr continue to hold 
back the project, called for using the stabilization fund for 
development, and announced plans to audit Central Bank 
operations.  The Ambassador also passed along condolences for 
President Yeltsin's death.  END SUMMARY 
. 
U.S. AND RUSSIA 
--------------- 
. 
2. (C) Commenting on U.S.-Russia relations, Stepashin 
acknowledged that the relationship is presently going through 
a tough patch and stressed that the underlying reasons might 
not be fully appreciated in Washington. The psychological 
aspect is an important component of our relationship.  He 
said the U.S. gesture of sending two former presidents to 
Boris Yeltsin's funeral and television images of their 
genuine sympathy for Yeltsin's family did more to improve 
U.S.-Russian relations than recent high-level meetings and 
negotiations. 
. 
3. (SBU) Another factor at play is Russia's complex 
relationship with its post-Soviet neighbors.  Stepashin used 
the analogy of old neighbors living under the same roof. 
Although, they were still touchy about past wrongs, this is 
only temporary and they will learn to live together.  Only 
time can help them forgive each other.  Bringing up current 
disputes with Estonia and the soldier's monument and Poland 
over meat imports and prosecution of former leader General 
Wojciech Jaruzelski, he claimed these were more complicating 
factors than U.S. missiles and radars in the Czech Republic 
and Poland.  He said, as a former military man, he knew that 
these installations posed no danger.  He cited the example of 
Kosovo and Yugoslavia when he was Prime Minister as a model 
to work out of the current impasse over the U.S. missile 
defense issue in Eastern Europe.  Stepashin also suggested 
increasing ties between the Duma and Congress as one way to 
improve the relationship. 
. 
IRAN AND BUSHEHR 
---------------- 
. 
4. (C) Stepashin said that Rosatom Director Kiriyenko had 
requested his assistance on the Bushehr question.  (Note: 
According to the Audit Chamber's website, Stepashin sent a 
letter in March to his Iranian counterpart, Mohammed Reza 
Rakhimi, to look into financing problems for the Bushehr 
nuclear power station.  Atomstroyexport has been constructing 
the power plant, but work stalled in January because Iran 
stopped making payments on the project. End note.)  He said 
payment problems at Bushehr continue to hold back the project 
and also summarized Russia's position on Iran's nuclear 
program.  He said that our positions are similar: Russia also 
does not want Iran to develop nuclear weapons or allow 
proliferation.  However, he said it is important to avoid a 
military solution.  As an ex-military officer, he was certain 
that the problem could not be solved by force.  Iran sits in 
a strategic region for Russia, close to its borders and next 
to Azerbaijian.  Whereas Russia's influence was limited 
because the current Iranian leadership was more difficult to 
deal with than the previous one, Russia still had more room 
to maneuver than the U.S. 
. 
STABILIZATION FUND AND THE ECONOMY 
---------------------------------- 
. 
5. (SBU) In response to the Ambassador's question about the 
economy, Stepashin gave a broad and detailed opinion on 
Russia's current economic course.  He said that the Norwegian 
model of development no longer applied. (Comment: He was 
probably referring to the Norwegian example of setting up a 
rainy day fund to soak up excess revenues from oil exports. 
End comment.)  The GOR has been worried about a repeat of the 
1998 ruble crisis for too long.  As a result, there have been 
 
MOSCOW 00001960  002 OF 003 
 
 
too many missed opportunities in the past few years.  He said 
that he had recently met with Economic Development and Trade 
(MEDT) Minister Gref, who shared these views.  He predicted 
the Stabilization Fund would be split up into a Reserve Fund 
and a Fund for Future Generations.  He also took pride in the 
success of the fund to date and took credit for the idea of 
establishing the fund three years ago. 
 
6. (U) The new three-year budget
 would lay the foundation for 
Russia's future development and address three primary goals: 
increase living standards, revive the real economy, and 
define the course of development.  He said that the new 
budget gave the government more flexibility and will act as a 
catalyst for domestic investment.  He noted that the new 
budget was also "more closed, but this is our problem." 
(Note: He is probably referring to the lack of public 
oversight in implementing the federal budget. Recent press 
articles have highlighted the Audit Chamber's efforts to 
strengthen its authority as the agency with primary 
responsibility for increasing the effectiveness of public 
expenditures. End note.)  He said that there was no problem 
with foreign investment and claimed that $200 billion came 
into the country last year. 
. 
7. (SBU) On monetary policy, he expected the inflation rate 
to be around 6-8 percent this year.  He identified the high 
refinancing rate of the Central Bank as a cause of low 
domestic investment in the country. Stepashin stated as a 
matter of fact that the Audit Chamber would be looking into 
Central Bank operations.  (Note: On April 20, the Duma gave 
the Audit Chamber the go-ahead to audit the Central Bank. 
End note.)  The strong ruble on the back of high energy and 
commodity prices has led to higher imports. He is concerned 
that imports could replace domestic production. 
. 
8. (SBU) He listed two main challenges facing economic 
development: the lack of management experience in the 
government at the mid- and higher-levels and income 
disparity.  As an example, he said this year the government 
managed to spend only $70 billion out of $230 billion 
designated for development projects.  Administrative reform 
and Putin's repeated urging have not been able to increase 
the effectiveness of the bureaucracy.  He identified the 
government tendering system as one area that needed 
attention.  The growing income disparity between the rich and 
the poor is also becoming a problem.  He cited the recent 
election in Krasnoyarsk, where 22 percent of the population 
voted for the communists, as a signal that the government 
needs to address this issue. 
. 
AUDIT CHAMBER/GAO COOPERATION 
----------------------------- 
. 
9. (U) Stepashin also described the Audit Chamber's 
international activities and domestic priorities. He 
discussed his recent trip to the UN's INTOSAI (International 
Organization of Supreme Audit Institutions) in Vienna where 
corruption was a main topic of discussion and acknowledged 
the problem in Russia.  He stressed that he has a very good 
relationship with GAO Comptroller General David Walker and 
was looking forward to signing an MOU between the two 
agencies in November to move cooperation onto a practical 
footing.  On the homefront, he told the Ambassador that the 
Audit Chamber recently held a joint collegium with the 
General Procuracy and that the two agencies were cooperating 
in two main areas: land ownership/distribution in the regions 
and IPR protection.  He commented that he hoped to learn from 
U.S. experience in protecting intellectual property. 
. 
COMMENT 
------- 
. 
10. (C) Chairman Stepashin was joined by External Relations 
Director Nikolay Paruzin, Auditor Viktor Kosourov, and MFA 
North American Desk Head Nikolay Vladimir.  Stepashin spoke 
easily and knowledgeably about a range of topics outside his 
immediate brief.  This is no doubt a result of his broad 
experience in government having served at one time or another 
as Justice Minister, Internal Affairs Minister, Federal 
 
MOSCOW 00001960  003 OF 003 
 
 
Security Services Head, and Prime Minister.  While exiting, 
he joked with MFA's Vladimir by asking whether he got 
everything right.  At the risk of fueling the presidential 
succession rumor mill, an advisor to MEDT Deputy Minister 
Belousov told econoffs this week that Stepashin may be a dark 
horse candidate for the 2008 presidential elections. End 
comment. 
BURNS

Wikileaks

07MOSCOW1932, PUTIN’S STATE OF THE FEDERATION ADDRESS: TOUTING

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1932.
Reference ID Created Released Classification Origin
07MOSCOW1932 2007-04-26 15:00 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO8191
OO RUEHDBU RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #1932/01 1161500
ZNR UUUUU ZZH
O 261500Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9731
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 MOSCOW 001932 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL ECON PGOV PARM RS
SUBJECT: PUTIN'S STATE OF THE FEDERATION ADDRESS: TOUTING 
ECONOMIC ACHIEVEMENTS; SUPPORTING "MORATORIUM" ON CFE 
 
 
1.  (SBU)  Summary: President Putin's hour-plus address to 
the Federal Assembly on April 26 was - he emphasized - his 
last.  To loud applause, he declared support for a 
"moratorium" on Russia's compliance with the CFE Treaty.  He 
again condemned U.S. plans to deploy BMD systems in Europe. 
The bulk of Putin's remarks focused on economic initiatives. 
However, the election-year economic measures he highlighted 
represented more a repackaging of existing programs than, as 
it might have appeared, a torrent of new spending.  Putin 
slammed efforts by unnamed "external forces" to interfere 
with Russia's internal affairs.  He noted he had discussed a 
global digital library initiative with President Bush.  End 
Summary. 
. 
Last Speech as President 
------------------------ 
 
2.  (U)  Putin began his (one hour and twenty minute) annual 
State of the Federation speech by asking for a moment of 
silence to mark Yeltsin's death earlier in the week.  After 
noting the difficult transition following the fall of the 
Soviet Union, he underlined that Russia was only at the 
beginning of the road to national revival, which would be 
marked not only by political stability and economic 
achievement, but by strengthened values.  Putin stressed that 
this was the last of his eight annual addresses as President. 
 The next address to the Federal Assembly, he said, would be 
given by a new head of government.  He did not tip his hand 
as to his successor and stressed that it was too early to 
discuss his political legacy. 
. 
CFE Moratorium and Missile Defense 
---------------------------------- 
 
3.  (SBU)  Putin drew sustained applause (the loudest of the 
address) when he announced that he considered it "expedient 
to declare a moratorium on Russia's implementation of the CFE 
Treaty until all NATO members, with no exception, ratify it 
and, as Russia does unilaterally today, implement it 
strictly."  Putin justified the move by arguing that while 
Russia had ratified the treaty and complied with its 
requirements -- even when it disadvantaged Russia during the 
Chechen war -- Western countries had not.  He suggested that 
Russia would consider withdrawal from CFE if no progress was 
made.  He proposed "to discuss the problem in the NATO-Russia 
Council  framework."  Putin reiterated that U.S. missile 
defense deployment in Central Europe threatened European 
security and suggested that it be discussed in the OSCE. 
Unlike in last year's address, Putin did not emphasize 
military modernization. 
. 
Duma Elections:  Referendum on Russia's Course 
--------------------------------------------- - 
 
4.  (U)  Turning to the upcoming Duma elections, Putin 
stressed the role of political parties in maintaining 
political stability.  He predicted that the December 2007 
election would show the degree to which Russian civil society 
supports the current direction the country is taking, noting 
that implementation Russia's strategic goals depended on the 
makeup of the next parliament.  The only significant 
institutional change Putin flagged was the introduction of 10 
year local residency requirements for Federation Council 
seats. 
. 
Democracy Promotion = "Dirty" Politics 
-------------------------------------- 
 
5.  (SBU)  In harsh terms, Putin slammed efforts by unnamed 
"external forces" to interfere with Russia's internal 
affairs.  Foreign entities used the "dirtiest" of political 
technologies to fuel ethnic and confessional conflict in 
order to keep Russia down and steal it riches.  He said that 
NGOs played a role in the political process, but their 
activities needed to be appropriately channeled through 
institutions like the Public Chamber.  Putin called on 
Parliament to pass legislation countering extremism without 
delay.  He emphasized the role of the Russian language and 
culture in encouraging patriotism and family values.  He 
noted he had recently spoken with President Bush about a 
"world digital library." 
. 
Highlighting Economic Accomplishments 
------------------------------------- 
 
6.  (SBU) Touting Russia's newfound economic strength, Putin 
announced that Russia has "not only completely overcome its 
long period of declining production, but has become one of 
the ten largest world economies."  He advocated a transition 
toward a more efficient, innovative economy through 
 
MOSCOW 00001932  002 OF 002 
 
 
infrastructure development, more efficient use of natural 
resources, development of nanotechnologies, stronger support 
for small business, poverty reduction, and expansion of the 
middle class.  He named electric power development a 
priority, calling for greater use of nuclear, hydro and coal, 
and emphasized the need for better transportation 
infrastructure, particularly airports and seaports.  In a nod 
to regional dissatisfaction with federal funding, Putin 
anno
unced plans to transfer 153 billion rubles (about $6 
billion) to the regional governments. 
 
7.  (SBU)  As expected in this election year, Putin 
characterized as successful efforts under the National 
Priority Projects to invest in human capital.  His only 
criticism was to call for improved management, particularly 
stronger financial oversight.  He highlighted the housing 
project, setting a goal of building one square meter per 
capita annually to better meet demand.  Expressing particular 
concern over the appalling state of the housing utilities 
sector, Putin argued that part of the revenue the state 
receives from the payment of Yukos debt should go to 
improving utilities.  Furthering his populist theme, Putin 
announced that pensions would increase by at least 65% over 
the next two years and affirmed that the retirement age would 
not be raised anytime soon.  Also, for the first time he 
suggested splitting the Stabilization Fund into three funds: 
the Reserve, Future Generation, and Social Program Funds. 
 
Foreign Policy:  Rote Speech 
---------------------------- 
 
8.  (SBU)  Putin was at his least animated in discussing 
Russia's foreign policy aims other than defense.  Noting 
Russia's economic and energy interests in the area of the 
former Soviet Union, he highlighted the integration function 
of the Eurasian Economic Community and the Shanghai 
Cooperation Organization.  After a perfunctory nod to the 
Russia-Belarus Union State, Putin stressed the economic 
potential of cooperation with Russia's European partners. 
BURNS

Wikileaks

07MOSCOW1931, AMBASSADOR’S VISIT TO TVER

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1931.
Reference ID Created Released Classification Origin
07MOSCOW1931 2007-04-26 14:43 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO8171
RR RUEHDBU RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #1931/01 1161443
ZNR UUUUU ZZH
R 261443Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 9729
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 4029
RUEHVK/AMCONSUL VLADIVOSTOK 2080
RUEHYG/AMCONSUL YEKATERINBURG 2401

UNCLAS SECTION 01 OF 02 MOSCOW 001931 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR ECON EINV RS
SUBJECT: AMBASSADOR'S VISIT TO TVER 
 
MOSCOW 00001931  001.2 OF 002 
 
 
1. (SBU) SUMMARY:  Tver Governor Dmitriy Zelenin is a 
businessman turned politician who integrates a Western 
business outlook in his style of government.  During the 
Ambassador's visit to Tver Oblast on April 20, Zelenin 
outlined his priorities and described the future for economic 
development and public services delivery in the region. The 
Ambassador later addressed students at Tver State University. 
 END SUMMARY. 
 
--------------------------- 
An Entrepreneur as Governor 
--------------------------- 
 
2. (SBU) Governor Zelenin is a member of the new generation 
of Russian leaders.  From his post-university software 
startup in 1989, he worked his way into banking, 
manufacturing, investment (as General Director of Interros) 
and ultimately onto the Norilsk Nickel Board of Governors. 
He turned to politics in 2003 when he was elected Governor of 
Tver and joined the United Russia party. 
 
3. (SBU) In his meeting with the Ambassador, Zelenin focused 
almost exclusively on economics and public services in Tver 
Oblast.  Although he mentioned the familiar regional 
complaint that Moscow provides insufficient resources for 
infrastructure and social needs, Zelenin offered a more 
business-oriented solution, suggesting the focus should be to 
develop Tver's internal resources and attract greater Russian 
and international investment.  He said Tver's development 
problems were rooted in the transportation bottleneck. 
Tver's poor road infrastructure and inadequate airport made 
it difficult and expensive to export goods from the region 
and to get businessmen and tourists to visit.  These 
deficiencies squander Tver's greatest natural advantage: its 
location between Moscow and St. Petersburg. 
 
-------------------- 
The New Jersey Model 
-------------------- 
 
4. (SBU) Zelenin said Tver's proximity to Moscow, coupled 
with lower property and labor costs than Moscow, positions 
Tver to draw investment for manufacturing and distribution, 
much as New Jersey has drawn economic advantage from its 
proximity to New York City.  The Governor's office has an 
active foreign investment marketing program, and Tver has 
already secured significant foreign investment, such as a USD 
20 million German automobile distribution center, a USD 40 
million Georgia-Pacific paper manufacturing plant, and a USD 
123 million Chinese glass manufacturing plant. 
 
5. (SBU) Tver Oblast is a large, sparsely populated region -- 
it has an area greater than Austria and only 1.5 million 
people, a third of whom live in the capital.  As the 
neighboring Moscow Oblast becomes more congested and land 
prices rise, Tver Oblast is drawing Muscovites to build 
dachas and to vacation around its more than 600 lakes. 
Zelenin has encouraged this trend and has been actively 
promoting tourism and outdoor sports.   While he briefly 
discussed agricultural development, which he described as 
"more productive than average for Russia," he claimed that no 
more funding was forthcoming from the federal government for 
this national priority project. 
 
------------------------------------------- 
Social Development via Economic Development 
------------------------------------------- 
 
6. (SBU) Zelenin said Tver's sparse population and rural 
character make it difficult to ensure the full range of 
public services.  Education and healthcare were hampered by a 
shortage of teachers and doctors.  Zelenin said that he seeks 
to change the mentality of the people towards self-reliance 
and away from seeking paternalistic government handouts.  His 
plan to improve services was to improve overall economic 
conditions and to keep young adults (who require fewer 
services on average) in the region through better job 
opportunities.  Zelenin said that he was actively promoting 
small business incubators and technology service providers 
such as computer call centers and software development 
businesses. 
 
--------------------- 
Tver State University 
--------------------- 
 
7. (SBU) The Ambassador later spoke with about 200 students 
at Tver State University.  The questions from the students 
 
MOSCOW 00001931  002.2 OF 002 
 
 
focused on social issues and education.  In a turnabout from 
the usual questions about how they could study in the United 
States, they asked why there were not more American students 
in Russia. They also pressed the Ambassador on whether 
globalization was really best for Russia.  Their questions 
revealed a polite skepticism of the United States and a 
curiosity about American motives for Jackson-Vanik and the 
recent report on Supporting Human Rights and Democracy. 
 
------- 
Comment 
------- 
 
8. (SBU) Zelenin is different from most Russian politici
ans 
because his governing style is influenced by his success as a 
businessman.  He is not expecting the center to solve his 
problems but is instead trying to leverage the inherent 
advantages of his region for greater economic development. 
BURNS

Wikileaks

07MOSCOW1919, Russia: Environmental NGOs Focus on Sochi

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1919.
Reference ID Created Released Classification Origin
07MOSCOW1919 2007-04-26 07:31 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXRO7606
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHMO #1919/01 1160731
ZNR UUUUU ZZH
R 260731Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 9712
INFO RUEHZN/EST COLLECTIVE
RUEAEPA/HQ EPA WASHDC
RUEHYG/AMCONSUL YEKATERINBURG 2395
RUEHVK/AMCONSUL VLADIVOSTOK 2074

UNCLAS SECTION 01 OF 03 MOSCOW 001919 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR OES/ENV, EUR/RUS and EUR/PGI 
 
E.O. 12958: N/A 
TAGS: SENV PGOV RS
SUBJECT: Russia: Environmental NGOs Focus on Sochi 
 
REFS:  A) 06 MOSCOW 8221 
       B) 06 MOSCOW 8300 
 
MOSCOW 00001919  001.2 OF 003 
 
 
1.  SUMMARY:  Large scale development plans for Sochi, a major 
resort in the south of Russia and one of three finalists to host the 
2014 Winter Olympics, continue to prompt concerns among 
environmental NGOs in Russia.  Despite intense government pressure 
and Rosprirodnadzor approval of an environmental impact assessment, 
NGOs persist in objecting to development in sensitive protected 
areas.  World Wildlife Fund is pursuing informal lobbying channels, 
while Greenpeace-Russia has filed a second legal challenge that will 
be heard June 6.  Most of the government's development plan will be 
completed irrespective of whether Sochi is selected to host the 2014 
games, and should provide some ecological improvements to the 
region's sagging infrastructure.  Still, the NGO activism 
demonstrates a high degree of engagement in the process -- and 
acceptance of their involvement by Russian Government agencies -- 
and has a fair chance at influencing the outcome.  END SUMMARY. 
 
Background 
---------- 
 
2.  Long one of Russia's leading nature retreats, Sochi, located in 
Krasnodar Kray, is one of three finalists to host the 2014 Winter 
Olympics.  A pristine and unique environment tucked between the 
Western Caucasus Mountains and the Black Sea, Sochi is home to both 
the Caucasus Nature Reserve (a UNESCO World Heritage Site) and Sochi 
National Park.  Buoyed by Russia's strong economy, President Putin 
has taken a significant personal interest in upgrading Sochi into a 
world class resort.  The Federal Targeted Program for the 
"Development of the City of Sochi as a Mountain Climate Resort 
(2006-2014)" calls for $12 billion in investment to be split 60-40 
between the federal government and private investors.  However, 
these development plans have met stiff challenges from environmental 
NGO's in Russia.  EST recently met with representatives of the two 
largest NGOs involved -- Igor Chestin, Director of World Wildlife 
Fund-Russia (WWF), and Ivan Blokov, Campaign Director for 
Greenpeace-Russia -- to discuss their ongoing action. 
 
3.  The government's proposal was adopted June 8, 2006, but was 
promptly challenged in court by Greenpeace for lack of an 
environmental impact assessment and plans to build within the 
protected buffer zones of Sochi National Park and the Caucasus 
Nature Reserve.  Greenpeace ultimately lost its case in the Russian 
Supreme Court this March in what Blokov described as a "highly 
political decision," but the challenge -- and a letter from Director 
Chestin to Putin in February -- prompted Deputy Prime Minister 
Zhukov to order the Ministry of Natural Resources to form an expert 
ecological group to offer recommendations for an environmental 
impact assessment.  This advisory ecological commission, headed by 
Natural Resources Deputy Minister Anatoliy Tyomkin, includes experts 
from ministries, academic institutes, regional administration, and 
NGO's.  (NOTE: Several NGO's known for vocal opposition to the 
development proposal were excluded. END NOTE).  WWF's Chestin is a 
member and also sits on the Ministry for Economic Development and 
Trade (MEDT) Coordination Council.  The MEDT council is tasked with 
overseeing implementation of Sochi's development, and consists of 
representatives from several ministries, the bid committee, the 
Olympic committee, private investors -- the major players are 
Gazprom, Interross, and Basic Element -- and administrators from the 
Krasnodar region. 
 
Heavy State Pressure Secures Development Approval 
--------------------------------------------- ---- 
 
4.  On March 30 the Ministry of Natural Resources advisory 
ecological commission issued an almost unanimous positive 
environmental impact assessment; only the representative from 
Greenpeace objected.  With Sochi's Olympic bid depending on the 
federal development plans, many parties had a strong interest in 
approval.  According to Chestin and Blokov, members of the group 
were pressured (some with threats to research budgets) by officials 
to issue a positive assessment.  Chestin supported the final 
conclusions, but attached a dissenting opinion.  In his view, the 
most critical of the expert opinions -- those dealing with animal 
migratory patterns and the integrity of protected areas -- were 
wrongly omitted from the final assessment.  As each specialist 
reviewed only issues in their narrow field of expertise, the 
omission of key expert objections softened the final text in a way 
that, by glossing over critical issues, allowed all members to 
accept.  The impact assessment was officially approved by 
Rosprirodnadzor on April 17. 
 
Government Development Plans Not All Bad... 
------------------------------------------- 
 
5.  The federal development plans will provide needed ecological 
improvements and are preferable to the alternative of unregulated 
 
MOSCOW 00001919  002.2 OF 003 
 
 
development.  Chestin noted that Sochi is one of the most prominent 
resorts in Russia and it is not
a question of whether or not there 
will be development, but rather where and how it will be carried 
out.  The Federal Targeted Program for the development of Sochi is a 
significant government priority.  It is a $12 billion dollar plan, 
70 percent of which is to be completed irrespective of Sochi's 
selection to host the 2014 Winter Games.  In addition to developing 
the local economy, the project will bring ecological improvements to 
the region, including needed solid and biological waste treatment 
facilities, proper dumps and recycling facilities, a sustainable 
water management system, and energy efficiency initiatives.  The MNR 
ecological commission also successfully lobbied the government to 
restrict nighttime road construction to lessen the threat to certain 
mammal species.  It has also been promised that its views will be 
incorporated in the coming months as the MEDT commission defines 
specific parameters for monitoring construction.  It is because of 
these ecological improvements that WWF generally supports the 
federal development plans.  Many points of concern continue to be 
raised by environmental NGOs, however. 
 
...but NGO Objections Persist 
----------------------------- 
 
6.  NGOs continue to press the government to further address the 
weak points of its proposal.  WWF is particularly anxious about a 
major sports and hotel complex that is to be built in the buffer 
zone of the Caucasus Nature Reserve, and has suggested an 
alternative location.  WWF is concerned that the complex, with its 
bobsled track, hotel complex, and an Olympic Village in the 
mountains approximately 25 km east of Krasnaya Polyana, will 
interrupt the migratory patterns of deer and wild boar in and out of 
the Caucasus Nature Reserve.  Greenpeace has broader concerns, 
reluctantly accepting development of recreational sports facilities 
in protected areas  as a "grey area" that is technically legal, but 
arguing there are nine other illegal construction projects, 
including a spa and hydro-electric center, planned in these areas. 
Greenpeace representative Blokov claims that the new law pushed 
through by the Ministry of Natural Resource's advisory ecological 
commission requiring environmental impact assessments for all major 
developments will not be applied retroactively to projects already 
begun.  He said that the authorities have made a calculated decision 
to start work on many of the development projects in order to 
circumvent this new requirement. 
 
What Comes Next? 
---------------- 
 
7.  After losing a legal challenge in the beginning of March that 
rose all the way to the Russian Supreme Court, Greenpeace has filed 
a second court brief.  The first hearing will be June 6.  WWF plans 
to continue to work in MEDT's Coordination Council to press both the 
government and private investors to relocate construction projects 
(something Blokov said Greenpeace unofficially supports). However, 
while the proposed site is closer to existing infrastructure 
(roughly 1 km north of Krasnaya Polyana) and will almost certainly 
meet the technical requirements of the Bobsled track and Olympic 
Village, officials remain reluctant to change their initial 
planning.  If a suitable compromise cannot be reached with the 
government, Chestin said he will focus on working directly with 
private investors.  He has almost reached an agreement with one, 
Interross. 
 
8.  Chestin also claimed that, if necessary, he is prepared to 
appeal to the IOC to bring in an external IUCN-World Conservation 
Union commission to review the Russian environmental impact 
assessment.  As no changes are allowed to the bid proposal before 
the July decision, such a move to re-evaluate the assessment would 
likely lead to the dismissal of Russia's 2014 Winter Olympic Bid and 
eliminate some critical construction such as the Olympic village. 
Such a direct attack on the Olympic bid is unlikely, but it reflects 
growing assertiveness on the part of NGOs seeking to influence 
policy decisions. (NOTE: Even if WWF is successful in reaching an 
agreement to move the construction site, no actual change to the 
development plans would be made until after the July IOC bid 
announcement, under an existing agreement with the MEDT. END NOTE) 
 
Comment 
------- 
 
9.  Environmental NGOs clearly are playing an active role in shaping 
Sochi development plans.  The Russian Government has acknowledged 
that role and their interests by including some of them in the 
review process.  Although the federal development program for Sochi 
is generally sound, these NGOs have stepped forward to fill an 
important niche as they pressure the Russian government to defend 
and clarify the weak points in its proposal. Still, it is unlikely 
they will obstruct Russia's bid for the 2014 Winter Games.  Because 
this bid is such a matter of pride amongst Russian officials, any 
 
MOSCOW 00001919  003.2 OF 003 
 
 
deliberate attempt to derail it would probably cause NGOs more harm 
than good.  Despite contrasting avenues of action --  both informal 
lobbying and direct legal challenges -- the environmental NGOs 
continue to establish themselves as active stakeholders in the 
policy making process. 
 
BURNS

Wikileaks

07MOSCOW1904, RUSSIA: INVITATION TO TELECOMMUNICATIONS EXPO

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #07MOSCOW1904.
Reference ID Created Released Classification Origin
07MOSCOW1904 2007-04-25 10:22 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0004
PP RUEHWEB

DE RUEHMO #1904 1151022
ZNR UUUUU ZZH
P 251022Z APR 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9675
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
INFO RUEHRL/AMEMBASSY BERLIN 1927

UNCLAS MOSCOW 001904 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EB/CIP/MA (GIBBS), EUR/RUS (GUHA) 
BERLIN FOR ROBERT HAGEN 
 
E.O. 12958:  N/A 
TAGS: ECPS ECON EINT ETRD RS
SUBJECT: RUSSIA: INVITATION TO TELECOMMUNICATIONS EXPO 
 
1.  On April 24 Yekaterina Slizkova, Deputy Chief of the Section for 
International Cooperation of the Ministry for Information 
Technologies and Communications (MinInformSvyazi), extended an 
invitation from Minister Leonid Reyman to Commerce Secretary 
Gutierrez to attend the October 25-27 InfoCom telecommunications 
conference in Moscow.  During a meeting with FCS and EST officers, 
Slizkova said Reyman will send a letter by the end of May containing 
the invitation and describing a proposed roundtable of 
telecommunication companies and officials. She provided a list of 17 
Russian agencies and companies suggested for the roundtable, which 
will be separately transmitted to the Department of Commerce. 
 
2.  Slizkova also proposed the creation of a Russian-American 
working group on telecommunications.  The Ministry suggested the 
working group be chaired by a deputy minister or equivalent and meet 
semi-annually in various Russian or American cities. 
 
3.  Slizkova asked that the USG encourage American companies to 
consider participation in the newly created technoparks.  She 
promised to send information on the federal and regional funding for 
such technoparks, their structure and operations. 
BURNS

Wikileaks