Monthly Archives: July 2007

07MOSCOW3737, RUSSIAN MFA DISMISSES REPORTS OF MILITARY AIRCRAFT

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Reference ID Created Released Classification Origin
07MOSCOW3737 2007-07-31 16:24 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO7101
OO RUEHDBU
DE RUEHMO #3737 2121624
ZNY CCCCC ZZH
O 311624Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2511
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC
RHMFISS/CDR USEUCOM VAIHINGEN GE

C O N F I D E N T I A L MOSCOW 003737 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 07/31/2017 
TAGS: ETTC PREL MCAP IR RS
SUBJECT: RUSSIAN MFA DISMISSES REPORTS OF MILITARY AIRCRAFT 
SALES TO IRAN 
 
 
Classified By: Charge d'Affaires Daniel A. Russell. Reasons 1.4 (B/D). 
 
(C) On July 31, Embassy raised media reports that Russia 
plans to sell long-range Sukhoy fighter aircraft to Iran with 
Andrey Odnoral, Arms Technology and Transfer Specialist in 
the Foreign Ministry's Department for Disarmament and 
Security Affairs.  Odnoral told us that the purported 
transfer to Iran of 250 Su-30 fighter aircraft, along with 20 
Il-78 air refueling tankers, was a "fairy tale."  He stated 
that Moscow valued its international reputation and would not 
transfer weapons to Iran that were clearly in violation of 
existing UN Security Council resolutions.  Odnoral said no 
negotiations were ongoing between Rosoboroneksport and 
Iranian officials to transfer aircraft or any other weapons 
systems to Tehran.  He added that Russia did not currently 
have the capability to produce that quantity of fighter 
aircraft. 
RUSSELL

Wikileaks

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07MOSCOW3736, RUSSIAN NOTE ON SEA LAUNCH, MFA COMMENTS ON SPACE ISSUES

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Reference ID Created Released Classification Origin
07MOSCOW3736 2007-07-31 14:38 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXYZ0001
PP RUEHWEB

DE RUEHMO #3736 2121438
ZNR UUUUU ZZH
P 311438Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 2510
INFO RUEHTA/AMEMBASSY ASTANA 0120

UNCLAS MOSCOW 003736 
 
SIPDIS 
 
DEPARTMENT FOR OES/SAT(HODGKINS), EUR/PRA(FRIEDT), 
EUR/RUS(GREENSTEIN), ISN/CATR, L/NP 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: TSPA ECPS KSCA PREL PARM RS
SUBJECT: RUSSIAN NOTE ON SEA LAUNCH, MFA COMMENTS ON SPACE ISSUES 
 
REFS: A. STATE 87399 
       B. STATE 77400 
 
THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT 
ACCORDINGLY. 
 
1. (SBU) This message contains an action request.  See paragraph 6. 
 
2. (SBU) On July 27, EST Officers met Andrey Kruitskikh, Deputy 
Director of the Department for Security and Disarmament Affairs 
(DVBR) of the Ministry of Foreign Affairs, at his request.  He 
delivered a Diplomatic Note regarding the Sea Launch Technology 
Safeguards Agreement (TSA) stating that GOR had taken all necessary 
government steps to bring the TSA into force.  Kruitskikh said the 
USG should deliver a final note acknowledging the date of delivery 
of the Russian note to bring the TSA into force. 
 
3. (SBU) Kruitskikh also reported that the MFA is ready to move 
forward with the extension of the Agreement for Cooperation in the 
Exploration and Use of Space for Peaceful Purposes (the "Civil Space 
Agreement," Ref A) and the Agreement Concerning the Procedure for 
the Customs Documentation and Duty-Free Entry of Goods Transported 
within the Framework of U.S.-Russian Cooperation in the Exploration 
and Use of Space for Peaceful Purposes (the "Customs Agreement," Ref 
B).  He delivered two draft diplomatic notes that he said the GOR 
was prepared to formalize if the USG accepts proposed minor wording 
adjustments reflected in the notes. 
 
4. (SBU) Referring to the Baikonur Technology Safeguards Agreement 
(BTSA), Kruitskikh said that the GOR had completed its comparison of 
the Russian and Kazakh texts, and is prepared to finalize all legal 
matters.  He reported that the GOR hopes the USG will move to 
complete the process and suggested that the USG and the GOR approach 
the GOK to urge quick action to bring the BTSA into force. 
 
5. (SBU) Regarding the draft Framework Technology Safeguards 
Agreement (FTSA), he said he looks forward to reviewing USG 
revisions.  Already wearing a fishing jacket, Kruitskikh noted that 
he would be on vacation from August 20 until the end of September 
and expressed the hope that the two sides could meet in Moscow upon 
his return. 
 
6. (SBU) Copies of the diplomatic notes and Embassy's informal 
translation have been sent electronically to EUR/PRA and EUR/RUS. 
 
7. (SBU) Post requests instructions to respond to Kruitskikh's 
proposals on the draft diplomatic notes on the Civil Space Agreement 
and the Customs Agreement. 
 
RUSSELL

Wikileaks

07MOSCOW3735, GREAT RUSSIA PARTY PROTESTS REGISTRATION DENIAL

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Reference ID Created Released Classification Origin
07MOSCOW3735 2007-07-31 14:05 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO6962
RR RUEHDBU RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #3735/01 2121405
ZNR UUUUU ZZH
R 311405Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2508
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 4347
RUEHVK/AMCONSUL VLADIVOSTOK 2304
RUEHYG/AMCONSUL YEKATERINBURG 2601

UNCLAS SECTION 01 OF 02 MOSCOW 003735 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR SOCI RS
SUBJECT: GREAT RUSSIA PARTY PROTESTS REGISTRATION DENIAL 
 
REF: MOSCOW 3262 (NOTAL) 
 
MOSCOW 00003735  001.2 OF 002 
 
 
1. (SBU) Summary: Following the Federal Registration 
Service's (FRS) July 24 refusal to register it, Dmitriy 
Rogozin's nationalist Great Russia party has begun mapping 
strategies for getting on the ballot for the December Duma 
elections.  The party's Central Committee Secretary told us 
that the FRS's arguments for denying registration were weak 
and legally indefensible, and that the party was planning 
multiple strategies for overturning or by-passing the 
decision.  Options under consideration are a court appeal and 
a possible merger with an already-registered party of the 
same political stripe, such as Patriots of Russia.  End 
Summary. 
 
-------------------------------------- 
Great Russia Party Denied Registration 
-------------------------------------- 
 
2. (U) As expected, on July 24 the Federal Registration 
Service (FRS) denied registration to the Great Russia party, 
citing alleged errors in their registration documents. 
(Great Russia was founded on May 5 by members who had left 
the Rodina party after it had been merged with two other 
parties in the creation of the pro-Kremlin "A Just Russia." 
It filed for registration on June 25.) Party leaders noted 
that Great Russia's application had been copied verbatim from 
"A Just Russia's" registration application, which the FRS had 
effortlessly approved, and Great Russia leader Andrey Savelev 
had written a point-by-point rebuttal of the FRS rejection, 
which had been posted on Great Russia's website. 
 
3. (U) Great Russia Central Committee Secretary Sergey 
Pykhtin, a former Rodina member of the Moscow City Duma, 
confirmed to us July 30 that the denial had not been 
unexpected (reftel).  Pykhtin insisted that Great Russia met 
the minimal legal requirements for registration: it was not 
an extremist organization, it had more than 50,000 registered 
party members in at least 45 federal regions, and its 
constituent assembly had approved the party's charter.  The 
FRS letter had cited violations that Pykhtin said were 
impossible to confirm without additional information.    For 
example, it alleged that 135 people (on what Pykhtin said was 
a list of more than 60,000) had not actually applied for 
party membership, but it had not provided the names of the 
135 alleged offenders. Even if the 135 applications were 
ruled invalid, Pykhtin added, that would not invalidate Great 
Russia's application, as only 50,000 valid names were 
required by law.  In addition, the FRS had made no attempt to 
consult with Great Russia representatives before rejecting 
the application. 
 
---------- 
Next Steps 
---------- 
 
4. (SBU) Pykhtin told us that Great Russia would continue its 
efforts to get the FRS to reconsider its refusal, and 
Savelev's letter was the first step in that effort.  If that 
failed, Great Russia would file a legal appeal. Pykhtin said 
that while one appeal should be sufficient, Great Russia was 
considering filing appeals for each of the 60,000 party 
members disenfranchised by the FRS decision. 
 
5. (SBU) If legal appeals fail, Great Russia could merge with 
another registered party in order to get its candidates on 
the ballot.  The Patriots Party was the closest ideologically 
to Great Russia, Pykhtin said, but that issue would be 
discussed at a party presidium meeting on July 31. 
 
---------------------------------------- 
The Media and Ties to Nationalist Groups 
---------------------------------------- 
 
6. (SBU) Pykhtin said that Russian media had thus far covered 
the Great Russia registration story fairly, and had fully and 
accurately printed comments from the Great Russia leadership 
explaining their complaints against the FRS.  He lamented 
that the Western media had unquestioningly accepted as true 
allegations by organizations such as the Moscow Bureau for 
Human Rights and the SOVA Center that Great Russia was 
extremist, anti-Semitic, and racist.  "I think the Western 
nations make a great mistake when they fund these 
organizations that are looking for danger where there is 
none," Pykhtin said.  He denied that the Movement Against 
Illegal Immigration (DPNI), with which Great Russia 
cooperates, was racist or anti-Semitic. Participants in the 
2005 DPNI-sponsored "Russia March" who had carried pro-Nazi 
 
MOSCOW 00003735  002.2 OF 002 
 
 
signs and given the Nazi salute as they marched down Moscow 
streets were "provocateurs," he contended.  (Note:  Among 
Great Russia's followers are DPNI's Aleksandr Belov, Andrey 
Savelev and Yuriy Popov who have, at times, made anti-Semitic 
and/or racist statements.) 
 
----------------------- 
Rogozin on Great Russia 
----------------------- 
 
7. (U)  In the wake of the FRS's refusal, Rogozin has been 
everywhere in the print media, arguing both that Great Ru
ssia 
had been artificially excluded, and expressing his continued 
determination to advance an "ideology of national interests" 
which, he insisted, would in the end triumph.  Rogozin held 
little hope that the court would back Great Russia's appeal 
of the FRS's decision, but he thought that a large number of 
individual appeals to regional courts by those whose rights 
had been allegedly denied by the FRS might force a reversal. 
Should that fail, Rogozin reported that Great Russia would 
have recourse to "plan B," which would have party members 
seek places on the list of an ideologically-similar party. 
 
------- 
Comment 
------- 
 
8. (SBU)  All signs to date, however, suggest that the 
Kremlin is unlikely to allow Rogozin to find his way into the 
Duma via any of these routes.  He appears to be on the 
government-controlled media's "black list," and it seems that 
the Kremlin has decided that, if given a national platform in 
the form of a political party able to mine Russian 
nationalism, the charismatic Rogozin might be just too 
difficult to manage. 
RUSSELL

Wikileaks

07MOSCOW3732, MOSCOW’S SCIENCE MUSEUMS: EXPERIMENTING WITH SUCCESS

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Reference ID Created Released Classification Origin
07MOSCOW3732 2007-07-31 11:13 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXRO6784
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHMO #3732/01 2121113
ZNR UUUUU ZZH
R 311113Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2504
INFO RUCPDOC/USDOC WASHDC
RUEHZN/EST COLLECTIVE

UNCLAS SECTION 01 OF 02 MOSCOW 003732 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EUR/RUS 
 
E.O. 12958: N/A 
TAGS: SCUL SENV TPHY TBIO RS
SUBJECT: MOSCOW'S SCIENCE MUSEUMS: EXPERIMENTING WITH SUCCESS 
 
 
1.  SUMMARY: As Moscow increasingly becomes a tourist destination, 
science museums could play a role as second tier destinations, but 
funding and attracting visitors remain a challenge.  END SUMMARY. 
 
2.  Embassy EST intern recently visited many of Moscow's science 
museums. 
 
This Way to the Dinosaurs: Orlov Museum of Paleontology 
--------------------------------------------- ---------- 
 
3.  The Paleontology museum boasts the world's largest collection of 
Permian fossils which date from about 250-300 million years ago. 
Impressive in its size, the Paleontology museum is tucked away in 
the outer edges of Moscow.  The design of the building is friendly, 
expansive, and striking.  High ceilings echo the effect of giant 
skeletons of bygone animals.  Bas-relief tile frescoes adorn the 
walls and ceiling providing patrons a glimpse of the animals in 
their full form. 
 
4.  The deputy director spoke with us at length concerning the 
museum's future.  According to his records, approximately 100,000 
visitors tour the institution per year.  Every year the staff 
changes and reshapes some exhibits.  The museum has staged traveling 
exhibits to the United States, Puerto Rico, Japan, Europe, 
Australia, and elsewhere.  The museum is funded primarily (90%) 
through the Russian Academy of Sciences.  The city of Moscow pays an 
additional 10% for utilities and other operating expenses.  Ticket 
sales also contribute to the museum budget.  Drawing on kids' 
interest in dinosaurs and fossils, the museum sponsors lecture 
events, a Kids' Paleontology Table, excavation exercises, and art 
contests.  The number of visitors has increased over the past few 
years.  Many children visit the museum either with their parents or 
on a school field trip. 
 
Factories, Planes and Inventions: Polytechnical Museum 
--------------------------------------------- --------- 
 
5.  The Moscow Polytechnical Museum gives visitors the opportunity 
to explore a variety of different scientific areas including space, 
photography, mining, flight, chemistry, electronics, robotics, and 
meteorology.  Built in 1877, the building is an outstanding example 
of Russian Revival architecture.  Scale models of factories, 
aircraft, and inventions adorn the museum's many rooms.  The 
original basket of the air-balloon used by Mendeleyev (organizer of 
the modern Periodic Table of the Elements) is on display in the 
museum.  The first nuclear bomb is represented.  Important 
industries within Russia are also showcased including steel 
production, chemical enterprises, and hydroelectric power plants.  A 
short summary of each item, in both Russian and English, is placed 
next to each exhibit.  Exhibits range from alternative energy 
resources to space food. 
 
Eco-Consciousness at Timiryazev State Museum of Biology 
--------------------------------------------- ---------- 
 
6.  Nestled in a quaint section of town near the U.S. Embassy, the 
State Museum of Biology showcases nature, experimentation, and 
development.  During the summer of 2007, the museum is focusing on 
the benefits of recycling.  For this exhibit, the museum partnered 
with the ecological program sponsored by the government of Moscow, 
the U.S. Environmental Protection Agency (EPA), and Cornell 
University.  On display are costumes that students have created from 
ordinary trash.  Informational material posted on the wall provides 
the decomposition times of particular items and landfill usage 
across the world.  Taxidermy animals are prominently displayed 
throughout the museum.  Models of mushroom varieties provide a 
glimpse into the traditional Russian pastime of mushroom hunting.  A 
disturbing but historically interesting exhibit includes details of 
the experiments done by Dr. Ivan Pavlov, the world-famous Nobel 
laureate and physiologist, on dogs.  While the museum lacks the 
interactive feel of those in the United States, an area devoted to 
human development features a painted ceiling reminiscent of a 
prehistoric cave painting.  Most of the museum's visitors are 
children on school outings. 
 
The Gems of the Moscow State University Geology Museum 
--------------------------------------------- --------- 
 
7.  Moscow State University, located on the Vorobyov Hills, 
maintains its own collection of geological phenomena, which provide 
students unique opportunities to examine and complete research.  An 
impressive display covering five floors of the immense university 
includes samples from around the world.  Boasting a large collection 
of soils from various terrains, the geology museum contributes 
toward a better understanding of environmental climate change, as 
many of the soil samples were taken decades ago.  Rocks, ores, 
gemstones, and minerals from around the world sparkle in display 
cases.  Depictions of geological activity explain volcanic activity, 
meteor impacts, and deep sea beds.  Students studying geology and 
geography often attend lectures in a special auditorium within the 
 &#x0
00A;MOSCOW 00003732  002 OF 002 
 
 
museum.  The museum is not open to the public unless special 
arrangements are made.  All university students may enter the museum 
free of charge with their student identification card. 
 
Is it All Happening at the Moscow City Zoo? 
------------------------------------------- 
 
8.  Although not up to the standards of Western zoos, the Moscow 
City Zoo is wildly popular among Muscovite families with young 
children.  A large pond with swans, ducks, and other aquatic fowl is 
in the center of each of the zoo's two sections, while pens with 
land animals surround these ponds.  Compared with American zoos, the 
pens are smaller and less natural looking, though each animal's 
habitat appears sufficient.  While guidebooks and expats warn that 
the zoo is shabby by Western standards, gradual improvements are 
being made.  A special section for young children contains pens with 
farm animals, a playground, and a few small amusement park rides.  A 
new "exoterium" building houses exotic reptiles, fish and insects, 
and can be entered for an additional fee on top of the general zoo 
admission. 
 
9.  COMMENT:  Moscow's scientific treasures are not as well known to 
tourists as the city's historical and art collections.  Colorful and 
interactive displays to entertain and educate children have not yet 
penetrated the dour museum atmosphere.  For Westerners accustomed to 
lights, sounds, and hands-on museum experiences, the quiet 
atmosphere of Moscow's science museums could feel subdued and 
old-fashioned.  Despite their potential, these museums will likely 
remain underappreciated until they upgrade their displays and adopt 
coherent marketing strategies. 
 
RUSSELL

Wikileaks

07MOSCOW3716, DEMARCHE DELIVERED: PROMOTION OF AMERICAN

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Reference ID Created Released Classification Origin
07MOSCOW3716 2007-07-30 13:33 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0008
RR RUEHWEB

DE RUEHMO #3716 2111333
ZNR UUUUU ZZH
R 301333Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2491
INFO RUEHGV/USMISSION GENEVA 5076

UNCLAS MOSCOW 003716 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREF PREL PHUM ICRC RS
SUBJECT: DEMARCHE DELIVERED: PROMOTION OF AMERICAN 
CANDIDATE FOR INTERNATIONAL RED CROSS STANDING COMMISSION 
 
REF: SECSTATE 102873 
 
(U) We delivered reftel demarche urging support for the 
candidacy of Steve Carr to the International Red Cross and 
Red Crescent Standing Commission on July 27 to Igor Panin, 
MFA Legal Department Section Chief.  Panin told us that the 
GOR would consider the request and promised to pass it to the 
Russian National Red Cross Association. 
RUSSELL

Wikileaks

07MOSCOW3708, RUSSIA: TRADE MINISTRY CONTINUES WORK TOWARD THE

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Reference ID Created Released Classification Origin
07MOSCOW3708 2007-07-30 12:44 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO5864
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #3708/01 2111244
ZNY CCCCC ZZH
P 301244Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 2487
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 003708 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS, EB/TPP/BTA 
NSC FOR TMCKIBBEN 
USDOC FOR 4231/IEP/EUR/JBROUGHER 
USDOC FOR 4231/IEP/EUR/MEDWARDS 
 
E.O. 12958: DECL: 07/29/2017 
TAGS: PREL ECON ETRD BO RS
SUBJECT: RUSSIA:  TRADE MINISTRY CONTINUES WORK TOWARD THE 
RUSSIA-BELARUS UNION STATE 
 
REF: MOSCOW 88 
 
Classified By: Acting Econ Counselor Kathleen Doherty, reasons 1.4 (b) 
and (d). 
 
1.(C) Despite public predictions that the Russia-Belarus 
Union State is dead, Russian trade officials continue to meet 
Belarussian officials at the working level to plug away at 
the economic aspects of the 1999 agreement.  Although trade 
between the two countries has increased significantly in 
recent years, it is still heavily skewed toward oil and gas. 
To help diversify exports, the Ministry of Economic 
Development and Trade (MEDT) has proposed the establishment 
of joint production projects in sectors of historical 
Belarussian expertise.  Russian trade officials are also 
working to resolve a number of troublesome economic issues, 
including property rights and tariff differences with third 
countries.  Moscow supports Belarussian WTO entry, and 
provides modest technical assistance to the GOB.  The 
ambitious customs union envisioned among Russia, Belarus and 
Kazakhstan has been put on hold for the foreseeable future. 
Despite the efforts of trade officials to move the Union 
State forward, progress is hampered by politics. 
 
2.(C) Emboffs recently met with Victor Kalmykov, Deputy 
Director of Department of Trade Negotiations at the Ministry 
of Economic Trade and Development (MEDT).   Kalmykov leads 
GOR negotiations with Belarus on trade and economic issues, 
except for the issues of oil and gas.   He stated that MEDT 
continues to conduct discussions with Belarus under the 
umbrella of the 1999 Union State Agreement, which already has 
an extensive base of 120 bilateral agreements, most in the 
economic sphere. 
 
3.(C) According to MEDT statistics, Russia-Belarus turnover 
trade has doubled in the past four years - from $10 billion 
in 2002 to $20 billion in 2006.  Given that first quarter 
2007 trade reached $5 billion, MEDT expects year-end totals 
to be over $20 billion.  Despite this strong growth, the GOR 
would like to see the structure of trade evolve away from 
natural resources.  Currently, 54-56% of Russian exports to 
Belarus are oil and gas, followed by equipment at 10-11%, 
which Kalmykov points out are similar to export statistics to 
the EU.  Kalmykov added, however, that trade statistics with 
Belarus are difficult given the nearly open border between 
the two countries. 
 
4.(C) Investment statistics are less impressive.  In 2006, 
Russian investment in Belarus was about $400 million, and 
Belarussian investment in Russia about $320 million.  To help 
encourage greater trade and investment outside the natural 
resources sector, the Union State has a program aimed at 
establishing joint government production projects focused on 
the electronics, medical equipment and biotechnology sectors, 
all areas of Belarus specialization during the Soviet period. 
 He also noted that significant inter-regional cooperation is 
underway, pointing to a recent visit to Minsk by Moscow Mayor 
Yury Luzhkov that resulted in $1 billion worth of deals, 
mostly in construction. 
 
5.(C) Kalmykov reported that current Union State discussions 
are working to resolve problems in the areas of property 
rights, based on an agreement reached in January 2006, and on 
harmonizing differing tariff rates with third countries. 
However, Kommersant recently reported that the goal of 
creating a trilateral customs union with Russia, Kazakhstan 
and Belarus has been put on hold until at least Russia and 
Kazakhstan have acceded to the WTO.  Meanwhile, customs 
issues remain uncertain.  Although the customs border between 
the two countries has de jure been eliminated, de facto both 
Russia and Belarus conduct random checks of shipments.  The 
free movement of people between the two countries has been 
criticized by Duma deputies as a potential entry point for 
illegal migrants or terrorists. 
 
6.(C) Regarding Belarus' bid to join WTO, Kalmykov stated 
that Russia provides some technical assistance and "help on 
methodology" to Belarus, but is not "pushing" for its 
accession.  He indicated, however, that he does not consider 
U.S. opposition to Belarusian accession to be helpful, as he 
believes that it would benefit Belarus to be part of the 
international trading system.  He noted that Russia and 
Belarus, which have not yet negotiated a WTO bilateral market 
access agreement, would have to resolve several difficult 
issues, particularly in the agricultural sector. 
 
MOSCOW 00003708  002 OF 002 
 
 
 
7.(C) Comment: Despite MEDT efforts to make progress on the 
other economic aspects of the Russia-Belarus Union State, 
they are often overwhelmed by political differences and oil 
and gas dynamics.  Although tensions over subsidized gas 
prices and oil transit have subsided since their peak in 
January (reftel), there remains an uneasy truce.  As long as 
Russia is dependent on the Druzhba pipeline to supply oil to 
Europe, Belarus has leverage in its economic dealings with 
the GOR.  There
is no question, however, that Russia would 
prefer to lessen its dependence on Belarus as a transit state 
and that it is moving to do so with various proposed 
bypasses.  If Russia is successful in securing alternative 
routes to its lucrative markets, Belarus will lose a key 
bargaining chip.   End Comment. 
RUSSELL

Wikileaks

07MOSCOW3684, FLY ME TO THE MOON, AND MARS; SHAKE-OUT IN RUSSIAN

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Reference ID Created Released Classification Origin
07MOSCOW3684 2007-07-27 14:57 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO4461
PP RUEHHM RUEHPB
DE RUEHMO #3684/01 2081457
ZNY CCCCC ZZH
P 271457Z JUL 07 ZFF4
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 2444
INFO RUEHZN/EST COLLECTIVE
RUEHFT/AMCONSUL FRANKFURT 3493
RUEHBS/USEU BRUSSELS

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 003684 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR OES/SAT (HODGKINS, WALKER), EUR/RUS 
(GREENSTEIN) 
STATE PASS TO NASA (BARRY) 
 
E.O. 12958: DECL: 07/27/2017 
TAGS: TSPA ESA KSCA TSPL RS
SUBJECT: FLY ME TO THE MOON, AND MARS; SHAKE-OUT IN RUSSIAN 
SPACE SECTOR 
 
REF: A. MOSCOW 2927 
     B. MOSCOW 1637 
     C. 06 MOSCOW 12582 
 
Classified By: EST Deputy Counselor Kristina Kvein. Reason 1.4 (b), (d) 
 
1. (SBU) SUMMARY:  On June 22 the president of Energia, one 
of the major Russian space corporations, was suspended by the 
Board of Directors at the instigation of the Federal Space 
Agency Roskosmos in a reported dispute over the direction of 
space exploration.  He had urged more market-oriented 
policies aimed at increasing revenues, and he promoted 
exploration of the Moon and future flights to Mars in 
contrast to the current Federal Space Program 2006-2015, 
which emphasizes continued operation of the International 
Space Station.  This dispute arose as Roskosmos reorganizes 
the Russian space industry to consolidate more than 100 
enterprises into 6 to 10 holding companies by 2010.  The 
process of consolidation challenges the space industry to 
become a major competitor on the global market for products 
and services. END SUMMARY 
 
Reconfiguring the Space Industry 
-------------------------------- 
 
2. (U)  Roskosmos,the Federal Space Agency, has been working 
since last July to implement the government-approved plan of 
reorganization for the Russian space industry to consolidate 
by 2010 over 100 manufacturers, research centers and design 
bureaus into a small number of joint stock holding companies 
whose stock is owned by the government and private investors. 
 The initial holding companies will be created from a merger 
and reconstitution of the six existing major space 
enterprises and four new enterprises that will encompass 
nearly 60 percent of the space industry.  The six current 
enterprises are the Rocket Space Corporation Energia, 
Khrunichev Research and Production Space Center, 
Mashinostroeniye Research and Production Association, the 
Russian Institute of Space Device Engineering (RIISD), 
Progress Design Bureau and Information Satellite Systems. 
 
3.  (SBU)  Prime Minister Fradkov said the consolidation was 
designed to bring state unitary enterprises together with 
private investors to double Russia's share of the global 
space equipment market--estimated by Roskosmos head Anatoliy 
Perminov at $20 billion-- from its current 11 percent to over 
21 percent by 2015.  The first efforts consolidated 
Khrunichev from a state unitary enterprise to a 100 percent 
government-controlled joint stock company that will primarily 
produce heavy rocket launch vehicles.   Later in the year, 10 
enterprises were consolidated into Information Satellite 
Systems, with the Reshetnev Research and Production 
Association for Applied Mechanics (NPO PM) as the parent 
enterprise.  By December Perminov announced that the other 
four enterprises-- Mashinostroeniye ("Machine-Building), 
Progress, Energia and RIISD --had been consolidated. 
 
4.  (U)  At the outset of the consolidation, representatives 
of Roskosmos, the Russian Academy of Sciences and business 
and academic leaders met in Moscow August 27-31 at the 
spanking-new Presidential Center for Administration Studies 
for the Fifth International Aerospace Congress, which was 
dedicated to the 20th anniversary of the orbital launch of 
Space Station Mir.  Scientists and promoters presented papers 
on exploration of the Moon and Mars in the near future and 
specialized topics of aerospace technology.  The Aerospace 
Congress hailed the achievements of Soviet and Russian space 
exploration and pointed to a bright future, but concerns 
emerged at Roskosmos soon afterward as the GOR planned for 
the next decade in space. 
 
Explosive Fuel and Volatile Personalities 
----------------------------------------- 
 
5.  (SBU)  The space program suffered several devastating 
losses in the past year.  On July 27,2006,a Dnepr rocket 
crashed seconds after launch from the Baikonur cosmodrome, 
destroying 18 satellites and spilling toxic rocket fuel over 
Kazakh territory. (NOTE: Russia accepted liability and paid 
Kazakhstan about $1,000,000 in damages after Kazakhstan cut 
off launches from Baikonur, which is the only manned-vehicle 
launch site for Russia. END NOTE)  In October President Putin 
issued a decree firing Alexander Medvedev, the director of 
Khrunichev.  According to sources at Khrunichev, this was a 
result of the October 8 disintegration of the European Space 
Agency CryoSat satellite and other failures of Khrunichev 
 
MOSCOW 00003684  002 OF 003 
 
 
products.  On January 30 a Zenit rocket exploded on the Sea 
Launch commercial satellite platform in the Pacific Ocean, 
only the second failed launch by the Sea Launch consortium of 
Russia, the United States, Ukraine and Norway.  An 
investigation panel determined in March that the fault 
appeared to be in the upper stages of the RD-171M rocket 
engine, which is manufactured by Energomash, the Russ
ian 
rocket production company. 
 
6. (SBU)  On January 17, Roskosmos took the unusual step of 
singling out Nikolay Sevastyanov, President and chief 
designer of Energia, for harsh criticism for promoting 
"untried technical ideas, contrary to the national space 
policy."  Sevastyanov has a reputation as a voluble booster 
of Russian space efforts, often going beyond the official 
Space Program 2006-2015 announced by Roskosmos, which favors 
further development of the International Space Station, even 
if Russia goes alone after the international program ends. 
At the Aerospace Congress Sevastyanov presented his proposal 
for flights to and exploration of the Moon and mining of 
helium-3 from the lunar surface as a potential fuel for 
earth-based nuclear reactors.  Sevastyanov's ideas still held 
sway as Roskosmos meanwhile continued to push forward with 
the European Space Agency on plans to study the effects of 
500 days isolation on a team of volunteers, replicating a 
human voyage to Mars. 
 
7.  (SBU)  On Friday June 22 Roskosmos, which controls 38 
percent of the shares of Energia, engineered a late night 
vote of the Board of Directors to suspend the powers of 
Sevastyanov.  The newspaper Kommersant reported that the 
ostensible reason was disagreement with Perminov on the 
direction Energia wanted to take in developing space 
programs. Nevertheless, Sevastyanov defended his expansive 
programs in a June interview with Izvestiya and cited his 
record of nearly doubling the revenues of Energia during his 
two years at the helm.Sevastyanov's suspension was 
controversial.  Seventeen top managers of Energia signed a 
letter to the Board of Directors protesting that the action 
"contradicts the law and violates the charter of the 
corporation."   The official government newspaper 
Rossiysskaya Gazeta reported on June 26 that Putin had signed 
off on the Roskosmos decision. 
 
8.  (SBU)  An extraordinary meeting of shareholders is 
scheduled for July 31 to vote on a new head of Energia, and 
Roskosmos is expected to have the votes to install its 
choice.  On June 18 the GOR advised the Energia general 
assembly of stockholders to select Dr. Vitaliy Lopota. 
Lopota is the General Director-Designer of the Central 
Scientific and Research Institute of Robotic Engineering and 
Cybernetics in St. Petersburg. 
 
 
GLONASS Strives for Liftoff 
--------------------------- 
 
9. (SBU)  The other major thrust of the Russian Space Program 
is the Global Navigation Satellite System (GLONASS), which is 
the Russian response to the U.S. Global Positioning System 
(GPS). (Ref B)  The first satellites of GLONASS were launched 
in 1982, but by the late 1990s the system was no longer 
functional, as many satellites had reached obsolescence and 
were not replaced.  In 2001 Roskosmos began a renewed program 
to deploy satellites of the GLONASS type, and by 2006 had 
deployed between 12 and 15 satellites.  In December, three 
satellites were placed in geostationary orbit, bringing the 
current total to 14 or 15 operating satellites.  (NOTE: 
Several Russian newspapers reported in April that as many as 
seven of the satellites had operational problems, raising 
questions about the overall configuration of the system.  END 
NOTE)  The director of Reshetnev NPO PM, which manufactures 
the GLONASS satellites, told EST in June that with two 
launches of three newer model GLONASS-M satellites in 
September and December, respectively, 18 navigational 
satellites will be deployed by the end of 2007, sufficient 
for initial operation of the GLONASS system. (Ref A)  In 2008 
Roskosmos will launch six more satellites of the GLONASS M 
category, effectively providing global coverage. 
 
10. (U)  At the Nineteenth SvyazExpoCom held May 14-18 in 
Moscow, among the advanced telecommunications offerings, 
numerous manufacturers displayed GLONASS- and/or GPS-based 
receivers, including the Russian Institute of Radionavigation 
and Timing (RIRV) and exhibitors from various foreign 
countries .  They quoted prices to us from $220 for a 
 
MOSCOW 00003684  003 OF 003 
 
 
Taiwanese GPS receiver to 15,000 rubles (approximately $600) 
for the basic Hyundai model with a 2-inch display screen. 
The foreign models are offered in Russia on the Internet and 
through local distributors, but no foreign manufacturer has 
established a presence in the country.  The RIRV models are 
available at electronic stores in major cities.  Only the GPS 
receivers are currently functional in Russia, and 
representatives of the manufacturers told us that due to 
limitations in Russian mapping capabilities, they were 
operational only in the European sections of Russia and in a 
narrow strip of Siberia stretching to Chita. (NOTE: 
Then-Defense Minister Sergey Ivanov lifted restrictions on 
use of global navigation systems at the beginning of 2007, 
ending the longstanding prohibition on locating objects 
within a range of 30 meters.  END NOTE)  Several exhibitors 
told us they had not yet designed a GLONASS receiver because 
they were not certain when the system would be deployed. 
 
Changes at Roskosmos? 
--------------------- 
 
11.  (SBU)  The changes at the top of Energia and Khrunichev 
presage future changes in a unified space industry.  The 
Russian space industry employs approximately 243,000 workers, 
according to Roskosmos head Perminov, but he has stated that 
their number will be reduced as reforms proceed.  He reported 
in December that the federal budget allotted 24.4 billion 
rubles ($980 million) for the space program in 2007 out of an 
overall budget of 36 billion rubles ($1.3 billion) for 
Roskosmos.  The Federal Space Program contemplated spending 
305 billion rubles ($12 billion) in the period 2006 to 2015. 
At the present time, 70 percent of Russian space exports are 
reported to be in the segment of launching services, where 
they hold an estimated 40 percent of the $2.5 to $3 billion 
world market.  However, the primary area of growth in space 
products by 2010 is expected to be commercial satellites, 
navigation equipment and services, satellite communications 
and remote Earth observations, with the total market growing 
from nearly $100 billion up to $300 billion.  In contrast, 
the market for launching services is expected to grow slowly 
or to remain stagnant.  The consolidated Russian space 
industry will be trying to break into a market that is 
growing most strongly in the areas where it is weakest. 
 
12.  (C)  In May 2006, several newspapers ran a story that 
Perminov would be replaced as head of Roskosmos by a 
relatively unknown middle level official.  Contacts at 
Roskosmos scoffed at the idea, and the head of the protocol 
office told EST "there have been rumors that Perminov would 
be fired since he walked in the door."  Since that time, 
Perminov has seemingly lined up support from Sergey Ivanov, 
First Deputy Prime Minister, who is in charge of the space 
program.  In Ma
rch Ivanov told assembled officials of 
Roskosmos that the space industry would lead Russia into a 
future of technological achievements, but he has coupled such 
predictions with stringent requirements for successful 
performance. Several newspapers reported that Perminov 
consulted with Ivanov before suspending Sevastyanov. It is 
likely at this point that Perminov depends on Ivanov to 
retain his position at Roskosmos. 
 
13.  (C)  COMMENT:  Roskosmos has been a reliable partner in 
the International Space Station and other joint ventures, 
such as space medical and biological experiments. (Ref C) 
Under Kremlin orders to reform, the Russian space industry is 
facing severe challenges as it converts from a centrally 
controlled and government-supported collection of related 
enterprises to a market-driven group of public entities with 
sometimes competing interests and a limited claim on the 
federal budget.  The new structure does not ensure 
transparency, nor does it respond readily to market forces. 
In addition to the inherent dangers of rocket launches, the 
industry must contend with the vagaries of the marketplace 
and the political climate,  These changes come as Roskosmos 
is designing the Russian space program for 2016 to 2025. 
Thus far, the forces of orthodox thinking have won out over 
more radical risk-takers. 
RUSSELL

Wikileaks

07MOSCOW3650, RUSSIA: STRATEGIC SECTOR LAW MOVES TO DUMA

WikiLeaks Link

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Reference ID Created Released Classification Origin
07MOSCOW3650 2007-07-26 12:31 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO3068
OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #3650/01 2071231
ZNY CCCCC ZZH
O 261231Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2388
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHMFISS/DEPT OF JUSTICE WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 003650 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND GARVERICK, 
DOE FOR HARBERT, EKIMOFF 
DOC FOR 4231/IEP/EUR/JBROUGHER 
NSC FOR MCKIBBEN 
TREASURY FOR DALY, HAUSER, MEYER, BAKER 
 
E.O. 12958: DECL: 07/25/2017 
TAGS: EINV EIND ENRG PREL ECON RS
SUBJECT: RUSSIA: STRATEGIC SECTOR LAW MOVES TO DUMA 
 
REF: MOSCOW 517 
 
Classified By: ACTING ECON M/C KATHLEEN DOHERTY 
 
1. (SBU) SUMMARY.  On July 17, PM Fradkov sent the draft Law 
on Foreign Investment in the Strategic Sectors (SSL) to the 
State Duma, currently on summer recess and reconvening 
September 3.  The Ministry of Industry and Energy's (MIE) 
revised version streamlines the review process, broadens the 
definition of foreign investor to include other forms of 
foreign control, and includes a paragraph in Article 7 giving 
the federal security services investigative authority to 
determine the extent of foreign control. The GOR appears to 
have put off the decision about the draft amendments to the 
sub-soil legislation, which would spell out which "strategic" 
deposits are off limits to foreign control, until after the 
March presidential elections.  END SUMMARY. 
. 
NEW AND IMPROVED DRAFT 
---------------------- 
. 
2. (SBU) Despite Fradkov's televised criticism of the draft 
SSL law during the government meeting in January (reftel), 
the version he sent to the Duma on Tuesday looks much like 
the law he had earlier sent back to the MIE for rewriting. 
The draft law still lists the same 39 economic activities 
considered "strategic" and maintains the same 50 percent 
ownership/control thresholds that trigger a review.  The 
activities listed in the draft law concern roughly six 
sectors; nuclear, defense, aviation, space, encryption, and 
natural monopolies.  Within these sectors, a review is not 
necessary if the foreign investor seeks to acquire a minority 
or a non-controlling stake in the enterprise.  Restrictions 
to foreign investment in strategic sub-soil deposits were 
taken out of the SSL in January and are treated separately in 
amendments to the Sub-Soil legislation, which are still 
bogged down in government review (reftel).  In all other 
sectors not on the list, the law does not apply.  If the 
foreign company is either owned or controlled by a foreign 
government, the law limits the permissible stake in these 
enterprises to 25 percent.  Along with the SSL, a series of 
amendments to existing laws have been submitted to reconcile 
those laws with the SSL. 
. 
3. (C)  The review process has been streamlined in the 
current version of the draft law.  The previous version 
required three layers of decisions with some cases requiring 
presidential approval.  The process now begins with the 
interested foreign investor informing the authorized 
government body, not specified in the draft law, about the 
proposed transaction and submitting all required 
documentation to it.  The authorized body then has one month 
to forward the application along with its proposal to an 
inter-ministerial commission chaired by the PM.  According to 
a Presidential Administration (PA) expert on the SSL, 
Stanislav Voskresenskiy, although the commission's membership 
is to be determined later by the GOR, he expected it to 
include representatives from the economic and security 
ministries.  The commission will have three months to decide 
on the application from the date of registration with the 
authorized body.  In exceptional cases, the GOR can extend 
the deadline for another three months. 
. 
4. (SBU)  Another change in the draft law is a more flexible 
definition of a foreign investor to take into account other 
corporate structures that might also constitute foreign 
control.  For instance, control could be exercised by a group 
of foreign investors acting in concert or third party 
intermediaries or management acting on their behalf.  Control 
is no longer strictly equated with ownership of 50 percent 
plus one share of the target enterprise's equity. 
. 
5. (SBU) Unlike the previous version, the revised draft law 
includes an explicit role for the GOR's security services. 
Article 7 now includes a paragraph giving security agencies 
investigative authority to determine the control, direct or 
indirect, that a foreign investor would exercise over the 
target enterprise as the result of the transaction under 
consideration.  A July 23 Kommersant article mistakenly 
indicated that the draft law gives the FSB a conditional veto 
 
MOSCOW 00003650  002 OF 002 
 
 
over proposed foreign acquisitions of these enterprises. 
(BEGIN COMMENT: While in practice, the FSB probably could 
derail a proposed foreign acquisition of a strategic 
enterprise through an "adverse finding", the draft only 
spells out their investigative authority.  END COMMENT.) 
. 
COMMENT 
------- 
. 
&#18
2;6. (C) After two years of back and forth between the various 
ministries and agencies that have fought to shape this draft 
law, the SSL seems poised to becoming law.  Our contacts in 
the PA and the MIE have told us that they expect the law to 
pass quickly through the Duma.  In discussions with members 
of the business community who are not involved in the energy 
sector, the consensus seems to be that the SSL fills a 
legislative vacuum and passage would be a positive 
development.  Even then, as the chairman of the Foreign 
Investment Advisory Council pointed out to us, the law would 
apply to only a tiny fraction of actual business deals that 
his members would be interested in.  In the energy sector, 
oil companies do not appear overly concerned that amendments 
to the sub-soil legislation did not accompany the SSL to the 
Duma.  In the words of one oil company analyst, the sub-soil 
amendments will appear once the Kremlin has a firm grip on 
all the strategic deposits. 
. 
7. (SBU) An unofficial translation of the SSL has been sent 
to the Russia desk at State.  END COMMENT. 
RUSSELL

Wikileaks

07MOSCOW3649, DEMARCHE DELIVERED: HOLOCAUST REMEMBRANCE

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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. #07MOSCOW3649.
Reference ID Created Released Classification Origin
07MOSCOW3649 2007-07-26 10:58 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXRO2962
RR RUEHAP RUEHFL RUEHGI RUEHGR RUEHKN RUEHKR RUEHMA RUEHMJ RUEHMR
RUEHPA RUEHPB RUEHQU RUEHRN
DE RUEHMO #3649 2071058
ZNR UUUUU ZZH
R 261058Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2387
INFO RUCNSCO/UNESCO COLLECTIVE

UNCLAS MOSCOW 003649 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: UNESCO RS
SUBJECT: DEMARCHE DELIVERED: HOLOCAUST REMEMBRANCE 
RESOLUTION 
 
REF: SECSTATE 99959 
 
1. (U) We delivered reftel demarche July 25 to Grigoriy 
Ordzhonikidze, Secretary General for the GOR's UNESCO 
commission.  We conveyed appreciation for the GOR's continued 
support for the bill.  Ordzhonikidze promised to forward the 
updated version of the text to the GOR's UNESCO Mission and 
assured no change in the GOR position. 
RUSSELL

Wikileaks

07MOSCOW3625, MAYOR LUZHKOV – THE CONDUCTOR LEADS ON

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Reference ID Created Released Classification Origin
07MOSCOW3625 2007-07-24 14:14 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO0932
PP RUEHDBU
DE RUEHMO #3625/01 2051414
ZNY CCCCC ZZH
P 241414Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 2344
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

Tuesday, 24 July 2007, 14:14
C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 003625 
SIPDIS 
SIPDIS 
EO 12958 DECL: 07/24/2017 
TAGS PGOV, PINR, SOCI, RS 
SUBJECT: MAYOR LUZHKOV - THE CONDUCTOR LEADS ON 
Classified By: Charge d’Affaires Daniel A. Russell for reason 1.4(d).
1. (C) Summary: In early July, Moscow Mayor Luzhkov took the oath of office for his fifth term, bringing to a close a reported power struggle with the Kremlin. For the past fifteen years, Luzhkov’s dominance of Moscow politics has made him one of the most powerful politicians in the country, and an important factor in the ruling party’s campaign strategy for the December Duma and March 2008 presidential campaigns. Although President Putin’s recent public rebuke during Luzhkov’s swearing-in has prompted speculation that the Mayor’s power may be waning, Luzhkov has demonstrated a remarkable ability for remaining in power in spite of changes in the city administration and allegations of personal corruption. End Summary.
The Appointment
--------------- 
2. (C) On July 6, Yuriy Luzhkov was sworn in for a fifth term as mayor - this time, as Putin’s man, rather than as a popularly elected official. (Under election laws adopted in 2005, the President appoints the mayors of Moscow and St. Petersburg as positions equal to that of a regional governor, with the approval of the city legislatures. Luzhkov’s appointment was the first time since 1992 that Muscovites did not directly elect their mayor.) The inauguration ceremony capped a political power struggle between the Mayor and the Kremlin, with Luzhkov seeking early reappointment (his term was set to expire in December 2007) and the Kremlin reportedly demanding greater political obeisance in return. According to well-connected journalists, Luzhkov first approached the Kremlin in February 2007, but was told that his appointment would come at the cost of his political inner circle. Luzhkov declined the Kremlin offer, and a game of political chicken began. Deputy Prime Minister Aleksandr Zhukov reportedly was also a contender for the post of mayor.  However Dmitriy Badovskiy, Director of Development and Project Planning in the Moscow City government, carefully noted to us that Zhukov’s candidacy did not “satisfy all of the requirements” held by unnamed officials. Luzhkov’s ambitions and the Kremlin’s need for the popular Mayor to deliver votes for United Russia in the December parliamentary and March 2008 presidential elections reportedly drove his reappointment in June.
3. (SBU) In the days following Luzhkov’s inauguration, the media speculated whether Luzhkov had agreed to the reorganization of the city government and dismissal of some of his staff in return for another term in office. On July 21, Luzhkov refuted these reports stating, “There was no kind of pressure and no sort of recommendations, neither from the head of the government, nor from the Presidential Administration, nor the administration of the Central Federal District. They gave me the full ability to form my team of the Moscow government absolutely by myself.”
4. (C) On July 23, Luzhkov reappointed the majority of his staff to their former positions. Of his senior staff, he dismissed only First Deputy Mayor Petr Aksyonov and Deputy Mayor Yosif Ordzhonikidze. Luzhkov also dismissed Vladimir Obyedkov, Head of the Northern Administrative District of Moscow, because he was reportedly displeased with the job that Obyedkov had done. Even before the changes had been announced, Badovskiy had stressed to us that the changes within the City Administration were not extremely important in the long term. More significant, he argued, were state-owned Gazprom’s acquisition of the city energy complex and the changing of the city land laws to the advantage of unnamed businessmen, both of which increased the Kremlin’s power over Moscow. Badovskiy added that the new Head of the City Property Council, Vladimir Silkin, would be a key player in Luzhkov’s new administration.
The Mayor
--------- 
5. (SBU) Since becoming mayor in 1992, Luzhkov has presided over the transformation of Moscow from dreary Soviet capital to the world’s most expensive city. Luzhkov has improved the city’s infrastructure, developed social programs, and supervised the construction of buildings throughout Moscow. His support for social programs such as free public transportation for pensioners and the pension supplements have met with wide approval. During the series of Chechen terrorist attacks in Moscow in 1999, Luzhkov provided the strong leadership for which Muscovites were looking. At the recent inauguration ceremony, Putin praised him for the “real results that we see in Moscow.”
6. (C) Although Luzhkov has developed Moscow, controversy surrounds many of his projects. He has not hesitated to
MOSCOW 00003625 002 OF 003
demolish nearly 650 historical buildings to create space for more lucrative, high-rise offices. To the chagrin of many Muscovites, Luzhkov also placed sculptor Zurab Tsereteli’s 300-foot statue of Peter the Great along the Moscow River. The biggest source of controversy connected to Luzhkov’s building spree is his billionaire wife Yelena Baturina, who heads the largest construction company in Moscow. After Luzhkov entered office, Baturina became the wealthiest woman in Russia, thanks to the profitable building contracts that her construction company received from the Moscow city government. In the two weeks since Luzhkov’s inauguration, Baturina’s company has received two more building contracts totaling almost 800 million dollars. As one Muscovite told us, “On one hand, Luzhkov has done a lot for Moscow, but we do not know how much public money has ended up in his personal bank account.”
7. (C) Beyond the controversy, Moscow under Luzhkov has become a city of paradoxes, none of which seems to have hurt the mayor’s popularity among Muscovites. Luzhkov has expan
ded the metro system, reconstructed highways, and plans to build a fourth ring road around Moscow, but traffic jams and overcrowded metro lines remain ever-present problems. Thousands of apartments have been built, but average Muscovites cannot afford to buy them. Although Luzhkov claims to support the Kremlin’s new social policies, typically pessimistic Muscovites complained to us that “nothing is being done.” They reported that medical clinics are overflowing with patients, that there is a shortage of doctors, and that corruption and bureaucracy plague the city.  Despite the problems with rising prices and overcrowding in Moscow, quality of life has improved since the 1990s, and many Muscovites believe Luzhkov was the man who “put the city in order.”
8. (SBU) Luzhkov is a charismatic and controversial figure. The son of a woodcutter, he cultivates his image as a man of the people. An avid sportsman, Luzhkov neither drinks nor smokes, and his passions include beekeeping, opera, and hunting. He has published numerous short stories and is a dedicated patron of the arts. Although he is forward-thinking with regards to religious diversity and the environment, he refused to sanction a gay pride parade in Moscow, calling it a “Satanic event.”
The Politician
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9. (SBU) As a politician, Luzhkov has masterfully played on his relationship with the Kremlin. During the Yeltsin years, he was powerful enough to challenge Yeltsin’s authority and many saw him as a serious contender for the presidency because of the economic and political independence he had created. Having failed in his own presidential bid in 1999, Luzhkov was compelled to close ranks with the Kremlin once Putin came to power, becoming a leader of United Russia. It is reported that another quid pro quo for Luzhkov’s reappointment was the mayor’s agreement to stump more actively for United Russia. However, the rivalry and ill-will between Luzhkov and Putin reportedly remains. Luzhkov is one of the few political leaders whose political popularity is independent of the Kremlin and whose political base gives him the resources and standing to challenge Kremlin directives. In the top-down “vertical” preferred by Putin, Luzhkov’s independence remains an irritant, such as when Moscow’s city-owned television station continues its criticism of federal ministries (although not of Putin himself).
10. (C) President Putin’s remarks at Luzhkov’s inauguration ceremony, comparing Luzhkov to a conductor who cannot get his musicians to play well together, were heard as a warning that Moscow cannot remain independent from the federal government.  In the joke, the conductor fires the musicians who offer to help. Putin added, “such a scene ought to be an exception in the Moscow government.” Using this sort of public criticism as a warning and a way to assert his own power is “classic Putin,” according to XXXXXXXXXXXX. XXXXXXXXXXXXXX downplayed the significance of Putin’s criticisms and suggested that the criticism stemmed from Putin and Luzhkov’s mutual dislike.
11. (C) Although Putin’s comments indicate frustration with Luzhkov, the consensus is that the Kremlin needs him to ensure a victory in the upcoming parliamentary and presidential elections and to maintain stability in Moscow. XXXXXXXXXXXX suggested that the Kremlin needs Luzhkov’s strong leadership in Moscow to promote stability during the political transition period. XXXXXXXXXXXX noted that Luzhkov has maneuvered in such a way that Moscow cannot operate
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without his personal oversight. His opponents have sought to undermine Luzhkov’s power by emphasizing the systemic problems that plague Moscow, namely, housing shortages, price increases, low pensions, and traffic jams.
12. (C) It is not clear if the 70-year-old Luzhkov will serve the entirety of his fifth term. Luzhkov’s wife has sold some of her construction businesses, and rumors are rampant, according to XXXXXXXXXXXX, that the power couple has purchased residences in several European capitals -- actions that suggest Luzhkov may not be mayor for much longer. However, the rumors regarding Luzhkov’s retirement are unreliable at best, since such speculations have been circulating since the late 1990s. XXXXXXXXXXXX believed that Luzhkov would stay in office for one more year to oversee the elections and put his own business in order. In contrast, XXXXXXXXXXXX did not think Luzhkov would leave office any earlier than 2010 because there are many problems that need to be resolved. In the final analysis, Luzhkov has proved his ability at surviving scandals and changes in the political environment, and it seems that this term may be no different. RUSSELL

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