Monthly Archives: December 2007

07MOSCOW5971, DEMARCHES ON POTENTIAL S-300 SALE TO IRAN

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Reference ID Created Released Classification Origin
07MOSCOW5971 2007-12-31 11:11 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO2239
OO RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHMO #5971/01 3651111
ZNY CCCCC ZZH
O 311111Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6039
INFO RUCNIRA/IRAN COLLECTIVE IMMEDIATE
RUEHZG/NATO EU COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005971 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/27/2017 
TAGS: PREL IR RS
SUBJECT: DEMARCHES ON POTENTIAL S-300 SALE TO IRAN 
 
Classified By: DCM Daniel Russell for reasons 1.4 (b,d). 
 
1. (C) Summary: In response to multiple demarches from the 
DCM, senior MFA officials have alluded to, but not confirmed 
a potential sale of the S-300 air defense system to Iran 
based on an unspecified contract which predated UNSCR 1737. 
When challenged that a Russian Government agency has publicly 
stated that an S-300 sale is not now taking place or under 
consideration, the MFA officials implied that the public 
statement was accurate today, but might not be in the future. 
 MFA officials refused to be pinned down on a timetable for a 
potential sale or delivery.  It was clear from the 
conversations that the Russians believe Iran made this 
potential sale public at this time to tweak the U.S.  In any 
event, the MFA officials reiterated that the S-300 was a 
defensive weapons system and its transfer would not violate 
international sanctions regimes.  They also claimed that the 
U.S. should not haven been surprised since President Putin 
referred to an existing S-300 contract with Iran in a 
December 2006 telephone conversation that preceded UNSCR 
1737.  End Summary. 
 
2. (C) On December 27, the DCM raised U.S. objections to the 
transfer of the S-300 air defense missile system to Iran with 
MFA Security Affairs and Disarmament Department Director 
Anatoliy Antonov, in the absence of Deputy Foreign Minister 
Kislyak.  The DCM reiterated our concern that the supply of 
this system would undercut the objectives of UNSCR 1737 and 
increase risks to coalition assets in the region.  Antonov 
acknowledged our multiple approaches about longstanding 
concerns on the transfer of this weapons system to Iran, but 
said: 
 
-- The U.S. should have not been surprised by news of a 
possible Russian sale of S-300s to Iran: "We're not trying to 
hide anything from you."  Antonov claimed that President 
Putin had mentioned an existing contract with Iran with the 
President in a call months ago. 
 
-- The S-300 is defensive in nature.  Antonov acknowledged 
the S-300 was indeed a relatively sophisticated system, but 
argued it had no offensive capability; therefore, it was not 
destabilizing.  Acknowledging UNSCRs and shared goals 
vis-a-vis Iran's nuclear program, Antonov nonetheless 
reiterated the legalistic view that the transfer of a 
defensive conventional arms system violated no international 
sanctions regime. 
 
3. (C) Antonov did complain that he did not understand why 
the Iranians had chosen to make the sale public at this time, 
"except to tweak Washington."  On the timing of a potential 
S-300 sale or delivery, Antonov would not be pinned down, 
saying only that it was not imminent. 
 
4. (U) Later the same day (December 27), Russia's Federal 
Military-Technical Cooperation Service (FSVTS) publicly 
denied the existence of current plans to supply Iran with the 
S-300.  The FSVTS statement read, "the delivery of S-300 
systems to Iran, which has arisen in the press, is not 
currently taking place, is not being considered, and is not 
being discussed at this time with the Iranian side."  (FSVTS 
is formally responsible for military-technical cooperation 
and reports through First Deputy Prime Minister Sergey Ivanov 
to the President; FSVTS's current relationship with 
Rosoboronexport is unclear, following the latter's 
subordination to the Military Industrial Commission in 2006.) 
 
5. (C) On December 28, DCM again raised the S-300 transfer 
separately with Antonov and with MFA North America Department 
Director Neverov, pointing out the obvious contradictions 
between Antonov's initial private comments and the subsequent 
FSVTS public statement.  Antonov stated that he stood by what 
he had said the previous day.  On the FSVTS statement, he 
said that it must be read "carefully" pointing to the present 
tense and use of the "current."  Antonov refused to be pinned 
down on any details or any timeframe for a forthcoming S-300 
sale or delivery. 
 
6. (C) DCM delivered our points separately to Neverov, who 
clarified to which presidential telephone call Antonov had 
referred.  The call took place on December 23, 2006.  Neverov 
claimed that, in response to the President's request for 
Russian support of draft UNSCR 1737, Putin said Russia would 
be ready to support 1737, but pressed for an understanding 
that the resolution would cover contracts signed after its 
adoption but not before.  Neverov claimed that Putin 
specifically referred to an existing contract on S-300s for 
Iran, stating that there had been no deliveries yet, but that 
if things went well, in terms of both relations with Iran and 
managing its nuclear aspirations, Russia would proceed and be 
within its full rights to do so. 
 
 
MOSCOW 00005971  002 OF 002 
 
 
7. (C) Comment: Beyond the presumptions that the Iran's S-300 
announcement surprised Moscow and FSVTS did not bother with 
interagency coordination before going public, the Russian 
Government's lack of clarity does not inspire confidence.  We 
tend to doubt that An
tonov, one of the MFA's senior arms 
control/arms sales experts and most careful diplomats, would 
get his facts wrong with us on this sensitive issue.  Our 
assumption is that there is an existing umbrella contract for 
S-300 deliveries, but the timing of a sale and delivery has 
not yet been worked out. 
RUSSELL

Wikileaks

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07MOSCOW5969, POINTS DELIVERED ON U.S. POLICY ON PAKISTAN’S

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Reference ID Created Released Classification Origin
07MOSCOW5969 2007-12-31 10:08 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXRO2176
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHMO #5969 3651008
ZNR UUUUU ZZH
P 311008Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6035
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 2388

UNCLAS MOSCOW 005969 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PINR PINS PREL PTER SHUM PK RS
SUBJECT: POINTS DELIVERED ON U.S. POLICY ON PAKISTAN'S 
ELECTIONS 
 
REF: SECSTATE 170928 
 
 1.  We delivered reftel points to the office of MFA Second 
Asia Department Director Aleksandr Maryasov.  The MFA is 
closed for the holidays, but Maryasov's staff promised to 
pass the points to Maryasov immediately. 
RUSSELL

Wikileaks

07MOSCOW5958, RUSSIAN DFM GRUSHKO ON OSCE DUES

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Reference ID Created Released Classification Origin
07MOSCOW5958 2007-12-28 13:34 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO1099
PP RUEHFL RUEHLA RUEHMRE RUEHROV RUEHSR
DE RUEHMO #5958 3621334
ZNY CCCCC ZZH
P 281334Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6019
INFO RUCNOSC/OSCE POST COLLECTIVE PRIORITY

C O N F I D E N T I A L MOSCOW 005958 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/27/2017 
TAGS: PREL OSCE RS
SUBJECT: RUSSIAN DFM GRUSHKO ON OSCE DUES 
 
 
Classified By: DCM Daniel Russell for reasons 1.4 (b,d). 
 
 1.  (U) Local press seized on Russian Deputy Foreign 
Minister Aleksandr Grushko's December 26 statement about 
Russia's decreasing contributions to the OSCE budget.  During 
an end-of-year press conference, Grushko said, "Russia is 
already reducing its financing of the OSCE.  If we look at 
the evolution of this contribution, it has been corresponding 
more and more with the ability-to-pay principle, which is 
stipulated by the UN."  Kommersant newspaper reported that 
Grushko said Russia would reduce its OSCE dues by 50 percent. 
 
2.  (C) MFA European Cooperation Department Counselor 
Vladimir Yanin told us on December 27 that Kommersant 
"completely misinterpreted" Grushko's statements regarding 
Russia paying its OSCE dues.  Yanin explained that Grushko 
advocated a recalculation of the way countries pay into the 
OSCE budget; namely, each country's ability to pay should be 
considered, like at the UN.  Yanin said that Grushko never 
threatened to cut off or reduce Russia's contribution to the 
OSCE, and joked that Russia was not attempting "to start a 
crisis involving the OSCE before the New Year."  Yanin was 
unsure where the 50 percent figure came from, but speculated 
that if Russia paid the same proportion of the OSCE budget as 
it does the UN budget, Russia's contribution could drop by 50 
percent. 
 
3.  (C) Comment: Russian calls for a recalculation of 
contributions to the OSCE scales of assessment are not new. 
Grushko's comments sound to us like continued frustration 
over Russia's inability to win traction for its OSCE "reform" 
proposals. 
BURNS

Wikileaks

07MOSCOW5955, RUSSIAN ENERGY MINISTER’S END-OF-YEAR REVIEW

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Reference ID Created Released Classification Origin
07MOSCOW5955 2007-12-28 11:04 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO0999
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #5955/01 3621104
ZNY CCCCC ZZH
P 281104Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6015
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005955 
 
SIPDIS 
 
SIPDIS 
 
EUR/RUS; EEB/ESC/IEC (GALLAGLY AND WRIGHT) 
EUR/CARC, SCA (GALLAGHER AND SUMAR) 
DOE FOR HARBERT, HEGBORG, EKIMOFF 
DOC FOR 4231/IEP/EUR/JBROUGHER 
 
E.O. 12958: DECL: 12/28/2017 
TAGS: ENRG ECON EPET PREL PINR RS
SUBJECT: RUSSIAN ENERGY MINISTER'S END-OF-YEAR REVIEW 
 
REF: MOSCOW 5835 
 
Classified By: Ambassador William J. Burns for reasons 1.4 (b) and (d) 
 
 1. (C)  Summary:  Meeting with the Ambassador on December 
21, the day after the formal signing of the Tri-Caspian 
(Russia, Turkmenistan, Kazakhstan) pipeline agreement, 
Minister of Industry and Energy Viktor Khristenko called it 
"a good note" on which to end the year.  He commented on 
domestic energy policies, stressing his concerns about 
improving energy efficiency. He urged U.S. consideration of 
his previous proposal for an exchange on national energy 
strategies.  Noting that the subsoil legislation amendments 
were no longer linked to the Strategic Sectors Law, 
Khristenko said passage of the law in Spring 2008 is a high 
priority.  Despite continuing rumors, he does not expect any 
major restructuring of his ministry.  End Summary. 
 
Pipelines 
--------- 
 
2.  (C)  Khristenko explained that the long-expected 
Tri-Caspian agreement had been completed by industry and 
government working in parallel.  The pipeline is expected to 
be functional by the end of 2010 with Turkmenistan and 
Kazakhstan supplying 10 billion cubic meters of gas each. 
Khristenko predicted that the capacity will eventually expand 
to 30 billion.  Saying the "Turkmen are always Turkmen," he 
found president Berdimuhamedow more open and less difficult. 
Khristenko forecast that another pipeline system will expand 
supply from Central Asia by as much as 117-127 billion cubic 
meters of gas, but cautioned that there are outstanding 
issues with Uzbekistan. 
 
3. (C)  In contrast, Khristenko said the 
Burgas-Alexandroupolis (BAP) was managed differently, with 
the political process coming first.  Referring to the 
commercial protocol signed in Greece during President Putin's 
visit earlier in the month, he said that it was 90 percent 
complete and that documents finalizing company registrations 
would be ready by January 15, before Putin travels to 
Bulgaria.  According to Khristenko, it will take half a year 
to complete the feasibility study and another year and a half 
for construction -- primarily the ports, as the connecting 
pipeline is relatively short -- making an opening date of 
2010 somewhat optimistic.  Calling BAP a clear priority for 
Russia in the Black Sea, he expressed concern about Turkey 
becoming a hub for both gas and oil, claiming it was "too 
ambitious." 
 
4.  (C)  Khristenko was positive about Transneft's role in 
the Caspian Pipeline Consortium (CPC), saying that the 
company has made good progress on tariffs and reducing the 
loan rate.  He claimed that progress with BAP would move CPC 
forward. Regarding the Odessa-Brody-Plotz-Gdansk proposal, 
however, Khristenko called it a direct competitor for 
Russia's Druzhba line and said that it could "not be 
tolerated." 
 
Domestic Policy 
--------------- 
 
5.  (C)  Khristenko strongly defended Russian policies to 
bring domestic gas prices and those in Belarus and Ukraine 
into line with world prices, and the privatization of Russian 
electric power generation, primarily to increase energy 
efficiency.  He bemoaned that few companies in Russia 
understand the need for making energy efficiency improvements 
and said he had to continually repeat its importance.  He 
expressed appreciation for DOE offering to host a group of 
Russian experts in the United States in February to learn 
more about the issue. Khristenko also pointed to the positive 
effect of long term (5 years) power contracts that industrial 
customers in Russia are increasingly obtaining, saying that 
this would lock in reforms. 
 
6.  (C)  Referring to the poor condition of Russia's housing 
infrastructure, regional development plans and the costs of 
heating government buildings, Khristenko said that Russia 
needs to learns from its partners.  In addition to working 
with U.S. agencies, he described ongoing efforts with the EU, 
 
MOSCOW 00005955  002 OF 002 
 
 
Germany, France and Holland.  He repeated his proposal made 
in March for a U.S.-Russian discussion on national energy 
strategies, saying it would provide opportunities for both 
countries and send a positive signal to world markets. 
 
 
7.  (C)  Discussing the Strategic Sectors Law, Khristenko 
said that its passage was a Spring priority project for the 
government.  Claiming that consultations with the business 
community were extensive, he said that the law would improve 
investor confidence.  He noted that originally amendments to 
the Subsoil Law we
re linked to the Strategic Sectors Law, but 
"that was no longer the case." 
 
8.  (C)  Despite continuing rumors of restructuring at the 
Ministry of Industry and Energy (reftel A), Khristenko said 
that radical change was unlikely.  Citing his experience in 
eight governments, he said that some adjustments to realign 
responsibilities and clarify lines of authority would be 
helpful.  He claimed that much of the 2004 administrative 
reform was "wishful thinking" that was not followed by 
necessary legislative change. 
BURNS

Wikileaks

07MOSCOW5938, RUSSIA SUPPORTS U.S. CANDIDATE FOR THE COMMITTEE

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Reference ID Created Released Classification Origin
07MOSCOW5938 2007-12-26 13:51 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXYZ0000
PP RUEHWEB

DE RUEHMO #5938 3601351
ZNR UUUUU ZZH
P 261351Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5994
INFO RUEHGV/USMISSION GENEVA 5116
RUCNDT/USMISSION USUN NEW YORK 0396

UNCLAS MOSCOW 005938 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
IO/RHS 
 
E.O. 12958: N/A 
TAGS: PHUM PREL UNGA RS
SUBJECT: RUSSIA SUPPORTS U.S. CANDIDATE FOR THE COMMITTEE 
ON THE ELIMINATION OF RACIAL DISCRIMINATION 
 
REF: A. MOSCOW 05918 
     B. STATE 169375 
     C. STATE 157655 
 
1.  (SBU) In response to reftel C demarche, the MFA conveyed 
its support for Pierre Prosper, but stressed its expectation 
of reciprocal U.S. support for the candidacy of Professor 
A.S. Avtonomov in the same election. 
 
2.  (SBU) Text of MFA dipnote: 
 
No. 11521-n/dgpch 
 
The Department for Humanitarian Cooperation and Human Rights 
of the Ministry of Foreign Affairs of the Russian Federation 
presents its compliments to the Embassy of the United States 
of America in Moscow and, in response to the Embassy's note 
No. MFA/143/07 of November 22, 2007, has the honor to advise 
that the Russian Federation will support the candidacy of P. 
Prosper in the election to the Committee on the Elimination 
of Racial Discrimination, which will take place in the course 
of the 22nd conference of the member states of the 
International Convention on the Elimination of All Forms of 
Racial Discrimination in January of 2008 in New York City. 
 
At the same time, the Department for Humanitarian Cooperation 
and Human Rights expresses its hope that, taking into account 
the gentlemen's agreement among the permanent members of the 
U.N. Security Council on mutual support of their candidacies 
to U.N. bodies of limited membership, the Government of the 
United States of America will provide support to the 
candidacy of Professor A.S. Avtonomov in the same election to 
the same body. 
 
The Department for Humanitarian Cooperation and Human Rights 
of the Ministry avails itself of the opportunity to extend to 
the Embassy renewed assurances of its fairly high 
consideration. 
 
Moscow, December 20, 2007 
(STAMP) 
 
End text. 
BURNS

Wikileaks

07MOSCOW5925, JCIC POINTS PASSED

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Reference ID Created Released Classification Origin
07MOSCOW5925 2007-12-21 14:46 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXRO7936
RR RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #5925 3551446
ZNR UUUUU ZZH
R 211446Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5980
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC

UNCLAS MOSCOW 005925 
 
SIPDIS 
 
GENEVA FOR JCIC 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: PARM KACT START JCIC US RS BO KZ UP
SUBJECT: JCIC POINTS PASSED 
 
REF: STATE 169189 
 
(U) We passed reftel dipnote to the office of Igor Neverov, Director 
of MFA North America Desk.  We have received no substantive reply. 
 
BURNS

Wikileaks

07MOSCOW5924, RUSSIA’S LATEST STATE CORPORATION: HOUSING

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Reference ID Created Released Classification Origin
07MOSCOW5924 2007-12-21 14:31 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO7910
RR RUEHLN RUEHVK RUEHYG
DE RUEHMO #5924/01 3551431
ZNR UUUUU ZZH
R 211431Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5978
INFO RUEHLN/AMCONSUL ST PETERSBURG 4715
RUEHVK/AMCONSUL VLADIVOSTOK 2575
RUEHYG/AMCONSUL YEKATERINBURG 2914
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 MOSCOW 005924 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/RUS WATSON, PATTERSON 
NSC FOR WARLICK 
 
E.O. 12958: N/A 
TAGS: ECON PGOV SOCI RS
SUBJECT: RUSSIA'S LATEST STATE CORPORATION: HOUSING 
MAINTENANCE FUND 
 
REF: MOSCOW 00510 
 
1.  (SBU) Summary.  In an effort to revitalize Russia's 
housing, President Putin on July 27 signed the law creating 
the Fund to Assist Housing Maintenance.  Minister of Regional 
Development Kozak will head the Fund's supervisory board and 
his protg, Konstantin Tsitsin, a Federal Council member, 
will head the Fund.  With a budget of 240 billion rubles (USD 
$9.6 billion), the Fund will finance projects to upgrade 
dilapidated housing and resettle people from uninhabitable 
homes to better ones.  The GOR hopes the Fund will also 
encourage development of a market for repair companies and 
jump start the formation of homeowners associations.  While 
most experts consider the Fund well-targeted, they express 
concern over its small size, the potential for corruption, 
and its ability to attract investors into the home repair 
market.  End summary. 
 
----------------------- 
Crumbling Housing Stock 
----------------------- 
 
2.  (SBU) Russia's dilapidated housing stock has been ignored 
since privatization in the 90s, as the GOR passed 
responsibility for maintenance and repair onto first-time 
homeowners who were unaccustomed to such responsibility and 
lacked sufficient financing to carry the new burden.  Most 
urban Russians live in apartment buildings where they own the 
individual apartments.  The rise of a do-it-yourself culture 
has led to improvements in individual dwellings, but weak 
homeowners associations have left maintenance of the building 
infrastructure, including elevators, communal spaces, and 
utility systems in disarray. 
 
-------------------- 
The Fund Takes Shape 
-------------------- 
 
3.  (SBU) The Fund is the latest in a series of state 
corporations that the GOR has created to address the 
country's economic problems.  Money has been allocated in the 
2008 federal budget and beginning January 1, regional and 
municipal governments can receive 500 million to eight 
billion rubles (USD $20-320 million) in assistance.  Sixty 
percent will finance the repair of existing housing and 40 
percent will finance resettlement into better homes.  Kozak 
will head the Fund's supervisory board, which will consist of 
17 members representing the Presidential Administration, 
State Duma, Federation Council, and Public Chamber. 
Konstantin Tsitsin, a Federal Council Member, will direct the 
Fund.  According to Tsitsin, board members will not receive 
salaries and staff employees (100 have been named so far) 
will receive wages somewhere between public and private 
sector averages -- meaning a pay hike for government workers 
moving to the Fund.  While Tsitsin is reported to be Kozak's 
protg, some experts have expressed concern over his lack of 
experience in the sector. 
 
4.  (SBU) According to Tsitsin, the regional and municipal 
governments must agree to 12 criteria -- three of which have 
generated the most attention and criticism.  First, the 
regional government must ensure that 25 percent of the 
service companies doing home repair in its region are 
privatized by January 1, 2009, and 80 percent by 2011. 
Second, the regional government must guarantee that five 
percent of apartment buildings in their region will form 
homeowners associations or cooperatives by January 1, 2009, 
rising to 10 percent in 2010 and 20 percent in 2011. Such 
associations would be responsible for choosing and overseeing 
companies repairing their building. Finally, the regional 
government, together with the Fund, would finance 95 percent 
of the total cost of repair, but homeowners must finance the 
remaining five percent. According to Tsitsin, 70 regions are 
ready to file the necessary applications to receive funding. 
 
------------------------- 
Resistance in the Regions 
------------------------- 
 
5. (SBU)  Regional and municipal authorities have objected to 
these last two criteria.  They claim homeowners associations 
are developing, but slowly.  Citizens are reluctant to take 
 
MOSCOW 00005924  002 OF 002 
 
 
control of their own buildings for fear of being saddled with 
huge costs and instead are waiting for local governments to 
finance repairs.  In addition, they argued that homeowners 
would balk at paying even five percent of the total repair 
cost.  According to recent press reports, authorities in 67 
cities have lobbied Duma and GOR officials to relax the 
requirements.  Duma deputies from the "A Just Russia" party 
have take up their cause and submitted amendments to the law 
for the Duma's consideration in spring 2008.  However, 
Tsitsin and Kozak have strongly opposed changes to the Fund's 
 
SIPDIS 
criteria. 
 
---------------------------------- 
Fund's Idle Capital to be Invested 
---------------------------------- 
 
6.  (SBU) The Fund's budget will not be entirely
 spent in its 
first year and up to 80 billion rubles (USD $3.2 billion) 
will be invested in federal, regional and OECD-country 
government obligations.  Further diversification will be 
considered later and could include investment in Russian and 
OECD-country stocks and mortgage obligations.  While the GOR 
wants to keep the money safe in low-yield investments, some 
experts believe that the only way to expand the Fund's 
capital -- or to simply keep up with inflation -- is to 
invest it in stocks, instead of low-yield securities. 
 
------------------------------ 
Good Idea, But Rising Concerns 
------------------------------ 
 
7.  (SBU) While most experts and officials support the idea 
of the Fund, there are concerns about opportunities for 
corruption in the distribution of the money and the small 
size of the Fund in comparison to the scope of the problem. 
Sergey Sivaev, Director of Municipal Economy at the Institute 
of Urban Economics, said that the Fund is too small to 
address the vast amount of repairs needed and would only 
provide 10 percent of what is necessary.  He added that 
attracting private capital would be key to any program 
seeking to improve the situation.  He also suggested changing 
current banking policies to allow homeowners to use 
apartments as collateral when applying for bank loans could 
spur more home improvement projects. 
 
8.  (SBU) Andrey Shirokov, Head of Real Estate and Urban 
Infrastructure Management at the Moscow Institute of State 
and Corporate Governance, reiterated that the Fund is just 
too small.  He said that up to two-thirds of Russia's 
housing, or 3.8 billion square meters, is in need of repair 
and requires 5-10 trillion rubles (USD $200-400 billion) to 
fix -- 20-40 times greater than Fund's budget.  Remir 
Mukumov, Head of Territorial Development at the MEDT and one 
of law's authors, argued that the Fund must start somewhere. 
 
9.  (SBU) Comment.  The Housing Maintenance Fund has the 
potential to jump-start the stalled National Priority Project 
in Affordable Housing, which has led to little improvement in 
the housing situation (reftel).  The Fund tackles a 
fundamental problem that the National Project, with its focus 
on construction and mortgages, has not addressed.  Targeting 
capital repairs fills this void and while initial monies may 
be low, positive results could spur additional funding. 
However, like other GOR projects, it is a waiting game to see 
if the Fund will reach those Russians in most need or if it 
will be hindered by corruption, inadequate funding and an 
inability to attract private investment.  End comment. 
BURNS

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07MOSCOW5918, DEMARCHE DELIVERED: ELECTIONS FOR THE COMMITTEE

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Reference ID Created Released Classification Origin
07MOSCOW5918 2007-12-21 12:31 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0003
PP RUEHWEB

DE RUEHMO #5918 3551231
ZNR UUUUU ZZH
P 211231Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5975
INFO RUEHGV/USMISSION GENEVA 5115
RUCNDT/USMISSION USUN NEW YORK 0395

UNCLAS MOSCOW 005918 
 
SIPDIS 
 
SIPDIS 
 
IO/RHS 
 
E.O. 12958: N/A 
TAGS: PHUM PREL UNGA RS
SUBJECT: DEMARCHE DELIVERED:  ELECTIONS FOR THE COMMITTEE 
ON THE ELIMINATION OF RACIAL DISCRIMINATION 
 
REF: MOSCOW 157655 
 
We delivered reftel demarche via diplomatic note to the MFA 
Office of International Organizations on November 20.  The 
MFA has not provided a substantive response to our request 
that Russia support the candidacy of Mr. Pierre-Richard 
Prosper to the United Nations Committee on the Elimination of 
Racial Discrimination. 
BURNS

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07MOSCOW5899, RUSSIA-CHINA RELATIONS

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Reference ID Created Released Classification Origin
07MOSCOW5899 2007-12-20 15:24 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0001
OO RUEHWEB

DE RUEHMO #5899/01 3541524
ZNY CCCCC ZZH
O 201524Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5963
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L MOSCOW 005899 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/20/2017 
TAGS: PREL PGOV ECON ENRG CH RS
SUBJECT: RUSSIA-CHINA RELATIONS 
 
Classified By: Political M/C Alice Wells.  Reasons 1.4 (B/D). 
 
1.  (C) Summary.  The pragmatic pursuit of economic growth 
and political stability, and a determined effort to avoid 
"interfering" with each other's domestic political 
developments have brought an improvement in ties between 
Russia and China.  The conclusion of two "national years" 
created a stronger foundation for mutual understanding and 
precedes reciprocal years of the Russian and Chinese 
languages.  Economic cooperation, however, has not kept pace 
with the political declarations of "strategic partnership." 
Moscow experts predict that the bilateral trade relationship 
will grow for at least another decade, but that economic 
growth will be offset by Russian ambivalence about the role 
of China in its economic and political life.  Augmenting that 
ambivalence will be the continuing competition for political 
dominance and economic advantage in resource-rich Central 
Asia.  End summary. 
 
Successful National Years 
------------------------- 
 
2.  (SBU) At the conclusion of the 2006 Year of Russia in 
China and the 2007 Year of China in Russia, the two 
governments agreed to launch a follow-on Year of Russian 
language in China in 2009 and a Year of Chinese Language in 
Russia in 2010.  In a November interview, MFA Director of the 
First Asia Department Konstantin Vnukov expressed 
satisfaction that the national years had "expanded the social 
basis for bilateral relations."  Vnukov particularly lauded 
the many cultural events conducted during the Year of China. 
 
3.  (SBU) Vnukov stressed the regularity of high-level 
meetings in 2007 between the two countries:  President Hu's 
March visit to Moscow, Vice Premier Wu Yi's leading role in 
the 11th St. Petersburg International Economic Forum, Putin 
and Hu in Bishkek in August, FM Lavrov with the Chinese and 
Indian FMs in Harbin in October, and Premier Wen's visit to 
Moscow in November.  In addition, First Deputy Prime Minister 
Medvedev and Vice Premier Wu Yi, who jointly headed the 
Years, actively engaged with each other throughout the year. 
During the official opening of the Year of China in March, 
Putin and Hu signed 21 agreements worth over USD 4 billion, 
USD 500 million of which was to be Russian exports of Russian 
machinery and technical products. 
 
More to Come 
------------ 
 
4.  (SBU) The bilateral trade volume in 2007 has reached USD 
40 billion, making China Russia's second largest trade 
partner after the EU.  The GOR expects that the amount will 
increase to USD 60 billion by 2010.  Chinese investment in 
Russia centers on construction, including the multifunctional 
"Baltic Pearl" complex in St. Petersburg and celluoid-paper 
mills in the Chita and Khabarovsk regions. Vnukov expected 
that Chinese companies would be awarded contracts for 
infrastructure projects for the 2012 Vladivostok APEC Summit 
and the 2014 Sochi Olympics. 
 
Growing Ties 
------------ 
 
5.  (U) China is part of the fabric of life in Russia. 
Besides the ever-present Chinese consumer goods, China is 
frequently on Russia's cultural center stage.  The Institute 
of Far Eastern Studies of the Russian Academy of Sciences is 
publishing a multi-volume encyclopedia entitled "China: 
Spiritual Culture."  The first volume was published in 2006 
and several more are expected in 2007.  It is easier to catch 
movies in Moscow by well-known Chinese directors such as 
Zhang Yimu or Ang Lee than Japanese or Korean films.  With 
more exposure to Chinese culture has come a growing interest 
in the Chinese language.  One of President Putin's daughters 
is majoring in Chinese at a St. Petersburg university.  In 
2006, 2.35 million Russians visited China, among whom 1.3 
million were tourists, while 765,000 Chinese, 157,000 of them 
tourists, returned the favor. 
 
Despite Progress, Problems Abound 
--------------------------------- 
 
6.  (C) Most experts view the "blossoming" of Russia-China 
relations as something necessary and beneficial to Russia.  A 
group lead by the Director of the Institute of Far Eastern 
Studies Mikhail Titarenko is strenuously recommending the 
Chinese model:  economic development above all; while 
pro-Western scholars at the Moscow Carnegie Center argue that 
Russia should not follow the "predatory" modernization model 
of China.  All agree that Russia's China policy lacks 
direction and clearly thought-out objectives, and that its 
terms are generally set by the Chinese. 
 
--Russian Platitude, Chinese Focus: 
 
7.  (C) IMEMO's Gennadiy Chufrin summarized the bilateral 
relationship as one with a proper political climate but 
limited prospects for full development.  According to 
Chufrin, "The problem lies with the Russians, not the 
Chinese; the Chinese know exactly what they want but we don't 
know what our nation's interests are in dealing with them." 
Not having formulated clearly what the policy and goals 
sh
ould be, the GOR repeats stock phrases about strategic 
partnership and a peaceful neighborhood.  Among Russian 
official and analysts, there is a firm understanding that 
there will never be a formal alliance between the two.  The 
issue of Taiwan is a case in point. Russia supports the 
one-China policy and does not consider Tibet a serious 
problem for China but should there be open conflict, the GOR 
will never opt for direct involvement on the side of China. 
 
--Economic Discomfort: 
 
8.  (C) While the GOR has good reasons to be satisfied with 
the increasing bilateral trade volume, most experts pointed 
out that the structure of that trade is dictated by the 
Chinese, with Russia exporting raw materials, while Chinese 
manufactured goods saturate the Russian market.  Chufrin 
criticized the GOR for missing many economic opportunities, 
and noted the PRC's single-minded pursuit of its own 
advantage.  Chufrin argued that with a better conceived 
policy, the GOR could maximize its advantage in many fields 
including the construction industry; the energy sector, 
including nuclear energy; and financial flows and 
investments. 
 
9.  (C) Much of Russia's confused economic policies toward 
China is the by-product of its basic ambivalence about its 
rapidly growing neighbor.  MGIMO'S Aleksey Bogaturov thought 
the GOR's had created confusion with its much-publicized East 
Siberian Pacific Ocean Pipelines (ESPO).  With the change in 
Transneft's leadership (the state owned oil pipeline company 
in charge of the construction), the promised 2008 completion 
of the Taishet - Skvorodino leg (which connects to China's 
Daquing) was unlikely.  Moreover, the GOR is vacillating 
between China and Japan, while experts contend that there is 
not enough oil to supply both countries.  Chufrin alleged 
that GOR officials were not truthful about certain matters: 
despite the GOR's announcement that unprocessed timber was no 
longer exported to China, Chufrin himself had witnessed loads 
of raw timber, possibly illegal, ready for shipment to China 
from the Khabarovsk region. 
 
10.  (C) Although China is the largest buyer of Russia's 
weapons, the Russians are keenly aware that China will buy 
from the EU when/if the EU's embargo ends; leaving Russia 
only small-arms sales.  Chufrin predicted that China will 
follow the Indian model; combining Russian hardware with 
European technology as India has done with its aircraft 
industry. 
 
--Many Reasons to Worry: 
 
11.  (C) IMEMO's Nadezhda Arbatova maintained that China with 
its growing economic power and unclear military aspirations 
are throwing a long shadow over Russia and is making many 
Russians nervous.  Russia could not "copy" China, because the 
two societies are fundamentally different and a direct import 
of the Chinese model simply would not work in Russia.  Fedor 
Lukyanov, Chief Editor of Russia in Global Affairs, termed 
the Chinese "too smart" for the Russians to compete with. 
There is a sense among the Russians that they are being 
"outwitted" by the Chinese, he said.  As soon as Russia 
garnered a contract in early November to build more nuclear 
power stations -- a comfortable scenario as the new reactors 
would be similar to the two Russian-built models already 
operating in China, China awarded a large contract for four 
stations to France during Sarkozy's November visit.  Russia 
is experiencing role reversal -- from Soviet "big brother" to 
junior partner-- which is difficult to accept.  With a tinge 
of the prejudice that is often evident in conversations on 
China here, Lukyanov said that Russia would never play second 
fiddle in the region. 
 
-- How Much China Acceptable?: 
 
 12.  (C) Lukyanov said that Russia would be content with the 
status quo: mutual good feeling and continued Russian 
economic parity.  He knew that such a situation would not 
last long, however, and the GOR would soon have to define how 
much China it could accept, especially in Central Asia and 
the former Soviet space.  With Russia's sluggishness in 
Central Asia, Kazakhstan has been aggressively courted by 
China, said Bogaturov.  Friction within the Shanghai 
Cooperation Organization (SCO) is part of the GOR's 
"stupidity," and GOR officials will soon have to ask 
themselves if Russia would be willing to relinquish its 
dominant role in the organization to China.  Many experts 
urged that Russia, the EU, and the US identify areas where 
their interests intersect rather than trying to portray 
Russia - China relations as an attempt to counter the West. 
 
Comment 
------- 
 
13.  (C) We expect little change in Russia-China relations in 
the near future; certainly not until well beyond the Russia's 
presidential elections. 
BURNS

Wikileaks

07MOSCOW5898, RUSSIA-MOLDOVA RELATIONS: BACK ON TRACK?

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Reference ID Created Released Classification Origin
07MOSCOW5898 2007-12-20 15:00 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0020
OO RUEHWEB

DE RUEHMO #5898 3541500
ZNY CCCCC ZZH
O 201500Z DEC 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5962
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L MOSCOW 005898 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 12/18/2017 
TAGS: PREL PGOV ECON MD RS
SUBJECT: RUSSIA-MOLDOVA RELATIONS: BACK ON TRACK? 
 
REF: MOSCOW 4828 
 
Classified By: Political M/C Alice G. Wells. 
Reasons 1.4 (B/D). 
 
1.  (C) Summary.  While evaluating Russia-Moldova relations 
without the Transnistria conflict is difficult, there are a 
few signs that the GOR is continuing its efforts to "mend" 
the bilateral relationship through economic and other means. 
The MFA told us that Russia is hopeful that frequent 
high-level meetings and regularized Intergovernmental 
Commission sessions could promote a better bilateral 
relationship.  On Transnistria, GOR official insisted that 
without the direct contact between Moldovan President Voronin 
and Transnistrian leader Smirnov, the conflict will remain 
frozen.  The MFA expressed concern over deteriorating 
Moldovan-Romanian relations.  End summary. 
 
Continued Progress in Bilateral Relations 
----------------------------------------- 
 
2.  (C) MFA Second CIS Department Director Viktor Sorokin 
during a December 18 meeting maintained that notwithstanding 
the situation in Transnistria, the GOR is trying to improve 
the bilateral relationship with Moldova on a pragmatic basis 
(reftel).  Putin and Voronin already met four times this year 
while another round of economic talks through the 
Intergovernmental Commission just concluded in Moscow. 
Although Sorokin told us that President Voronin is scheduled 
to visit Moscow in January, local press reported that Voronin 
will travel to Moscow December 21-22 to discuss customs 
regulations with a few other CIS leaders, including 
Nazarbayev and Lukashenko.  Some press reports also hinted 
that a Putin-Voronin meeting was scheduled in advance to 
discuss Kosovo implications on the Transnistria conflict. 
 
3,  (C) Sorokin positively characterized negotiations on 
Russia's ban on Moldovan wine, noting that besides the 17 
Moldovan wineries which have begun bringing Moldovan wines to 
Russia, many more companies are already undergoing "quality 
inspection" for import.  He said that the GOR hopes to expand 
bilateral trade beyond the current Russian  imports of wine, 
fruits, dairy products and meat, and exports of oil and gas. 
Sorokin pointed out that the humanitarian aid of grains and 
fuel during the 2007 summer drought in Moldova, which the GOR 
dispatched at the request of the Moldovan government, helped 
warm the relationship. 
 
Transnistria Still Frozen 
------------------------- 
 
4.  (C) Sorokin insisted that as long as there is no direct 
contact between Voronin and Smirnov, aimed at resolving the 
conflict, Transnistria will remain frozen.  All other 
"players" could only "help" but not "resolve," he added. 
Sorokin said that the GOR is frustrated with the attitude of 
both parties who "wait for others to solve the problem for 
them."  He regretted that the Kozak document did not go 
forward and stressed that since then, no positive movement 
has happened.  Separately, Deputy Director of the CIS 
Institute Vladimir Zarikhin, who advises the Duma 
International Relations Committee, claimed that Transnistria 
is "artificially" frozen.  Unlike other regional conflicts, 
Transnistria has no component of ethnic, religious difference 
and IDPs, while privatization happened after the break-up, 
lending itself more easily to the resolution.  Zarikhin 
warned that the GOR will apply Kosovo as a "model" for 
Transnistria. 
 
Moldova-Romania Relations 
------------------------- 
 
5.  (C) Sorokin expressed concern with the deteriorating 
relationship between Moldova and Romania.  He criticized the 
Romanian government for treating Moldova like a younger 
brother -- an "unhelpful" gesture.  Sorokin said that the 
relationship is "not simple" and needs to be tended 
carefully. 
BURNS

Wikileaks