Daily Archives: February 1, 2008

08MOSCOW270, RUSSIA’S KINDER, GENTLER FACE TO THE WORLD?

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Reference ID Created Released Classification Origin
08MOSCOW270 2008-02-01 15:48 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0023
PP RUEHWEB

DE RUEHMO #0270 0321548
ZNY CCCCC ZZH
P 011548Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6379
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L MOSCOW 000270 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/RUS, EEB/IFD 
TREASURY FOR MEYER, TORGERSON 
NSC FOR WARLICK 
 
E.O. 12958: DECL: 02/01/2018 
TAGS: EFIN ECON RS
SUBJECT: RUSSIA'S KINDER, GENTLER FACE TO THE WORLD? 
 
Classified By: Ambassador William J. Burns, Reasons 1.4 (b/d). 
 
Summary 
------- 
 
1.  (C) During the opening session of the 2008 Russia Forum 
organized by Troika Dialog, Deputy Prime Minister and Finance 
Minister Aleksey Kudrin called for "a shift in the GOR's 
foreign policy goals" to ensure a more stable, more 
attractive investment climate.  His comments followed, but 
did not respond to, more critical statements by Unified 
Energy Systems President Anatoly Chubais who said Russia 
should "stop acting like a teenager" in its international 
relations and lamented lost investment as a result of this 
behavior.  Participants in other panel discussions at the 
Forum, told us Kudrin might have been playing to the crowd, 
namely market-oriented financial professionals and economic 
observers, but that he was also likely in favor of a more 
business-friendly foreign policy.  End Summary. 
 
Kudrin Suggests an Adjustment 
----------------------------- 
 
2.  (SBU) In his address to the Russia Forum, Deputy Prime 
Minister Kudrin provided a brief overview of Russia's 
economic performance in 2007 as well as the prospects for 
2008 and beyond.  He said that real GDP growth for 2007 would 
prove to be 7.8 percent or higher, but had been tempered by 
higher-than-expected inflation.  He said the business climate 
had demonstrated considerable resilience in the aftermath of 
the financial market turmoil that subprime concerns had 
generated.  The Central Bank and the Finance Ministry were 
taking measures to sustain liquidity among the country's 
banks and the country had already embarked on a broadbased 
infrastructure investment program, which Kudrin emphasized 
were key elements in maintaining Russia's economic growth. 
 
3. (SBU) However, another key factor supporting the long-term 
development of Russia's economy, Kudrin suggested, lay in the 
area of foreign policy.  He called for a "shift in the GOR's 
foreign policy goals in the near future to guarantee a stable 
investment climate." 
 
4.  (SBU) Kudrin's comments followed, but did not respond 
directly to a more critical assessment of Russia's foreign 
policy by Unified Energy Systems President Anatoly Chubais. 
Chubais praised the GOR for recognizing the country's need 
for enhanced infrastructure from ports to schools to better 
medical facilities.  He also lauded the Finance Ministry's 
and Central Bank's response to the liquidity squeeze in 
August and September 2007 brought on by subprime concerns. 
However, he lamented that Russia had been "belligerent" in 
its foreign policy, which threatened to keep potential 
investors out of the country.  Chubais said Russia should 
"stop acting like a teenager" and focus on longer-term 
considerations.  Discussing the recent tension with the 
British Council, Chubais rhetorically asked "how much does 
this foreign policy cost Russia?" 
 
A "Kinder, Gentler" Foreign Policy? 
----------------------------------- 
 
5.  (C) Participants in other panel discussions told us that 
Kudrin's comments could not necessarily be taken as an 
indication of a shift in Russia's foreign policy.  Eurasia 
Group President Ian Bremmer said that Kudrin might have been 
playing to the crowd.  Attendees, and many of the 
participants scheduled to make presentations during the 
Forum's various sessions, were either financial sector 
professionals or economic observers who tend to favor liberal 
economic policies writ large. 
 
6.  (C) Troika Asset Management President and former Deputy 
Minister of Economic Development and Trade Andrei Sharonov 
speculated that while Kudrin might share Chubais frustration 
over the recent tensions with the British Council, his 
disappointment with the handling of the so-called Storchak 
affair probably contributed to the outburst.  Sharonov said 
that "in his understated way" Kudrin might be trying to to 
keep a hardline foreign policy from disrupting the country's 
business and investment climate.  Sharonov expressed doubt 
that Kudrin's statement had been coordinated with Medvedev's 
office but said that he would not be surprised if Medvedev 
adopted a more cooperative approach to foreign policy. 
BURNS

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08MOSCOW268, RUSSIA ON COUNCIL OF EUROPE REFORM

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Reference ID Created Released Classification Origin
08MOSCOW268 2008-02-01 15:09 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO7362
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #0268/01 0321509
ZNY CCCCC ZZH
P 011509Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6375
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 000268 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/31/2018 
TAGS: PREL COE RS
SUBJECT: RUSSIA ON COUNCIL OF EUROPE REFORM 
 
REF: STRASBOURG 1 
 
Classified By: Political M/C Alice G. Wells for reasons 1.4 (b/d) 
 
1.  Summary.  (C) The GOR told us Russia supported the 
January reforms to PACE's presidential election process, 
stressing that it did not perceive the resulting delay until 
2010 of Federation Council Deputy Margelov's presidency as a 
slight against Russia, although recognizing that some 
member-states had spun this as a political decision.  MFA 
officials maintained that GOR opposition to Saakashvili's 
speech in PACE had no connections to the reform process, but 
was prompted by worries his presence might inhibit debate on 
Georgia's December elections.  During his January 17 visit to 
Moscow, outgoing PACE president Rene van der Linden in 
encouraging Russia to ratify the 6th Protocol on the 
Convention on Human Rights, dealing with the death penalty, 
and the 14th Protocol, dealing with reform of the European 
Court of Human Rights (ECHR), was unsuccessful.  End Summary. 
 
2.  (C) In a January 23 meeting, MFA PACE Section Head 
Alexander Kurmas affirmed Russia's strong relationship with 
PACE and the Council of Europe (CoE).  Although there are 
differences -- Russia remains the only one of the 47 
countries that has not ratified Protocols 6 and 14 of the 
Convention on Human Rights -- Kurmas stressed that Russia 
valued its membership and was willing to work with other 
members towards consensus on contentious issues, although it 
would continue to speak its mind.  Media sources reported 
that new PACE president Luis de Puig of Spain emphasized 
publicly that Russia was a "full and important member" of the 
CoE.  Dutch diplomats told us that van der Linden had 
commented during his Moscow visit that Russia seems more 
willing to accept criticism from the CoE than from the EU and 
the OSCE, although when van der Linden expressed his hope 
that Russia would avoid the defects in its parliamentary 
elections in the upcoming presidential campaign, Putin only 
"nodded politely." 
 
No Hard Feelings: Russia Supports PACE Leadership Reform 
--------------------------------------------- ----------- 
 
3.  (C)  Kurmas told us that Russia fully supports reforms to 
PACE's presidential election procedure adopted at a January 
10 meeting in Paris of the leaders of PACE's five political 
groups.  The new arrangement would allow for rotation among 
all five political groups, instead of the four that existed 
when the agreement originated.  The first presidency of the 
new agreement was given to the largest group, the Socialists, 
headed by Spain's de Puig. 
 
4.  (C) Kurmas noted that it was only "by chance" that 
Chairman of the Federation Council International Affairs 
Committee Margelov happened to be next in line under the 
previous process when the reforms went into effect. 
According to Kurmas, most of the "horse-trading" that went 
into this deal was completed in December, well before the 
deal became public in mid-January, and he noted that the GOR 
never accused PACE of discrimination.  He said it was 
"disappointing" that some member states had tried to paint 
this as a political decision and "play the Russia card."  The 
GOR felt that the reforms were presented to the public in an 
"ugly and unacceptable way."  The GOR continued to support 
Margelov for the PACE presidency in 2010, but Kurmas said it 
would wait for him to be invited by Europe -- it would not 
demand recognition.  Dutch diplomats said that according to 
van der Linden, there was general support of parties and 
countries for Margelov in 2010. 
 
Saakashvili at PACE 
------------------- 
 
5.  (C)  Saakashvili's invitation to speak at PACE on January 
24 was not an issue in the December negotiations on 
leadership reform, Kurmas told us.  He said that the GOR did 
not object to Saakashvili's invitation in principle, noting 
he had spoken there in 2000 and 2004, and stressed that 
Russia welcomed the chance to discuss human rights with 
Georgia whenever possible.  However, Kurmas maintained the 
GOR had opposed Saakashvili's appearance in January because 
PACE would be discussing the Georgian elections, and the GOR 
worried his presence might "inhibit" an open discussion. 
 
The 6th Protocol: "The Public Isn't Ready" 
------------------------------------------ 
 
6.  (C) During his farewell visit to Moscow, Van der Linden 
entreated Putin to sign the 6th Protocol, which would abolish 
the death penalty in Russia.  The death penalty was abolished 
three times, and reinstated four, in Russia in the 20th 
century, and is currently in moratorium.  According to Dutch 
diplomats, Putin declined, citing a reopening of public 
discussion on the matter after the 2004 Beslan attack, which 
 
MOSCOW 00000268  002 OF 002 
 
 
still infused public opinion.  Putin said that the GOR would 
follow public opinion on the matter, which was not yet ready. 
 He told van der Linden that it was "only a matter of time." 
 
The 14th Protocol: Lacking Trust in the ECHR 
-------------------------------------------- 
 
7.  (C) Van der Linden also discussed Russian ratifica
tion of 
the 14th Protocol, which deals with reform of the European 
Court of Human Rights.  (Note: The 14th Protocol was signed 
by Putin in 2006 and sent to the Duma, but the Duma did not 
ratify it -- the first time in post-USSR Russia an executive 
agreement was not authorized by the legislative, with the 
ruling party-dominated Duma clearly following instruction 
from the Kremlin.)  Konstantin Kosachov, Chairman of the Duma 
International Affairs Committee stated publicly that Russia 
doubted the court's "impartiality" and accused it of being a 
political tool.  Kurmas claims that the GOR believes there 
are not enough "checks and balances" against "spurious" 
cases, citing the Ilascu and Others v. Moldova and Russia 
case (reftel).  He also complained about Baltic countries 
suing Russia for its "occupation" of their territories, which 
the GOR believes fell outside of the court's jurisdiction. 
He also noted the GOR's concern that the 14th Protocol, which 
would reduce chambers from three judges to one, invited more 
subjective decisions.  However, he claimed that Russia still 
supported the court, pointing to the three million euros the 
GOR spent clearing backlogged cases during its Council of 
Ministers presidency, and a proposed "Protocol 15" with 
alternative reforms.  He said Russia's willingness to move 
forward on court reform depended on the "integrity" of new 
judges, almost a third of whom were elected this year. 
 
8.  (C) With Russia winning only about 5% of its cases, and 
Russian citizens making up 26% of the court's workload in 
2007, Dutch diplomats noted that Russian citizens favored the 
ECHR as an impartial alternative to their judicial system. 
They noted that when Russia lost, it paid restitution 
promptly, but reiterated the complaint that Russia tended to 
ignore the court's suggestions for systemic reform. 
 
Comment 
------- 
 
9.  (C) While the MFA painted its relationship with the CoE 
in brighter tones than the corresponding relationship with 
the OSCE, it remains sensitive to Russia's disproportionate 
caseload in the CoE.  Russian media were quick to draw a line 
between European unhappiness over Russia's human rights track 
record and Margelov's deferred candidacy. 
BURNS

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08MOSCOW267, POLISH FM SIKORSKI PREPARES FOR TUSK VISIT TO

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Reference ID Created Released Classification Origin
08MOSCOW267 2008-02-01 14:57 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO7347
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #0267/01 0321457
ZNY CCCCC ZZH
P 011457Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6373
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 000267 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/22/2017 
TAGS: PREL PARM MARR PL RS
SUBJECT: POLISH FM SIKORSKI PREPARES FOR TUSK VISIT TO 
MOSCOW 
 
 
Classified By: Ambassador William J. Burns for reasons 1.4 (b/d). 
 
1.  (C)  Summary:  Polish FM Sikorski visited Moscow January 
21 in preparation for Prime Minister Tusk's February 8 
consultations.  No new ground was broken in discussions with 
FM Lavrov on missile defense; the GOR reiterated that it had 
no "veto" power over Poland's cooperation with the U.S., with 
Sikorski privately stressing that Poland's security needs had 
to be guaranteed before America's could be addressed.  Russia 
was pleased to hear that Poland intended to lift its hold on 
PCA negotiations during the February 18 GAERC.  Although 
wary, Poland is considering a GOR proposal to ease the 
transit for Polish troops to Afghanistan, in exchange for 
easing restrictions on Russian military rotations to 
Kaliningrad.  Sikorski also met with Russian opposition 
leader, former PM Kasyanov, as a sign of continued 
"skepticism" about the bilateral relationship.  End Summary. 
 
Preparation for Tusk Visit 
-------------------------- 
 
2.  (C) Polish FM Sikorski came to Moscow January 21 to 
prepare for the February 8 visit of Polish President Tusk. 
MFA Poland Section Chief Tkachyev told us on January 25 that 
Tusk's efforts to reach out to Russia had generated a 
positive response from the GOR.  He emphasized that after a 
period of shaky relations, ties were developing step by step, 
and that Russia was satisfied with the atmosphere of the 
relationship.  Sikorski and Lavrov discussed a wide range of 
bilateral and multilateral issues that would be raised during 
Tusk's visit, including missile defense, Polish meat and 
dairy imports to Russia, NATO-Russia Council, the CFE Treaty, 
trade and investment, navigation arrangements in Kaliningrad, 
and visa facilitation.  They agreed to resume the work of the 
Intergovernmental Commission on Economic and Trade 
Cooperation, and to step up the work of the Public Forum in 
both countries. 
 
Missile Defense 
--------------- 
 
3.  (C) According to Tkachyev, there were no new proposals 
from either side during Sikorski's visit on missile defense, 
with talks focused on comparing notes on the Iranian threat 
and hewing to discussions between Sikorski and Kislyak in 
Warsaw on January 10.  Polish diplomats told us that Sikorski 
privately stressed to Lavrov that Poland's national security 
must be guaranteed before U.S. security concerns could be 
addressed.  In reference to recent comments by Russian Chief 
of the Armed Forces Baluyevskiy that Russia should not be 
afraid to use its nuclear deterrent when negotiating on MD, 
Sikorski half-jokingly commented during his press conference 
with Lavrov that "Poland would be grateful if it is 
threatened by nuclear war not more often than once every 
third month." 
 
4.  (C) Tkachyev echoed Lavrov's public statement that 
"Russia has no veto power" on Poland's decisions and told us 
Russia acknowledges and expects Poland to ensure it own 
national security first.  Although Tkachyov stressed that 
Russia wanted Poland to understand its concerns on MD, the 
GOR was satisfied with the status of current talks between 
the two countries.  However, as long as there was no 
agreement between Poland and the U.S., he said, there was 
room for negotiation between Russia and Poland, and Russia 
was willing to consider the full breadth of options. 
 
PCA Negotiations 
---------------- 
 
5.  (C)  Tkachyev said that Russia was appreciative of 
Poland's efforts to find a "technical solution to a technical 
problem" on the problem over imported Polish meat, and not 
treat it as a political crisis.  He credited Tusk's 
government for the productive change in policy.  Polish 
diplomats confirmed that a "mutually acceptable solution" had 
been found regarding Polish meat and dairy imports to Russia, 
and told us that Poland intended to lift its veto of new PCA 
negotiations at the February 18 GAERC. 
 
Military Transit 
---------------- 
 
6.  (C) Lavrov proposed a deal that would allow Polish troops 
and equipment to transit Russia to Afghanistan more easily, 
in return for the same rights for Russian troops and 
equipment headed to Kaliningrad.  Polish diplomats told us 
that Poland would consider the offer, but was wary. 
 
Poland Strikes a Balance 
------------------------ 
 
 
MOSCOW 00000267  002 OF 002 
 
 
7.  (C) Polish diplomats agreed with Tkachyov's general 
assessment that Sikorski's trip was "productive," and added 
that both Sikorski and the GOR came to the table ready to 
engage on problems.  They stressed that Sikorski's meeting 
with former Prime Minister and opposition leader Mikhail 
Kasyanov was meant as a signal to the GOR that Poland would 
retain skepticism about the bilateral relationship, and noted 
that Sikorski's laying of a wreath at the Tomb of the Unknown 
Soldier was followed by a similar ceremony at a monument to 
victims of Stalin's regime. 
 
BURNS

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08MOSCOW266, New USAID Mission Director’s January 24 Meeting with MFA’s

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Reference ID Created Released Classification Origin
08MOSCOW266 2008-02-01 14:40 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXYZ0006
PP RUEHWEB

DE RUEHMO #0266/01 0321440
ZNR UUUUU ZZH
P 011440Z FEB 08
FM AMEMBASSY MOSCOW
TO SECSTATE WASHDC PRIORITY 6371

UNCLAS MOSCOW 000266 
 
SIPDIS 
 
STATE F FOR THE DIRECTOR OF FOREIGN ASSISTANCE, EUR/ACE 
AIDAC STATE FOR AID/E&E ASSISTANT ADMINISTRATOR DOUGLAS MENARCHIK; 
AID/E&E FOR BREWER, ROBINSON; AID/DCHA/OFDA 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: EAID PREL KDEM RS
SUBJECT: New USAID Mission Director's January 24 Meeting with MFA's 
Konuzin on Partnering for Development 
 
Sensitive but unclassified, not for internet distribution. 
 
------- 
SUMMARY 
------- 
 
1. (SBU) USAID's New Mission Director called on Alexander Konuzin, 
Director for International Organizations of the Ministry of Foreign 
Affairs (MFA) on January 24th to discuss the GOR's upcoming visit to 
the United States to learn about the USG approach to development 
assistance and identify areas of common interest for future 
partnering.  (Note: President Putin approved a plan on Russia's 
Participation in International Development Assistance on June 14, 
2007 -- a project often referred to as "RusAID").  The USAID 
Director noted that USAID's programs in Russia focus on partnership 
and collaboration, and that he will actively seek opportunities to 
expand cooperation.  Konuzin expressed his hope that Russia could 
benefit from USAID's experience in delivering international 
assistance and that the visit to Washington scheduled for February 
27-29 might serve as a basis for joint development efforts in third 
countries in the future.  Konuzin said this cooperation would be a 
strong step forward to compensate for more confrontational elements 
of the bilateral relationship.  End Summary. 
 
------------------------------ 
FROM ASSISTANCE TO PARTNERSHIP 
------------------------------ 
 
2. (SBU) On January 24th, the newly arrived Mission Director in his 
meeting with Alexander Konuzin, Director for the Department of 
International Organizations at MFA, stressed the desire to identify 
areas of cooperative partnership where the United States and Russia 
can advance along a common trajectory.  Konuzin expressed deep 
appreciation for the assistance provided by the international 
community over the last 17 years, but noted that Russia is now 
becoming a donor country and that the environment has changed.  He 
explained that the GOR has begun to view itself as an international 
donor, albeit a modest one.  Waskin said he would look to the GOR to 
help USAID identify and expand areas of cooperation where our 
objectives coincide. 
 
----------------------------- 
A RUSSIAN DEVELOPMENT AGENCY? 
----------------------------- 
 
3. (SBU) The USAID Director reaffirmed USAID's earlier offer to 
support Russia's efforts to build its capacity for carrying out 
international humanitarian assistance and development activities and 
in particular to orchestrate a visit by the MFA, MinFin, and other 
interested GOR representatives to USAID in Washington.  Konuzin said 
the dates of February 27-29th that USAID had previously proposed 
were suitable and had been discussed with MinFin (Note: MinFin 
coordinates Russia's participation in multilateral development banks 
and is a central player in Russia's efforts to create a development 
agency.  There have been some differences of opinion between MFA and 
MinFin regarding the desired shape of the "RusAID" program). 
Konuzin noted that MFA and MinFin are still grappling with the 
effort to find a common vision for Russia's development agency or 
assistance mechanism, but plans are moving forward. 
 
4. (SBU) Konuzin said that Russia needs sound development models, 
observing that former Soviet attempts at assistance were not a good 
place to start.  Konuzin is particularly interested in how, in 
practical terms, assistance is organized, planned, funded, and 
implemented.  (Note: President Putin approved the concept paper for 
Russia's Participation in International Development Assistance on 
June 14, 2007.  Even before President Putin officially endorsed the 
project, USAID was working with relevant Russia ministries and other 
donors including the World Bank, UNDP, and DFID to jump-start the 
idea). 
 
5. (SBU) Konuzin said he believed that these joint efforts could 
pave the way for joint U.S.-Russian interventions in third countries 
when humanitarian and development situations warrant.  Konuzin said 
that he needs more examples of cooperative partnership such as this 
to counter-balance other challenges to the U.S.-Russia bilateral 
relationship.  Konuzin cautioned that Russia might not model all of 
its work on the U.S. experience, but emphasized that Russia will 
seek to learn from the U.S. experience and apply those lessons as 
appropriate. 
 
--------------------------------------------- ----- 
COMMENT: BALANCING BETWEEN ENGAGEMENT AND PROGRESS 
--------------------------------------------- ----- 
 
6. (SBU) Approaches to advancing USG transformational development 
objectives are multifaceted in Russia, often benefiting with 
engagement with the host government at some level to achieve 
 
results.  In some areas such as anti-money laundering, partnerships 
with the GOR have yielded substantial results in reducing the threat 
of transnational crime.  In health, HIV/AIDS programs under the 
Presidential Bratislava Initiative have begun to develop the joint 
capacities necessary for Russia to be a strong contributor to 
fighting H
IV/AIDS in Africa.  USAID programs to promote 
decentralized governance, fiscal reform, and community development 
have also been strengthened by USAID's relationship with local 
governments.  However, in other areas USAID must find a way to reach 
USG objectives of a vibrant civil society, a diverse media 
environment, and political pluralism without GOR support. 
 
7. (U) USAID/Russia will follow-up with USAID's Bureau for Europe 
and Eurasia regarding the visit planned for February 27-29.  Post 
anticipates that this visit will include, inter alia, calls on the 
Office of the Director of Foreign Assistance, the USAID 
Administrator's Office, EUR/ACE, USAID's Bureau for Europe and 
Eurasia, and the Office of Management and Budget. 
 
 
BURNS

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08MOSCOW265, NYET MEANS NYET: RUSSIA’S NATO ENLARGEMENT

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Reference ID Created Released Classification Origin
08MOSCOW265 2008-02-01 14:25 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXYZ0000
OO RUEHWEB

DE RUEHMO #0265/01 0321425
ZNY CCCCC ZZH
O 011425Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6368
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE IMMEDIATE
RUEHZG/NATO EU COLLECTIVE IMMEDIATE
RUEKJCS/SECDEF WASHDC IMMEDIATE
RUEKJCS/JOINT STAFF WASHDC IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE

C O N F I D E N T I A L MOSCOW 000265 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/30/2018 
TAGS: PREL NATO UP RS
SUBJECT: NYET MEANS NYET:  RUSSIA'S NATO ENLARGEMENT 
REDLINES 
 
REF: A. MOSCOW 147 
     B. MOSCOW 182 
 
Classified By: Ambassador William J. Burns.  Reasons 1.4 (b) and (d). 
 
1.  (C) Summary.  Following a muted first reaction to 
Ukraine's intent to seek a NATO Membership Action Plan (MAP) 
at the Bucharest summit (ref A), Foreign Minister Lavrov and 
other senior officials have reiterated strong opposition, 
stressing that Russia would view further eastward expansion 
as a potential military threat.  NATO enlargement, 
particularly to Ukraine, remains "an emotional and neuralgic" 
issue for Russia, but strategic policy considerations also 
underlie strong opposition to NATO membership for Ukraine and 
Georgia.  In Ukraine, these include fears that the issue 
could potentially split the country in two, leading to 
violence or even, some claim, civil war, which would force 
Russia to decide whether to intervene.  Additionally, the GOR 
and experts continue to claim that Ukrainian NATO membership 
would have a major impact on Russia's defense industry, 
Russian-Ukrainian family connections, and bilateral relations 
generally.  In Georgia, the GOR fears continued instability 
and "provocative acts" in the separatist regions.  End 
summary. 
 
MFA: NATO Enlargement "Potential Military Threat to Russia" 
--------------------------------------------- -------------- 
 
2.  (U) During his annual review of Russia's foreign policy 
January 22-23 (ref B), Foreign Minister Lavrov stressed that 
Russia had to view continued eastward expansion of NATO, 
particularly to Ukraine and Georgia, as a potential military 
threat.  While Russia might believe statements from the West 
that NATO was not directed against Russia, when one looked at 
recent military activities in NATO countries (establishment 
of U.S. forward operating locations, etc. they had to be 
evaluated not by stated intentions but by potential.  Lavrov 
stressed that maintaining Russia's "sphere of influence" in 
the neighborhood was anachronistic, and acknowledged that the 
U.S. and Europe had "legitimate interests" in the region. 
But, he argued, while countries were free to make their own 
decisions about their security and which political-military 
structures to join, they needed to keep in mind the impact on 
their neighbors. 
 
3.  (U) Lavrov emphasized that Russia was convinced that 
enlargement was not based on security reasons, but was a 
legacy of the Cold War.  He disputed arguments that NATO was 
an appropriate mechanism for helping to strengthen democratic 
governments.  He said that Russia understood that NATO was in 
search of a new mission, but there was a growing tendency for 
new members to do and say whatever they wanted simply because 
they were under the NATO umbrella (e.g. attempts of some new 
member countries to "rewrite history and glorify fascists"). 
 
4.  (U) During a press briefing January 22 in response to a 
question about Ukraine's request for a MAP, the MFA said "a 
radical new expansion of NATO may bring about a serious 
political-military shift that will inevitably affect the 
security interests of Russia."  The spokesman went on to 
stress that Russia was bound with Ukraine by bilateral 
obligations set forth in the 1997 Treaty on Friendship, 
Cooperation and Partnership in which both parties undertook 
to "refrain from participation in or support of any actions 
capable of prejudicing the security of the other Side."  The 
spokesman noted that Ukraine's "likely integration into NATO 
would seriously complicate the many-sided Russian-Ukrainian 
relations," and that Russia would "have to take appropriate 
measures."  The spokesman added that "one has the impression 
that the present Ukrainian leadership regards rapprochement 
with NATO largely as an alternative to good-neighborly ties 
with the Russian Federation." 
 
Russian Opposition Neuralgic and Concrete 
----------------------------------------- 
 
5.  (C) Ukraine and Georgia's NATO aspirations not only touch 
a raw nerve in Russia, they engender serious concerns about 
the consequences for stability in the region.  Not only does 
Russia perceive encirclement, and efforts to undermine 
Russia's influence in the region, but it also fears 
unpredictable and uncontrolled consequences which would 
seriously affect Russian security interests.  Experts tell us 
that Russia is particularly worried that the strong divisions 
in Ukraine over NATO membership, with much of the 
ethnic-Russian community against membership, could lead to a 
major split, involving violence or at worst, civil war.  In 
that eventuality, Russia would have to decide whether to 
 
intervene; a decision Russia does not want to have to face. 
 
6.  (C) Dmitriy Trenin, Deputy Director of the Carnegie 
Moscow Center, expressed concern that Ukraine was, in the 
long-term, the most potentially destabilizing factor in 
U.S.-Russian relations, given the level of emotion and 
neuralgia triggered by its quest for NATO member
ship.  The 
letter requesting MAP consideration had come as a "bad 
surprise" to Russian officials, who calculated that Ukraine's 
NATO aspirations were safely on the backburner.  With its 
public letter, the issue had been "sharpened."  Because 
membership remained divisive in Ukrainian domestic politics, 
it created an opening for Russian intervention.  Trenin 
expressed concern that elements within the Russian 
establishment would be encouraged to meddle, stimulating U.S. 
overt encouragement of opposing political forces, and leaving 
the U.S. and Russia in a classic confrontational posture. 
The irony, Trenin professed, was that Ukraine's membership 
would defang NATO, but neither the Russian public nor elite 
opinion was ready for that argument.  Ukraine's gradual shift 
towards the West was one thing, its preemptive status as a de 
jure U.S. military ally another.  Trenin cautioned strongly 
against letting an internal Ukrainian fight for power, where 
MAP was merely a lever in domestic politics,  further 
complicate U.S.-Russian relations now. 
 
7.  (C) Another issue driving Russian opposition to Ukrainian 
membership is the significant defense industry cooperation 
the two countries share, including a number of plants where 
Russian weapons are made.  While efforts are underway to shut 
down or move most of these plants to Russia, and to move the 
Black Sea fleet from Sevastopol to Novorossiysk earlier than 
the 2017 deadline, the GOR has made clear that Ukraine's 
joining NATO would require Russia to make major (costly) 
changes to its defense industrial cooperation. 
 
8.  (C) Similarly, the GOR and experts note that there would 
also be a significant impact on Russian-Ukrainian economic 
and labor relations, including the effect on thousands of 
Ukrainians living and working in Russia and vice versa, due 
to the necessity of imposing a new visa regime.  This, 
Aleksandr Konovalov, Director of the Institute for Strategic 
Assessment, argued, would become a boiling cauldron of anger 
and resentment among the local population. 
 
9.  (C) With respect to Georgia, most experts said that while 
not as neuralgic to Russia as Ukraine, the GOR viewed the 
situation there as too unstable to withstand the divisiveness 
NATO membership could cause.  Aleksey Arbatov, Deputy 
Director of the Carnegie Moscow Center, argued that Georgia's 
NATO aspirations were simply a way to solve its problems in 
Abkhazia and South Ossetia, and warned that Russia would be 
put in a difficult situation were that to ensue. 
 
Russia's Response 
----------------- 
 
10.  (C) The GOR has made it clear that it would have to 
"seriously review" its entire relationship with Ukraine and 
Georgia in the event of NATO inviting them to join.  This 
could include major impacts on energy, economic, and 
political-military engagement, with possible repercussions 
throughout the region and into Central and Western Europe. 
Russia would also likely revisit its own relationship with 
the Alliance and activities in the NATO-Russia Council, and 
consider further actions in the arms control arena, including 
the possibility of complete withdrawal from the CFE and INF 
Treaties, and more direct threats against U.S. missile 
defense plans. 
 
11.  (C) Isabelle Francois, Director of the NATO Information 
Office in Moscow (protect), said she believed that Russia had 
accepted that Ukraine and Georgia would eventually join NATO 
and was engaged in long-term planning to reconfigure its 
relations with both countries, and with the Alliance. 
However, Russia was not yet ready to deal with the 
consequences of further NATO enlargement to its south.  She 
added that while Russia liked the cooperation with NATO in 
the NATO-Russia Council, Russia would feel it necessary to 
insist on recasting the NATO-Russia relationship, if not 
withdraw completely from the NRC, in the event of Ukraine and 
Georgia joining NATO. 
 
Comment 
------- 
 
12. (C) Russia's opposition to NATO membership for Ukraine 
and Georgia is both emotional and based on perceived 
 
strategic concerns about the impact on Russia's interests in 
the region.  It is also politically popular to paint the U.S. 
and NATO as Russia's adversaries and to use NATO's outreach 
to Ukraine and Georgia as a means of generating support from 
Russian nationalists.  While Russian opposition to the first 
round of NATO enlargement in the mid-1990's was strong, 
Russia now feels itself able to respond more forcefully to 
what it perceives as actions contrary to its national 
interests. 
BURNS

Wikileaks

08MOSCOW264, RUSSIA COMPLAINS AFGHANS HAVE NOT RESPONDED TO

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Reference ID Created Released Classification Origin
08MOSCOW264 2008-02-01 14:19 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO7291
PP RUEHPW
DE RUEHMO #0264 0321419
ZNY CCCCC ZZH
P 011419Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6367
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

C O N F I D E N T I A L MOSCOW 000264 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/01/2018 
TAGS: PGOV PREL MASS AF RS
SUBJECT: RUSSIA COMPLAINS AFGHANS HAVE NOT RESPONDED TO 
MILITARY AID OFFER 
 
REF: A. 07 MOSCOW 4929 
 
     B. 07 MOSCOW 5098 
 
Classified By: Ambassador William J. Burns for reasons 1.4 (b/d). 
 
1. (C) Russia is concerned by Afghanistan's failure to 
respond to its offer of military assistance, which the GOR 
believes is indicative of larger problems in the Karzai 
Government.  MFA Afghanistan Desk Chief Yuriy Khokhlov told 
us on January 30 that the GOR invited Afghan Defense Minister 
Wardak to Moscow in December to discuss the Russian offer to 
provide hundreds of millions of dollars worth of weapons and 
military supplies to the Afghan National Army (refs).  The 
GOR planned to develop with the DefMin a list of material 
Russia could provide and discuss delivery.  The GOR was told, 
however, that the DefMin was traveling outside of Afghanistan 
for over a month and was not available.  When asked if the 
GOR had more recently approached the Afghans about the DefMin 
coming to Moscow, Khokhlov responded that Russia "does not go 
knocking on doors." 
 
2. (C) Khokhlov expressed exasperation with the Afghan 
Government, and asked how a country fighting an active 
insurgency could have its DefMin missing for such a long 
period?  Furthermore, if strengthening the Army and improving 
security was an Afghan priority, why would it ignore Russia's 
offer?  Khokhlov said that this situation raised serious 
questions about the capabilities of the Afghan Government, 
which he accused of "passivity" in the face of increasing 
insurgent attacks.  The GOR remained concerned by the 
government's inability to expand central authority and carry 
out reconstruction and development projects.  Khokhlov 
pointed, for example, to the Solong Tunnel, which remained 
heavily damaged and of limited use despite a Russian 
company's offer to reconstruct it using the original Soviet 
plans.  Khokhlov counseled the U.S. to "reconsider" its 
support for certain Afghan officials and get more effective 
people into the government. 
 
3. (C) Khokhlov reiterated that the GOR supported the U.S. 
and NATO roles in Afghanistan.  He stressed that the GOR had 
"no agenda" to re-establish influence in Afghanistan or 
undermine the U.S.  "Russia has had enough of Afghanistan," 
according to Khokhlov.  He explained that there were 
divisions within the GOR over the level of support for the 
U.S. and NATO, with the Defense Ministry and intelligence 
services suspicious of American intentions.  During a recent 
inter-ministerial meeting on granting NATO transit rights 
through Russia and Central Asia to Afghanistan, Khokhlov said 
that objections from other ministries led the MFA to remind 
them that Putin had made the decision to "fully support" the 
U.S. and NATO. 
 
4. (C) Finally, Khokhlov advised that Afghanistan was an area 
in which the U.S. and Russia could cooperate more 
extensively.  It could be a "bright spot in our 
relationship," he added.  In a meeting with the Ambassador on 
February 1, Putin's foreign policy advisor Sergey Prihodko 
reiterated that Russia was open to expanded cooperation, but 
would not do so as an "appendage" of NATO, and suggested 
again that the U.S. look at working with CSTO. 
BURNS

Wikileaks

08MOSCOW262, DEMARCHE DELIVERED: INFORMING ARF MEMBERS OF

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Reference ID Created Released Classification Origin
08MOSCOW262 2008-02-01 12:57 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0001
PP RUEHWEB

DE RUEHMO #0262 0321257
ZNR UUUUU ZZH
P 011257Z FEB 08
FM AMEMBASSY MOSCOW
TO SECSTATE WASHDC PRIORITY 6366

UNCLAS MOSCOW 000262 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL ARF PTER RS
SUBJECT: DEMARCHE DELIVERED:  INFORMING ARF MEMBERS OF 
UPCOMING U.S. INITIATIVES AND ACTIVITY 
 
REF: STATE 8005 
 
We delivered reftel demarche and related documents on 
February 1 to MFA ARF Division Counselor Dimitriy 
Lukiyantsev.  Lukiyantsev expressed appreciation for our 
keeping the GOR informed of U.S. initiatives regarding ARF, 
but offered no substantive comment. 
BURNS

Wikileaks

08MOSCOW255, RUSSIA BEGINS ONE-YEAR CONSCRIPTION REQUIREMENT

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Reference ID Created Released Classification Origin
08MOSCOW255 2008-02-01 09:32 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO6996
RR RUEHIK RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #0255/01 0320932
ZNR UUUUU ZZH
R 010932Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 6346
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 MOSCOW 000255 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL MARR RS
SUBJECT: RUSSIA BEGINS ONE-YEAR CONSCRIPTION REQUIREMENT 
WHILE STRUGGLING WITH MILITARY PROFESSIONALIZATION 
 
 
1.  (U) Summary.  Russia has adopted a multipronged approach 
to the professionalization of its military:  seeking to 
enhance the quantity and quality of its conscripts by 
reducing the numbers of exemptions and limiting the draft to 
one-year; shifting the balance of forces within the military 
between contract and conscript; and endeavoring to make 
contract service more attractive with increased pay and 
better quality of life conditions.  However, the 2006 law on 
military conscription which came fully into force on January 
1, 2008, fails to tackle adequately the continued problems of 
hazing, Russian demographics, and abysmal living conditions 
for enlisted men.  The overarching failure to make 
significant changes in Russia's military doctrine will 
continue to make it difficult for Russia to meet its manpower 
and professionalization goals.  End summary. 
 
One-Year Mandatory Military Service 
----------------------------------- 
 
2.  (U) Following the Second Chechen War, Putin reportedly 
became convinced that a conscript army was ineffective to 
defend the country and to engage in new high-tech, 
rapid-reaction, counter-insurgency and counterterrorist 
operations.  In 2003, Putin and the military leadership 
reached a solution to develop a cadre of professional 
soldiers able to handle future regional conflicts, with the 
goal of having 70 percent contract and 30 percent conscript 
servicemen by 2010. 
 
3.  (SBU) At the same time, Putin insisted on also cutting 
conscription service from two years to one year.  This 
decision  was opposed by the military leadership, but was a 
popular political move, and partially intended to help deal 
with the serious problem of hazing in the military.  In June 
2006, the Russian State Duma passed the law cutting the term 
of conscription from two years to 18 months in 2007, and then 
to one year in 2008.  Along with the cut in length of 
service, the new law also eliminated a number of exemptions 
from serving and imposed stricter requirements for 
registration of 17-year olds and for approval of exemptions. 
According to most estimates, up to 90 percent of draft-age 
men avoided service by taking advantage of the numerous 
exemptions, including for university or technical education, 
health, hardship, alternative service, and other reasons, and 
by paying bribes to officials to escape being drafted. 
Aleksandr Golts, Deputy Editor-In-Chief of the Weekly 
Journal, noted that "avoiding military service became the 
national sport." 
 
4.  (SBU)  Deputy Chief of the General Staff Vasili Smirnov 
claimed that the new regulations would double the number of 
conscripts.  Officials would be expected to approve fewer 
exemptions, to undertake greater efforts to identify and 
register 17-year olds and to make 18-year olds report for 
service, to enact programs to address health issues at an 
earlier age, and to ensure border guards scrutinized more 
closely the reasons young men were going abroad and refused 
exit to those who appeared to be dodging the draft.  Also, 
there would be more effort to enforce the requirement that 
those who received university and technical education 
exemptions served their term after they graduated. 
Then-Defense Minister Sergey Ivanov said in 2005 that the 
military was made up of "workers and peasants," because so 
many Russians with access to education were obtaining 
exemptions.  Tatiana Parkhalina, Director of the Center for 
European Security, agreed that going to a one-year term would 
increase the percentage of those entering service, noting 
that one year was psychologically more palatable.  Golts 
disagreed, predicting that draft-age men would still seek to 
avoid service, by paying bribes to local officials, or 
emigrating abroad.  Both acknowledged, however, that Russia's 
demographics would make it very difficult for Russia to meet 
its manpower goals. 
 
Positive Impact on Hazing? 
-------------------------- 
 
5.  (SBU) Ministry of Defense officials also contended that 
going to a one-year term for conscripts would help reduce the 
serious problem of hazing, and thereby eliminate one of the 
principal reasons young men sought to avoid service.  Some 
experts, including Parkhalina, and Aleksandr Belkin, Deputy 
Executive Director of the Council on Foreign and Defense 
Policy, agreed, noting that most hazing was done by 
second-year conscripts of first-year recruits.  Others, 
 
MOSCOW 00000255  002 OF 003 
 
 
however, like Golts and Valentina Melnikova, Executive 
Secretary of the Union of Soldiers' Mothers Committee in 
 
SIPDIS 
Russia, argued that officers were increasingly carrying out 
the hazing, and they did not anticipate a significant 
decrease in the amount or severity of cases.  Golts noted 
that Russia did not have an effective Non-Combatant Officer 
(NCO) corps, and in its efforts to create one, it was simply 
forcing specialists to sign contracts as Sergeants.  With 
little supervi
sory experience, he argued, these new NCO's 
would continue to see hazing as an easy way to keep 
discipline. 
 
Demographics and Corruption Undercut Manpower Goals 
--------------------------------------------- ------ 
 
6.  (U)  The MOD declared its intention to cut the number of 
active servicemen from over 1.3 million in 2001 to 1.1 
million by 2011-2015, and to achieve 70 percent 
professionalization of the forces by 2010.  According to 
demographic statistics, the number of males reaching military 
age annually was 1.5 million in 2005.  Given current 
demographic trends, that number is expected to drop to 
roughly 840,000 by 2009.  To maintain the forces at the 
levels desired, Russia would need to draft approximately 
400,000 - 500,000 young men in 2009 (since all those drafted 
in 2008 would leave service after one year).  Even if the 
exemption rate dropped below 90 percent, the MOD would be 
hard-pressed to meet their conscript-level goals. 
 
7.  (SBU) Similarly, the MOD has had to cut its anticipated 
number of sergeants and soldiers switching to contract duty 
from 144,000 to 100,000.  General Smirnov has acknowledged 
that 20 percent of contract positions remain vacant. 
According to Golts, the MOD was drawing most of its 
professional soldiers from the ranks of current short-term 
personnel, many of whom were being forced into signing 
contracts through the use of "deceit, fraud, psychological 
pressure, and violence."  He added that many of these 
contract soldiers were simply not returning from leave. 
Rather than seeking them out and forcing them to return to 
duty or face disciplinary action, he said, many commanding 
officers were not reporting their absence and pocketing their 
pay instead.  Additionally, MOD estimates were that only 
15-19 percent of contract servicemen were renewing their 
contracts upon expiration.  Golts estimated that only about 
50-75,000 of the reported 100,000 professional forces were 
actually available for service. 
 
Systemic Problems and Lack of Resources 
--------------------------------------- 
 
8.  (SBU) The MOD has taken a number of steps to improve 
quality-of-life conditions, including increasing pay and 
pensions, establishing educational benefits, and constructing 
thousands of new housing units for enlisted personnel, in 
order to make both conscription and contract service more 
attractive.  Vitaly Shlykov, Founding Member of the Council 
on Foreign and Defense Policy, noted that Defense Minister 
Serdyukov has made improving the quality of military housing 
and conditions a top priority. 
 
9.  (SBU) However, Shlykov, and other experts, noted that 
there was still a significant housing shortage and much 
existing housing was in very poor condition.  Furthermore, 
salary and pension increases, while substantial (pay 
increases were 15 percent in 2007), could not keep up with 
inflation rates in Russia (inflation has averaged 10 percent 
annually over the past five years).  Thus, perceptions among 
draft-age males were still of difficult living conditions, 
and insufficient remuneration and benefits.  These, coupled 
with the fear of being killed or seriously injured in hazing 
incidents, continued to make serving in the military 
unappealing to many young men. 
 
Doctrine Does Not Match Planning 
-------------------------------- 
 
10.  (SBU) Finally, according to most experts, despite the 
announced goal of using professionalization to modernize the 
Russian military and make it better able to handle regional 
conflicts and insurgency and terrorist operations, the 
military brass continues to base its doctrine on the need for 
mass mobilization of the army, and sees conscription as the 
best way to get large numbers of cannon fodder into the field 
fast.  Thus, some experts, including Golts, predicted that, 
 
MOSCOW 00000255  003 OF 003 
 
 
in the face of significant manpower shortfalls beginning in 
2009, the military leadership could seek to reinstate the 
two-year draft. 
 
Comment 
------- 
 
11.  (SBU) The change to a one-year term for conscription and 
accompanying exemptions are likely to lead to a slight 
increase in the numbers of young males carrying out their 
military service, but systemic problems in the Russian 
military, such as hazing, low pay, poor living conditions, 
negative perceptions, and corruption will not disappear in 
the near future.  Similarly, while the Defense Ministry will 
(reluctantly) continue to carry out the Kremlin's edict to 
professionalize the army, its failure to overhaul its 
doctrine, coupled with inadequate defense spending and 
demographic trends, will make meeting its long-term goals 
increasingly challenging. 
BURNS

Wikileaks

08MOSCOW252, PM ZUBKOV RUMORED TO BE NEXT GAZPROM CHAIR,

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Reference ID Created Released Classification Origin
08MOSCOW252 2008-02-01 03:49 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO6979
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHMO #0252 0320349
ZNR UUUUU ZZH
P 010349Z FEB 08 ZDS
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6343
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS MOSCOW 000252 
 
SIPDIS 
 
C O R R E C T E D C O P Y  ((SENSITIVE CAPTION)) 
 
SENSITIVE 
 
NOT FOR INTERNET DISTRIBUTION 
 
SIPDIS 
 
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT 
EUR/CARC, SCA (GALLAGHER, SUMAR) 
DOE FOR HARBERT, HEGBORG, EKIMOFF 
DOC FOR 4231/IEP/EUR/JBROUGHER 
 
E.O. 12958: N/A 
TAGS: EPET ENRG ECON PREL RS
SUBJECT: PM ZUBKOV RUMORED TO BE NEXT GAZPROM CHAIR, 
UNLIKELY TO BRING MAJOR CHANGE 
 
 
-------------------------- 
GAZPROM LEADERSHIP SHUFFLE 
-------------------------- 
 
1. (SBU) Gazprom is currently reshuffling its board of 
directors as a result of chairman Dmitri Medvedev's 
nomination as President Putin's successor.  The company's 
senior leadership was apparently sequestered January 30 in an 
extended board meeting to review nominees.  The current make 
up of the board: five members from the government, four from 
Gazprom, and two "independent" members, is not expected to 
change.  (N.B. Only one of the independent members, the 
chairman of Germany's E.On, seems to truly represent an 
entity outside the control of the GOR.) 
 
2. (SBU) Medvedev's replacement as chairman has been the 
focus of intense speculation in the press.  Putin's economic 
advisor Arkaday Dvorkovich told Bloomberg news January 30 
that Prime Minister Viktor Zubkov had emerged as the choice 
for chairman.  This followed an article in the business daily 
Kommersant that Putin would take over the chairmanship. 
However, other press reports indicate Putin is not a 
candidate and the speculation is now firmly centered on 
Zubkov.  Although the list of board nominees is tightly held, 
nominees for the other government slots also reportedly 
include Economy Minister Nabiullina replacing former Minister 
German Gref, with most other members remaining the same. 
 
------- 
COMMENT 
------- 
 
3. (SBU) Regardless of who becomes chairman, we don't expect 
any major changes in Gazprom's strategy or tactics. 
Gazprom's chairman is not traditionally involved in the 
day-to-day operations of the company.  The chairman is 
instead part of the country's senior political leadership and 
the big decisions on strategy and major deals will continue 
to be made by the Kremlin.  End comment. 
BURNS

Wikileaks

08MOSCOW251, SERBIAN EMBASSY SAYS NO SURPRISES IN GAZPROM DEAL

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Reference ID Created Released Classification Origin
08MOSCOW251 2008-02-01 03:49 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6738
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #0251/01 0320349
ZNY CCCCC ZZH
P 010349Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6341
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE 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 000251 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT 
EUR/CARC, SCA (GALLAGHER, SUMAR) 
DOE FOR HARBERT, HEGBORG, EKIMOFF 
DOC FOR 4231/IEP/EUR/JBROUGHER 
 
E.O. 12958: DECL: 12/03/2017 
TAGS: EPET ENRG ECON PREL RS
SUBJECT: SERBIAN EMBASSY SAYS NO SURPRISES IN GAZPROM DEAL 
 
REF: A. MOSCOW 222 
 
     B. MOSCOW 116 
     C. 07 BELGRADE 1433 
 
Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d) 
 
------- 
SUMMARY 
------- 
 
1. (C) Serbian Embassy Counselor Boris Sekulic told us 
January 29th that the recently signed energy deal between the 
GOS and the GOR would route the South Stream pipeline through 
Serbia, result in Gazprom's construction of a gas storage 
facility in Serbia, and sell Gazprom a 51 percent stake in 
NIS, the Serbian government's oil and gas monopoly.  Sekulic 
said Gazprom's promise that South Stream would transit Serbia 
was the key to the deal.  It would help make Serbia 
economically relevant to Europe and bring in needed transit 
fees.  One of our key Gazprom contacts claimed the deal was 
purely commercial with no politics involved but could not 
explain why the company had already decided to route the 
pipeline through Serbia when the feasibility studies were not 
yet complete.  End Summary. 
 
--------------------------- 
SERBIA HAPPY WITH AGREEMENT 
--------------------------- 
 
2. (C) Serbian Embassy Counselor Boris Sekulic told us 
January 29th that the energy cooperation agreement signed 
January 25th during the visit of Serbian President Tadic and 
Prime Minister Kostunica was largely along the lines of what 
had been widely reported in the press and as had been 
expected (refs B and C).  The single document, an 
inter-governmental agreement with an attached "protocol" 
signed with Gazprom, outlines general terms for Gazprom's 
purchase of 51% of Serbia's government-owned oil and gas 
monopoly NIS, the routing of the South Stream gas pipeline 
through Serbia, and the construction of a gas storage 
facility in Serbia. 
 
3. (C) According to Sekulic, Gazprom will own 51% of the 
South Stream pipeline on Serbian territory, with the GOS 
owning the remaining 49%.  In addition to the investments in 
South Stream and gas storage, Sekulic said Gazprom agreed to 
pay 400 million euros for the stake in NIS and to invest 500 
million euros in the company over the next few years. 
Sekulic indicated that the agreement between the GOS and the 
GOR includes a provision to protect NIS from competition 
until Serbia modifies its laws to comply with EU policies on 
integration. 
 
4. (C) Sekulic reiterated his previous (ref B) assertion that 
for Serbia, the key point of the agreement was the assurance 
that South Stream would transit Serbia.  He said Russia's 
agreement on this point was the reason President Tadic agreed 
to sign the deal.  Sekulic said his government is concerned 
that Serbia not be isolated and said South Stream would 
ensure the country's economic relevance to the region and to 
Europe as a whole.  Sekulic said the deal is also profitable 
for the GOS, which estimates that it will earn between 100 
and 200 million euros in transit revenues from South Stream. 
In that regard, Sekulic added that the GOS would welcome 
routing of the proposed Nabucco gas pipeline through Serbia 
as well. 
 
5. (C) Sekulic said the document needs to be ratified by 
parliaments in both countries.  According to Sekulic, while 
the main points remained basically unchanged throughout the 
negotiations, the Russian MFA was editing and changing the 
document even during the final minutes prior to the arrival 
of the Serbian delegation.  The negotiations, he said, lead 
him to believe that Gazprom will be a very "difficult" 
partner. 
 
6. (C) Although energy dominated the presidential visit, 
Sekulic said other economic topics were also discussed. 
Sekulic said the GOS continues to push for ratification by 
the Russian Parliament of a Milosevic-era trade agreement 
that would provide duty-free entry into Russia for a variety 
of Serbian goods.  He added, however, that Russia simply 
 
MOSCOW 00000251  002 OF 002 
 
 
promised, as it has for years, that "it will be ratified 
soon." 
 
-------------------------- 
GAZPROM: A COMMERCIAL DEAL 
-------------------------- 
 
7. (C) Gazprom international affairs director Ivan Zolotov 
told us January 29th that for Gazprom, this was a "purely 
commercial" deal.  He claimed that politics did not influence 
Gazprom's decision to buy NIS and that for Gazprom, "it's all 
about money."  He said the GOR made no political promises to 
Serbia as part of the deal. 
 
8. (C) That said, Zolotov could not explain why the agreement 
includes a route for South Stream through Serbia when the
 
company set up by Gazprom and Italy's ENI (the 50-50 owners 
of the South Stream project) has yet to complete the 
feasibility studies meant to identify the most profitable 
route.  "I'll have to get back to you on that."  ENI's chief 
representative in Russia, Ernesto Ferlenghi, told us January 
28th (ref A) that the route for South Stream had not yet been 
determined, but then back-tracked and said it would indeed go 
through Serbia. 
 
------- 
COMMENT 
------- 
 
8. (C) The Serbia deal, as with Gazprom's other recent 
western forays, represents both a risk and an opportunity. 
The risk is that Gazprom will export its non-transparent 
business practices to a credulous partner such as NIS.  The 
opportunity is the further integration of the company into 
European regulatory processes as Serbia works toward EU 
standards.  End comment. 
BURNS

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