Monthly Archives: May 2008

08MOSCOW1536, RUSSIAN CONSTRUCTION SECTOR NGO EXPLAINS HIGH

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Reference ID Created Released Classification Origin
08MOSCOW1536 2008-05-30 13:52 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO7204
RR RUEHLN RUEHVK RUEHYG
DE RUEHMO #1536/01 1511352
ZNR UUUUU ZZH
R 301352Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 8317
INFO RUEHLN/AMCONSUL ST PETERSBURG 4965
RUEHVK/AMCONSUL VLADIVOSTOK 2842
RUEHYG/AMCONSUL YEKATERINBURG 3189
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 MOSCOW 001536 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/RUS 
 
E.O. 12958: N/A 
TAGS: ECON EIND PGOV RS SOCI
SUBJECT: RUSSIAN CONSTRUCTION SECTOR NGO EXPLAINS HIGH 
HOUSING PRICES 
 
REF: A. MOSCOW 1450 
     B. MOSCOW 1501 
 
------- 
Summary 
------- 
 
1. (SBU) Numerous reasons have been cited for Russia's lack 
of affordable housing, an issue of increasing importance for 
the country's new government.  Continuing our series of 
cables on the topic, Econoffs met with Vladimir Ponomarev, 
Vice President and Head of Housing and Mortgage Finance at 
the Russian Builders' Association (ASR).  Ponomarev told us 
that the construction industry had failed to meet rising 
demand for affordable housing because of the lack of 
construction materials and labor, excessive profit margins, 
barriers to new entrants to the sector, and limited financing 
options for infrastructure development.  Ponomarev argued 
that the sector would take a long time to self-adjust and 
that government action was needed.  End Summary. 
 
------------------------------------------ 
Housing Prices Beyond Most Russians' Reach 
------------------------------------------ 
 
2. (SBU) Ponomarev said the ASR is a non-profit NGO aimed at 
solving a range of issues in Russia's construction industry. 
It represents more than 500 members working in construction, 
insurance, real estate, banking, and mass media and also 
maintains close links with relevant governmental committees. 
The ASR's latest efforts have focused on the construction 
industry's underdevelopment, and in particular the lack of 
housing stock and sky-rocketing home prices. 
 
3. (SBU) According to Ponomarev, there are a number of 
factors that account for rising housing prices.  On the 
demand side, many Russians received homes for free during 
privatization in the early 1990's.  However, much of this 
housing was poorly constructed and has further deteriorated 
with time and neglect.  He agreed with statistics we cited 
that approximately two-thirds of Russia's total housing stock 
needs renovation and that nearly the same percentage (60 
percent) of Russians are in need of better housing. 
 
4. (SBU) Ponomarev said that in the face of this rising 
demand, the supply response from the industry has been 
inadequate.  Last year, total housing construction was only 
700,000 units, enough for only 1-2 percent of Russian 
families.  Ponomarev said that the supply response has been 
inhibited by a limited supply of construction materials and 
qualified labor.  These shortages have increased construction 
costs, limiting new construction and driving up housing 
prices. 
 
5. (SBU) Ponomarev told us that the limited supply and high 
cost of construction materials and labor were especially 
problematic for new businesses to overcome.  Add to these 
impediments the usual bureaucratic and costly obstacles 
associated with starting a new business in Russia, and it is 
clear why new housing construction has lagged behind demand. 
 
6. (U) Ponomarev told us that the imbalance between housing 
supply and demand has led to an average real estate price 
increase of 26 percent annually nationwide since 1999. 
However, another contributing factor to rising home prices, 
according to Ponomarev, is the excessive profit margins 
charged to the home buyer, ranging from 60-150 percent in 
Moscow and 30 percent in the regions for the residential 
construction business as a whole ) including investors, 
developers and construction companies. 
 
7. (SBU) In addition, Ponomarev said the lack of long-term 
financing options available to developers to cover their 
increasing costs further contributes to the lack of supply of 
new housing.  In particular, he noted that lack of available 
land near city centers was driving new developments further 
out into the countryside where basic infrastructure, roads, 
sewers and the like was non-existent.  Developers had to 
create the infrastructure from scratch.  While they 
ultimately passed the costs on to the home buyers, further 
driving up prices, the lack of financing options to build 
this infrastructure significantly raised the amount of start 
up capital needed. 
 
MOSCOW 00001536  002 OF 002 
 
 
 
------------------ 
What is to be Done 
------------------ 
 
8. (SBU) Ponomarev said he expected the problem of rising 
prices to worsen with continued economic growth and rising 
incomes, which would further stoke demand.  While market 
solutions were preferable, the sector clearly needed a 
jump-start from the government to respond to this demand. 
 
9. (SBU) Ponomarev said the government should intervene to 
bring down costs, for instance by making long-term financing 
and land more available and by developing needed 
infrastructure.  Absent this intervention, it was difficult 
to predict how long it would take for market
 forces to 
correct the imbalance between housing supply and demand, and 
thus to bring housing prices into the range that the average 
Russian could afford. 
RUSSELL

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08MOSCOW1533, DEMARCHE DELIVERED: SUDAN – SEEK SUPPORT FOR

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Reference ID Created Released Classification Origin
08MOSCOW1533 2008-05-30 13:16 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0027
PP RUEHWEB

DE RUEHMO #1533 1511316
ZNR UUUUU ZZH
P 301316Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 8314
INFO RUCNDT/USMISSION USUN NEW YORK 0427

UNCLAS MOSCOW 001533 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETTC PREL EFIN KTFN PTER UNSC SU RS
SUBJECT: DEMARCHE DELIVERED:  SUDAN - SEEK SUPPORT FOR 
DESIGNATING FOUR INDIVIDUALS UNDER TARGETED SANCTIONS 
 
REF: STATE 57129 
 
We delivered reftel demarch on May 29 to MFA Senior Counselor 
for International Organizations Petr Ilichev.  Ilichev said 
Russia would support adding the four individuals named in 
reftel to the consolidated asset freeze and travel ban list 
maintained by the Committee established pursuant to UN 
Security Council Resolution 1591 (2005) concerning the Sudan. 
RUSSELL

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08MOSCOW1532, FRIENDS OF IRAQ CONFERENCE PROPOSED AGENDA

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Reference ID Created Released Classification Origin
08MOSCOW1532 2008-05-30 13:15 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXRO7147
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHMO #1532 1511315
ZNR UUUUU ZZH
P 301315Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 8313
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS MOSCOW 001532 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: IZ MARR MOPS OTRA PREL RS
SUBJECT: FRIENDS OF IRAQ CONFERENCE PROPOSED AGENDA 
DELIVERED 
 
REF: STATE 56560 
 
We delivered the proposed agenda for the Friends of Iraq 
Conference on May 29 to MFA First Secretary Elbrus Kutrashev. 
 Kutrashev could not say whether Russia would be represented 
at the conference. 
RUSSELL

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08MOSCOW1519, TNK-BP INTERNAL FIGHT GOES PUBLIC; BOTH SIDES

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Reference ID Created Released Classification Origin
08MOSCOW1519 2008-05-30 07:40 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6619
PP RUEHBW
DE RUEHMO #1519 1510740
ZNY CCCCC ZZH
P 300740Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 8302
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

C O N F I D E N T I A L MOSCOW 001519 
 
SIPDIS 
 
STATE FOR EUR/RUS; NSC FOR MWARLICK 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: ECON EINV ETRD PREL PGOV RS
SUBJECT: TNK-BP INTERNAL FIGHT GOES PUBLIC; BOTH SIDES 
RAISE STAKES 
 
REF: MOSCOW 1294 AND PREVIOUS Classified By: CDA Daniel A. Russell for Reasons 1.5 (b) and (d).

1.(SBU) TNK-BP President, AmCit Robert Dudley, gave an interview to the Russian business daily Vedomosti, which was published in their Monday May 26 edition. In the interview, Dudley aired BP's differences with its Russian partners, including over international projects. The most sensational aspect of the interview was his accusation of "managerial violations" by some in the company that had deliberately understated to the GOR the number of visas needed for the company's expats, putting their status and the company's operations in jeopardy.

2.(C) In a May 28 meeting with ECMIN, AmCit Shawn McCormack, TNK-BP's Vice President for International Relations (strictly protect) said that BP had made a decision to forcefully respond to the continuing efforts of their Russian partners, especially Alfa Group billionaires Mikeil Fridman, German Khan, and Petr Aven, to undermine BP's position in the partnership (reftels). BP had decided to go forward with a PR campaign, including the Vedomosti interview and a series of press briefings on background that would further expose their partner's bad faith.

3.(C) McCormack said that there was no truth to the rumor that the Russian partners, collectively known as the AAR group (after the initials of their companies: Alfa, Access, and Renova) had asked BP Chairman Tony Hayward for Dudley to resign. However, BP expected AAR to formally request Dudley's resignation at TNK-BP's May 29 Board Meeting in Cyprus. BP would refuse and given the 50/50 split in the company AAR would be unable to force Dudley out.

4.(C) xxxxxxxxxxxx

5.(C) McCormack said the bigger picture remained unchanged: Gazprom still wanted to buy out the Russian half of TNK-BP and pursue a global partnership with BP. The AAR billionaires were using their wealth and connections within the GOR to fight off Gazprom on one front while trying to seize greater control of the company from BP on another. He expected the "war" to continue and even intensify in the coming weeks.

6.(C) Update: McCormack called late in the evening May 29 to report that the TNK-BP Board meeting had broken down in acrimony following AAR's efforts to remove Dudley, which BP refused, and BP's efforts to force out Khan, which AAR had rejected. McCormack said BP expected the attacks on their executives at TNK-BP, especially Dudley, to worsen in the aftermath. RUSSELL

0 05/30/2008 3221 ECON,EINV,ETRD,PREL,PGOV,RS TNK-BP INTERNAL FIGHT GOES PUBLIC; BOTH SIDES RAISE STAKES 156028 BP hits back 164519 8/1/2008 12:18 08MOSCOW2237 Embassy Moscow CONFIDENTIAL VZCZCXRO1244PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSRDE RUEHMO #2237/01 2141218ZNY CCCCC ZZHP 011218Z AUG 08FM AMEMBASSY MOSCOWTO RUEHC/SECSTATE WASHDC PRIORITY 9271INFO RUCNCIS/CIS COLLECTIVE PRIORITYRUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITYRUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITYRHEHNSC/NSC WASHDC PRIORITYRHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITYRUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 002237 SIPDIS DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT EUR/CARC, SCA (GALLAGHER, SUMAR) DOE FOR FREDRIKSEN, HEGBORG, EKIMOFF DOC FOR 4231/IEP/EUR/JBROUGHER E.O. 12958: DECL: 07/08/2018 TAGS: ECON EINV ETRD PREL PGOV RS

------------------- BP/AAR Negotiations -------------------

2.(C) Summers, a UK citizen (please protect), said that BP's dispute with AAR head reached the "end of the beginning" and that BP CEO Tony Hayward had met in Prague with Mikheil Fridman the day before, July 30, to negotiate a "cease-fire." (N.B. The meeting has since been reported in the press.) Summers, however, likened it to an Israeli-Palestinian cease-fire in which Khan would play the role of Hamas, ready with some provocation or incident that would restart hostilities. Moreover, of all the partners, Khan was the least leveraged and therefore had the least to lose if the dispute dragged on and the company's performance suffered and payouts were delayed. He also had the least exposure outside Russia were BP to push the button and start seizing the AAR assets through arbitration.

3.(C) Summers said a longer-term resolution of the dispute would depend on reaching agreement in four areas: picking a new CEO, agreeing on governance issues, agreeing on the level and nature of BP support to TNK-BP, and on "liquidity." He said Dudley was unlikely to return. However, Summers felt Fridman had overplayed his hand, and was now getting pressure from the GOR to resolve the dispute and was therefore unlikely to play hardball on the identity of the new CEO.

4.(C) Summers said the second issue, corporate governance, was central to control of the company and would be the most difficult to resolve. The structure of the Board, the presence of independent directors, the authorities of the CEO, and structure of the subsidiary companies were the keys to BP protecting its investment in the company. He added that the opaque nature of Russia's legal system made this even more essential from BP's point of view and that any foreign investor in Russia should have in its hands at a minimum the Chief Financial Officer (CFO) and the head of internal auditing.

5.(C) On BP's level of support, S
ummers said the questions revolved around whether BP would provide technical skills to TNK-BP in the form of secondees and if so how many and under what terms. He noted that AAR and the Russian Government knew full well that the company could not be run successfully without foreign employees. First, there were simply not enough skilled Russian petroleum engineers and second the Russian engineers' skills were not to world standards. What the foreign personnel had brought to TNK-BP and other Russian oil companies were not only more sophisticated drilling techniques but also an integrated approach to the work that maximized production. As an aside, Summers said he was very pessimistic that Russia would ever be able to get its production over 10 million barrels a day and predicted instead a steady decline in production as the current fields were depleted and few if any new fields were brought on line.

6.(C) Summers said liquidity was really AAR's issue as their ultimate goal was to take value out of the company. Decisions would how much to pay out, including in the form of dividends, and how much to invest back into the company. Summers added that while the AAR partners overall goal was clear enough ) make as much money as they could ) they had no real strategy for achieving that and instead approached everything tactically, and that the preferred tactics of the Alfa partners in particular were to play rough. They had felt pressured from the government to sell at a discount, disrespected by a BP that had been weakened by its transition MOSCOW 00002237 002 OF 002 to a new CEO, and had decided to make themselves difficult until they were accommodated.

7.(C) If the negotiations were to fail, Summers said BP would react decisively. He said BP had not reacted fast enough or aggressively enough as the dispute had gathered steam but was "angry and fully awake" now and ready to go to arbitration if necessary.

----------------------------- German Khan and the Godfather -----------------------------

8.(C) Summers said he had a complicated and sometimes difficult relationship with Khan, though it was not as difficult as Dudley's relationship had been. It was complicated because although they were technically on the same level in the company, Khan as a part owner out-ranked him. However, at the same time, Khan knew very little about the oil business, knew it, and therefore deferred to Summers on running the company. With Dudley, he added, part of Khan's anger was because Dudley was the boss and had thwarted several of Khan's pet projects, such as investing in "rogue" states.

9.(C) Summers added that Khan was a very difficult person to work with. xxxxxxxxxxxx They had flown out to Khan's hunting lodge, which Summers said was like a Four Seasons hotel in the middle of nowhere. At dinner that evening, Khan had told a stunned Summers that The Godfather was his favorite movie, that he watched it every few months, and that he considered it a "manual for life." Khan had also come to dinner armed with a chrome-plated pistol.

10.(C) Summers said that after the trip he had gotten a copy of The Godfather and now watched it on a regular basis himself so as to better understand Khan and anticipate his tactics. He added that Khan's aggressive but relatively simple business style was typically Russian where multi-million dollar deals are made in smoke-filled rooms in a matter of a few hours and only later are turned over to the accountants to see if they make sense. It was not a style that meshed well with BP and that culture clash was in part responsible for the acrimony of the dispute, as Khan had never felt BP treated him with sufficient respect.

11.(C) Summers added that Khan had gone along with Deputy Prime Minister Sechin on his trip to Cuba this week. Khan had been very nervous about the trip, since he would not be the headliner but instead would be surrounded by other powerful Russian oligarchs, including Sechin and Gazprom's Alexander Medvedev. Summers said nothing was likely to come out of the trip. Cuba's potential deposits were small and the geology was complicated. Even Khan was not really interested and Summers doubted any other Russian oil company would be interested either.

----------- Visa Update -----------

12.(C) TNK-BP's VP for International Relations, Amcit Shawn McCormick, updated us the morning of August 1 on the visa situation within the company. According to McCormick, work visas have been trickling in all week for the foreign employees, including a batch of 18 that morning. Although the company is still waiting for 23 additional visas, McCormick said that all of foreign employees in "key/critical" positions, with the exception of Dudley, have now received visas and work permits (this includes McCormick). RUBIN

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08MOSCOW1517, RUSSIAN-UKRAINIAN RELATIONS MONOPOLIZED BY

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Reference ID Created Released Classification Origin
08MOSCOW1517 2008-05-30 06:47 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6589
OO RUEHBW
DE RUEHMO #1517/01 1510647
ZNY CCCCC ZZH
O 300647Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8298
INFO RUEHZG/NATO EU COLLECTIVE IMMEDIATE
RUCNCIS/CIS COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001517 
 
SIPDIS 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: PREL PGOV RS
SUBJECT: RUSSIAN-UKRAINIAN RELATIONS MONOPOLIZED BY 
UKRAINE'S NATO BID 
 
Classified By: Charge Daniel A. Russell for reasons 1.4 (b,d). 
 
1.  (C) Summary: The consensus here is that Yushchenko's 
"clearly anti-Russia" agenda and his "blind pursuit" of NATO 
membership have hijacked Russian-Ukrainian relations.  MFA 
officials confirmed that Russia's top issue in bilateral 
contacts with Ukraine, including Lavrov's meeting with 
Ukrainian FM Ogryzko and DFM Grushko's trip to Kyiv, is the 
"disastrous consequences" of Ukrainian NATO membership for 
Russian-Ukrainian relations.  Analysts told us that Russia's 
thinly veiled threats to use any and all levers at its 
disposal to resist Ukraine's "forced entry" into NATO, 
including undermining Ukraine's territorial integrity and 
boosting gas prices, should be taken seriously, but note that 
the deep and multifaceted ties that bind Russia and Ukraine 
may restrain Russia from taking the most extreme measures. 
End Summary. 
 
NATO Dominates Russian-Ukrainian Relationship 
--------------------------------------------- 
 
2.  (C) Senior Russian officials have taken virtually every 
opportunity to stress to their Ukrainian counterparts that 
Russia is serious about its objection to Ukraine's NATO bid. 
MFA Second CIS Department Deputy Director Mordvintsev told us 
on May 27 that Lavrov expressed in the clearest terms in his 
April 15 meeting with Ukrainian FM Ogryzko that Russia would 
continue to resist MAP for Ukraine, given the "disastrous 
consequences for Europe, Russian-Ukrainian relations, and 
NATO-Russia relations."  Lavrov also raised Russia's concerns 
(albeit in general terms) over Ukrainian arms sales to 
Georgia, underscoring the negative impact of such sales on 
the settlement of the separatist conflicts.  Mordvintsev said 
that Deputy Foreign Minister Grushko reinforced this message 
during his May 23 meeting with Ukrainian First DFM Handogiy 
in Kyiv, noting that Russia has yet to receive a clear 
explanation from Ukraine for its "forced efforts" to join 
NATO. 
 
3.  (C) Mordvintsev said that Putin's 20 minute one-on-one 
meeting with PM Timoshenko on the margins of a May 21 CIS 
meeting in Minsk focused on gas and economic issues, 
including the possibility of eliminating intermediaries from 
Ukraine's purchase of Russian gas, but acknowledged the 
"possibility" that NATO was raised in the context of future 
gas deals.  The Ukrainian Embassy noted that Putin's only 
formal bilateral meeting in Minsk was with Timoshenko and 
speculated that Russia was likely trying to strengthen its 
relationship with Timoshenko, who is perceived in Moscow as 
an "opportunist." 
 
4.  (C) GOR Special Envoy for Black Sea Fleet Issues Dorokhin 
acknowledged that Moscow Mayor Luzhkov's May 11 remarks 
during the 225th anniversary of the Black Sea Fleet were 
"unnecessary and incendiary," but stressed that they 
accurately reflected public opinion in Russia and stem from 
the GOU's failure to address Russian concerns over further 
NATO expansion.  The most recent opinion polls indicate that 
almost 70% of Russians believe that Crimea belongs to Russia. 
 Dorokhin added that Ukraine's decision to present Russia 
(during Ogryzko's April meeting with Lavrov) with an official 
memorandum declaring Ukraine's readiness to commence 
immediate negotiations on the withdrawal of the fleet, 
Yushchenko's recent instructions to the Rada to prepare a 
bill on the fleet's withdrawal, and announcing Luzhkov's 
persona non grata status in Ukraine were "premature and hasty 
moves," but were "probably connected" to Ukraine's NATO 
aspirations. 
 
If Georgian Membership is Hard to Swallow, 
Ukraine's Membership...Impossible 
------------------------------------------ 
 
5.  (C) Russian analysts across the political spectrum 
asserted that Russia could never be persuaded to understand, 
much less accept, Ukraine's full court press to receive a MAP 
offer in December.  Although GOR officials have generally 
denounced Ukrainian and Georgian membership bids with equal 
fervor, Ukraine's possible accession hits much closer to home 
than that of Georgia and thus is viewed with considerably 
more consternation and anger.  Analysts provide the following 
explanation for Russia's strong and unmovable opposition to 
MAP for Ukraine: 
 
-- Most Ukrainians Not Interested in NATO.  Russians firmly 
believe that Ukrainians vehemently oppose NATO membership. 
As Carnegie Center analyst Dmitriy Trenin put it, "if 
Ukrainian society shared the same anti-Russian views as in 
Poland or Estonia, Russia would have less difficulty 
swallowing Ukraine's accession to NATO."  Russian officials 
and analysts frequently throw around poll figures indicating 
 
MOSCOW 00001517  002 OF 003 
 
 
that anywhere from 60-75 percent of Ukrainians are against 
membership.  Moreover, experts are convinced that such 
statistics cannot be reversed simply by a GOU-led aggressive 
PR campaign on the benefits of NATO membership.  Our contacts 
contend that Ukraine is simply not ready to abandon close 
ties with Russia for an uncertain future with NATO and would 
split at the seams if it were forced to make that choice in 
the near future. 
 
-- A
nti-Russia Hysteria Generated by Yushchenko.  Russian 
analysts find it unacceptable that Yushchenko and his 
political allies view the "demonization" of Russia as the 
only path to the development of Ukraine's identity and 
independence.  Russians point to Ukraine's exaltation of 
Soviet "traitors" such as Roman Shukhevich, the designation 
of the 1930 famine in Ukraine as genocide, the banning of 
films not dubbed into Ukrainian, and the closing down and 
banning of Russian-language schools, as evidence of this 
anti-Russia policy.  In his May 23 op-ed in Izvestia, 
well-known analyst Vyacheslav Nikonov wrote that in contrast 
with Kazakhstan (in light of Medvedev's recent visit), 
Ukraine's elite is "maximally interested" in limiting 
Russia's influence, blaming Russia for its "past tragedies," 
and building a national identity in "direct opposition to 
Russian culture." 
 
-- Damage to Russia's Military Industrial Complex.  MFA 
officials claimed that Ukraine's accession to NATO would 
force Russia to sever its billion-dollar arms production and 
technology sharing agreements with its neighbor, noting that 
the costs of shifting away from Ukrainian-made parts for 
Russian equipment would be astronomical.  Moreover, once 
under the protection of NATO, Russians are convinced that 
Ukraine would be less flexible on extending the lease of the 
Black Sea Fleet in Sevastopol beyond 2017.  Dorokhin told us 
that securing a renewal of the lease was a top priority for 
Russia, if for no other reason than to avoid the significant 
financial costs and logistical nightmare of relocation, and 
Russia would insist on delaying withdrawal negotiations until 
at least 2013. 
 
Russia's Response to MAP 
------------------------ 
 
6.  (C) GOR officials publicly and privately do not hide that 
their endgame is the status quo.  Russia has accepted 
Ukraine's westward orientation, including its possible 
accession to the EU and closer ties with NATO, but NATO 
membership and the establishment of a U.S. or NATO base in 
Ukraine remain clear redlines.  Ideally, Russia aims to 
secure a written neutrality pledge from Ukraine. 
 
7.  (C) In contrast to Georgia, most experts believe that 
Ukraine's close economic relationship (bilateral trade 
reached more than USD 30 billion in 2007), energy 
interdependence, historical and cultural ties, a relatively 
open border (internal passports are only necessary), could 
restrain Russia from taking the most extreme measures. 
Moreover, the view here is that Bucharest "proved" that 
Russia's anti-NATO expansion policy is unattractive but 
effective, at least temporarily.  Analysts doubt that the 
position of key Allies will be reversed in December at the 
NATO Ministerial, or anytime in the near future; Trenin 
commented that it made little sense for France and Germany 
"to give the gift of MAP" to an outgoing U.S. administration. 
 At the same time, Ukraine's possible NATO membership grates 
on the rawest Russian nerves.  Mordvintsev warned that 
Ukraine and NATO should not downplay statements from Putin 
and Lavrov -- "Russia will not swallow a MAP offer to 
Ukraine; our reaction will be strong." 
 
8.  (C) In the event of a likely MAP offer, MFA officials and 
analysts assert that Russia could take the following measures: 
 
-- Boost Gas Prices.  Mordvintsev said that Russia would be 
released from any commitment to maintain below-market gas 
prices for Ukraine.  Specifically, Russia could dramatically 
raise prices from $179/bcm to "near European levels" (over 
$300/bcm).  Russia would argue that the price increases were 
consistent with Russia's continuing efforts to base all gas 
deals on market principles and would be fully prepared to 
undergo the heavy international criticism for taking such a 
step. 
 
-- Scale Back Cooperation with NATO.  Russians stress that a 
MAP offer to Ukraine would weaken or dissolve NATO-Russia and 
U.S.-Russia cooperation on common concerns such as countering 
terrorism and drug trafficking in Afghanistan.  Some experts 
such as CIS Institute Deputy Director Vladimir Zharikhin 
pointed to Medvedev's decision to travel to Beijing on his 
maiden international trip as a warning that Russia would be 
 
MOSCOW 00001517  003 OF 003 
 
 
forced to look eastward and focus more attention on the 
Shanghai Cooperation Organization if NATO and the U.S. 
ignored one of Russia's most important strategic concerns. 
 
-- Withdraw from the "Big Treaty."  Mordvintsev also raised 
the possibility that Russia would withdraw from -- or refuse 
to extend in 2009 -- the Treaty of Friendship, Cooperation, 
and Partnership ("Big Treaty"), in which Russia recognizes 
the current borders of Ukraine.  Although Russian Ambassador 
to Ukraine Chernomyrdin publicly dismissed the possibility of 
Russia's withdrawal from the Big Treaty on April 24, 
Mordvintsev stressed that Russia has not ruled out this 
option.  Ukraine's decision to join NATO would violate 
Article 6 of the Treaty, which stipulates that neither party 
will take any action or join any organization that threatens 
the security of the other.  Mordvintsev and Dorokhin added 
that Russia would not have to exert any effort to weaken 
Yushchenko's grip on Eastern Ukraine and Crimea, but analysts 
told us that Russia could certainly fan the flames of 
separatism in Crimea. 
 
-- Other Measures: Mordvintsev said that Russia is looking at 
other punitive measures, such as canceling the open border 
policy and possibly redirecting Russia's ballistic missiles 
toward Ukraine, but these plans have not been fully 
developed. 
 
9.  (C) Conspicuously absent in Russia's approach to 
Ukraine's NATO bid is the offer of positive incentives in 
exchange for Ukraine's neutrality; sticks are the only items 
on display at the moment.  However, even if Russia were 
inclined to calibrate its dialogue with Ukraine, the GOR 
would be hardpressed to offer anything other than more of the 
same. 
RUSSELL

Wikileaks

08MOSCOW1516, RUSSIAN OPPOSITION GRAPPLES WITH AUTHORITARIAN

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Reference ID Created Released Classification Origin
08MOSCOW1516 2008-05-30 03:29 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6484
RR RUEHBW
DE RUEHMO #1516/01 1510329
ZNY CCCCC ZZH
R 300329Z MAY 08 ZDK
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 8295
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001516 
 
SIPDIS 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: PGOV PHUM PREL ECON RS
SUBJECT: RUSSIAN OPPOSITION GRAPPLES WITH AUTHORITARIAN 
SUCCESS 
 
Classified By: Charge d'Affaires Daniel Russell: Reasons 1.4 (b, d). 
 
1.  (C)  Summary:  Carnegie analyst Masha Lipman argues that 
the success of Putin's authoritarian model of development has 
challenged Russian liberal assumptions that more democracy 
and better civil society are the engines of future growth. 
Based on recent conversations, many in the traditional 
liberal opposition fear permanent marginalization under the 
popular Putin-Medvedev governing tandem, which continues to 
float high on oil prices and consistent increases in real 
wages, with no guarantee that even a reform-oriented Medvedev 
will address the economic challenges facing Russia 
(inflation, demographics, stagnant oil and gas production, 
and a crumbling infrastructure) with a Western toolbox.  In 
contrast to Garry Kasparov's strategy of open opposition, the 
leaders of Yabloko and SPS are focused on accommodation, with 
former presidential candidate Irina Khakamada leaving 
politics altogether.  Both opposition and establishment 
figures downplay the U.S. ability to promote reform in 
Russia, given the backlash over Kosovo, missile defense, and 
NATO expansion, and the ingrained belief that Russia's 
democratic course is for Russians alone to determine.  As 
many standard-bearers of the 1990s attempt to make themselves 
attractive to Medvedev, it's not clear the new President 
wants or needs their support.  End Summary 
 
Authoritarian Model Ascendant? 
------------------------------ 
 
2.  (C)  Carnegie Center's Masha Lipman told us that Putin's 
success in developing Russia economically, while relying on 
an authoritarian political model, challenged assumptions that 
liberals such as herself had about the need for stronger 
democratic institutions and a more developed civil society as 
engines for growth.  While Putin was the lucky beneficiary of 
sky-high oil and gas prices, Lipman said the track record of 
nine years of 10 percent average growth in wages had produced 
a significant increase in the standard of living and in 
morale, which was impossible for any opposition to belittle. 
The economic "euphoria" was matched by an atypical Russian 
optimism about the future, pride over Russia's return to the 
international stage, and satisfaction over the fact that 
Russia could not be taken for granted.  Noting the public 
delirium over successive victories -- in hockey, soccer, and 
the Eurovision contest -- Lipman dismissed residual Kremlin 
concerns over the possibility of an "orange revolution." 
Russians are living better than they ever had, under a regime 
that is the "least repressive in Russian history."  People 
may grumble, she said, but "life is quantifiably better." 
The result, she commented, was a profound political apathy 
and voluntary ceding of authority to the state. 
 
3.  (C)  Whether Putin's brand of authoritarianism could be 
sustained over the next eight years given the challenges 
posed by inflation, demographics, public attachment to 
entitlements, and the plateau in oil and gas production 
brought on by expanding state control and lack of upstream 
investment, Lipman argued, was "an open question," but not 
one that automatically resolved itself in favor of 
Western-style reformers.  Medvedev was a "meaningful choice" 
-- given the more conservative and isolationist pretenders to 
the Kremlin throne -- but it did not necessarily follow that 
he would modernize Russia in the style of the West.  Medvedev 
belonged to an elite that did not want another redistribution 
of property and sought to avoid the fate of many in Yeltsin's 
circle.  As long as the same elite remained in power, there 
were "clear limits" on what Medvedev could undertake. 
 
Opposition: Divided Over Response to Tandemocracy 
--------------------------------------------- ---- 
 
4.  (C)  The opposition remains divided over its approach to 
the Medvedev-Putin construct.  While Other Russia's Garry 
Kasparov recently told us that he and former Kremlin economic 
adviser Andrey Illarionov remain wedded to the strategy of 
conducting a parallel "opposition" national assembly, with 
the initial May 17 session bringing together 450 civil 
society and human rights activists, SPS Deputy Leonid Gozman 
dismissed the approach as "sheer fantasy."  Maintaining that 
he had no difficulty working with the "captains and 
lieutenants" in rival opposition parties, Kasparov conceded 
that tensions among the "generals" continued to prevent a 
united front.  Kasparov dismissed opposition figures who were 
comfortable staying "in a narrow box" and derided others who 
believed in incremental change.  Arguing that Russia would 
face a jolt sooner or later, precipitated by inflation, 
sky-rocketing food prices, a liquidity crisis, or the 
collapse of the pension system, Kasparov argued that this 
would produce an opening for democratic reform.  Rather than 
producing democracy, Gozman responded to us, crises in 
Russian history had produced terror. 
 
MOSCOW 00001516  002 OF 003 
 
 
 
5.  (C)  In contrast to Other Russia, Yabloko Deputy Ivanenko 
rejected t
he strategy of "radical opposition" and argued that 
his party had to choose between working with the 
Medvedev-Putin tandem or adopting a 1960's-style mode of 
intellectual opposition.  His strong counsel, he noted, was 
for Yabloko chief Yavlinskiy to join forces with Medvedev, 
although Ivanenko was quick to add that there were no 
concrete proposals on the table, despite Putin's general 
discussion of the possibility of Yavlinskiy taking up a 
prominent ambassadorship.  The Yabloko leadership, he added, 
had to deal with the reality that most of their supporters 
also supported Putin, and viewed the former President as one 
of Russia's leading democrats.  Ivanenko stressed that Putin 
was a "complicated guy," and while no democrat, he was also 
no Stalin.  It was Putin's loyalty to former Mayor Sobchak 
and his understanding that iconoclasts like Andrey Sakharov 
were needed that gave Yabloko a toehold.  Arguing that 
Putin's appointment of Medvedev constituted recognition of 
the need for a course correction, Ivanenko said encouraging 
the Medvedev team offered more possibility for Yabloko than 
Kasparov's "hopeless" quest to create a parallel parliament. 
Likewise, Ivanenko said it made more sense to work with 
Medvedev than seek an accommodation with SPS, whose 
oligarchic base of support and intimate association with the 
1990s were political poison pills. 
 
6.  (C)  According to Gozman, SPS remained publicly 
ambivalent about its working relationship with the 
Medvedev-Putin tandem and privately focused on repairing RAO 
UES Chairman and SPS elder statesman Anatoliy Chubais' 
relationship with Putin, in order to secure both Chubais and 
Gozman's shift to Rosnanotech.  According to Gozman, Chubais' 
designated phone to the Kremlin had not rung since his 
criticism of Russian economic policy at Davos.  Cosmetic 
party gestures, such as the pseudo resignation of Boris 
Nemtsov (who continues to participate in informal party 
strategy sessions), whose critical report of Putin's legacy 
angered the former President's circle, had done little to 
mend fences.  Even Nemtsov, who joined forces with Kasparov 
in the alternate national assembly, told a visiting U.S. 
delegation that there was "a small window of opportunity" to 
influence Medvedev.  By taking the new President seriously, 
Nemtsov argued that both the international community and 
Russian politicians would strengthen Medvedev's position. 
For another opposition stalwart, Irina Khakamada, the choice 
between working with the government or joining Kasparov's 
assembly led to her public declaration to leave politics 
entirely. 
 
 
U.S. Promotion of Democracy Overshadowed 
---------------------------------------- 
 
7.  (C)  U.S. promotion of reform was complicated, liberals 
and establishment figures told us, because it was 
overshadowed by unpopular Administration policies and seen as 
superfluous to what was essentially an internal debate among 
Russians.  Nemtsov stressed to us that Russians needed 
democracy more than the U.S. needed Russia to be democratic. 
It's "our problem," and Russians don't welcome U.S. 
commentary, against the backdrop of an unpopular war in Iraq, 
recognition of Kosovo, missile defense plans, and effort to 
expand NATO to Georgia and Ukraine.  Nonetheless, Nemtsov 
said that focused U.S. criticism was useful for Putin to 
hear, if only to check any desire to shift from a "managed 
democracy" to the depredations of a Lukashenko regime. 
 
8.  (C)  Lipman was more pessimistic, arguing that the U.S. 
lacked leverage, since it wanted more from Russia than Russia 
needed from the West.  While pushing her U.S. audience to 
identify what constituted the "or else" in American 
criticisms of Russian policy, Lipman warned that the debate 
over NATO expansion could eviscerate the bilateral 
relationship.  "No matter how desperate Russia was for 
Western technology or approval," no Russian leadership could 
compromise on opposition to MAP.  The conundrum, she 
underscored, was that "the U.S. has no constituency here," in 
a country where "the situation is not desperate."  Positing 
that the opposition enjoyed, at most, around seven percent 
support, Lipman concluded that "your (U.S.) constituency is a 
few thousand, unpopular people," which was why "Western 
efforts to influence Russia are hopeless."  While Lipman 
thought Medvedev's selection signified a desire to move away 
from "anti-West diversions," she acknowledged that the 
temptation would remain to play on the theme of the external 
enemy, despite the absence of any visceral hatred of the U.S. 
among average Russians. 
 
9.  (C)  Establishment supporters have staked out a harsher 
critique of the U.S. reform agenda.  Kremlin adviser 
 
MOSCOW 00001516  003 OF 003 
 
 
Vyacheslav Nikonov told us that it was "hard to find anyone 
in the Kremlin interested in talking about the U.S." given 
"exhaustion" over U.S. demands.  For nationalists, he said, 
the U.S. was a hostile force; for liberals, it was 
discredited due to Iraq, Kosovo, and NATO; and for the 
mainstream, there remained only a residual hope for sensible 
cooperation in areas of overlapping interest.  Arguing that 
Medvedev was receptive to new ideas and serious about 
economic and judicial reform, Nikonov nonetheless downplayed 
the extent to which democratic values could feature in a 
bilateral dialogue.  "I don't know what Medvedev could do to 
please you," he said dismissively. 
 
10.  (C)  From the pro-U.S., but equally fervent supporter of 
Putin, prominent journalist and TV host Vladimir Solovyev 
said the fact that the former President left office, in 
deference to the constitution, was "huge," as was the fact 
that opposition politicians were only harassed and not 
imprisoned.  "Do you think communist habits die overnight?" 
Stressing that no one knew whether Medvedev would succeed and 
the transition stick, Solovyev argued for taking the new 
administration at face value, recognizing that Medvedev had 
chosen some decent technocrats to advise him.  Arguing that 
Medvedev was infinitely preferable to what a free electoral 
contest would produce -- a xenophobic and race-baiting 
nationalist -- Solovyev urged common sense in dealing with 
the new power construct. 
 
Comment 
------- 
 
11.  (C)  For the standard bearers of economic and political 
reform from the 1990s, the quest for relevance has further 
fractured an opposition elite already riven by personality 
and policy disputes.  While many leaders of the liberal 
opposition court accommodation rather than Kasparov's picket 
line, it's not clear that Medvedev and Putin need or seek 
their support. 
RUSSELL

Wikileaks

08MOSCOW1515, PROGRESS IN LEBANON AND SYRIA BODES WELL FOR

WikiLeaks Link

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Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08MOSCOW1515.
Reference ID Created Released Classification Origin
08MOSCOW1515 2008-05-30 03:29 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6481
PP RUEHBW RUEHROV
DE RUEHMO #1515 1510329
ZNY CCCCC ZZH
P 300329Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 8294
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

C O N F I D E N T I A L MOSCOW 001515 
 
SIPDIS 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: PGOV PREL IR LE SY RS
SUBJECT: PROGRESS IN LEBANON AND SYRIA BODES WELL FOR 
MOSCOW ME CONFERENCE? 
 
REF: MOSCOW 1375 
 
Classified By: Political M/C Alice G. Wells for reasons 1.4 (b/d). 
 
1. (C) MFA Deputy Director for the Middle East and North 
Africa Oleg Ozerov told us on May 28 that positive 
developments in Lebanon and Syria justified revisiting dates 
for the GOR's planned Moscow Middle East conference.  The GOR 
believed that settlement of the Lebanese political crisis 
with the election of a new President and progress in 
Syria-Israel talks should be capitalized on, possibly with a 
conference held before the end of summer.  Ozerov explained 
that the GOR sought an expanded agenda, since the different 
negotiating tracks inevitably would play off one another and 
require the support of the Quartet and Arab neighbors. 
Ozerov reiterated GOR support for the efforts of the 
President and Secretary, and painted a Moscow follow-on 
conference as building on the momentum begun by the U.S. 
 
2. (C) Ozerov said it was difficult to asses how the 
Syria-Israel negotiations would develop.  Moscow had been 
aware of the talks underway, assumed it knew the contours of 
a proposed settlement, but was not briefed on the details. 
He argued that "normalization" of the situation in Lebanon 
presented a favorable climate for the Syria-Israel talks. 
Ozerov maintained that the outcome of the Lebanese political 
crisis was win-win, since it was not settled by Syria or 
Iran, but by the Lebanese factions themselves.  He reiterated 
Russia's insistence that Lebanon settle its problems without 
the interference of foreign powers; while Moscow had 
reinforced this message with Iran, Ozerov cautioned against 
attempts to exclude Iran from discussions of regional issues. 
 
3. (C) Ozerov said that its was "unclear" what progress had 
been made on the Palestine-Israel negotiations, which, he 
believed, presented a "last chance" for a well balanced 
outcome that offered benefits to both the Palestinians and 
Israelis.  Moscow looked to the U.S. to secure Israeli 
compliance with its pledge to reduce roadblocks.  Having just 
visited some of the sites in question, Ozerov expressed 
disappointment over Israeli actions to date and stressed that 
the goal had to be a meaningful improvement in the daily 
lives of Palestinians.  Russia would continue to support 
Palestinian economic development, which was the best way to 
strengthen Abbas' position.  Most recently, a Russian 
delegation took part in a Russia-Arab business council 
mission to examine potential investment in the Palestinian 
tourism sector -- with Russian tourists an increasingly 
prominent segment of the market.  While joking over whether 
Olmert or Abbas hated Hamas more, Ozerov renewed Russian 
arguments that Palestinian unity was essential to move 
forward. 
 
4. (C) Israeli Emboff Michael Brodsky told us that his 
Embassy had not heard anything new from the GOR regarding the 
possibility of a Moscow conference since the May 13 visit of 
Israeli MFA Deputy General Director Leshno-Yaar, who was 
quizzed by Russian officials on the progress of the 
Palestinian-Israeli negotiations (reftel).  Brodsky 
understood that the GOR was depending upon progress on the 
Palestinian track to determine when the timing was right for 
its conference, but could look to progress on other fronts to 
call its long desired meeting. 
RUSSELL

Wikileaks

08MOSCOW1514, WAR OF WORDS OVER ABKHAZIA CONTINUES; SOUTH

WikiLeaks Link

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Reference ID Created Released Classification Origin
08MOSCOW1514 2008-05-30 03:29 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6479
OO RUEHBW RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #1514/01 1510329
ZNY CCCCC ZZH
O 300329Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8292
INFO RUCNCIS/CIS COLLECTIVE IMMEDIATE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUEHXD/MOSCOW POLITICAL COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 001514 
 
SIPDIS 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: PREL PGOV GG RS
SUBJECT: WAR OF WORDS OVER ABKHAZIA CONTINUES; SOUTH 
OSSETIA BROUGHT INTO MIX 
 
REF: MOSCOW 1499 
 
Classified By: Charge d'Affaires Daniel A. Russell. Reasons 1.4(b) and 
(D) 
 
1. (C)  Summary: The verbal fireworks between Russia and 
Georgia continued May 28-29 with Russian FM Lavrov declaring 
that Russia could not negotiate with the current regime in 
Tbilisi and suggesting a "foreign hand" was guiding Georgia's 
actions, while Georgia called for an urgent UN Security 
Council meeting, demanded compensation for the drone shot 
down on April 20, and insisted Russia had rebuffed an April 
23 opportunity to investigate the incident.  Meanwhile, 
Russian Co-Chair of the Joint Control Commission (JCC) for 
Georgian-Ossetian Conflict Resolution Yuriy Popov, in a May 
27 interview, reminded observers that the situation in South 
Ossetia gave serious grounds for concern.  The MFA said it 
was likely that President Medvedev would meet with Georgian 
President Saakashvili at the St. Petersburg Economic Forum 
June 6-8, but noted the GOR had not received confirmation of 
Saakashvili's attendance.  The Georgian Embassy here, 
however, confirmed Saakashvili would travel to St. 
Petersburg, regardless of a presidential meeting.  Lowering 
the public rhetoric will create more opportunity for the 
first Medvedev-Saakashvili meeting to be a success.  End 
summary. 
 
War of Words 
------------ 
 
2. (U) On May 27, following issuance of the UNOMIG report on 
the April 20 shootdown of a UAV over Abkhazia, FM Lavrov and 
the Russian MFA accused Georgia of having refused to allow 
Russia to investigate the incident or to inspect the 
videotape of the UAV destruction.  In the wake of Georgian 
demands for compensation for the UAV, insistence that the 
Russians had been offered on April 23 an opportunity to study 
the UAV shootdown and exchange information, and call for an 
urgent meeting of the UN Security Council, Lavrov announced 
during a press conference May 28 that Russia could not 
negotiate with the current regime in Tbilisi.  Lavrov charged 
that he did not understand what the Georgian authorities 
wanted, unless they were "being used by someone else to 
constantly provoke Russia."  He reiterated previous 
statements claiming Russia had withdrawn its troops from 
Georgia, and argued Georgia was breaking the terms of 
agreements which Russia was prepared to uphold.  Lavrov also 
said he doubted that Georgia would go through with the 
agreement to set up a joint antiterrorism center in Batumi. 
 
3.  (C) Dmitriy Tarabrin, Deputy Director of the 4th CIS 
Department of the MFA, told us May 29 that the only offer the 
Georgians had made following the April 20 incident was to 
exchange radar information.  They had never provided Russia 
with the actual video, without which the GOR could not 
determine the veracity of the tape.  All Russian experts had 
been able to view was the Internet version which could easily 
have been fabricated or doctored. 
 
4. (C) Tarabrin said Russia was not opposed to holding a 
meeting of the UN Security Council but reiterated that if 
Georgia were to be present, Abkhaz authorities should also be 
allowed to participate. 
 
Saakashvili-Medvedev? 
--------------------- 
 
5. (C) When asked whether he could confirm that Medvedev 
would meet with Georgian President Saakashvili at the June 
6-8 St. Petersburg Economic Forum, Tarabrin said the 
Georgians had requested the meeting and Russia expected it to 
take place, but the GOR had not yet received confirmation of 
Saakashvili's attendance at the Forum.  Georgian Embassy 
officials, however, confirmed that Saakashvili would travel 
to St. Petersburg, regardless of a meeting with Medvedev. 
 
Don't Forget South Ossetia 
-------------------------- 
 
6. (U) In an interview with Izvestiya May 28, JCC Co-Chair 
Popov said that while developments in South Ossetia were not 
as sensational as in Abkhazia "where with mysterious suicidal 
stubbornness unmanned spy planes have got into the habit of 
flying in, only to be downed every time by Abkhaz air defense 
forces," there were serious reasons for concern.  He claimed 
the numbers of Georgian police were being built up, road 
movement was being blocked, and Georgia was still not 
interested in overcoming the vacuum in the negotiating 
process.  He asserted that Georgia was ignoring Russia's 
outstanding proposal to hold an informal meeting of the JCC 
 
MOSCOW 00001514  002 OF 002 
 
 
Co-Chairs in Moscow to reanimate the dialogue and concluded 
that Georgian ill-will had frozen the negotiating process. 
 
Comment 
------- 
 
7. (C) While Security Council Deputy Secretary Zubakov is in 
Tbilisi (accompanied by Georgian Ambassador Kitsmarishvili) 
for private consultations, the public rhetoric has heated up 
again, eroding what little of the good will that might have 
been behind the warm national day message by Medvedev.  As we 
saw in the 2006 spy scandal, Russia will respond to Georgian &#
x000A;name and shame tactics by digging in.  This latest public 
exchange obviously has not helped set the stage for the 
expected Medvedev-Saakashvili encounter in St. Petersburg. 
RUSSELL

Wikileaks

08MOSCOW1513, RUSSIAN OPPOSITION GRAPPLES WITH AUTHORITARIAN

WikiLeaks Link

To understand the justification used for the classification of each cable, please use this WikiSource article as reference.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol).Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08MOSCOW1513.
Reference ID Created Released Classification Origin
08MOSCOW1513 2008-05-30 03:25 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6475
RR RUEHBW
DE RUEHMO #1513/01 1510325
ZNY CCCCC ZZH
R 300325Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 8289
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001513 
 
SIPDIS 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: PGOV PHUM PREL ECON RS
SUBJECT: RUSSIAN OPPOSITION GRAPPLES WITH AUTHORITARIAN 
SUCCESS 
 
Classified By: Charge d'Affaires Daniel Russell: Reasons 1.4 (b, d). 
 
1.  (C)  Summary:  Carnegie analyst Masha Lipman argues that 
the success of Putin's authoritarian model of development has 
challenged Russian liberal assumptions that more democracy 
and better civil society are the engines of future growth. 
Based on recent conversations, many in the traditional 
liberal opposition fear permanent marginalization under the 
popular Putin-Medvedev governing tandem, which continues to 
float high on oil prices and consistent increases in real 
wages, with no guarantee that even a reform-oriented Medvedev 
will address the economic challenges facing Russia 
(inflation, demographics, stagnant oil and gas production, 
and a crumbling infrastructure) with a Western toolbox.  In 
contrast to Garry Kasparov's strategy of open opposition, the 
leaders of Yabloko and SPS are focused on accommodation, with 
former presidential candidate Irina Khakamada leaving 
politics altogether.  Both opposition and establishment 
figures downplay the U.S. ability to promote reform in 
Russia, given the backlash over Kosovo, missile defense, and 
NATO expansion, and the ingrained belief that Russia's 
democratic course is for Russians alone to determine.  As 
many standard-bearers of the 1990s attempt to make themselves 
attractive to Medvedev, it's not clear the new President 
wants or needs their support.  End Summary 
 
Authoritarian Model Ascendant? 
------------------------------ 
 
2.  (C)  Carnegie Center's Masha Lipman told us that Putin's 
success in developing Russia economically, while relying on 
an authoritarian political model, challenged assumptions that 
liberals such as herself had about the need for stronger 
democratic institutions and a more developed civil society as 
engines for growth.  While Putin was the lucky beneficiary of 
sky-high oil and gas prices, Lipman said the track record of 
nine years of 10 percent average growth in wages had produced 
a significant increase in the standard of living and in 
morale, which was impossible for any opposition to belittle. 
The economic "euphoria" was matched by an atypical Russian 
optimism about the future, pride over Russia's return to the 
international stage, and satisfaction over the fact that 
Russia could not be taken for granted.  Noting the public 
delirium over successive victories -- in hockey, soccer, and 
the Eurovision contest -- Lipman dismissed residual Kremlin 
concerns over the possibility of an "orange revolution." 
Russians are living better than they ever had, under a regime 
that is the "least repressive in Russian history."  People 
may grumble, she said, but "life is quantifiably better." 
The result, she commented, was a profound political apathy 
and voluntary ceding of authority to the state. 
 
3.  (C)  Whether Putin's brand of authoritarianism could be 
sustained over the next eight years given the challenges 
posed by inflation, demographics, public attachment to 
entitlements, and the plateau in oil and gas production 
brought on by expanding state control and lack of upstream 
investment, Lipman argued, was "an open question," but not 
one that automatically resolved itself in favor of 
Western-style reformers.  Medvedev was a "meaningful choice" 
-- given the more conservative and isolationist pretenders to 
the Kremlin throne -- but it did not necessarily follow that 
he would modernize Russia in the style of the West.  Medvedev 
belonged to an elite that did not want another redistribution 
of property and sought to avoid the fate of many in Yeltsin's 
circle.  As long as the same elite remained in power, there 
were "clear limits" on what Medvedev could undertake. 
 
Opposition: Divided Over Response to Tandemocracy 
--------------------------------------------- ---- 
 
4.  (C)  The opposition remains divided over its approach to 
the Medvedev-Putin construct.  While Other Russia's Garry 
Kasparov recently told us that he and former Kremlin economic 
adviser Andrey Illarionov remain wedded to the strategy of 
conducting a parallel "opposition" national assembly, with 
the initial May 17 session bringing together 450 civil 
society and human rights activists, SPS Deputy Leonid Gozman 
dismissed the approach as "sheer fantasy."  Maintaining that 
he had no difficulty working with the "captains and 
lieutenants" in rival opposition parties, Kasparov conceded 
that tensions among the "generals" continued to prevent a 
united front.  Kasparov dismissed opposition figures who were 
comfortable staying "in a narrow box" and derided others who 
believed in incremental change.  Arguing that Russia would 
face a jolt sooner or later, precipitated by inflation, 
sky-rocketing food prices, a liquidity crisis, or the 
collapse of the pension system, Kasparov argued that this 
would produce an opening for democratic reform.  Rather than 
producing democracy, Gozman responded to us, crises in 
Russian history had produced terror. 
 
MOSCOW 00001513  002 OF 003 
 
 
 
5.  (C)  In contrast to Other Russia, Yabloko Deputy Ivanenko 
rejected the s
trategy of "radical opposition" and argued that 
his party had to choose between working with the 
Medvedev-Putin tandem or adopting a 1960's-style mode of 
intellectual opposition.  His strong counsel, he noted, was 
for Yabloko chief Yavlinskiy to join forces with Medvedev, 
although Ivanenko was quick to add that there were no 
concrete proposals on the table, despite Putin's general 
discussion of the possibility of Yavlinskiy taking up a 
prominent ambassadorship.  The Yabloko leadership, he added, 
had to deal with the reality that most of their supporters 
also supported Putin, and viewed the former President as one 
of Russia's leading democrats.  Ivanenko stressed that Putin 
was a "complicated guy," and while no democrat, he was also 
no Stalin.  It was Putin's loyalty to former Mayor Sobchak 
and his understanding that iconoclasts like Andrey Sakharov 
were needed that gave Yabloko a toehold.  Arguing that 
Putin's appointment of Medvedev constituted recognition of 
the need for a course correction, Ivanenko said encouraging 
the Medvedev team offered more possibility for Yabloko than 
Kasparov's "hopeless" quest to create a parallel parliament. 
Likewise, Ivanenko said it made more sense to work with 
Medvedev than seek an accommodation with SPS, whose 
oligarchic base of support and intimate association with the 
1990s were political poison pills. 
 
6.  (C)  According to Gozman, SPS remained publicly 
ambivalent about its working relationship with the 
Medvedev-Putin tandem and privately focused on repairing RAO 
UES Chairman and SPS elder statesman Anatoliy Chubais' 
relationship with Putin, in order to secure both Chubais and 
Gozman's shift to Rosnanotech.  According to Gozman, Chubais' 
designated phone to the Kremlin had not rung since his 
criticism of Russian economic policy at Davos.  Cosmetic 
party gestures, such as the pseudo resignation of Boris 
Nemtsov (who continues to participate in informal party 
strategy sessions), whose critical report of Putin's legacy 
angered the former President's circle, had done little to 
mend fences.  Even Nemtsov, who joined forces with Kasparov 
in the alternate national assembly, told a visiting U.S. 
delegation that there was "a small window of opportunity" to 
influence Medvedev.  By taking the new President seriously, 
Nemtsov argued that both the international community and 
Russian politicians would strengthen Medvedev's position. 
For another opposition stalwart, Irina Khakamada, the choice 
between working with the government or joining Kasparov's 
assembly led to her public declaration to leave politics 
entirely. 
 
 
U.S. Promotion of Democracy Overshadowed 
---------------------------------------- 
 
7.  (C)  U.S. promotion of reform was complicated, liberals 
and establishment figures told us, because it was 
overshadowed by unpopular Administration policies and seen as 
superfluous to what was essentially an internal debate among 
Russians.  Nemtsov stressed to us that Russians needed 
democracy more than the U.S. needed Russia to be democratic. 
It's "our problem," and Russians don't welcome U.S. 
commentary, against the backdrop of an unpopular war in Iraq, 
recognition of Kosovo, missile defense plans, and effort to 
expand NATO to Georgia and Ukraine.  Nonetheless, Nemtsov 
said that focused U.S. criticism was useful for Putin to 
hear, if only to check any desire to shift from a "managed 
democracy" to the depredations of a Lukashenko regime. 
 
8.  (C)  Lipman was more pessimistic, arguing that the U.S. 
lacked leverage, since it wanted more from Russia than Russia 
needed from the West.  While pushing her U.S. audience to 
identify what constituted the "or else" in American 
criticisms of Russian policy, Lipman warned that the debate 
over NATO expansion could eviscerate the bilateral 
relationship.  "No matter how desperate Russia was for 
Western technology or approval," no Russian leadership could 
compromise on opposition to MAP.  The conundrum, she 
underscored, was that "the U.S. has no constituency here," in 
a country where "the situation is not desperate."  Positing 
that the opposition enjoyed, at most, around seven percent 
support, Lipman concluded that "your (U.S.) constituency is a 
few thousand, unpopular people," which was why "Western 
efforts to influence Russia are hopeless."  While Lipman 
thought Medvedev's selection signified a desire to move away 
from "anti-West diversions," she acknowledged that the 
temptation would remain to play on the theme of the external 
enemy, despite the absence of any visceral hatred of the U.S. 
among average Russians. 
 
9.  (C)  Establishment supporters have staked out a harsher 
critique of the U.S. reform agenda.  Kremlin adviser 
 
MOSCOW 00001513  003 OF 003 
 
 
Vyacheslav Nikonov told us that it was "hard to find anyone 
in the Kremlin interested in talking about the U.S." given 
"exhaustion" over U.S. demands.  For nationalists, he said, 
the U.S. was a hostile force; for liberals, it was 
discredited due to Iraq, Kosovo, and NATO; and for the 
mainstream, there remained only a residual hope for sensible 
cooperation in areas of overlapping interest.  Arguing that 
Medvedev was receptive to new ideas and serious about 
economic and judicial reform, Nikonov nonetheless downplayed 
the extent to which democratic values could feature in a 
bilateral dialogue.  "I don't know what Medvedev could do to 
please you," he said dismissively. 
 
10.  (C)  From the pro-U.S., but equally fervent supporter of 
Putin, prominent journalist and TV host Vladimir Solovyev 
said the fact that the former President left office, in 
deference to the constitution, was "huge," as was the fact 
that opposition politicians were only harassed and not 
imprisoned.  "Do you think communist habits die overnight?" 
Stressing that no one knew whether Medvedev would succeed and 
the transition stick, Solovyev argued for taking the new 
administration at face value, recognizing that Medvedev had 
chosen some decent technocrats to advise him.  Arguing that 
Medvedev was infinitely preferable to what a free electoral 
contest would produce -- a xenophobic and race-baiting 
nationalist -- Solovyev urged common sense in dealing with 
the new power construct. 
 
Comment 
------- 
 
11.  (C)  For the standard bearers of economic and political 
reform from the 1990s, the quest for relevance has further 
fractured an opposition elite already riven by personality 
and policy disputes.  While many leaders of the liberal 
opposition court accommodation rather than Kasparov's picket 
line, it's not clear that Medvedev and Putin need or seek 
their support. 
RUSSELL

Wikileaks

08MOSCOW1512, WAR OF WORDS OVER ABKHAZIA CONTINUES; SOUTH

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Reference ID Created Released Classification Origin
08MOSCOW1512 2008-05-30 03:25 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO6472
OO RUEHBW RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #1512/01 1510325
ZNY CCCCC ZZH
O 300325Z MAY 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8287
INFO RUCNCIS/CIS COLLECTIVE IMMEDIATE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUEHXD/MOSCOW POLITICAL COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 001512 
 
SIPDIS 
 
E.O. 12958: DECL: 05/29/2018 
TAGS: PREL PGOV GG RS
SUBJECT: WAR OF WORDS OVER ABKHAZIA CONTINUES; SOUTH 
OSSETIA BROUGHT INTO MIX 
 
REF: MOSCOW 1499 
 
Classified By: Charge d'Affaires Daniel A. Russell. Reasons 1.4(b) and 
(D) 
 
1. (C)  Summary: The verbal fireworks between Russia and 
Georgia continued May 28-29 with Russian FM Lavrov declaring 
that Russia could not negotiate with the current regime in 
Tbilisi and suggesting a "foreign hand" was guiding Georgia's 
actions, while Georgia called for an urgent UN Security 
Council meeting, demanded compensation for the drone shot 
down on April 20, and insisted Russia had rebuffed an April 
23 opportunity to investigate the incident.  Meanwhile, 
Russian Co-Chair of the Joint Control Commission (JCC) for 
Georgian-Ossetian Conflict Resolution Yuriy Popov, in a May 
27 interview, reminded observers that the situation in South 
Ossetia gave serious grounds for concern.  The MFA said it 
was likely that President Medvedev would meet with Georgian 
President Saakashvili at the St. Petersburg Economic Forum 
June 6-8, but noted the GOR had not received confirmation of 
Saakashvili's attendance.  The Georgian Embassy here, 
however, confirmed Saakashvili would travel to St. 
Petersburg, regardless of a presidential meeting.  Lowering 
the public rhetoric will create more opportunity for the 
first Medvedev-Saakashvili meeting to be a success.  End 
summary. 
 
War of Words 
------------ 
 
2. (U) On May 27, following issuance of the UNOMIG report on 
the April 20 shootdown of a UAV over Abkhazia, FM Lavrov and 
the Russian MFA accused Georgia of having refused to allow 
Russia to investigate the incident or to inspect the 
videotape of the UAV destruction.  In the wake of Georgian 
demands for compensation for the UAV, insistence that the 
Russians had been offered on April 23 an opportunity to study 
the UAV shootdown and exchange information, and call for an 
urgent meeting of the UN Security Council, Lavrov announced 
during a press conference May 28 that Russia could not 
negotiate with the current regime in Tbilisi.  Lavrov charged 
that he did not understand what the Georgian authorities 
wanted, unless they were "being used by someone else to 
constantly provoke Russia."  He reiterated previous 
statements claiming Russia had withdrawn its troops from 
Georgia, and argued Georgia was breaking the terms of 
agreements which Russia was prepared to uphold.  Lavrov also 
said he doubted that Georgia would go through with the 
agreement to set up a joint antiterrorism center in Batumi. 
 
3.  (C) Dmitriy Tarabrin, Deputy Director of the 4th CIS 
Department of the MFA, told us May 29 that the only offer the 
Georgians had made following the April 20 incident was to 
exchange radar information.  They had never provided Russia 
with the actual video, without which the GOR could not 
determine the veracity of the tape.  All Russian experts had 
been able to view was the Internet version which could easily 
have been fabricated or doctored. 
 
4. (C) Tarabrin said Russia was not opposed to holding a 
meeting of the UN Security Council but reiterated that if 
Georgia were to be present, Abkhaz authorities should also be 
allowed to participate. 
 
Saakashvili-Medvedev? 
--------------------- 
 
5. (C) When asked whether he could confirm that Medvedev 
would meet with Georgian President Saakashvili at the June 
6-8 St. Petersburg Economic Forum, Tarabrin said the 
Georgians had requested the meeting and Russia expected it to 
take place, but the GOR had not yet received confirmation of 
Saakashvili's attendance at the Forum.  Georgian Embassy 
officials, however, confirmed that Saakashvili would travel 
to St. Petersburg, regardless of a meeting with Medvedev. 
 
Don't Forget South Ossetia 
-------------------------- 
 
6. (U) In an interview with Izvestiya May 28, JCC Co-Chair 
Popov said that while developments in South Ossetia were not 
as sensational as in Abkhazia "where with mysterious suicidal 
stubbornness unmanned spy planes have got into the habit of 
flying in, only to be downed every time by Abkhaz air defense 
forces," there were serious reasons for concern.  He claimed 
the numbers of Georgian police were being built up, road 
movement was being blocked, and Georgia was still not 
interested in overcoming the vacuum in the negotiating 
process.  He asserted that Georgia was ignoring Russia's 
outstanding proposal to hold an informal meeting of the JCC 
 
MOSCOW 00001512  002 OF 002 
 
 
Co-Chairs in Moscow to reanimate the dialogue and concluded 
that Georgian ill-will had frozen the negotiating process. 
 
Comment 
------- 
 
7. (C) While Security Council Deputy Secretary Zubakov is in 
Tbilisi (accompanied by Georgian Ambassador Kitsmarishvili) 
for private consultations, the public rhetoric has heated up 
again, eroding what little of the good will that might have 
been behind the warm national day message by Medvedev.  As we 
saw in the 2006 spy scandal, Russia will respond to Georgian &#
x000A;name and shame tactics by digging in.  This latest public 
exchange obviously has not helped set the stage for the 
expected Medvedev-Saakashvili encounter in St. Petersburg. 
RUSSELL

Wikileaks