Daily Archives: July 10, 2009

09MOSCOW1790, TATARSTAN’S EXPORT-ORIENTED ECONOMY AWAITS GLOBAL

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Reference ID Created Released Classification Origin
09MOSCOW1790 2009-07-10 14:50 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO4434
OO RUEHDBU
DE RUEHMO #1790/01 1911450
ZNY CCCCC ZZH
O 101450Z JUL 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4217
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001790 
 
SIPDIS 
 
E.O. 12958: DECL: 07/10/2019 
TAGS: PREL PGOV ECON PINR KISL SCUL RS
SUBJECT: TATARSTAN'S EXPORT-ORIENTED ECONOMY AWAITS GLOBAL 
RECOVERY 
 
REF: MOSCOW 1733 
 
Classified By: Ambassador John Beyrle; reason 1.4 (b) and (d) 
 
1.  (C) Summary:  During Ambassador Beyrle's June 24-25 visit 
to Kazan, Tatarstan President Mintimir Shaymiyev and members 
of the central Russian republic's business community told him 
that the republic's export-oriented local economy (oil and 
heavy machinery) is suffering greatly from the current global 
economic crisis and any lasting improvement will only come 
after the rest of the world recovers.  During the visit the 
Ambassador joined local Ministry of Education officials in 
opening an annual conference for English teachers.  Shaymiyev 
also highlighted the large number of education exchange 
programs between Tatarstan and the United States, and noted 
that despite an internal debate over closer ties to the U.S., 
the republic leads other regions in Russia for educational 
exchanges.  Ambassador discussed Tatarstan's historical 
moderate form of Islam and its implications for the rest of 
Russia with Tatarstan's chief mufti and hosted a reception 
for alumni of U.S. exchange programs.  End Summary. 
 
Tatarstan Waits for the Global Recovery 
--------------------------------------- 
 
2.  (C) Leading members of the Tatarstan business community 
and President Shaymiyev told the Ambassador that after 
enjoying significant increases in production and investment 
in 2008, the republic's export-driven industrial sector is 
acutely experiencing the impact of the world economic crisis, 
with substantial declines in both industrial production and 
external trade during the first half of 2009.  Shamil Ageyev, 
Chairman of the Tatarstan Chamber of Commerce, noted that 70 
percent of the republic's oil is exported and that the lower 
world price for oil and lower demand for Tatarstan's other 
main export, KAMAZ heavy duty trucks, has exacerbated the 
effect of the current global crisis on the local economy. 
Tatarstan's KAMAZ automobile plant employs 20 percent of the 
region's industrial workforce and produces almost a third of 
Russian trucks.  Shortly before our arrival, the plant 
announced that it had fulfilled its June orders and would 
shut down production for the remainder of the month.  Ageyev 
also noted that the low world price for oil has coincided 
with repayment of loans taken out for a five-year 
modernization program in that sector and that companies 
receiving rubles whose value is dependent on the price of oil 
are now having trouble repaying dollar-denominated debts.  He 
noted that the region's smaller sectors, including 
construction materials, metal, paper and food 
production/processing are still promising and continue to 
grow despite the crisis.  Ageyev added that despite the 
current lower price for oil, Tatarstan is looking to broaden 
its oil refining capabilities and petro-chemical industry. 
 
3.  (C) President Shaymiyev noted at the outset of their 
meeting that the Ambassador had just come from opening a new 
Alcoa aluminum production line in neighboring Samara (reftel) 
and hoped that on his next visit he would also be able to 
open a new U.S. investment in Tatarstan.  Shaymiyev said the 
global economic crisis was having a serious effect on the 
local economy, especially the low price of oil to which 60 
percent of Tatarstan's economy was oriented.  The problem, 
Shaymiyev continued, was that Tatarstan was powerless to 
increase the demand (mainly from Europe) for the republic's 
oil and oil-based products.  He admitted that, at present, 
Tatarstan did have the kind of economy that could overcome 
the crisis on its own and that until the world economy 
revives, he did not believe the local economy would be 
restored. 
 
4.  (C) Shaymiyev saw the most important goal facing his 
government was to make sure the current economic crisis does 
not become a social crisis.  Primary among the means to do 
this, he continued, was to preserve the level of pensions. 
He also noted that much of the republic's military-industrial 
complex during Soviet times had converted to civilian 
production, and now these factories had begun to close due to 
the crisis.  He said that Tatarstan did not have any 
experience with massive unemployment, and that this could 
begin to cause family and social problems if the head of the 
household were to lose his job.  (NOTE:  Shaymiyev claimed 
that unemployment was officially at only 3.2 percent of those 
able to work, but we believe the actual figure to be more 
like 10 percent.  Wage arrears continue to swell totaling 
over 185 million rubles.  The government has already begun to 
implement measures to combat the effect of the crisis on the 
economy.  As part of a 1.2 billion ruble program to combat 
unemployment, over 19,000 workers have already found new jobs 
mostly in the agriculture and construction sectors.  END 
NOTE).  Shaymiyev also thought that there were possibilities 
 
MOSCOW 00001790  002 OF 003 
 
 
to add greater value to the 32
million tons of oil by 
refining more of it within Tatarstan and investing in the 
republic's petro-chemical industry. 
 
Shaymiyev:  "Tatarstan's Children are its Future" 
--------------------------------------------- ---- 
 
5.  (C)  Shaymiyev highlighted the success Tatarstan has 
achieved in sending its students on exchange programs to 
study in the United States.  He noted that Tatarstan is the 
first among all the other regions in such exchange programs. 
(NOTE:  On a per capital basis Tatarstan is the most 
forward-leaning regions in Russia in advocating for more 
educational exchange opportunities for its students.  In 2009 
we will send 29 high school students on the FLEX exchange 
program, we average one UGRAD fellow per year out of the 20 
sent from the Russian Federation, since 1993 there have been 
19 Fulbright scholars from Tatarstan and we will send four 
more to the U.S. this fall.  This year Tatarstan will send 17 
undergraduate and graduate students on its own 
government-financed program, down from the average of 30 per 
year since the program started in 2007.  END NOTE).  The 
Tatarstan Ministry of Education and Science has also 
recognized the need to retool and upgrade its cadre of 
English language instructors in order to help the republic 
build stronger international business ties.  It has signed a 
contract with a US-based NGO to provide teacher training 
workshops and has offered considerable cost sharing for next 
year's Kazan-based Senior English Language Fellow. 
 
6.  (SBU)  As part of its dedication to improving educational 
opportunities for children in Tatarstan, the ministry 
supported holding the 15th annual National Teachers of 
English (NATE) Conference in Kazan for several hundred 
English teachers from the region and provided a sizable 
contribution to the event's overall budget.  The Ambassador 
and Minister of Education and Science Albert Guilmutdinov 
opened the conference at the Kazan Power and Engineering 
University on June 25.  Several speakers stressed that the 
choice of a technical university as the venue for the 
conference rather than a foreign language faculty showed the 
importance placed by the ministry on the need for every 
student in Tatarstan to learn the English language. 
Concluding his visit to Kazan, the Ambassador hosted a 
reception at the republic's National Library for a large and 
enthusiastic contingent of alumni of U.S. educational and 
business exchange programs. 
 
Shaymiyev Seems Willing and Able to Remain as President 
--------------------------------------------- --------- 
 
7.  (C) Even at the age of 72, Shaymiyev seemed willing and 
able to remain as Tatarstan's president.  His jousting with 
Moscow over the republic's "special status" and his call last 
spring for the return to the election of local leaders (a 
view shared by a majority of Russians in a recent Levada 
Center poll) do not appear to have caused Medvedev to 
consider replacing him.  Shaymiyev told the Ambassador that 
Tatarstan's strength is derived from the Russian Federation 
and its federal system.  He admitted that the continued 
development of Russia's federal system is a difficult 
process, but that Russia will be a democratic state only if 
it is a federal state and a unitary state would not be 
sustainable.  Chairman of the Politics and Law Department at 
the Kazan Power and Engineering Institute Nail Mukharyamov 
placed little importance on current Russian Constitutional 
Court deliberations on requiring Tatarstan and other federal 
republics to amend their constitutions to bring them into 
line with the Russian Constitution on the primacy of federal 
over local law because of a provision in Tatarstan's 
Constitution allowing changes to the article dealing with the 
primacy of Tatar law only by a referendum, which he believes 
neither Kazan nor Moscow will countenance. 
 
8.  (C) Mukharyamov said that Shaymiyev's current tenure as 
president is without a set term and does not end next year 
despite the fact that he was proposed by Putin and approved 
by the local parliament in 2005.  He said that Shaymiyev 
could leave voluntarily after the 2013 Universiade, an 
international "university Olympics" sporting competition to 
be held in Kazan that many see as a critical prelude to the 
2014 Sochi Olympics.  Mukharyamov believed that the most 
likely candidate to replace Shaymiyev would be 40 year-old 
Kazan mayor Ilsur Metshin, with whom Shaymiyev retired to his 
private office after the meeting with the Ambassador 
concluded.  Mukharyamov said that Metshin's experience as 
mayor of Tatarstan's two largest cities and his willingness 
to protect Shaymiyev's family would be more crucial than 
running state-owned enterprises like KAMAZ or Tatneft in any 
decision as to who would replace Shaymiyev. 
 
MOSCOW 00001790  003 OF 003 
 
 
 
Preserving Tatarstan's Moderate Version of Islam 
--------------------------------------------- --- 
 
9.  (C)  During his meeting with Gusman Iskhakov, the 
republic's chief mufti, the Ambassador said he was struck 
during his drive from Samara to Kazan at the peaceful 
co-location of Muslim and Orthodox places of worship 
throughout Tatarstan.  Iskhakov replied that there was no 
special recipe for the historical acceptance by the region's 
Muslim faithful of other religious beliefs.  He made a 
linguistic point of distinguishing the acceptance of other 
religions from the mere "tolerance" of them.  He was emphatic 
that while Islam continues its resurgence in post-Soviet 
Tatarstan -- the republic boasts 11 centers of Muslim higher 
education including of the five federally-supported Russian 
Islamic Universities, two higher madrases and eight 
middle-level madrases -- Tatarstan would safeguard its 
cultural and historical moderation.  He noted that unlike in 
the 1990s, when most of the religious instructors at 
Tatarstan's religious schools were non-Russian, now only the 
Arabic-language instructors are from abroad.  He also said 
that whenever an imam or other religious leader returns from 
study abroad, he is "quarantined" and observed to see if he 
will cause any problems.  While Iskhakov admitted that there 
have been some problems, he said that it was not on the scale 
that has occurred in the North Caucasus. 
 
Comment: 
-------- 
 
10.  (C) We were warmly welcomed in Kazan by English 
teachers, exchange alumni, business leaders and government 
officials.  President Shaymiyev spoke frankly about the 
current economic problems in Tatarstan and was sincere in his 
desire for increased cooperation with us.  Under Shaymiyev, 
Tatarstan has charted its own course, including developing a 
highly successful educational exchange and commercial 
relationship with the United States.  Further cooperation and 
increased commercial ties there should be like pushing 
against an open door. 
BEYRLE

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09MOSCOW1787, EXTRANCHECK: PRE-LICENSE CHECK: SIGM PLUS COMPANY, MOSCOW,

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Reference ID Created Released Classification Origin
09MOSCOW1787 2009-07-10 12:55 2011-08-30 01:44 UNCLASSIFIED Embassy Moscow

VZCZCXYZ0004
PP RUEHWEB

DE RUEHMO #1787 1911255
ZNR UUUUU ZZH
P 101255Z JUL 09
FM AMEMBASSY MOSCOW
TO RUCPDOC/USDOC WASHDC PRIORITY
INFO RUEHC/SECSTATE WASHDC 4214
RHMFIUU/US CUSTOMS AND BORDER PROTECTION WASHINGTON DC

UNCLAS MOSCOW 001787 
 
SIPDIS 
 
USDOC FOR 532/OEA/LRITTER 
USDOC FOR 3150/USFCS/OIO/CEENIS/MCOSTA 
USDOC FOR 532/OEE/MO'BRIEN 
USDOC FOR 532/BIS/OEA/TWILLIS/EHOLLAND/ANALYST 
 
E.O. 12958: N/A 
TAGS: BEXP ETRD ETTC RS
SUBJECT: EXTRANCHECK: PRE-LICENSE CHECK: SIGM PLUS COMPANY, MOSCOW, 
RUSSIA, LICENSE NO. D419161 
 
REFTEL: REQUEST #4110019; DATED 6/15/2009 
 
1. Unauthorized disclosure of the information provided below is 
prohibited by Section 12C of the Export Administration Act. 
 
2. Reftel requested a pre-license check to determine the legitimacy 
and reliability of the end-user, Sigm Plus Company, Moscow, Russia. 
The company is listed on BIS license application D419161 as the 
ultimate consignee of one 00133.5kg arsine gas (AH3), packaged in 
cylinders as liquid under its own vapor pressure. This item is 
contQed for national security and anti-terrorism reasons under 
ECCN 3C004. The licensee is Spectra Gases, Inc., 3434 Route 22 West, 
Branchburg, NJ. 
 
3. On June 9, 2009, Export Control Attach Peter Liston and LES 
Natalya Shipitsina conducted the requested pre-license check at the 
offices of Sigm Plus Company, 3 Vvedenskogo Street, Moscow, Russia. 
The export control team met with Peter Bulaev, General Director and 
Michael Kovalenko, Financial Director. 
 
4. Sigm Plus Company was founded in 1991, as a manufacturer of 
semiconductors.  It has 54 employees at its facility in Moscow, 
Russia. Sigm Plus Company is a privately help Joint Stock Company 
with 6 shareholders. Sigm Plus Company was originally founded under 
the name Sigma Plus.  The name was changed in 1998 to Sigm Plus 
Company. The manufacture of semiconductors remains the primary 
business to date, with sales of their products in markets around of 
the globe, including the United States. Sigm Plus Company does not 
sell semiconductor material to any country of concern to the United 
States. Sigm Plus has in place a compliance program for the security 
and protection of Commerce licensed exports of dual-use commodities. 
Sigm Plus Company gave the Moscow export control team full access to 
its storage and production facilities in Moscow. Sigm Plus Company 
has received licensable commodities in the past from the United 
States and the European Community. 
 
5. The commodity in reftel will be stored and utilized on site at 
Sigm Plus CompanyQs semiconductor manufacturing facility in Moscow, 
Russia. The reftel commodity is a source material for Epitaxial 
Wafer production for optoelectronics. 
 
6. The Moscow export control team found that Sigm Plus Company has 
the commercial viability for the purchase of the reftel commodity. 
It has the technical and commercial sophistication required for the 
manufacture of semiconductor material. Sigm Plus Company has a 
legitimate need and a legitimate end use for the reftel commodity. 
 
 7. Recommendations: Post recommends Sigm Plus, Moscow, Russia, as 
reliable recipients of sensitive U.S. origin commodities. 
(FCS MOSCOW/ JMARKS/PLISTON) 
BEYRLE

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09MOSCOW1781, U.S. HOUSE FOREIGN AFFAIRS COMMITTEE MEETS WITH DUMA

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Reference ID Created Released Classification Origin
09MOSCOW1781 2009-07-10 10:39 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO4095
RR RUEHDBU RUEHIK RUEHLN RUEHPOD RUEHSK RUEHSL RUEHVK RUEHYG
DE RUEHMO #1781/01 1911039
ZNR UUUUU ZZH
R 101039Z JUL 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 4208
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE

UNCLAS SECTION 01 OF 03 MOSCOW 001781 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: PREL PGOV SNAR ECON RS
 
SUBJECT: U.S. HOUSE FOREIGN AFFAIRS COMMITTEE MEETS WITH DUMA 
COUNTERPARTS 
 
1. (SBU) Summary: U.S. Representatives of the House Foreign Affairs 
Committee met with Duma deputies June 29 to discuss an array of 
issues affecting U.S.-Russia relations.  Economic topics included 
Russia's WTO membership aspirations, IPR, corruption, and energy, 
while the discussion of internal issues covered Russian legislation 
on NGOs and political parties.  In addition to discussing adoption 
and visa questions, Duma members drew attention to a 1998 vehicular 
accident in Vladivostok involving a former U.S. Consul General.  On 
international issues, the sides discussed the NPT, START, missile 
defense, Iran, Pakistan, Afghanistan, and North Korea.  End 
Summary. 
 
-------------------------------------------- 
Duma & House Foreign Affairs Committees Meet 
-------------------------------------------- 
 
2. (SBU) In welcoming remarks for Chairman of the House Foreign 
Affairs Committee Howard Berman (D-CA), Representatives Howard Coble 
(R-NC), Bill Delahunt (D-MA), Brad Miller (D-NC), Dana Rohrabacher 
(R-CA), David Scott (D-GA), and Albio Sires (D-NJ), Duma Speaker 
Boris Gryzlov (United Russia) and Chairman of the Duma Committee on 
International Affairs Konstantin Kosachev (United Russia) noted the 
value of the Duma-HFAC meetings, now in their fourth round, as one 
of the few venues for the U.S. and Russian lower houses to 
communicate.  Kosachev welcomed Chairman Berman's suggestion to host 
the next round of meetings outside of the capital area, while 
maintaining the current format of the talks. 
 
---------------------- 
U.S.-Russian Relations 
---------------------- 
 
3. (SBU) In the first session of the June 29 talks, Kosachev 
characterized U.S.-Russian relations as in a third phase since the 
collapse of the Soviet Union.  After initial "romantic relations" 
under President Yeltsin in the 90's, the post-9/11 era was one of 
goodwill, but no follow-up, Kosachev posited, leading to a growing 
disappointment in Russia with the U.S.  Now, in the third phase of 
relations in the wake of the August 2008 Russia-Georgia war, the 
U.S. and Russia needed to find a way to coexist and cooperate, 
moving away from an "our-theirs" world view to one of solving global 
problems such as the economic crisis or Afghanistan.  In this 
regard, Kosachev argued against moralizing politics in favor of 
moving toward a pragmatic approach in U.S.-Russian relations, as the 
U.S. was already doing with China.  Committee member Valeriy 
Bogomolov (United Russia) asserted that all countries leveraged 
their advantages, saying, "We act like you do.  In foreign policy 
there are no friends, only interests." 
 
5. (SBU) First Deputy Chairman of the Committee on International 
Affairs Leonid Slutsky (Liberal Democratic Party) listed permanent 
normal trade relations, graduation from Jackson-Vanik, the 123 
Agreement, and disarmament as major issues in U.S.-Russia relations. 
 While Committee member Semyon Bagdasarov (Fair Russia) noted 
differences in opinion on issues such as Manas, the Baltics, Iran, 
Syria, Georgia, and Afghanistan, Committee member Mikhail Terentiev 
urged both sides to find uniting, not dividing subjects, with 
support from First Deputy Chairman of the Duma Committee on Economic 
Policy and Enterprises Vladimir Golovnyov (United Russia), who asked 
the U.S. to aid Russia in creating a high-tech economy.  In 
response, Chairman Berman stated that the U.S. would revise its 
technology export controls regarding Russia but that the U.S. was 
concerned with the re-export of sensitive technology (e.g., 
Russian-Iranian cooperation). 
 
4. (SBU) In his opening remarks, Representative Delahunt suggested 
people-to-people exchanges as one way to rebuild U.S.-Russian 
relations.  Noting the presence of Olympic gold medalists in the 
Duma, he proposed creating a sports-based exchange program for young 
people.  Terentiev and others welcomed Rep. Delahunt's proposal. 
 
--------- 
Economics 
--------- 
 
WTO 
--- 
 
6. (SBU) Russian parliamentarians were optimistic about the chances 
for the trilateral customs union between Belarus, Russia and 
Kazakhstan to join the WTO, claiming that the unprecedented 
membership process did not contravene WTO rules.  Noting the 
"discriminating terms" upon which Russia's neighbors (e.g., Ukraine, 
Georgia, and Moldova) were admitted to the WTO, Kosachev stated that 
there was a lack of consensus among Russia's political-business 
establishment regarding the advantages of joining the WTO. 
 
IPR 
 
MOSCOW 00001781  002 OF 003 
 
 
--- 
 
7. (SBU) Russian Duma members stated that intellectual property 
protection had improved in Russia in recent years, with   Slutskiy 
suggesting that the problem of piracy was now no worse in Russia 
than in the U.S. 
 
Corruption 
---------- 
 
8. (SBU) In response to Rep Delahunt's s
tatement that corruption 
hindered foreign investment in Russia, Kosachev asserted that the 
issue of corruption was an internal Russian problem, which the GOR 
was committed to tackling. 
 
Energy 
------ 
 
9. (SBU) Bagdasarov suggested that there were two categories of 
energy states among former Soviet republics: 1) rich energy states 
such as those in Central Asia, and 2) transit countries such as 
Ukraine and Georgia.  Along with Slutskiy, he claimed that Ukraine 
exploited its role as an energy transit state for political ends, 
whereas Russia never used its energy supply to pressure neighboring 
states.  Noting that Russian gas still flowed to Georgia during the 
August 2008 conflict, Kosachev stated that Russia would trade gas 
with Ukraine regardless of its political regime.  Kosachev said that 
Russia had been charging neighboring states lower than average 
prices for gas to elicit support from their regimes, and claimed 
that energy discords with these states were a product of Russia's 
raising gas prices to market levels. 
 
--------- 
Adoptions 
--------- 
 
10. (SBU) Chairman of the Committee on Family, Women and Children 
Elena Mizulina (Fair Russia) argued that while there had been 
relatively few deaths of adopted Russian children in the U.S. (16), 
these cases had reverberated throughout Russia.  Therefore some Duma 
deputies were considering prohibiting the adoption of Russian 
children by U.S. citizens.  To ward that off, Mizulina proposed an 
information-sharing agreement on adopted children, which would help 
dispel the "myths" that existed within Russia on Russian children 
adopted by Americans.   Congressman Delahunt rejected Mizulina's 
criticism that the Hague Convention on Intercountry Adoption was 
mainly designed to protect the interests of adopting parents, and 
urged Russia to ratify the Convention. 
 
----- 
Visas 
----- 
 
11. (SBU) Calling the U.S. and Russian visa regimes a "stumbling 
block" in U.S.-Russian relations, Member of the Committee on Family, 
Women, and Children and Olympic Gold Medal winner Svetlana Zhurova 
lamented the continual problems for Russian citizens in obtaining 
U.S. tourist visas, including denials for prominent, well-to-do 
Russian businessmen, sportsmen and politicians. 
 
---------------- 
Alexander Kashin 
---------------- 
 
12. (SBU) During the business lunch, Parliamentarian Maksim Mishenko 
(United Russia) drew attention to a 1998 case in which former U.S. 
Consul General in Vladivostok Douglas Kent was involved in a car 
accident with Russian citizen Alexander Kashin, which left Kashin 
partially paralyzed.  Mishenko stated that providing adequate 
compensation to Kashin would help strengthen bilateral ties, as many 
Russians considered the case a test of U.S.-Russian relations.  In 
what appeared to be a pre-planned move, Chairman Kosachev presented 
a document to Chairman Berman outlining the Russian position on the 
accident and requesting adequate compensation to Mr. Kashin. 
Following the lunch, Chairman Berman was met outside the Duma dining 
room by the press, who photographed and filmed him with the 
document.  Subsequently, during the closing press conference between 
the two foreign affairs committees, Parliamentarian Mishenko brought 
in the wheelchair-bound Kashin to be photographed and filmed with 
the Congressmen. 
 
-------------------- 
NGOs & Press Freedom 
-------------------- 
 
13. (SBU) Speaking to concerns shared by Congressmen on the status 
of NGOs within Russia, Chairman Kosachev announced that in Fall, the 
Duma would introduce changes to Russian legislation that regulated 
 
MOSCOW 00001781  003 OF 003 
 
 
NGOs with the aim of reducing its "restrictive nature."  Turning to 
the spike in killings of Russian journalists in recent years, 
Chairman Kosachev admitted that the assassinations had been a blow 
to Russia's reputation and stated that all killings would be 
thoroughly investigated.  On press freedom, Chairman Kosachev said 
that Russia's "pluralistic press" included many which were critical 
of the GOR.  Noting that equal access to TV among political parties 
remained a problem, Kosachev stated that the Duma was working on a 
bill to assure equal press access to all Russian political parties. 
 
--- 
WMD 
--- 
 
14. (SBU) Chairman of the State Duma Defense Committee and former 
Russian Ambassador to NATO, General Victor Zavarzin (United Russia), 
said that Russia favored strengthening and universalizing the 
Non-Proliferation Treaty (NPT) and improving international 
inspection and verification regimes such as the IAEA.  Although he 
claimed that Iran was far from developing a reliable nuclear weapon, 
he advocated tying Iran into the NPT framework.  Russia agreed with 
the U.S. that recent North Korean missile tests violated UN 
resolutions, and that it was necessary to continue Six-Party talks 
with North Korea.  While it was important to conclude a follow-up 
START Treaty that addressed all forms of nuclear weapon delivery 
systems, Zavarzin charged that the proposed U.S. missile defense 
(MD) system hindered U.S.-Russia cooperation on complex issues. 
Chairman Berman responded that the threat of a nuclear Iran was the 
reason for the MD system, adding that the Obama administration was 
reviewing the U.S. policy on MD. 
 
15. (SBU) Bagdasarov cited North Korea and Pakistan as countries of 
great concern to Russia.  Arguing that it was "normal" to desire to 
obtain nukes, he said the real question was not whether Iran would 
develop nuclear weapons, but whether the governing regime was a 
friend or foe of the U.S.  Congressman Delahunt stated that a 
nuclear-armed Iran could turn on Russia, causing Kosachev to call 
for greater U.S.-Russian intelligence cooperation, claiming that 
Russia was not privy to the intelligence that proved an Iranian 
missile threat. 
 
16. (SBU) Chairman Berman rejected Committee on International 
Affairs member and Communist Party member Yuliy Kvisinkiy's claim 
that the U.S. was behind recent post-election unrest in Iran and 
sought regime change there as it had in Kosovo, Georgia, and 
Ukraine.  Kvisinkiy argued that Iran would hardly attack the U.S., 
knowing it could be annihilated by a U.S. nuclear response. 
Alleging a nuclear Iran would not change the regional balance of 
power, Kvisinkiy said the U.S. was using the Iranian missile threat 
so as to justify its MD plans.  Representative Rohrabacher responded 
that Russia had nothing to fear from the U.S. MD system. 
 
----------- 
Afghanistan 
----------- 
 
17. (SBU) Bogomolov said that the narcotics problem in Afghanistan 
was destabilizing Central Asia and an important source of terrorist 
funding.  In response, Congressman Rohrabacher stated that the U.S. 
possessed a fungus that could destroy Afghanistan's poppies within 
one week, w
hich it had not used yet out of concern that the fungus 
could be considered a biological weapon by some. 
 
BEYRLE

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09MOSCOW1780, CODEL BERMAN MEETS WITH CARNEGIE CENTER AND AMCHAM

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Reference ID Created Released Classification Origin
09MOSCOW1780 2009-07-10 10:36 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO4085
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK
RUEHYG
DE RUEHMO #1780/01 1911036
ZNR UUUUU ZZH
P 101036Z JUL 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4206
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 MOSCOW 001780 
 
 
SENSITIVE 
SIPDIS 
 
E.O.  12958: N/A 
TAGS: PREL PGOV ECON RS
SUBJECT:  CODEL BERMAN MEETS WITH CARNEGIE CENTER AND AMCHAM 
 
1. (SBU) Summary:  In separate meetings June 30, Codel Berman met 
with Carnegie Center experts and AmCham members.  Carnegie's Trenin 
told the Codel that missile defense was the "make-or-break" issue 
for Russia's post-START treaty posture.  Russia benefited from U.S. 
tensions with Iran, although it had little influence over that 
country.  Masha Lipman and Nikolay Petrov described the GOR's 
internal structure as "clannish" with competing visions, while 
Putin's job was to maintain the public image of the government as a 
cohesive whole.  Russia's recent WTO membership decision was proof 
that the liberal clan was in the minority.  AmCham members told the 
Codel that business corruption was decreasing in Russia, but still 
amounted to 5-10 percent of operating expenses.  U.S. companies 
operating in Russia were positively affecting Russians' views of 
corruption.  End summary. 
 
--------------------------- 
Carnegie on START, MD, Iran 
--------------------------- 
 
2.  (SBU) In a June 30 meeting, Carnegie Center Director Dmitriy 
Trenin told House Foreign Affairs Committee Howard Berman (D-CA), 
Representatives Howard Coble (R-NC), Bill Delahunt (D-MA), Brad 
Miller (D-NC), Dana Rohrabacher (R-CA), David Scott (D-GA), and 
Albio Sires (D-NJ) that Russia did not want a START treaty renewal 
at any price, although it understood it was bargaining from a 
position of global military weakness.  For Russia the negotiating 
process was more important than concluding a post-START treaty, as 
the process put Russia on the same level as the U.S.  Russia 
considered missile defense (MD) to be the "make-or-break" issue in 
this context, as Moscow believed the U.S. was striving through MD to 
acquire invulnerability against Russian missiles.  Trenin held out 
that this central tenet of Russian strategic thinking could be 
weakened if the U.S. and Russia were to agree to a joint effort 
study on MD, leading to a breakthrough in the U.S.-Russian 
relationship.  However, Russia had nothing it could offer the U.S. 
to make cooperation on MD worthwhile. 
 
3.  (SBU) Trenin said that Russia's influence on Iran was limited, 
although Moscow considered President Obama's January letter 
purportedly asking for Medvedev's assistance on Iran to be an 
implicit acknowledgement of Russian interests in the region.  While 
Russia considered sanctions to be ineffective, it was waiting for 
the U.S. policy on Iran to prove itself.  Trenin stated that Russia 
benefited from tense U.S.-Iran relations, which allowed Russia to 
maintain closer ties with the "rising power" in the Middle East. 
 
----------------------------- 
Carnegie on internal politics 
----------------------------- 
 
4.  (SBU) Carnegie's Masha Lipman told the congressmen that the 
Russian government was not split into factions, rather there were 
different "visions" amongst members, as evidenced by recent 
contradictory statements by 1st Deputy PM Shuvalov and Deputy PM 
Sechin on the value of low oil prices for Russia.  Putin ensured 
that such differences of opinion did not spill out to the public, 
maintaining the image of a cohesive and loyal government.  Lipman 
did not judge the current economic crisis to be dire enough to 
threaten Putin's position, or even cause him to change his economic 
policies. 
 
5.  (SBU) Carnegie's Nikolay Petrov said the Center had a working 
group to figure out the "clan structure" in the Russian government. 
He said the clans were not stable, changing according to the issue 
at hand.  Putin played the clans by favoring one on one day, and 
another on the next.  That the liberal clan was in the minority was 
illustrated by Putin's unexpected decision to pursue WTO membership 
from within a customs union with Kazakhstan and Belarus. 
 
-------------------- 
AmCham on Corruption 
-------------------- 
 
6.  (SBU) In a June 30 meeting with American Chamber of Commerce 
members in Russia, AmCham members told Codel Berman that the 
situation on corruption in Russia, while still a concern, had 
improved somewhat for U.S. companies doing business there.  Overall, 
one member estimated that corruption in Russia caused U.S. 
businesses an average of 5-10 percent of operating expenses. 
Although the level of government corruption was perceived as 
unchanged, instances of corrupt business practice had declined. 
AmCham members attributed this to the realization that corruption 
slowed down doing business, siphoned off profits and subsidies, and 
increased expenses to cover the higher risk that working in a 
corrupt environment entailed.  All agreed that larger companies were 
more able than smaller and medium sized companies to fend off 
attempts by Russian officials and business partners to engage in 
corrupt practices.  AmCham president Somers highlighted the positive 
influence of U.S. business in Russia, with 95 percent of Russian 
 
MOSCOW 00001780  002 OF 002 
 
 
employees in Ame
rican companies believing their company "conducted 
business in a transparent manner," compared to 66 percent in Russian 
companies. 
 
BEYRLE

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