Daily Archives: July 13, 2009

09MOSCOW1797, DA, WE CAN”: OPTIMISM SWEEPS CIVIL SOCIETY SUMMIT

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Reference ID Created Released Classification Origin
09MOSCOW1797 2009-07-13 14:27 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Moscow

VZCZCXRO5888
RR RUEHDBU RUEHLN RUEHPOD RUEHSK RUEHVK RUEHYG
DE RUEHMO #1797/01 1941427
ZNR UUUUU ZZH
R 131427Z JUL 09
FM AMEMBASSY MOSCOW
TO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHC/SECSTATE WASHDC 4231

UNCLAS SECTION 01 OF 03 MOSCOW 001797 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM KDEM RS
SUBJECT: "DA, WE CAN": OPTIMISM SWEEPS CIVIL SOCIETY SUMMIT 
 
REF: MOSCOW 1620 
 
1. (SBU) Summary: The Civil Society Summit of July 6-7 
brought together approximately 100 NGO representatives from 
both the U.S. and Russia.  Although participants were pleased 
with the detailed results of the Summit's various Working 
Groups, they saved their most effusive praise for President 
Obama, noting his own past as a community organizer and 
calling him "one of us."  Two factors remained to dampen the 
excitement: the absence of Medvedev at the Summit, and the 
decision to appoint conservative Kremlin Chief of Staff 
Vyacheslav Surkov to head up the Russian side of the newly 
created bilateral commission on Civil Society.  Nonetheless, 
the existence of this commission indicates that this Summit 
will likely contribute to bilateral cooperation in this area, 
both at the government and at the NGO level.  End Summary. 
 
Summit goals: Change the tone, get something done 
--------------------------------------------- ---- 
 
2. (SBU) The Civil Society Summit of July 6-7, brought 
together in Moscow approximately 100 NGO representatives from 
both the U.S. and Russia, working in areas such as the 
environment, community development, education, health, 
anti-corruption, and human rights.  Groups identified areas 
for civil society collaboration and joint efforts to address 
common challenges.  Organized by the New Eurasia Fund (NEF) 
in Russia and the Center for Strategic and International 
Studies in the U.S., the Summit was designed to parallel the 
bilateral summit between Presidents Obama and Medvedev; as 
Human Rights Watch Russia director Allison Gill told us July 
9, "the two civil societies have grown apart as the two 
governments have," making this Civil Society Summit, as NEF 
chief Andrey Kortunov said at the event, "an important first 
step." 
 
3. (SBU) In general participants -- especially those from 
less populous regions -- who address technical aspects of 
environmental protection, housing, community economic 
development, youth engagement, and encouragement of more 
healthy living, all appreciated the opportunity to meet their 
counterparts, with some Americans interacting with Russian 
civic leaders for the first time.  They all committed 
themselves personally and professionally to maintaining 
contacts and sharing information and state-of-the-art models 
in their sectors. 
 
4. (SBU) At the conference, a number of human rights 
representatives noted that challenges in Russia -- such as 
security, political prisoners, and working conditions for 
NGOs -- remain more severe for Russian NGOs than for their 
American counterparts.  At the same time, they said that it 
will be important to shift the paradigm of U.S. civil society 
"assistance," replacing it with mutual cooperation on issues 
that both countries face, with the U.S. side scrupulously 
avoiding a lecturing or paternalistic tone.  To achieve this 
careful balance, the Human Rights Working Group (HRWG) within 
the larger Civil Society Summit recommended including both 
Russian and American government officials and civil society 
representatives in the dialogue, as well as addressing 
priority topics for both countries.  (Note: The bilateral 
commission on civil society, with NSC Senior Russia Director 
Mike McFaul representing the U.S. and Kremlin Chief of Staff 
Vyacheslav Surkov the Russian side, is likely to begin work 
in the fall.  End Note.)  The HRWG's specific recommendations 
noted problems with human rights practices in both countries, 
such as the need for the U.S. to close Guantanamo, and for 
Russia to "improve the climate for human rights NGOs and 
independent reporters in Russia." 
 
Bravo to the Americans! 
----------------------- 
 
5. (SBU) Although most Russian human rights defenders are 
conditioned to temper any occasional euphoria, the 
combination of the Civil Society Summit's concrete 
recommendations and President Obama's star power left Russian 
human rights activists at the who participated feeling upbeat 
and energized.  Veteran activist Lyudmila Alekseyeva, head of 
the Moscow Helsinki Group (MHG), sang President Obama's 
praises to us July 9, and exclaimed, "Bravo to the 
Americans!" for electing him.  She also expressed the belief 
that the Civil Society Summit in general, and particularly 
the individual working groups, "went beyond pretty words" in 
their discussions and recommendations to the two Presidents. 
Svetlana Gannushkina of Civic Assistance, who also serves on 
Medvedev's Human Rights Council, similarly told us that she 
had found the Civil Society Summit's work useful, and had 
been "dazzled" by Obama's speech, which she called "a 
surprising feeling."  Noting that Obama himself had once 
worked as a community organizer, she said that the consensus 
 
MOSCOW 00001797  002 OF 003 
 
 
among those present was that he is "one of us," a member of 
the civil society brotherhood. 
 
6. (SBU) Some participants viewed the event in a more sober 
light.  Human Rights Watch's Gill was cir
cumspect, calling 
the HRWG's accomplishments "a good start," but noting that a 
Civil Society G-8 had taken place alongside a G-8 meeting 
three years ago, and that nothing had resulted from it.  Oleg 
Orlov of Memorial, speaking to us July 9, also cautioned 
against reading too much into the event, but said that it was 
"interesting" to hear Obama's perspective, and "useful" to 
get human rights defenders together to talk, something he 
noted happens too rarely. 
 
7. (SBU) In the media, although some writers had feared that 
Obama would eschew direct criticism of the GOR's human rights 
record, most commentators agreed that he had managed to raise 
the important issues, while remaining respectful. 
Transparency International Russia head Yelena Panfilova, who 
delivered a speech on anti-corruption efforts to Obama at the 
Civil Society Summit, was pleased with Obama's efforts to 
remove any perceived paternalism from U.S. discussion of 
Russia's record.  Lev Ponomarev of For Human Rights would 
have liked to have heard more from Obama about the 
Khodorkovskiy case, although he noted with satisfaction that 
the HRWG explicitly acknowledged "the existence of 
politically motivated justice" in Russia.  Tatyana Stanovaya 
of the Center for Political Technologies wrote on politcom.ru 
that the process of reset will take some time, but that it is 
clear that it will apply to civil society and that it will 
continue.  She said that the U.S. has made it clear that 
democracy and human rights will remain part of the dialogue, 
and that there are enough points of mutual concern that 
Russia will be able to bring to the table to enable the 
"political will" for dialogue on their end. 
 
Two disappointments 
------------------- 
 
8. (SBU) Both in the media and among our contacts, nearly all 
observers pointed to the absence of Medvedev at the Summit as 
a discouraging sign.  Gannushkina called his absence 
"ominous," especially when combined with the Kremlin's 
decision to appoint conservative Kremlin Chief of Staff 
Vyacheslav Surkov to head up the Russian side of the newly 
created bilateral commission on Civil Society.  Orlov 
speculated that Medvedev avoided the Civil Society Summit in 
order to signal to conservative elites that there are limits 
to how far he will go in reforming society and defying their 
wishes.  (Note: In a press conference following the Civil 
Society Summit, Ella Pamfilova, who heads the Presidential 
Council on Civil Society and Human Rights, claimed that 
Medvedev had not received the invitation in time to act on 
it.  End Note.) 
 
9. (SBU) As for Surkov, on July 8, immediately after the 
Civil Society Summit, a group of 22 human rights activists 
meeting at the Sakharov Center signed an open letter to 
Medvedev and Obama, published on the MHG website, urging 
Medvedev to re-examine his decision to appoint Surkov. 
Ponomarev told the mainstream liberal business daily 
Vedomosti on July 9 that he had little doubt that Surkov 
would marginalize the most influential activists, and that 
the commission would remain under Kremlin control "like the 
Public Chamber."  Medvedev had already disappointed rights 
activists in May by appointing Surkov to head the working 
group formed to re-work a deeply unpopular 2006 law which 
placed a number of burdensome registration restrictions on 
NGOs (reftel).  The group produced modest, though concrete, 
results, with a law passing the State Duma in June 
meaningfully easing registration for about one-third of 
Russian NGOs, and providing no improvement in the law for 
foreign-funded NGOs. 
 
Comment 
------- 
 
10. (SBU) Both the U.S. and the GOR must now accomplish a 
balancing act in promoting civil society.  For the U.S., the 
challenge will be how to address the clear asymmetry between 
the two countries in human rights problems, while still 
changing the perception of paternalism into one of mutual 
respect and cooperation.  For the GOR, and Medvedev in 
particular, it will be how to show that he is serious about 
reforming systemic political, legal, and social degradation 
in Russia, while at the same time avoiding accusations from 
conservatives that he is selling out to the West and 
returning the country to the dreaded 1990s.  Human rights 
defenders and other commentators appear confident in Obama's 
ability to attain this balance, but are less sure about 
Medvedev.  His choice of Surkov to head the bilateral 
 
MOSCOW 00001797  003 OF 003 
 
 
commission is a clear attempt by the Kremlin to have it both 
ways, as the commission represents a concrete piece of 
potential progress, while Surkov has already established his 
conservative bona fides as the author of "sovereign 
democracy" and the main obstacle to greater progress on 
amending the NGO law. 
BEYRLE

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09MOSCOW1794, RUSSIAN MFA DOWNPLAYS DISCORD WITH UKRAINE

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Reference ID Created Released Classification Origin
09MOSCOW1794 2009-07-13 13:16 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO5794
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHMO #1794/01 1941316
ZNY CCCCC ZZH
P 131316Z JUL 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4227
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 001794 
 
SIPDIS 
 
E.O. 12958: DECL: 07/13/2019 
TAGS: PREL PGOV ENRG RS UP
SUBJECT: RUSSIAN MFA DOWNPLAYS DISCORD WITH UKRAINE 
 
Classified By: Acting Pol M/C David Whiddon for reasons 1.4 (b), (d) 
 
1.  (C) Summary.  The MFA downplayed press speculation that 
Russia stood to benefit from the de-sovereignization of 
Ukraine, but said Russia would continue to protest against 
attempts to "ukrainize" Crimea.  While several recent accords 
showed that Russia-Ukraine relations remained fruitful on the 
working level, the Poltava and Konotop battle commemorations 
were examples of discord.  However, Russian barbs like 
Putin's doomsaying on Ukraine's gas payments were reactions 
to Ukrainian antagonism and were meant to show European 
customers who would be responsible for any future gas crisis. 
 While Ambassador Chernomyrdin's resignation as Russia's 
ambassador to Kyiv was not a dismissal by the Kremlin, 
Zurabov's nomination could neither be construed as 
fence-building, nor provoking.  The MFA expected both 
Tymoshenko and Yanukovich to drive a more Russia-friendly 
policy if they won the presidential elections, while 
describing Yatseniuk as a "cautious, reasonable, and 
pragmatic" politician.  End Summary 
 
---------------------- 
Crimea and sovereignty 
---------------------- 
 
2.  (C) On July 8, MFA 2nd CIS Department Director Vyacheslav 
Yelagin downplayed recent op-eds that Ukraine might be losing 
its sovereignty from within, leaving the door open for Russia 
to take over the Crimea and eastern Ukraine, possibly even 
through war.  Yelagin told us Russia would continue to honor 
its border agreement with Ukraine, so there could be no 
thought of war.  However, Russia would also continue to 
protest Ukrainian attempts to "ukrainize" Crimea.  In a July 
9 press conference, MFA speaker Nesterenko appealed to the 
OSCE High Commission on National Minorities to address 
"discriminatory steps" against the Russian-speaking 
population in Ukraine.  Yelagin suggested that the current 
tensions in Crimea would subside if Ukraine abandoned its 
intention to join NATO.  Russia's preferred "end-state" for 
Ukraine would be a Ukraine outside of NATO (EU membership 
would be acceptable), with Crimea remaining part of Ukraine, 
however with sufficient protection for the Russian 
population's culture and language. 
 
-------------------- 
No "common language" 
-------------------- 
 
3.  (C) Yelagin pointed to numerous instances of businesslike 
cooperation between Russia and Ukraine to underscore that 
relations between the countries remained calm at the working 
level.  He cited as successes trade relations, the June 4 
cooperation agreement of the Ministries of Interior to 
address drug trafficking, organized crime, and illegal 
migration, the June 11 agreement on the protection of 
technologies and cooperation in the research and use of space 
for peaceful purposes, and the nuclear waste agreement 
planned for signature July 15. 
 
4.  (C) However, Yelagin admitted that sides had not "found a 
common language" during the June 16-17 Kerch Strait talks, 
and Ukraine had not sent a high enough level delegation to 
the Battle of Poltava commemoration, despite Russia's efforts 
in preparing the event and the attendance of Head of the 
Kremlin Administration Sergei Naryshkin.  In addition, 
Yelagin said that Ukrainian president Yushchenko's plan to 
visit Konotop in Ukraine to commemorate the 1659 victory of 
Ukrainian, Polish, and Turkish troops over Russia was seen 
very negatively in Moscow. 
 
5.  (C) Yelagin said Putin's inflammatory remarks, whether on 
the prospects of Ukraine paying its next gas bill, or when 
quoting Russian general Denikin describing Ukraine as "Russia 
minor," were always reactions to Ukrainian provocations.  On 
gas, Putin was also trying to ensure that the EU understood 
whose fault it would be when the next gas crisis erupted, and 
could not claim it had not been warned.  Yelagin noted 
Ukraine's "black list" of individuals barred from entering 
Ukraine (like Duma deputy Konstantin Zatulin, who was refused 
entry June 6) and Kyiv's decision not to allow the Russian 
Black Sea Fleet to use the Mars-75 radio-navigation station 
as further examples of Ukrainian antagonism. 
 
----------------------------------------- 
Chernomyrdin's departure not a bellwether 
----------------------------------------- 
 
MOSCOW 00001794  002 OF 002 
 
 
 
6.  (C) Yelagin said that Chernomyrdin's resignation as 
ambassador to Ukraine was not a "dismissal" by the Kremlin. 
Noting Chernomyrdin's poor health and unusually long tenure 
in Kyiv (eight years), Yelagin suggested that it was 
Chernomyrdin's, not the Kremlin's, decision to go. 
 
7.  (C) Yelagin called the appointment of a political 
appointee to a former Soviet Union country, such as former 
minister of Health and Social Development Mikhail
Zurabov's 
appointment to Kyiv, a normal procedure for Moscow. 
Therefore, while there could be no talk of an attempt by 
Moscow to antagonize the Yushchenko administration by the 
nomination, one could also not say that Zurabov's nomination 
was intended as a first step in improving the strained 
Moscow-Kyiv relations. 
 
--------------------------------------------- - 
Russia publicly agnostic on upcoming elections 
--------------------------------------------- - 
 
8.  (C) Yelagin did not allow himself to be drawn out on 
Russian preferences in the Ukrainian presidential campaign. 
He allowed that Moscow expected both Yanukovich and 
Tymoshenko to conduct policies more "friendly" to Russia, but 
doubted a coalition between the two could hold.  Yelagin 
judged presidential contender Yatseniuk to stand some chance 
of winning, and described him as a "cautious, reasonable, and 
pragmatic politician." 
 
------- 
Comment 
------- 
 
9.  (C) Although Yelagin expected his portfolio to slow down 
for the summer, it will be increasingly hard for Moscow not 
to meddle in Ukrainian affairs as the heating season and 
Ukraine's presidential elections approach. 
BEYRLE

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09MOSCOW1793, ASD VERSHBOW DISCUSSES SUMMIT WITH ROUNDTABLE OF

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Reference ID Created Released Classification Origin
09MOSCOW1793 2009-07-13 09:48 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO5518
RR RUEHDBU RUEHSL
DE RUEHMO #1793/01 1940948
ZNY CCCCC ZZH
R 130948Z JUL 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 4224
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEKJCS/SECDEF WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUEKDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 001793 
 
SIPDIS 
 
E.O. 12958: DECL: 07/09/2019 
TAGS: PREL PGOV PARM MARR MCAP MNUC EAID RS
SUBJECT: ASD VERSHBOW DISCUSSES SUMMIT WITH ROUNDTABLE OF 
EXPERTS 
 
Classified By: Ambassador John R. Beyrle.  Reasons 1.4 (a, b, d, f, and 
 h). 
 
1. (C) Summary:  A panel of experts told ASD Vershbow the 
July 6-8 POTUS visit had been a success, with both sides 
working hard to ensure a positive outcome.  Experts praised 
Obama's rhetoric as defending U.S. values without meddling in 
Russia's internal affairs.  Being Obama's primary 
interlocutor may have boosted Medvedev's standing abroad, but 
it was unclear that this would affect his relationship with 
Putin.  Experts argued that the START Follow-On agreement was 
not a big step forward and cooperation on missile defense 
(MD) would be hard to achieve.  Concluding an agreement on 
the transit of lethal goods to Afghanistan demonstrated 
Russia's support for Afghan reconstruction.  Pakistan and not 
Iran was the biggest proliferation threat as far as the GOR 
was concerned, experts said.  They also argued that the U.S. 
should provide financial assistance to Georgia if it was to 
regain the breakaway regions of South Ossetia and Abkhazia. 
They added that military reform seemed to be making progress. 
 End Summary. 
 
----------------------------- 
Experts Call Summit a Success 
----------------------------- 
 
2. (C) During a July 8 roundtable hosted by the Moscow 
Carnegie Center, Deputy Editor-in-Chief of the Yezhednevniy 
Zhurnal Aleksandr Golts, Director of the Strategic 
Assessments Institute Aleksandr Konovalov, President of the 
New Eurasia Foundation Andrey Kortunov, and Carnegie Center 
expert Liliya Shevtsova told Assistant Secretary of Defense 
Alexander Vershbow the recent POTUS visit was a success. 
Shevtsova argued that the pessimists who predicted the summit 
would fail were wrong.  She said Russia's political and 
business elites did not want a return to the icy relations 
between the U.S. and Russia, as was the case after the August 
2008 conflict in Georgia.  This helped ensure the success of 
the summit. 
 
3. (C) Kortunov agreed, adding that Medvedev wanted a 
successful visit by Obama as a prelude to the G-8 summit in 
Italy.  By working constructively with Obama, Medvedev could 
increase his own visibility as a world leader.  Obama also 
appeared willing to take Russia's concerns into account, 
Kortunov argued, and this quieted some of the anti-U.S. 
rhetoric in Russia.  He warned however, that the GOR may 
spoil the upbeat mood by taking provocative actions such as 
flying bombers to Venezuela again. 
 
4. (C) Golts said the summit was a success for both the U.S. 
and Russia.  The U.S. secured a deal on lethal transit to 
Afghanistan, while working with the United States conferred 
international legitimacy on the GOR. 
 
---------------------------------- 
Obama's Rhetoric Struck Right Tone 
---------------------------------- 
 
5. (C) The experts agreed that Obama's tone was appropriate 
for the occasion, especially when talking directly to the 
Russian people, such as his speech at the New Economic 
School.  They said President Obama defended U.S. values 
without sounding as though he wanted to meddle in Russia's 
internal affairs.  Some Russian liberals may have been 
disappointed by the President's meeting with opposition 
leaders, however, as he appeared not to acknowledge the 
shortcomings of the Russian system or urge the opposition 
leaders to "fight for democracy." 
 
---------------------------------- 
"Dangerous Game" With Tandemocracy 
---------------------------------- 
 
6. (C) Konovalov and Kortunov argued that the summit boosted 
Medvedev's standing at home.  The creation of the 
Obama-Medvedev Commission (as opposed to a Biden-Putin 
Commission) sQd that Medvedev was going to get hands-on 
experience dealing with strategic issues.  Kortunov agreed, 
arguing that those who work for Medvedev were more visible 
during the summit than Putin's cadre. 
 
7. (C) Shevtsova, however, disagreed, arguing there is no 
evidence that anyone other than Putin is in charge of 
 
MOSCOW 00001793  002 OF 003 
 
 
Russia's foreign policy.  By talking largely to Medvedev, who 
Shevtsova characterized as Putin's "translator," POTUS may 
have boosted Medvedev's international standing somewhat, but 
this was a dangerous game.  It is unclear what effect, if 
any, this will have domestically.  Shevtsova posited that 
Putin's cadre still carried more weight than Medvedev's 
(Prikhodko, she said, was "useless" compared to Ushakov), and 
Medvedev may feel pressure to prove his loyalty to Putin by 
resorting to harsh rhetoric of the kind he had uttered after 
the August 2008 conflict in Georgia. 
 
---------------------------------------- 
START Follow-On Agreement
 Not A Big Step 
---------------------------------------- 
 
8. (C) Konovalov argued the approach the U.S. and Russia each 
take toward nuclear disarmament has changed since the Cold 
War.  Then, both sides disarmed out of fear of the other 
side.  Now, the two sides engage in disarmament talks to set 
a good example for other countries to follow the 
Nonproliferation Treaty.  He said this explained why the 
START Follow-On agreement signed during the summit was not a 
"serious document." 
 
9. (C) Golts agreed, arguing that little progress was 
actually made on nuclear disarmament.  Tough issues such as 
counting mechanisms had not yet been agreed.  The issue of 
inspections, he argued, would be even tougher because the GOR 
was frustrated by the U.S. presence at Votkinsk.  He posited 
that a START Follow-On agreement was not vital to the 
national security interests of the U.S. or Russia, but since 
both sides had invested so much effort into it, inability to 
reach a final agreement would be a large failure. 
 
--------------------------------------------- 
Missile Defense Cooperation Will Be Difficult 
--------------------------------------------- 
 
10. (C) Konovalov argued that, even if MD had not been 
settled during the summit, Obama would have most likely ended 
the "third site" program unilaterally if the Russians had not 
made such an issue of it due to a combination of factors, 
such as the system's unreliability, cost, and the financial 
crisis.  True MD cooperation would require joint crews at MD 
facilities, he said, including in Poland and the Czech 
Republic. 
 
11. (C) Golts argued, however, that talk of joint cooperation 
on MD ignored the main issue:  would the U.S. go ahead with 
plans to deploy elements of an MD system in Poland and the 
Czech Republic.  If not, then Russian radar systems could be 
used and joint cooperation could be achieved.  While nobody 
seriously believed deploying an MD system in Poland and the 
Czech Republic threatened Russian security, the GOR could 
never admit that, and therefore could not cooperate on a 
system that included bases there. 
 
----------------------------- 
Lethal Transit to Afghanistan 
----------------------------- 
 
12. (C) Konovalov said the GOR's willingness to allow the 
U.S. to transit lethal goods across Russia to Afghanistan was 
a signal that it recognized the U.S. was protecting Russian 
interests by fighting the Taliban.  Allowing 4,500 flights 
per year was a way to make a large contribution at little 
cost to the GOR, he said.  Cooperation on Afghanistan could 
be hindered, however, by lingering resentment over the U.S. 
base in Manas. 
 
---------------------------------- 
Iran Not Main Proliferation Threat 
---------------------------------- 
 
13. (C) Kortunov said that Russia viewed Pakistan as the main 
proliferation threat in the world.  He said Iran had actually 
shown some restraint in the Middle East, but questioned 
whether Iran would rein in Hamas and Hezbollah. 
 
------------------------------ 
The U.S. Should Assist Georgia 
------------------------------ 
 
14. (C) Shevtsova argued that, if Georgia was to recover 
 
MOSCOW 00001793  003 OF 003 
 
 
Abkhazia and South Ossetia, the U.S. should give Georgia 
financial assistance.  Only economic prosperity would lure 
the breakaway regions back into Tbilisi's fold. 
 
15. (C) Golts argued that Georgia was trying its best to play 
the role of the victim during the August 2008 conflict and 
exploit international opinion.  In reality, both sides 
provoked each other and therefore shared the blame. 
 
------------------------------------- 
Military Reform Appears to Be Working 
------------------------------------- 
 
16. (C) Golts said that, unlike previous attempts at military 
reform, the GOR was now pursuing realistic, strategically 
correct goals.  Unfortunately, MinDef Serdyukov was employing 
Soviet methods of reform, such as firing hundreds of 
thousands of officers without providing them the social 
benefits to which they are entitled.  Serdyukov therefore had 
the support of only the political leadership, he said.  Golts 
was nevertheless optimistic that Russia could produce an army 
designed to face present-day challenges such as regional 
conflicts. 
 
17. (U) ASD Vershbow cleared this cable. 
BEYRLE

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09MOSCOW1791, UNEMPLOYMENT FALLS, WAGE ARREARS & REDUCED HOURS

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Reference ID Created Released Classification Origin
09MOSCOW1791 2009-07-13 06:48 2011-08-30 01:44 CONFIDENTIAL Embassy Moscow

VZCZCXRO5344
PP RUEHDBU RUEHHM RUEHJO
DE RUEHMO #1791/01 1940648
ZNY CCCCC ZZH
P 130648Z JUL 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4220
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHXI/LABOR 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 001791 
 
SIPDIS 
 
STATE FOR EUR/RUS, DRL 
NSC FOR ELLISON 
DOL FOR BRUMFIELD 
 
E.O. 12958: DECL: 07/13/2019 
TAGS: ELAB ECON EIND PGOV SOCI RS
SUBJECT: UNEMPLOYMENT FALLS, WAGE ARREARS & REDUCED HOURS 
RISE 
 
REF: A. MOSCOW#538 
     B. MOSCOW#1562 
 
Classified By: DeputyEcon John Stepanchuk, Reasons 1.4 (b,d) 
 
------- 
SUMMARY 
------- 
 
1. (C) According to GOR data released last week, actual 
unemployment in Russia fell to 8.5 percent, or 6.5 million 
workers, in May.  Employment was also down 1.9 percent, or 
2.1 million workers, from May 2008.  Experts predicted that 
the employment decline would continue because workers leaving 
the formal labor market for the summer would again join the 
job search in the fall.  A recent newspaper report claiming 
the GOR had decided to reduce the frequency of its 
unemployment reporting incited debate over possible 
concealment of the real condition of the Russian labor market 
as well as the accuracy of GOR statistics.  Academic and ILO 
experts asserted that the monthly unemployment estimates were 
useless guesses and agreed that the GOR should only publish 
data based on quarterly surveys.  Owing to financial and 
government pressure, employers often withheld salaries or 
reduced work schedules, keeping workers technically employed. 
 Employees acquiesced to the situation in the hope of 
improved wages after the crisis.  As a result, experts 
emphasized the importance of wages as a more accurate 
indicator of labor market conditions.  End summary. 
 
----------------------------------- 
UNEMPLOYMENT & EMPLOYMENT BOTH DOWN 
----------------------------------- 
 
2. (SBU) The latest GOR employment statistics appeared to 
offer a glimmer of hope for the recovery of the Russian labor 
market.  The government statistics service (Rosstat) reported 
last week that actual unemployment fell to 8.5 percent, or 
6.5 million workers, in May, one percent lower than in 
February of this year, but still 3.1 percent higher than in 
May 2008.  Regional unemployment rates ranged from 3.4 
percent in Moscow to 50.3 in the Republic of Ingushetia. 
Rosstat attributed the 600,000-worker drop in unemployment to 
seasonal factors.  The Ministry of Public Health and Social 
Development (MHD) also announced that registered unemployment 
continued its gradual decline, dropping to just over 2.2 
million at the beginning of June. 
 
3. (SBU) Experts contended that the drop in unemployment 
would be temporary, while the decline in employment could 
continue in the long-term.  Rosstat's May employment survey 
revealed that employment had fallen 1.9 percent, or 2.1 
million workers, compared to May 2008.  Vladimir Gimpelson, 
Director of the Center for Labor Research at the Higher 
School of Economics, told "Vedomosti" last week that 
employment would continue to fall, even if production 
resurged, because employers were attempting to minimize the 
financial risks involved in maintaining a large workforce. 
Gimpelson warned that this trend could continue into the 
long-term.  Tatiana Maleva, Director of the Independent 
Institute for Social Policy, told the newspaper that workers' 
decisions to transition to the informal sector or leave the 
labor market contributed to the decrease in unemployment but 
obviously did not constitute a positive increase in 
employment.  Maleva asserted that these were only temporary 
decisions taken by workers during the summer when seasonal 
agriculture work would be available and that unemployment 
would start to grow again in the fall. 
 
--------------------------------------------- ------- 
EXPERTS DOUBT MONTHLY ESTIMATES, TRUST QUARTERLY SURVEYS 
--------------------------------------------- ------- 
 
4. (SBU) Rosstat's recently reported plan to switch from 
monthly to quarterly publication of employment statistics 
sparked intense speculation regarding the accuracy of its 
monthly figures and the GOR's motives for releasing data less 
frequently.  In April, &Kommersant8 reported that an 
anonymous Rosstat representative said that the organization 
would no longer release monthly estimates of actual 
unemployment, commenting that forecasting during the crisis 
had become an "unwelcome pursuit."  Other media sources 
reported that Rosstat officials would neither confirm nor 
deny the statement.  Vladimir Sokolin, Rosstat Head, told 
reporters in June that an "annoying blunder" by one of his 
 
MOSCOW 00001791  002 OF 003 
 
 
staff who titled the April report "first quarter" instead of 
"January, February, March" caused the confusion.  Sokolin 
said that Rosstat had absolutely not decided to reduce the 
frequency of its reporting, citing the fact that it continued 
to release its monthly estimates in May.  In addition, he 
announced that, while full unemployment surveys according to 
ILO standards currently took place quarterly in February, 
May, August, and November, Rosstat planned to switch to 
monthly surveys this fall. 
 
5. (C) Experts questioned th
e accuracy of Rosstat's monthly 
estimates and supported the idea of only releasing data based 
on actual surveys.  In May, Yevgeniy Gontmakher, head of the 
Social Policy Center of the Russian Academy of Sciences 
Institute of Economics, commented to "Nezavisimaya Gazeta8 
that practically no one relied on official statistics for 
serious analysis.  Vladimir Gimpelson, Deputy Director of the 
Higher School of Economics, told us that he also thought 
Rosstat's monthly estimates were &mechanical guesses8 
without a sensible methodology, noting their steady movement 
in consistent, round numbers.  Gimpelson asserted that 
focusing on the reliable quarterly data based on surveys 
would be a good decision.  He also supported Rosstat's plan 
to initiate monthly unemployment surveys in the fourth 
quarter of 2009. 
 
6. (C) An ILO representative concurred that Rosstat's monthly 
estimates were of little value, although its quarterly 
surveys offered a reliable picture of unemployment in Russia. 
 Mariko Ouchi, ILO Subregional Office for Eastern Europe and 
Central Asia Specialist, told us that Rosstat was simply 
guessing when it put out monthly actual unemployment figures. 
 However, she contended that the quarterly field surveys were 
dependable. 
 
--------------------------------------------- ------- 
"HIDDEN" UNEMPLOYMENT LEAVES INCOME AS THE TRUE INDICATOR 
--------------------------------------------- ------- 
 
7. (SBU) Employers' anti-crisis measures contribute to the 
concealment of the impact of the crisis on the labor market. 
Retaining workers on part-time schedules or without pay 
enable employers to avoid the expense of separation packages, 
which usually amount to three months' salary (see reftel A). 
Maksim Perov, 2K Audit ) Legal Consultation Company partner, 
told "Nezavisimaya Gazeta8 that declining unemployment was 
also a result of government pressure on employers to retain 
workers.  Russian companies are more likely to reduce hours 
and withhold wages than terminate employees in order to keep 
them technically employed.  For example, Boris Aleshin, 
AvtoVAZ President, recently informed union leaders that the 
company was considering the implementation of a 20-hour 
workweek from September 2009 through February 2010 in 
response to negative projections for auto sales this year. 
Although avoiding mass terminations, the plan would reduce 
employee's wages to 50 percent of their pre-crisis levels. 
 
8. (C) Russian workers often tolerate reduced hours and 
salaries in the hope that at some point in the future when 
the economy recovers, their wages will improve (see reftel 
B).  In addition, workers frequently receive supplemental 
benefits in connection with their employment through their 
local union, including access to sanatoria, health centers, 
and camps for children. 
 
9. (SBU) Experts point to wages as a more accurate indicator 
of the impact of the financial crisis on the labor market 
(see reftel A).  Russian workers continue to suffer from 
rising wage arrears and reduced work schedules.  According to 
Rosstat, unpaid salaries climbed 10.8 percent, or 853 million 
rubles, in May, totaling over 8.7 billion rubles.  (Note: 
Rosstat measurements of wage arrears only include information 
on large and medium companies, not SMEs.  End Note)  Wage 
arrears in the manufacturing sector constitute over 50 
percent of the nationwide total.  In addition, the number of 
workers reported by the MHD on administrative leave, idle 
time, or less than full-time schedules continued to rise at 
approximately the same rate that registered unemployment 
declined.  As of June 15, over 1.6 million workers found 
themselves in one or the other of those categories, an 
increase of more than one million workers since late January. 
 Overall, real incomes at the end of May were 1.3 percent 
lower than in May 2008 according to Rosstat. 
 
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MOSCOW 00001791  003 OF 003 
 
 
COMMENT 
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10. (C) Positive labor market trends in terms of employment 
are curious given the state of the rest of the Russian 
economy.  According to Rosstat and MHD data, the unemployment 
situation is improving while industrial output, retail sales, 
and GDP continue to decline.  In the absence of significant 
improvement in the rest of the Russian economy, the current 
positive unemployment trend is unlikely to continue after the 
seasonal factors driving it end this fall.  Other labor 
market indicators such as wage arrears and reduced hours 
provide a more complete picture of the actual labor 
situation.  End Comment. 
BEYRLE

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