VZCZCXRO8987
OO RUEHIK RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #0056/01 0101738
ZNR UUUUU ZZH
O 101738Z JAN 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6089
INFO RUEHZG/NATO EU COLLECTIVE PRIORITY
RUCNCIS/CIS COLLECTIVE PRIORITY
UNCLAS SECTION 01 OF 02 MOSCOW 000056
SIPDIS
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PREL ECON OVIP PGOV RS
SUBJECT: SCENESETTER FOR SENATOR HAGEL'S VISIT TO MOSCOW
1. (SBU) Summary: Russia's season for political surprises has
ended. The country now looks set to continue Putin's
domestic and foreign policies with the expected shift to
Medvedev as President and Putin as Prime Minister this
spring. The expected Putin-Medvedev team appears set to
ensure continuity of policy and continued economic stability.
Despite our frustrations with the course that Putin has
charted -- notably, the overcentralization of political power
and foreign policy toward some of Russia's neighbors, Russia
will matter enormously for American interests for years to
come. Russia is the world's largest energy producer, remains
the only nuclear power comparable to the U.S., and is a
permanent member of the UN Security Council. Against this
backdrop, the U.S. remains committed to deepening cooperation
with Russia in areas of strategic concern, while dealing
forthrightly with our differences. Your visit is a chance
for some frank dialogue on a full range of bilateral issues
in this election year for both countries. End summary.
Political Overview
------------------
2. (SBU) Your visit occurs as Russia's anticlimactic
presidential election campaign unfolds. The virtual
certainty that Putin protege First Deputy Prime Minister
Dmitriy Medvedev will win in the first round on March 2, then
name Putin as his Prime Minister, has reduced speculation
here to how Putin and Medvedev will share power in their new
administration. Two of the four parliamentary parties --the
Communists and the Liberal Democrats-- have nominated their
traditional candidates and independent contenders are, with
varying degrees of success, attempting to get their names on
the ballot, but their presence will do little to sidetrack
Medvedev's march to the presidency.
3. (SBU) The presidential contest was preceded by a Duma
campaign whose December 2 election produced a constitutional
majority for the pro-Kremlin United Russia party. With
Putin's decision to head the party list, there was little
doubt that United Russia would win the lion's share of seats.
That said, the use of administrative resources to support
United Russia and the unequal playing field for the
opposition were cited by international observers, who judged
the campaign to be neither free nor fair.
4. (SBU) The Duma election was preceded over the last two
years by changes to the laws on elections, extremism, and
NGOs that effectively made it more difficult for voices
independent of the Kremlin to be heard. Compounding the
effect of the changes to the laws were the unsuccessful
efforts by opposition parties to appeal to an electorate that
is content with unprecedented improvements in its standard of
living. In pursuit of continued popularity, the Kremlin has
both fed and played on grassroots anti-western sentiment
which remains strong here.
Economic Overview
-----------------
5. (SBU) Russia is enjoying an economic boom fueled by high
oil and gas prices and rising consumer spending. The World
Bank recently ranked Russia's economy eighth in the world in
terms of GDP. Russia is the world's largest energy producer
and has the world's largest gas reserves. Eight years of
strong economic growth have created an expanding consumer or
middle class and increased individual economic freedom.
However, there is an uneven distribution of benefits and
widespread poverty in the Russian Far East and the North
Caucasus. Other concerns include pervasive corruption,
increasing state interference in the economy, and health and
demographic problems.
Bilateral Agenda: Areas of Cooperation
--------------------------------------
6. (SBU) The Russia of the 1990s -- flat on its back
economically and preoccupied with internal woes -- is gone.
Armed with hydrocarbons, cash, strong domestic support,
nukes, and a UN Security Council veto, Russia is reasserting
itself on the world stage. 2007 marked the 200th anniversary
of bilateral diplomatic ties, but last year was particularly
challenging for U.S.-Russia relations, and this year promises
more of the same. Nonetheless, there is no alternative to
pursuing cooperation in areas of strategic importance to the
United States.
7. (SBU) Halting the spread of weapons of mass destruction
is a key component of the U.S.-Russia strategic security
dialogue. We are making significant progress with our
Russian counterparts on Nunn-Lugar programs to enhance
nuclear security at Russian facilities, and are on track to
MOSCOW 00000056 002 OF 002
meet the goals set by the President at the Bratislava Summit
with Putin. Russia's role in the Six Party Talks over the
denuclearization of North Korea has generally been
constructive (if limited). Russia joined the U.S. in
co-founding the Global Initiative to Combat Nuclear Terrorism
in 2006, which now includes 65 participants and seeks to
interdict unauthorized transfers of nuclear weapons and
technology. Rosatom Director Kiriyenko and Energy Secretary
Bodman signed in November a joint statement outlining a plan
for Russia's program to dispose of 34 metric tons of surplus
plutonium from its weapons program.
8. (SBU) Regarding Iran's nuclear weapons aspirations,
Russia and the United States share the same strategic goals,
but differ over tactics. Russia agrees that Iran's
possession of a nuclear weapon would be dangerous and is
working with us on a third UN Security Council resolution,
but continues to urge patience, direct engagement with Iran,
and collective action. Russia contends that its recent
delivery of fuel to Iran's Bushehr nuclear plant precludes
the need for Iran to continue its enrichment program. Russia
has played a helpful role in advancing the Middle East Peace
Process through the Quartet, and plans to host a
post-Annapolis conference in Moscow later this year.
9. (SBU) The U.S. and Russia have initialed a text for a 123
(Peaceful Uses of Nuclear Energy) Agreement which, if
approved, will allow for an expansion of civilian nuclear
cooperation. Russia has also signed on to the Global Nuclear
Energy Partnership, a multilateral effort spearheaded by the
U.S. to expand the peaceful uses of nuclear energy worldwide
in a secure and sustainable manner.
10. (SBU) The U.S. actively supports Russia's bid to join
the World Trade Organization. Russia's WTO accession
negotiations are in the endgame. It is in our interests to
have Russia integrated into a rules-based, global economic
system. The eventual revocation of Jackson-Vanik will be
needed to ensure that U.S. firms can compete fully in the
Russian market after Russia's WTO accession.
Bilateral Agenda: Differences
-----------------------------
11. (SBU) Our differences with Russia are prominent and
public. Despite U.S.-proposed confidence building and
transparency measures, Russia continues to view U.S. missile
defense plans in Central Europe as threatening. Foreign
Minister Lavrov has repeatedly warned that Kosovo's
unilateral independence would set a dangerous precedent for
the resolution of other separatist conflicts, including in
Georgia and Moldova. Russian suspended its participation in
the Treaty on Conventional Forces in Europe on December 12,
but continues to engage with the U.S. to try to bridge the
current impasse.
12. (SBU) The U.S. has repeatedly raised concerns about
Russia's conventional weapons sales -- a $7 billion per year
industry -- to Iran, Syria, Venezuela, and others. Russia
has voiced concerned about U.S. involvement in its backyard:
calls for further NATO expansion, support for democratic
movements and governments in the region, and encouragement
for alternative energy supply routes from Central Asia and
the Caucasus to Western Europe.
13. (SBU) Simply put, U.S. relations with Russia will likely
continue to include both competition and cooperation. As
difficult as the Russians can be at times, we cannot simply
ignore or bypass Moscow, which matters too much on too many
critical issues. We will need to speak forthrightly about
our differences and to work creatively in the existing areas
of common ground where our top strategic interests can be
advanced. Your visit offers an opportunity for some frank
dialogue on our challenging relationship with Russia in this
election year for both countries.
RUSSELL