VZCZCXRO0077
RR RUEHDBU
DE RUEHMO #2651/01 2991432
ZNY CCCCC ZZH
R 261432Z OCT 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5201
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC
C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 002651
SIPDIS
E.O. 12958: DECL: 10/23/2019
TAGS: PGOV KDEM PREL PHUM PINR KCOR RS
SUBJECT: VOLGOGRAD: STING OF FINANCIAL CRISIS SOFTENED BY
DECADES OF ECONOMIC DECLINE
REF: 08 MOSCOW ...
C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 002651 SIPDIS E.O. 12958: DECL: 10/23/2019 TAGS: PGOV KDEM PREL PHUM
PINR KCOR RS
Governor: Fourth Term may be a Bridge Too Far
2. (C) Volgograd Governor Nikolay Maksyuta is waiting to hear Moscow's decision, expected on October 22, about his
political future. With his third term expiring on January 22, 2009, Russian law mandates that the post's future occupant
be selected three months in advance (Note: The deadline for selection has passed with no news reports of a decision. End
note.). Eager to curry favor with the Kremlin and win a third term he had twice delayed the opening of a new bridge, 15
years in the making, over the Volga River in the hopes of attracting Putin or Medvedev to the ceremony. The bridge was
finally opened on October 10, one day before elections when the streets and riverfront were covered with United Russia
banners allowing ample photo-ops. The only other bridge crosses the dam of a petroleum refining plant and requires a
15km drive North of the city and back. Residents have been justifiably frustrated by months of delay in opening a bridge
that was clearly completed in order to curry political favor and maximize publicity.
3. (SBU) A Nezavisimaya Gazeta article on October 5 quoted Kremlin insiders stating that Maksyuta's chances of keeping
his post are slim. While none of our interlocutors in Volgograd were willing to suggest potential replacements,
Nezavisimaya Gazetta reviewed the four top candidates. State Duma Deputy Yuriy Isayev has until recently served as an
advisor to Federal Security Service (FSB) Deputy Director Sergei Pronichev and has strong support from the siloviki in
Moscow. Former Agrarian Party Leader Vladimir Plotnikov is reportedly supported by members of Maksyuta's team associated
with agriculture. Current Vice Governor of Volgograd Region Anatoliy Brovko formerly worked in a pipe factory in the
area, and like Isayev has strong backing from a major economic sector in the region. Either Isayev or Brovko could be
counted on to maintain the status quo, but would be unlikely to take on their own vested interests. Regional Just Russia
head Oleg Mikheyev is considered a long shot. However, the article argues, if United Russia is indeed using growing Just
Russia popularity to buttress its own support in the financial crisis then Mikheyev may be strongly considered.
4. (SBU) Pundits are debating the delay in decison making from Moscow in filling the Governor's post. Compilation of a
Presidential 1,000 Cadre List from which to draw leaders for posts across the country is not yet finished. Medvedev has
compiled a list, but it has not been reconciled with a similar list from the Prime Minister's office. In the absence of
a list agreed upon by both from which Medvedev would draw names for -- among other positions -- governorships, Medvedev
may be forced to rubber stamp present Putin appointments. Some speculate, perhaps prematurely, that Medvedev may
therefore be delaying appointments with the hope of better positioning his own candidates vice those of the Prime
Minister's Office.
Volgograd City Duma: Donations Appreciated
5. (C) Duma Deputy Chair Aleksandr Mordvintsev admitted that industrial production has fallen 17 percent during the
financial crisis. The city budget is relatively small and focused almost entirely on social services, which he claimed
MOSCOW 00002651 002 OF 004 are of a much higher quality than in rural regions of the Oblast. Though acknowledging that
the city is facing a significant budget deficit, he offered no clear policy responses other than requesting aid from the
Oblast and Federal governments. The City Duma has 48 deputies, though four positions are presently vacant as previously
elected members had stepped down. Elections took place October 11 to fill those vacancies, and Mordvintsev had predicted
that United Russia's majority would increase by at least two to three from its present 34. Though unofficial results
will not be published until the end of the month, the Central Election Commission website lists United Russia candidates
taking all four single mandate seats. Mordvintsev also predicted that a new Governor will be announced, citing as proof
the attendance of Vice Premier Ivanov and Minister of Transportation Levitin and not Putin or Medvedev at this month's
delayed bridge opening.
6. (C) Mordintsev is a Cossack from the village of Mixalovka in Volgograd Oblast. He has been a member of the Duma, and
the United Russia party, since 2004 when he was elected from a single mandate district. Until 2008 he was Chair of the
Budget Committee before taking on his present leadership role. He studied radio-physics at the Gorkovsky University in
Nizhny Novgorod before beginning his previous career as an engineer at a local tractor works, rising to the level of
General Director.
Volgograd City: Impractical Plans Differed
7. (C) Volgograd Mayor Roman Grebennikov was elected in May 2007 to a five year term. First Deputy Mayor Sergey Sokolov
argued that a foundation of good governance in Volgograd was the election of all Duma members from single mandate
districts to ensure that they are clearly accountable to the electorate, and not just the compilers of their own party
lists. The city's budget deficit presently sits at ten percent, with seven to ten percent of the budget coming from the
Oblast and 12-15 percent of the budget coming from the federal government. Sokolov proudly laid out the city's ambitious
plan to grow from approximately one million residents to three to five million over the next ten years. A third bridge
will be built to the South of the city to mirror the bridge to the North, allowing for the construction of a ring road,
spurring development of the East bank of the Volga. (Note: With the continuing financial crisis, these plans are
unlikely to be realized soon. Even without the financial crisis, however, estimates of a tripling of the city's
population over the next decade are farfetched given Russia's demographic trends. End Note.). In the short term, Sokolov
confirmed that preparations were underway for the winter, with road and factory winterization expected to be completed
by the end of October.
Economic Decline Leads to High Unemployment
8. (C) Vyacheslav Yagubkin, a political observer with the daily Gorodskiye Vesti "City News" and former head of
International relations at the Volgograd Academy of State Administration, noted that historically Volgograd has never
been a prosperous town, even during the oil boom of the last eight years. Unwilling to give figures for the unemployment
level, United Russia's Bulgakov did acknowledge that businesses were closing and the jobless rate was rising.
Unemployment has remained around 10 percent, and Mordvintsev acknowledged regional administration has done little but
request aid from Moscow. Sokolov stated that officially only 6,000 people are unemployed in Volgograd, less than one
percent of the population, and that everyone registered as unemployed was receiving support under a 20 million ruble
appropriation from Moscow. (Note: This number is at least ten times too low, compared to figures from other sources.)
While the financial crisis has certainly affected the area, all contacts agreed that the region has been in constant
economic decline since the fall of the Soviet Union, dulling the pain of the present, sharper fall.
United Russia as a Ladder to Success
9. (C) Multiple conversations during our visit stressed that membership in United Russia was, primarily, a career
opportunity for local politicians. United Russia dominates the regional Duma with 25 of 36 members. The Communist Party
MOSCOW 00002651 003 OF 004 holds six, Just Russia three and LDPR two. Parshin and Mikheyev both stressed that Mayor
Grebennikov and Governor Maksyuta, both former avid communists, had walked away from their party in favor of political
survival. Maksyuta, a longtime Communist, made the transition to United Russia after campaigning on an independent
ticket in the last election five years ago. Communist Party Regional Duma Fraction head Nikolay Parshin commented that
the Governor has significantly distanced himself from his former colleagues and operates well within the Moscow vertical
of control. While widely regarded as ineffective, their newfound loyalty to Moscow ensures, to an extent, their
short-term political future. None of our interlocutors felt that there was any strong ideological pull to United Russia.
Instead, United Russia's leverage appears directly linked to its promise of stability and upward mobility.
10. (C) Sergey Viktorovich Bulgakov, United Russia party member and Deputy Secretary of the Duma, appears to have been
courted by United Russia as a candidate with "the right stuff." He confidently stated that United Russia has seen no
loss in popularity over the course of the financial crisis. He also stressed that the agricultural, manufacturing and
refining sectors of the economy were in immediate need of investment and Western technology. Bulgakov has been a United
Russia party member for two years since joining to run on a party list for his present position. United Russia took 65
percent of the vote. Previously he was a Colonel in the Soviet Army before serving as head of Stavropoltavsky Kray
within Volgograd Oblast for 12 years.
The Opposition
11. (C) Communist Party Regional Duma Faction Head Nikolay Parshin supported Bulgakov's claims of consistent popular
support for United Russia through the financial crisis. He lamented that government propaganda, a lack of political
activism among the population and self-censorship had greatly diminished his ability to take advantage of the economic
decline politically. He gave as an example the Srednya Oktubinsky region of Volgograd Oblast, where unemployment has
grown 3,000 this year alone among a population of only 25,000. There is a myth of calm, as people in the regions survive
on their own produce, but in his opinion there is serious potential for turmoil. He cited corruption as the single
greatest obstacle to overcoming the financial crisis, as it undermined rule of law and the appropriation of funding to
support policy directives. Parshin is 37, from the city of Volzhsky on the Volga. His mother is Ukrainian and much of
his family is still living there. He is a lifetime member of the Communist Party and a professor of economics.
12. (C) Oleg Mikheyev, local Chair of the Just Russia Party, began discussions by stating that there was no real
opposition in Volgograd. He predicted that Sergey Mironov would remain national head of the party, and confirmed that
Mironov receives both support and policy directives from the Kremlin. When asked about the extent of Kremlin influence,
he responded that Mironov was still head of the party and elections were free. He stressed that the financial crisis was
boosting support for Just Russia (Note: Kremlin support for Just Russia may be tied to their ability to catch an
electorate that would otherwise be lost to the real opposition. End Note.). He observed that for 70 years Volgograd was
communist, and all of the local leaders worked together. There may be different political parties on the ballot now, but
none of the leaders have changed; neither had the regions economic legacy, he lamented.
13. (C) Galina Boldareva, Chair of the Yabloko Regional Branch, stressed a need for ecological protection and the lack
of her own party's influence with an ineffective local government. She estimated that the regional budget will be
reduced in the near future by 20 percent, and staff by 10 percent - the second such cuts this year. Industrial
production has dropped by 27 percent, worst among processing plants at 35 percent. There is little that the government
is able to do to address such drastic decline. She brought with her Nadezhda Beyedina, an economist formerly working in
the local chemical industry. Beyedina now organizes full time against the ecological damage to the region from its
growth as an industrial center. She stressed that environmental activists are often threatened, and even accused of
treason, by local authorities.
Comment MOSCOW 00002651 004 OF 004
14. (C) The Volgograd region appears politically stable despite continued economic decline. United Russia's popularity,
supported by aggressive campaigning and the undermining of any serious political opposition, has remained high. However,
the region has also seen minimal serious investment over the last two decades, and the prospects of near-term growth are
slim. Volgograd may be representative of regions where the potential for political unrest is increasing as local United
Russia-dominated governments run out of options other than requesting more funds from Moscow. Major wins for United
Russia, especially in the Volgograd City Duma, are unlikely to increase pressure on the party to push for short-term
reform.
Beyrle