C O N F I D E N T I A L LJUBLJANA 000221

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/06/2016
TAGS: PREL ECON RU SI
SUBJECT: SLOVENIA STRENGTHENS ECONOMIC TIES WITH RUSSIA


Classified By: COM Thomas B. Robertson for reasons 1.4 (b) and (d)


1. (SBU) Summary Slovenia has long prided itself on its
unique relationship with Russia, which lacks most of the
political baggage collected by its eastern neighbors during
years of Communist repression. While the GOS's policy
declaration at the beginning of its mandate in late 2004
specifically focuses on strengthening trans-Atlantic ties,
Slovenia is nothing if not a pragmatic country. It sees
advantages in keeping communication friendly and commercial
lanes open with its large northern neighbor, with which it
enjoys a USD 1 billion trade relationship. Slovenia has sent
one of its most dynamic and intellectually gifted young
diplomats as Ambassador to Moscow and it regularly hosts and
sends commercial delegations. Russian business has made
inroads into a notoriously xenophobic investment climate in
Slovenia. And to seal it all with a bear hug, Prime Minister
Jansa will visit Moscow (with a large commercial delegation
in tow) at the end of May and meet with President Putin. End
Summary.

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Raising its Profile
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2.(SBU) Slovenia was able to capitalize on the extra
exposure it garnered as CiO of the OSCE in 2005 to gain
increased access to higher ranks of government in Russia and
burnish its image as a reliable political and business
partner. Though the GOS tends to leave the big-picture
political relationship with Russia in the hands of the EU,
the bilateral relationship is comfortable since Slovenia does
not tend toward the same visceral negative reactions as some
of the other new eastern European members of the EU. The ease
of this relationship, however, does not mean Slovenia avoids
actions which upset or annoy Russia. Slovenia continues to
be very supportive of the struggle for increased freedom and
democracy in Russia's immediate neighborhood (Ukraine,
Belarus, Georgia etc.) With its EU presidency looming in the
first half of 2008, Slovenia is working to maintain the
expertise it developed in this region in order to be able to
manage this very important foreign policy portfolio down the
road.


3

. (C) While the GOS is comfortable delegating authority to
the EU on big issues with Russia, it is very aware that
Russian strategy is to continue to work its bilateral
relationships and to keep them strong. The GOS is wary of
what it sees as Russian "cherry picking" and attempts to play
one EU member off another on certain issues. In a recent
conversation at the MFA, a staffer on the Russia desk said
they (and the EU) were keeping an eye on the "Shanghai
Corporation" which she described as cooperation between
Russia, China and Central Asian republics on various
commercial and political initiatives. She described that
relationship as a concerted effort to eject American
influence from the (Central Asian) region.

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Settling the Debt
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4.(C) Slovenia and Russia enjoy an active bilateral
relationship across a wide spectrum of issues. During his May
visit, Prime Minister Jansa will focus heavily on economic
and commercial issues. He will be accompanied by the
Ministers of Foreign Affairs, Economy, Finance, Education and
possibly Defense. On the economic side, Slovenia hopes to
clear the USD 130 million debt it holds for Russia, which it
inherited from SFR Yugoslavia. Russia has proposed a
settlement of the debt which would include giving Slovenia
military arms and equipment. The Ministers of Defense and
Economics apparently support such an arrangement as long as
the arms or equipment are NATO compatible, while the Minister
of Finance is decidedly in favor of an all cash settlement.
At this point, the GOS has not reached consensus.

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Expanding Commercial and Cultural Ties
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5. (U) Russia is a significant and growing export market for
Slovenia, and 72 Slovenian companies have representation in
Russia. In 2004, Slovenia exported USD 520 million to
Russia, primarily pharmaceuticals and household white goods.
Slovenia imports from Russia totaled USD 392 million, mostly
petroleum derivatives and natural gas, from Russia. Both
countries would like to expand and diversify their markets.
There is a joint Slovenia-Russia commission on trade and
economic cooperation which is scheduled to meet during PM
Jansa's visit.


6. (U) In addition to the economic/commercial focus of the
upcoming PM visit, the two sides will hold discussions on
scientific cooperation, agriculture, and banking and
financial consulting. The Ministry of Education will be
exploring the expansion of educational and cultural exchanges
as well. Following the visit of PM Jansa to Moscow, Slovenia
will host a large Russian delegation in June to mark the 90th
anniversary of the "Russian Chapel," a church constructed by
Russian POWs during WWI in the Vrsic pass in Slovenia's harsh
and inhospitable Julian Alps.

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Comment
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6. (C) A member in good standing of both the EU and NATO,
Slovenia is not far from its years among the non-aligned and
uses its good ties from that era shrewdly to advance its own
interests in Europe and beyond. The GOS is currently in the
throes of preparing for its turn at the helm of the EU and is
strengthening connections now that it will have to rely on in
18 months time. (In addition to Russia, PM Jansa is planning
trips to both the UAE (22-26 April) and Bulgaria (May 10)).
Slovenia's chairmanship of the OSCE, though not always
handled to our complete satisfaction, did demonstrate it has
the ability to engage Russia on difficult issues and the
inclination to find common ground. Post believes that
Slovenia would welcome -- and the USG would benefit from --
increased contacts at higher levels and encourages those
traveling to Europe both from the Department and other
agencies, to put Ljubljana on their itineraries. The more
Slovenia understands of US policy and our goals for a
European partnership, the better ally it will be in 2008.
ROBERTSON