GORDEYEV ON THE WARPATH, AND THE DUTCH STRIKE BACK

C O N F I D E N T I A L MOSCOW 012757

SIPDIS

NOFORN
SIPDIS

SECSTATE PASS AGRICULTURE ELECTRONICALLY
USDA FOR OSEC/TERPSTRA, FAS FOR OA/YOST, OCRA/FLEMINGS,
- PASS ALSO APHIS AND FSIS
STATE FOR EUR/RUS AND EB/ATP/SINGER
STATE PASS USTR FOR RICHARD OWEN AND DOROTHY DWOSKIN
USDOC FOR 4231/IEP/JACK BROUGHER
NSC FOR TOM GRAHAM AND TRACY MCKIBBEN
BRUSSELS AND VIENNA PASS APHIS
POSTS FOR AGRICULTURE

E.O. 12958: DECL: 11/30/2026
TAGS: EAGR ETRD PREL WTO RS
SUBJECT: GORDEYEV ON THE WARPATH, AND THE DUTCH STRIKE BACK

REF: A. MOSCOW 12696

B. MOSCOW 12695

C. MOSCOW 12692

D. MOSCOW 11513

E. MOSCOW 12308

F. MOSCOW 9108

Classified By: Allan Mustard, AgMinCouns, for reasons 1.4(b) and (d)


1. (C/NF) SUMMARY: According to the Dutch AgCouns in Moscow,
Dutch veterinary and plant health authorities have run out of
patience with their Russian counterparts and are proposing
temporarily to halt plant quarantine certification by Dutch
authorities of exports of all plant products to Russia.
While the act will not result in any real reduction in trade,
it will create some additional headaches for Russian
inspection services and if actually implemented will be the
first instance of an EU member state fighting Russian (plant
quarantine) fire with fire.


2. (SBU/NF) A flurry of additional Russian actions and
threats over the past two weeks to restrict trade from the
European Union in fish and meat fits into a pattern of
EU-bashing. At the same time, the Russian system of
installing private-sector inspectors in EU member states has
expanded into Germany as well as Latin America. END SUMMARY.

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THE DUTCH THREAT
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3. (SBU) Sergey Dankvert, head of Russia's Federal Service
for Veterinary and Phytosanitary Surveillance (VPSS),
informed ITAR/TASS news agency November 22 that VPSS was
surprised Dutch plant protection authorities could not
guarantee shipments of products of plant origin would be free
of pests. The ITAR/TASS piece, which casts aspersions on
Dutch ability to guarantee disease- and pest-free products,
was reproduced widely in Russia media (addressees can find a
translation of Interfax's article in the DNI Open Source
database, document number CEP20061122950290, Intelink-S URL
http://opensource.dni.sgov.gov)


4. (C/NF) Dutch Agricultural Counselor Marinus Overheul
(protect) confided to AgMinCouns that Dutch authorities have
simply run out of patience trying to satisfy Dankvert and his
zero-tolerance mentality for bugs that in the Netherlands are
not considered quarantine pests, specifically, the California
thrips (Frankliniella occidentalis). Overheul said
veterinary and plant protection authorities in the Hague had
analyzed data on shipments of plant products from the
Netherlands to Russia, worth USD 250 million annually, and
concluded that between 2.85 and 3.2 percent had been infested
with California thrips. These shipments were held up at the
border so infested pots or cut flowers could be removed for
return to the Netherlands or destruction, and each incident
generated a rude letter from Nepoklonov or Dankvert to their
Dutch counterparts accusing them of gross violations of
Russian phytosanitary regulations. Overheul remarked that
the correspondence is so heavy the letters now come in
batches, once a week, to reduce the amount of time spent on
pickup and delivery. COMMENT: We sympathize with Overheul.
Our own correspondence with VPSS averages a letter a day.
END COMMENT.


5. (C) Overheul, noting that California thrips is not
considered a quarantine pest either in the Netherlands or by
the International Plant Protection Convention, said Dutch
authorities informed Dankvert that since the insect is
endemic to the Netherlands a new approach is needed.
Henceforth, they said, shipments to Russia would only be
certified if originating from a facility in the Netherlands
which in turn had been pre-certified as free of thrips. This
can only be done by spreading sticky traps around such
facilities, waiting a few months, then counting how many
thrips individuals had flown into the traps. Facilities with
zero captures will be certified as thrips-free, and only they
will henceforth be eligible to ship to Russia. Furthermore,
transshipments from third countries will no longer be
inspected at all, but will merely transit the Netherlands
under the original plant quarantine certificate of the
country of origin.


6. (C/NF) Overheul said Russian Plant Quarantine Directorate
Chief Mikhail Maslov pressed the Dutch team for roughly an
hour for details on how the new approach would work.
Overheul said it was clear from Maslov's line of inquiry he
was mainly concerned about the immediate and longer-term
reduction in trade flows subject to pre-inspection by the
Russian phytosanitary inspectors currently pre-certifying
shipments to Russia (REF D). In particular, Maslov was
troubled by the prospect of Dutch exports of plant products
being stopped for a period of some months (during which the
private-sector inspectors holding VPSS warrants would
generate no cash flow).


7. (C/NF) Overheul said the Dutch phytosanitary service had
received a green light from exporters to halt trade. The
exporters are also out of patience and assured Dutch ministry
officials that in any case actual trade flows would not be
reduced but merely rerouted through other EU member states.
COMMENT: We have heard from Russian traders that when
Dankvert shuts down one EU member state, plant products are
quickly rerouted, and that the major impact is a price hike
of about 20 percent. END COMMENT.

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MORE INSPECTORS
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8. (SBU) German AgAtt Judith Kons advised AgMinCouns this
week that a private Russian plant quarantine inspector,
apparently bearing a warrant from VPSS, has appeared in
Munich at the invitation of a German exporter, and is now
certifying shipments a la the scheme in the Netherlands (REF
D). The firm is called Vet Service. We have heard from
colleagues in the Colombian and Mexican embassies that
acceptance of resident Russian inspectors was a precondition
to their recent opening of trade in beef. Norway has already
caved in and allowed resident inspectors for its fisheries;
the inspectors charge USD 60 per metric ton for inspection
which will generate roughly USD 4 million in cash income for
VPSS annually. Even the public health service is getting into
the act: Gennadiy Onishchenko, Chief Medical Officer of
Russia, announced November 30 that resumption of trade in
beef and wine from Moldova as agreed between Presidents Putin
and Voronin would involve, among other things, joint quality
testing at Moldovan production facilities. The Moldovan
embassy told us they have barely gotten the process underway
and have not yet discussed modalities like resident
inspectors, but noted the regime will include monitoring of
the entire winemaking process from on-the-vine grape
inspection to retail sale, all paid for by the Moldovan side.
(COMMENT: We suspect that Moldova will be pressured to accept
resident inspectors. END COMMENT).

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COMMENT
--------------


9. (C) In the past few weeks Russia has undertaken a spate
of actions seemingly calculated to provoke the European Union
as well as Ukraine and Norway. We are reporting on some of
the more significant of them by unclassified septel (REFS
A-C),including new restrictions on EU-Russian fish trade and
the threat of a ban on EU-origin meat as of January 1, and
have previously reported (REFS E-F) on Norway's fish trade
problems, including imposition of resident inspectors and
reductions in numbers of market actors. This week Russian
Agriculture Minister Aleksey Gordeyev spewed vitriol to the
mass media in Saratov. "As soon as Russia becomes a WTO
member, big problems will start in that organization," he was
quoted. "We will present a big bill and demands for the same
level of support of agriculture as currently exists in the
European Union and Canada, for unscrupulous occupation of our
market by foreign producers, for forcing (on us) liberal
theories, as well as for our western colleagues forcing us to
act supposedly democratically, but in substance against the
interests of our domestic producers." This was followed by
Gordeyev complaining publicly to First Deputy PM Dmitriy
Medvedev that the Ministry of Economic Development and Trade
is allowing dumping of pork and poultry meat on the Russian
market.


10. (C) Significantly, Gordeyev did not mention the U.S.
when railing against countries with high levels of domestic
support for agriculture. Indeed, the last two weeks have
been comparatively quiet on the Russo-American agricultural
trade front, to the extent that we have enjoyed a few days
requiring no hand deliveries of letters to VPSS. Overheul
remarked that he and his EU colleagues in Moscow sense that
Gordeyev and Dankvert have been told to leave the U.S. alone
for the time being, and thus they are displacing their wrath
over successful conclusion of WTO bilaterals onto another
convenient target (while we feel for our EU colleagues, we
could frankly use the breather). There is no question that
Gordeyev was caught by surprise and enraged that the
U.S.-Russian WTO bilats concluded successfully. Our own
sources, plus those of German AgAtt Kons, have told us
Gordeyev was crowing up until the veterinary certificates
were signed that he had succeeded in derailing Russia's WTO
accession. This causes us to wonder if Gordeyev and
Dankvert, having failed to block Russia's WTO accession by
baiting the U.S., are now turning on the EU in hopes Brussels
will follow through on its threat to revoke its bilateral
accession agreement if ongoing meat trade problems are not
resolved.
BURNS