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. -------------- THE DUTCH THREAT -------------- ¶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. -------------- MORE INSPECTORS -------------- ¶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). -------------- 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