Identifier
Created
Classification
Origin
06MOSCOW12764
2006-12-04 03:47:00
CONFIDENTIAL
Embassy Moscow
Cable title:  

RUSSIANS STILL CYNICAL ABOUT NATIONAL PRIORITY

Tags:  EAGR ECON EFIN PGOV PREL RS POL 
pdf how-to read a cable
VZCZCXRO4884
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHMO #2764/01 3380347
ZNY CCCCC ZZH
P 040347Z DEC 06
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5630
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 012764 

SIPDIS

SIPDIS

STATE FOR EUR/RUS WARLICK
NSC FOR TGRAHAM, TMCKIBBEN
USDOC FOR 4231/IEP/EUR/JBROUGHER
STATE PASS ELECTRONICALLY TO USDA FOR OSEC, TERPSTRA;

E.O. 12958: DECL: 11/13/2016
TAGS: EAGR ECON EFIN PGOV PREL RS POL
SUBJECT: RUSSIANS STILL CYNICAL ABOUT NATIONAL PRIORITY
PROJECTS

Classified By: EMIN Quanrud for reasons 1.5 (b) and (d)
C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 012764

SIPDIS

SIPDIS

STATE FOR EUR/RUS WARLICK
NSC FOR TGRAHAM, TMCKIBBEN
USDOC FOR 4231/IEP/EUR/JBROUGHER
STATE PASS ELECTRONICALLY TO USDA FOR OSEC, TERPSTRA;

E.O. 12958: DECL: 11/13/2016
TAGS: EAGR ECON EFIN PGOV PREL RS POL
SUBJECT: RUSSIANS STILL CYNICAL ABOUT NATIONAL PRIORITY
PROJECTS

Classified By: EMIN Quanrud for reasons 1.5 (b) and (d)

1.(C) SUMMARY. One year into a $13 billion dollar two-year
endeavor aimed at shortcomings in health, education, housing
and agriculture, President Putin's National Priority Projects
have yet to impress the Russian people. Polls indicate that
the public is skeptical -- if not cynical -- of the
administration's efforts to date. Even supporters of the
project do not expect to see tangible progress this early in
the process, but some suggest it is possible that by this
time next year, the projects could be making headway. First
Deputy PM Dmitry Medvedev, considered a leading presidential
candidate, is in charge of the projects' implementation, and
continuing public skepticism will certainly not enhance his
political base. End Summary.

RUSSIANS - CYNICAL ABOUT
THE "NATIONAL PROJECTS"
--------------


2. (SBU) President Putin first rolled out his plan for the
four National Priority Projects in the spring of 2005. The
reported goal was to spread to ordinary Russians the benefits
of the energy-fueled economic boom of recent years and to
begin to tackle some of Russia's most pressing social and
economic needs. Coming as it did in the wake of the botched
implementation of the monetization of benefits, this effort
was intentionally never billed as reform. The GOR has
allocated $13 billion to the projects, or 1.7% of GDP, over
2006-2007. Critics say the spending is cosmetic -- populist
politics geared toward the next Duma and Presidential
elections. Supporters say the projects are the first serious
steps in remedying Russia's social ailments, and could soften
the public to a new cycle of post-election reform.


3. (SBU) Either way, the government is working hard to
trumpet the success to date of the projects. In November,

Medvedev announced, "One thing is evident: the National
Priorities that the Russian president formulated last year
hit the spot...effective and fast solutions to the problems
at hand are being found." Unfortunately, Russian citizens
beg to differ, according to Levada Center polling. While a
majority of respondents in a recent poll (58%) were familiar
with the projects, they did not believe they would see any
benefit, and more than one-quarter had never even heard of
the undertaking. Not only were informed respondents
unimpressed by the effort, 77% believed the money allocated
would be inefficiently spent or stolen.

HEALTH - A CURE IN SIGHT?
--------------


4. (SBU) The GOR's main goals for the healthcare system are
to improve the affordability, accessibility and quality of
medical assistance and to develop disease prevention
programs. The federal allocation for the healthcare project
in 2006 is $3.27 billion. In a recent poll by VTsIOM, a
majority (62%) of Russians considered the country's current
healthcare situation "negative," and almost half of those
polled claimed to have seen no change in the healthcare
system since the beginning of the year. On the positive
side, one-quarter of those polled said they have started to
see positive changes, and Russians seem generally optimistic
that the health system's ills will be addressed at some
level. While Levada polling found that 42% believe the
health project will lead to better healthcare, VTsIOM puts
the number at 62%.

EDUCATION -- A MEDIOCRE GRADE
--------------


5. (SBU) The GOR's short-term education goals have been to
provide grants and financing to outstanding students,
teachers, and schools; develop schools focused on
professional training; and provide necessary equipment and
transportation - such as buses and internet access. Slightly
more than two billion USD will be spent on education reform
in 2006-2007. According to Levada, barely half of Russians
believe the National Education Project will "probably" lead
to an improved education system, and 39% of those polled
doubt that the project will have any impact at all.
Education improvements are not a lost cause, however.
According to Levada's chief socio-economic analyst, the solid
education legacy of the former USSR and the fact that the

MOSCOW 00012764 002 OF 003


education project has a clearly defined set of goals gives
this project a greater chance of success.

HOUSING -- FINDING A ROOF
TO PUT OVER YOUR HEAD
--------------


6. (SBU) Earlier this fall, Medvedev spoke during a
television interview about the need for affordable housing,
noting that 80% of Russians believe that owning property is
fundamental to their well-being. By October of this year,
nine months after the launch of the Housing Project, the GOR
had built 26.5 million square meters of housing. Its
ambitious target is 50 million square meters by the end of
the year. Over the five-year life of the project, the
government plans to spend $33.6 billion, build one million
single family dwellings, and enable one-third of the
population to buy a new apartment. Despite arguably
impressive results to date, the Russian public remains highly
skeptical that they will personally benefit from this
project. Sixty percent of those polled by Levada did not
believe the project would improve access to decent housing.
In Moscow the figures are no doubt much higher, given recent
housing price trends.

AGRICULTURE -
NO TURNAROUND EXPECTED
--------------


7. (SBU) In agriculture, over the next two years the GOR
hopes to accelerate livestock development; stimulate
smallholder credit and activity; create credit cooperatives;
provide rural housing for young agriculture professionals;
and create investment incentives for the sector. The
Ministry of Agriculture has allocated slightly more than one
billion USD for 2006-2007. Analysts are encouraged by the
government's focus on smallholders and recognition of the
need for credit cooperative development and foreign imports
(equipment and genetics). Despite these upbeat observations,
Russians themselves are the least sanguine of all about the
agriculture project. Slightly more than two-thirds of
respondents in a Levada poll believed the national project
would fail to change the sector's overall performance.
Analysts say the negative sentiment can be attributed to the
rather unambitious outlines of the project: how large can the
impact be when only one billion USD over two years is spread
across more than 16 million producers? A second concern
analysts cite is the very short timeline (two years) in which
cash and imports are flooding into a sector that lacks the
proper legislation, infrastructure, delivery channels, staff
and management competency to integrate any radical changes.

LOOKING FOR MORE FROM
THEIR GOVERNMENT
--------------


8. (SBU) Polling data show that many Russians still look to
the government to improve their situation. According to
Levada, nearly a quarter of the population wants more from
their government, especially in the areas covered by the
national priority projects. It is notable that Russians are
asking for more from their government, but not for more
reform -- 80% believe current reforms are either not
beneficial or are downright harmful. And it is not only
soviet-era pensioners that are demanding more. MEDT's
Batkibekov tells us that the younger generation (16-18 years
old) seem to share the sentiment, although it is fueled not
by nostalgia for the Soviet system, but rather out of a
growing awareness of how western governments (especially
Western European governments) provide for their citizens.

ON THE GROUND, SOME
HEADWAY BEING MADE
--------------


9. (SBU) Supporters of the National Priority Projects say
that it is too early to expect tangible results. Most
projects were started less than nine months ago, and given
the staggering challenges and deteriorated condition of the
social system (particularly health and education),sudden
breakthroughs are unlikely. MEDT's Batkibekov thinks benefits
in the health sector should soon be most obvious, noting in
particular that the year-long procurement process should soon
be delivering to many hospitals and clinics state-of-the art

MOSCOW 00012764 003 OF 003


(or at least not obsolete) medical equipment. Higher salaries
should slow as well the exodus of teachers and attract
higher-qualified individuals, but that is a multi-year
effort. Regarding housing, supporters and critics alike
recognize that the GOR has made significant headway in
increasing the supply of housing, though keeping prices
within the reach of most Russians has proven far more
difficult.

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


10. (C) The project's harshest critics continue to call it
nothing more than ineffective populism, with a good dose of
fiscal mismanagement (read: corruption) thrown in. That may
very well be true, but if it is, we will know soon enough.
New medical equipment will either appear or not appear in the
country's numerous polyclinics. Teachers will either chose
to stay in response to salary increases or not. Housing
units will be available (and prices start to soften) or not.
And, as obvious as these changes will be to us, we are
betting they will be even more obvious (or not) to the
average Russian. Medvedev says he is serious about the
success of the projects, and they, in turn, have become a
very public trial of his ability to govern effectively.
BURNS