AMBASSADOR VISITS NORTH CAUCASUS, DECEMBER 4-5

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 012897

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/12/2017
TAGS: PREL PARM ETRD PINR GG RS
SUBJECT: AMBASSADOR VISITS NORTH CAUCASUS, DECEMBER 4-5

Classified By: Ambassador William J. Burns. Reason: 1.4 (b, d)

SUMMARY
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1. (C) Ambassador Burns traveled to the North Caucasus
December 4-5 -- the first American Ambassador to visit the
region in fifteen years. In Kabardino-Balkaria he discussed
with President Kanokov prospects for economic development and
political reform. Kanokov provided regional views on frozen
conflicts with Georgia. At a roundtable with Nalchik
University students, the Ambassador stressed the need to seek
areas of cooperation between Russian and the U.S., including
exchanges -- an issue the students raised as well. In North
Ossetia-Alania, Republic Head Mamsurov castigated Georgia and
urged the U.S. to drop its support for the neighboring
country. Ambassador visited Beslan School No. 1 and laid a
wreath at the cemetery for victims of the 2004 terrorist
attack. End Summary.


2. (SBU) The Ambassador visited Nalchik (Kabardino-Balkaria)
on December 4 and Vladikavkaz and Beslan (North
Ossetia-Alania) on December 5. At events in both republics
he noted that he visited the region more than ten years
before when he was PolMinCouns. The Ambassador stressed the
importance of U.S.-Russian relations to both countries and
the U.S. desire to play a role in North Caucasus relief and
recovery efforts -- as exemplified by our USD 11 million
assistance program for the region. The Ambassador also
highlighted the value of exchanges.

Kabardino-Balkaria President Arsen Kanokov
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3. (SBU) Kanokov received the Ambassador for a long meeting,
accompanied the Ambassador to a student roundtable at the
university, and hosted the Ambassador to a lavish dinner.
The dinner provided little opportunity for serious talk -- it
was punctuated by numerous toasts and a variety of musical
acts, including local singers, folkdancers and a xylophonist
playing "Carmen." Kanokov opened up afterwards when he drove
with Ambassador from the restaurant to the Ambassador's
hotel. At the formal meeting and dinner Kanokov was
accompanied by PM Andrey Yarin, Deputy PM Madina Dyshekova,
Presidential Administration Director Albert Kachesarov, local
MFA rep Leonid Filemonov, and Amcit of Kabardian heritage
Ibrahim Vuch.


4. (C) Kanokov led off the conversation at the formal
meeting by detailing the changes he had made to stabilize the
country in the wake of the October, 2005 attack on Nalchik by
local and Chechen extremists. He stressed that economic
development, with a concomitant increase in employment, is
the primary task in creating stability. Kabardino-Balkaria
has progressed well in the national priority projects, though
housing, as everywhere, is more difficult. The K-B
government has begun paying down its Rubles 60 billion debt,
and hopes to liquidate it entirely within three years.
Transfers from the federal center are up 24 percent,
providing an extra 2.2 billion rubles to build schools and
hospitals. Kanokov claimed that ethnic and religious
frictions are present but not serious. The republic's
problems boil down to one main issue: unemployment. Kanokov
has been seeking investment as a way of creating jobs, but
stereotypes of the North Caucasus have made potential
investors reluctant. Ambassador said he is willing to inform
U.S. investors of any projects Kanokov thinks might be
attractive.


5. (C) Ambassador asked about Kabardino-Balkaria's external
relations, leading to a discussion on South Ossetia, whose
referendum Kanokov had just observed. Kanokov thought
tensions in the region are increasing, though he admitted
that the departure of Georgian DefMin Okruashvili might mark
a "slight change" in Georgian policy. Ambassador reiterated
the U.S. position in support of Georgia's territorial
integrity and a negotiated solution achieved by peaceful
means.


6. (C) Later, in the one-on-one conversation on the drive to
the hotel, Kanokov admitted to the Ambassador that he is
struggling with the clan system in Kabardino-Balkaria. Clan
rivalries affect not only politics, but economic projects as
well. Clans and factions demand their cut of every project.

Nalchik University Roundtable
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7. (SBU) After Rector Karamurzov gave the Ambassador an
overview of the university and its physical sciences
orientation, the Ambassador addressed 50 students and faculty
many of them sitting around a conference table boasting a

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computer monitor at each seat. The Ambassador told the
audience that Russia and the U.S. matter to one another not
only in traditional security areas but also in facing
together the challenges of the 21st century. We should not
let day-to-day frustrations cause us to lose sight of areas
in which we gain by working together.


8. (SBU) A number of questioners stressed the value of
exchanges and lamented that programs such as Open World are
no longer as active as they once were. The Ambassador
acknowledged the value of exchanges at all levels. Other
questioners were interested in the U.S. stance on Russian WTO
accession, current American politics, and the Circassian
communities in America and Jordan, where the Ambassador
previously served.

Vladikavkaz Meeting with Republic Head Mamsurov
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9. (C) On December 5 the Ambassador traveled from Nalchik to
Vladikavkaz, capital of North Ossetia-Alania, where he met
with the republic's head, Teymuraz Mamsurov. Mamsurov was
accompanied by Larisa Khabitsova, Chair of the North Ossetian
Parliament; Oleg Khatsayev, First Deputy PM (the PM had just
been sacked) and Vladimir Tabolov, Chair of the republic's
Foreign Relations Committee.


10. (C) Mamsurov gave an often defensive overview of the
situation in North Ossetia, saying that the republic, like
the rest of the North Caucasus, is recovering from "mistakes
made over the last ten years under the slogan of 'reform.'"
He stressed the lack of land and the population density of
the republic. He touched on vodka production, denying that
North Ossetia's preponderance in the field meant that
Ossetians are drunkards. To the Ambassador's question on
relations with other republics, Mamsurov admitted that there
are political problems with both Ingushetia and Chechnya, but
asserted that these problems have economic roots.


11. (C) The Ambassador's question on relations with Georgia
opened the floodgates to an outpouring of nationalist
rhetoric. "In the 21st century" the Ossetian people must not
be divided between two countries, "serving in two different
armies," he said; "I cannot imagine my cousin serving in a
NATO army." He said charges that South Ossetia's economy is
based on counterfeiting and other criminal activity are
"shameful." Mamsurov saved his harshest rhetoric for the
Georgian leadership, which resorts only to "threats;"
Saakashvili, "who has lived little in Georgia," lacks the
wisdom and experience to serve his people well.


12. (C) Mamsurov warned against accepting the "myth" of
democracy in Georgia. "They threw Shevardnadze out like an
old dog," he said, "and Shevardnadze himself came to power
the same way." The Ossetians could not trust anything
Saakashvili says, Mamsurov believed. He criticized U.S.
support for Saakashvili, and urged the U.S. to take Georgian
rhetoric "more seriously." The Ambassador said the U.S.
supports Georgia's territorial integrity and an agreement
between Georgia and the South Ossetians to resolve the
conflict by purely peaceful means.

UN Heads
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13. (C) Marie Spaak (OCHA),Jo Hegenauer (UNHCR),Pirita
Vuorinen (UNDP),Khairiniso Najmetdinova (WFP),Rasheed
Mustafa (UNICEF),Armen Mehrabyan (FAO) and Zoltan Birro
(UNDSS) gave Ambassador their overview of the challenges they
face in the North Caucasus, stressing the difficulties in
promoting economic progress in the face of a brain drain and
reluctance of investors to sink funds into the region.
Adding to those difficulties are the lack of security,
government pressure to give assistance in the form of
infrastructure, not technical capacity-building, and
government restrictions on movements and NGO registration.
OCHA chief Spaak highlighted the demand by the Chechnya IDP
committee that all UN agencies move their offices -- and
warehouses -- to Chechnya. UNHCR chief Hegenauer noted that
UN humanitarian agencies must count on losing most of their
funding and ability to operate in the region within the next
few years as the focus shifts to development assistance.

NGOs
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14. (C) U.S. funded NGO heads Amir Omanovich (International
Rescue Committee),Zurab Koberidze (International Medical
Corps),Siobhan Kimmerlee (World Vision) and Eva Raubisko
(Danish Refugee Council) spoke of their difficulties with
re-registration (IMC and DRC have been re-registered; IRC and
WV are still caught up in the slow iterative process of re-

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and re-re-submitting forms). IRC said it has had to
terminate 90 percent of its contracts while awaiting
re-registration. IMC's Koberidze said the reporting
requirements are as onerous as those for re-registration.
There is also a need to reconcile requirements under Russian
NGO law with requirements under U.S. non-profit law.
Ambassador urged the NGOs to consult with the Embassy's legal
team, which has been advising NGOs in Moscow.

Beslan
--------------


15. (U) Before leaving North Ossetia-Alania Ambassador toured
School No. 1, site of the terrorist attack in September,

2004. He laid a wreath at the nearby cemetery devoted to the
hundreds of victims of the attack.

Observations
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16. (C) The North Caucasus has attracted international
attention for over ten years as a source of instability for
Russia and the region. The security situation is improving,
though that may prove elusive: there are strong and violent
extremist Islamist elements throughout the region, and they
are becoming the main channel for opposition to corrupt and
repressive regimes. The last fifteen years of war and
collapse have left the North Caucasus poorer and more
isolated than before. The U.S. value-added lies in
continuing humanitarian assistance and widening exchanges to
help reduce that isolation.

BURNS