AMBASSADOR'S VISIT TO KAZAN: FEDERALISM, ECONOMIC

C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 001322

SIPDIS

SIPDIS

USDOC FOR ITA/MAC/ORUE/JBROUGHER/MEDWARDS

E.O. 12958: DECL: 02/10/2016
TAGS: PGOV ECON PREL ETRD PINR RS
SUBJECT: AMBASSADOR'S VISIT TO KAZAN: FEDERALISM, ECONOMIC
DEVELOPMENT AND ISLAM

REF: 05 MOSCOW 14477

Classified By: Ambassador William J. Burns. Reasons: 1.4 (B/D).


1. (C) SUMMARY: The Ambassador's February 6-7 visit to
Tatarstan featured themes of federalism, economic opportunity
for U.S. firms, and Islam. Republic President Shaymiyev, in
a lengthy tour d'horizon, noted that he was taking
initiatives not encouraged by Moscow, including diversifying
the economy by developing the petro-chemical sector.
Shaymiyev took swipes at President Putin for seeking to
over-centralize power in Moscow and for economic
short-sightedness. Both Shaymiyev and a group of Tatarstan's
business leaders expressed to the Ambassador their hope for
broader commercial ties with U.S. firms. Shaymiyev and the
republic's leading Muslim figures highlighted Tatars'
tradition of tolerant Islam, although the visit also revealed
hints that Tatarstan's leadership is concerned about radical
Islamic influences from the Middle East. Despite rumors that
Shaymiyev's presidency may be nearing an end, he appeared
fully engaged on a range of issues and seemed very much in
control. Tatarstan appeared politically stable and a place
that could offer interesting opportunities for U.S.
commercial ties. END SUMMARY.


2. (SBU) Ambassador Burns visited Kazan, capital of the
Republic of Tatarstan, on February 6-7. He held a lengthy
meeting with republic President Mintimer Shaymiyev,
participated in a roundtable discussion with business leaders
and another with Islamic figures at the Russian Islamic
University of Kazan, and met with students and faculty of
Kazan State University. The Ambassador held a press
conference at Kazan's American Corner, where he also met
separately with alumni of USG exchange programs.
.
SHAYMIYEV'S TOUR D'HORIZON CENTERS AROUND FEDERALISM
-------------- --------------


3. (C) As noted reftel, Tatarstan has long been a key
battleground in center-regional relations, with Shaymiyev
resisting Putin-era efforts at centralization of power in
Moscow. That theme featured prominently in the Ambassador's
conversation with Shaymiyev, who was clearly enthusiastic
about the meeting and extended it far longer than planned.


4. (C) Shaymiyev began by describing Tatarstan as having
pursued its own approach, which had produced brisk
development. On the economic side, this had allowed the
republic to lessen the impact of national downturns,
Shaymiyev argued; whenever Russia's economy had encountered
hard times, Tatarstan's economy had not felt the impact as
severely.


5. (C) Turning to the current economic situation, Shaymiyev
posited that while the federal government sought to double
GDP, this was not an effective approach. Instead, Tatarstan
was focusing on qualitative economic development. While the
republic had sufficient oil reserves to meet its demand for
the next thirty years, drilling for that oil was expensive
and costs would only continue to rise. For this reason,
Tatarstan was focusing on developing the petro-chemical
sector, both to diversify its economy and to cushion it from
oil price fluctuations. Machine building was another focus
of development, Shaymiyev said. The republic had been a
central player in the military-industrial complex during the
Soviet era, but customers for military production were
becoming hard to find, resulting in the current turn to
civilian production.


6. (C) Tatarstan was following this course on its own,
Shaymiyev said, despite the limitations imposed by the
federal center. Only now was Moscow coming to understand the
wisdom of Tatarstan's approach, he continued, which had
helped produce stability in the republic.


7. (C) The Ambassador noted the progress made under Shaymiyev
and emphasized his desire for broader U.S. commercial ties
with the republic. This should not be limited to natural
resources, the Ambassador continued, particularly since human
capital was Tatarstan's best resource and special economic
zones offered interesting possibilities for U.S. business.
Commenting that the focus on the petro-chemical sector made
sense, the Ambassador said that Citigroup's financing of a
petro-chemical plant was a good first step in broadening
economic ties with the U.S. Shaymiyev responded that Moscow
was becoming interested in Tatarstan's petro-chemical
development effort, and that he would be meeting with
Economic and Trade Development Minister German Gref on

MOSCOW 00001322 002 OF 004


February 15 to discuss the issue, with an eye to pursuing a
regional approach involving the Bashkortostan Republic,
Orenburg Oblast and other of Tatarstan's neighbors. The
Ambassador noted that we would work with Gref as well to
explore a broader U.S. role. Noting that Tatarstan used much
U.S. technology in its agricultural sector, Shaymiyev praised
President Bush's proposal to use agricultural products to
generate energy as a bold move that warranted consideration
in Russia.


8. (C) Turning to the political front, Shaymiyev noted that
Tatarstan had recently agreed to a new treaty with Moscow to
replace one signed in 1992. (In a separate conversation, a
republic official told the Ambassador that the treaty, having
been approved by Tatarstan's parliament late last year, had
been sent to Moscow for ratification. It remained unclear
whether the State Duma would consider it or whether it would
go directly to President Putin for consideration and possible
signature.) The new treaty contained some important
concessions, Shaymiyev argued. It responded to the
republic's ethnic make-up (53 percent Tatar, 47 percent
Russian) by stipulating that the republic's president must
know both languages and requiring that efforts be made to
promote knowledge of the Tatar language and culture in the
republic and among its ethnic diaspora. Maintaining the
Tatar language and culture had required hard work but had
been largely successful. Unless this effort continued,
destabilization could result in Tatarstan.


9. (C) More broadly, Shaymiyev posited, Moscow often tried to
downplay the nationality factor. While it was hard to
account for the importance of nationalities, they could not
be ignored anywhere in today's world. Russia could not
become democratic if it was unitary, Shaymiyev argued. And
as the post-Soviet generation emerged, such democracy was
increasingly essential.


10. (C) Putin had done much for the country, Shaymiyev
continued. He had faced a tough legacy in the North
Caucasus, left him by Boris Yeltsin, who had admitted the
errors of his approach to Chechnya. More generally, Putin
had been faced with the need to establish order in the
country. It was easy to criticize Putin, but he had created
such order. Yet there must be limits to that order,
Shaymiyev argued, and Putin's approach on issues involving
federalism raised serious questions. Eliminating
gubernatorial elections had been an error, Shaymiyev argued,
although the law mandating that the winning party in a
region's legislative election would pick the governor undid
some of that damage.


11. (C) Noting that he was a member of the United Russia (YR)
party's national leadership, Shaymiyev said YR should adopt a
right-center position. The party needed to be at the center
of the country's political spectrum, but holding rightist
economic positions was essential, particularly during
Russia's modernization. Shaymiyev argued for a national
government chosen by parliament rather than by the president.
Russia would develop a genuine system of political parties
only if one party selected and controlled the government and
others were in opposition.


12. (C) The Ambassador noted Tatarstan's tradition of
religious tolerance, underscoring its importance to
maintaining stability. Shaymiyev expressed pride that the
Tatar model of Islam had been tolerant since well before the
Soviet era.
.
BUSINESS COMMUNITY SEEKS BROADER ECONOMIC TIES
-------------- -


13. (SBU) Some two dozen leaders of the republic's business
community voiced views similar to Shaymiyev's in a meeting
with the Ambassador. In introductory remarks, the republic's
Trade Minister noted Tatarstan's rapid economic growth and
the new focus on the chemical and petro-chemical sectors, as
well as on mechanical engineering and metallurgy. He and
others also highlighted the development of a special economic
zone (SEZ) in the republic's Yelabuga region. An official of
that SEZ said that sizable funding was being devoted to
infrastructure development, and that the zone would offer
opportunities for petro-chemical production, including that
of plastic resins, as well as car part production. Because
it is still under development, the SEZ offers opportunities
to U.S. consultants, service providers and others. The
official of one of the republic's leading banks said that
consultants from the U.S. could also find opportunities
because Tatarstan's small and medium sized enterprise sector

MOSCOW 00001322 003.2 OF 004


was still far from fully developed.


14. (SBU) Lack of sufficient U.S. business ties was a common
theme of other speakers at the session as well. A car parts
manufacturer noted that, while it had established ties with
Delphi, it sought to further expand its U.S. business
relations. A banking representative noted that while his
bank had access to USD ten million in EXIM funds, it had only
been able to use about fifteen percent of that amount. The
representative of a leading helicopter manufacturer
complained that the U.S. does not certify his firm's
helicopters, and saw the need for U.S. firms to view Russia
as a "civilized partner." By contrast, the representative of
Tatneft, the republic's main oil production entity, said his
firm had excellent ties with U.S. partners.


15. (SBU) The Ambassador stressed the importance of economic
ties with the U.S., and the broader significance of WTO
accession. He welcomed the examples of good ties but
stressed the need for more models of success, which would
draw potential U.S. partners' attention to Tatarstan. The
Ambassador said he would follow up, including with AmCham
Moscow and with visiting delegations. He underscored that
the G-8 Summit would allow Russia to highlight its business
opportunities, and hoped Tatarstan would take advantage of
that occasion.
.
TOLERANT ISLAM, BUT WITH A FEW STRESSES
--------------


16. (C) Reiterating his message about the importance of
tolerance, the Ambassador echoed in several other meetings
the message he had conveyed to Shaymiyev about Tatarstan's
reputation for having a tolerant version of Islam. On a
visit to the Russian Islamic University in Kazan, he held a
roundtable discussion with several major Muslim figures led
by Gasman Iskhakov, who is both the school's rector and Chief
Mufti of the republic. Noting the dramatic rise of Islamic
religious and educational institutions in Tatarstan since the
fall of the Soviet Union, Mufti Iskhakov said that each of
the republic's 47 administrative subdivisions now had their
own imam and, typically, some twenty to forty mosques. His
university had been founded to ensure that Tatars, rather
than those from the Middle East, would provide religious
leadership throughout the republic. His university, which
had begun with 18 students when it was founded in 1998, now
had between two hundred and three hundred students. Plans
were afoot to open branches in other regions of Russia,
including Saratov, the Mufti reported.


17. (C) The Mufti shared the Ambassador's view about the
importance of a tolerant Islam. Commenting on the Danish
caricatures controversy, he said they reflect lack of respect
for Muslims. Those who had drawn the caricatures and
published them were to blame, however, rather than the Danish
population as a whole, the Mufti argued. (Note: A few
participants in the Ambassador's meeting with USG program
alumni noted they had heard rumors that Danish food was being
boycotted in the republic, but said they opposed any such
boycott. According to the press, one of the republic's major
food chains took Danish food off the shelves as the
controversy was playing out, but stopped that policy,
particularly after Shaymiyev's administration took issue with
it. End Note.)


18. (C) Despite his comments to the Ambassador, the Mufti is
viewed by the Shaymiyev administration as overly influenced
by the Middle East, State Secretary for Political Affairs
Rafael Khakimov told us on the margins of Shaymiyev's meeting
with the Ambassador. (Indeed, the Mufti told the Ambassador
his religious education had taken place primarily in Jordan
and Libya.) Tatarstan's Council of Muftis will hold an
election later in February in which Iskhakov is running for
reelection as Chief Mufti. Khakimov said that Shaymiyev's
administration was strongly leaning toward replacing Iskhakov
with a more "secular" figure less oriented to the Middle East.


19. (C) The Ambassador also discussed Islam while visiting
the Kul Sharif mosque, built inside Kazan's Kremlin and
inaugurated during the city's millennium celebrations last
year. Describing Kul Sharif as a Tatar hero who had fought
off the Russians in the 16th century, the mosque's imam
hastened to add that Tatarstan's Muslims were in no way
anti-Russian. Russia brought together a range of
nationalities, of which the Tatars and their Islamic
traditions were an integral part. The imam added, however,
that Russia had been built on the foundations of the Golden
Horde, of which the Tatars had been the core in the 13th

MOSCOW 00001322 004 OF 004


century; the iman's implication was that Tatarstan still
enjoys pride of place in the country.
.
COMMENT
--------------


20. (C) We have heard rumors that Shaymiyev's presidency is
nearing an end for two reasons. On the one hand, some
believe that after over twenty years as president, he has
lost his enthusiasm for running the republic; Public Chamber
member Vyacheslav Glazychev, an expert on Russia's regions,
recently described Shaymiyev to us as "tired and indecisive,"
and we heard a similar view from Islam expert Rafik
Mukhamedshin on our latest visit to Kazan. On the other
hand, the reasoning goes, the Kremlin has gained enough power
that it now feels itself in position to remove Shaymiyev as
president, as long as they do it gracefully. At least
judging by the Ambassador's meeting with him, Shaymiyev
remains highly engaged on a broad range of issues and appears
to have a forward-looking vision for Tatarstan's development.
In his conversation with the Ambassador, Shaymiyev took some
swipes at the Putin administration, notably on
over-centralization of power and economic short-sightedness,
which suggests either a leader with little to lose or one
with much confidence about his own position.


21. (C) In his visit to Kazan, the Ambassador found a
thriving city with much recently built infrastructure --
largely the result of a huge injection of federal funds for
the millennium celebrations -- and many new construction
projects ongoing. Economically, the republic appears to
offer significant opportunities for U.S. firms. Politically,
the republic seemed stable, with little prospect that the
Kremlin would oust Shaymiyev without carefully calculating
the risks. The Ambassador's visit revealed few signs of
serious trouble on the Islamic front, despite some rumblings
about potential radical influences.
BURNS