CODEL FRIST MEETING WITH RUSSIAN EXPERTS

UNCLAS SECTION 01 OF 02 MOSCOW 003803

SIPDIS

C O R R E C T E D C O P Y - ADDED CODEL CAPTION

CODEL
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SIPDIS

E.O. 12958: N/A
TAGS: PGOV PHUM PREL KDEM ECON EATO KHIV RS
SUBJECT: CODEL FRIST MEETING WITH RUSSIAN EXPERTS


MOSCOW 00003803 001.4 OF 002



1. (SBU) SUMMARY. In an April 10 breakfast meeting with
Codel Frist and the Ambassador, Russian experts described the
range of challenges facing Russia in the political, economic,
and social sphere. Experts agreed that high oil profits
disincline the political leadership to push new policy
initiatives. They claimed that Russian foreign policy is not
anti-Western, but rather is on an independent trajectory.
They described positive economic developments, with a strong
banking sector and strong cash flow, and noted social
challenges that include the need for a new approach to
immigration and greater technical assistance in the health
sector. END SUMMARY.


2. (SBU) Senate Majority Leader Bill Frist (R-TN) and
Senators Judd Gregg (R-NH) and Richard Burr (R-NC),
accompanied by Ambassador Burns, met on April 10 with a group
of Russian experts, which included Dr. Aleksey Bobrik of the
Globus Consortium; Sergey Riabokobylko, a real estate
entrepreneur active in the American Chamber of Commerce and
co-founder of Stiles and Riabokobylko real estate firm;
Andrey Kortunov of the Eurasia Foundation; Boris Makarenko of
the Center for Political Technologies; Anatoliy Vishnevskiy
of the Center for Demography and Human Ecology; and Dmitriy
Trenin of the Moscow Carnegie Center.

POLITICAL MOOD
--------------


3. (SBU) Considering internal political developments, Russia
was not moving forward, according to Makarenko. High oil
profits allowed the political elite to "sit on the top and
enjoy" and reinforced a lack of initiative to introduce
change. This resulted in a political system that wasn't
being properly exercised. Kortunov agreed that oil money was
a major obstacle to structural reform in Russia as it allowed
the government to continue to offer social benefits, assuring
political loyalty. Despite this, Makarenko believed that
market forces and increased openness to the outside world
would continue to grow and eventually become dominant.


4. (SBU) According to Makarenko, the most active voters in
Russia were retirees, and political leaders were particularly
attentive to this group. But pensioners had still not
adjusted to reforms introduced in the 1990s. Young people
were worrisome, in that they gave significant support to
leaders such as nationalist political leader Vladimir
Zhirinovskiy. While Zhirinovskiy marketed himself as a
liberal-democrat, he was neither liberal nor a democrat. His
ability to attract support demonstrated that he was a
talented politician. Once elected, however, he didn't follow
through on his promises, instead cooperating with the
government. Middle-aged Russians were largely struggling to
survive in a changing economy and sought stability.
Makarenko predicted more rational political behavior in the
long-term, but admitted that "things might get worse before
they get better."

RUSSIA'S FOREIGN POLICY
--------------


5. (SBU) While Russia was facing internal challenges, it was
also encountering a change in its relations with the rest of
the world, the experts underscored. Trenin said the early
1990s brought to Russia a new openness to the outside world,
after a long period of self-containment. Initially, Russia
had followed the Western trajectory, but in the last several
years it had gone its own way in the hopes of creating its
own "solar system." According to Trenin, Russia's foreign
policy was neither anti-Western nor motivated by a desire to
recreate the USSR, but rather reflected the expansion of
Russia's economic interests and cultural commonalities in the
post-Soviet space. Russia's partners needed to take
seriously Russia's desire to carve out a niche for itself.
Trenin added that as Russia continued on its independent
trajectory, it would move closer to China, making China's
influence equal to that of the U.S.


6. (SBU) Echoing Trenin's assertion that Russia's intent in
the post-Soviet space was not driven by imperialist motives,
Kortunov warned that the real challenge for the West derived
from the growing feelings of arrogance and isolationism
displayed by the Kremlin. The Kremlin was not worried about
what the West thought of it and knew that it could not be
ignored in the world community. Kortunov emphasized that it
was important for the U.S. to encourage openness and
engagement in its approach to Russia. One way that the U.S.
could engage Russia more effectively was to move from the old
model of technical assistance toward a more reciprocal model,

MOSCOW 00003803 002.4 OF 002


with Russia sharing its expertise with the U.S. in areas such
as emergency disaster response. According to Kortunov, it
was important to strengthen the social dimension in the
U.S.-Russia relationship.

ECONOMIC ISSUES
--------------


7. (SBU) While Russia's political mood was mixed, economic
development seemed headed in a more positive direction.
Riabokobylko described Russia's main challenge in the
economic area as decreasing citizens' dependence on the
government for stability of income. Riabokobylko observed
that businessmen were increasingly in power in Russia's
regions and seemed sincerely interested in developing
infrastructure and raising living standards in their cities.
The banking sector in Russia was doing well and could be a
catalyst for infrastructure development. Russian-owned banks
like AlfaBank could even compete with international banks
like Citibank.


8. (SBU) While corruption existed in Russia, Riabokobylko
argued, it was possible to do business without paying bribes.
Favoritism due to local relationships existed, but was
hardly unique to Russia. The main challenge for businesses
in Russia was to change outside perceptions of Russia as
corrupt and focus on its more positive economic developments.

DEMOGRAPHIC CONCERNS
--------------


9. (SBU) On the demographic front, Vishnevskiy explained that
Russia needed a new approach to immigration. Currently most
immigrants came to Russia from Russian-speaking regions of
the post-Soviet space, but Russia needed more diversity in
its immigration. Unfortunately, Russian society was not
ready for this; public opinion was hostile to increasing
immigration due to the absence of previous experience with
immigration. Vishnevskiy said that lack of good legislation
to control the migration stream complicated the situation.
It would be helpful for the U.S. and Russia to share
experiences on immigration.

HIV/AIDS
--------------


10. (SBU) Bobrik agreed that more cooperation between the
U.S. and Russia in the health field was possible. Despite
the influx of money in the health sector, there was still a
lack of experience in the field and, according to Bobrik, the
GOR would be receptive to more U.S. technical assistance in
this area. Cooperation could also increase regarding vaccine
development. Some cooperation already existed through grants
and university exchanges, but the lack of English-speakers in
the health and science sector limited cooperation in this
area.
BURNS