IMPLEMENTATION OF THE NGO LAW: SO FAR, MUCH

C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 005372

SIPDIS

SIPDIS

E.O. 12958: DECL: 05/05/2016
TAGS: PROG PREL PINR RS
SUBJECT: IMPLEMENTATION OF THE NGO LAW: SO FAR, MUCH
UNCERTAINTY

REF: MOSCOW 2132

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


1. (C) SUMMARY: In the month since Russia's controversial
new NGO legislation formally went into effect, there has been
widespread uncertainty about how to comply with it and about
its long-term impact. Though implementing regulations have
been issued, they fail to address many practical questions.
The Justice Ministry reportedly is preparing explanatory
notes, and some Federal Registration Service (FRS) officials
indicate they are open to meeting with NGOs to discuss
compliance. Some major U.S.-based NGOs see reason for hope
that the law will not adversely affect them. Many
independent Russian NGO activists are less sanguine, fearing
the law's massive bureaucratic requirements and the GOR's
ability to apply them selectively. Kremlin officials have
told the Ambassador that no major drive is in the works to
shut down independent NGOs; he has reiterated to them our
concerns about implementation and urged maximum transparency
and minimum impact on NGO activities. While the law remains
highly worrisome, it is not clear that a worst-case scenario
will play out. We will continue to underscore -- ideally, in
unison with other governments -- our concern for fair and
transparent application of the law, and will need to avoid
having a counterproductive "Made in the U.S.A." stamp
attached to efforts to monitor implementation. END SUMMARY.
.
UNCERTAINTY ABOUNDS
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2. (C) The controversial amendments to NGO legislation
(reftel and previous) formally went into effect on April 18,
and the period since then has been dominated by uncertainty
and confusion. The Justice Ministry has issued implementing
regulations along with almost one hundred pages of forms for
NGOs to complete for various aspects of compliance.
Meanwhile, the FRS has begun hiring new staff to carry out
the law. AmCham deputy director for policy Tatyana Raguzina
told the Ambassador, in a May 15 meeting with major
U.S.-based NGOs working in Russia, that the deputy director
of the FRS office in charge of NGOs had told her the previous
day that his agency had hired some one thousand new
employees, although he gave no reason to believe that hiring
would continue to proceed apace. (By many accounts, the FRS
aims to hire a total of six thousand new employees to
implement the law.) That official also told Raguzina that
training had begun for regional FRS officials. If the
official voiced optimism about his agency's workplan, he also
acknowledged that his office was still ill-prepared to begin
the task of implementing the NGO law, telling her that, in
the tiny office he currently shares with a skeleton staff, he
was likely to be overwhelmed by paperwork for the foreseeable
future.


3. (C) Although the implementing regulations are extensive,
they fail to address many practical questions about
compliance. At the May 15 meeting with the Ambassador, for
instance, NDI country director Mary O'Hagan said she was
uncertain what constituted a "reportable" meeting or event
under the terms of the law. Many activists have told us they
are uncertain what level of detail they will have to provide
to comply with the law. American Jewish Joint Distribution
Committee (JDC) country director Sam Amiel, for instance,
told us that while his organization had not been directly
affected by the new law, many of the NGOs that receive JDC
funding are confused about how to proceed, which is weakening
their effectiveness. In earlier meetings, activists had told
us they were stymied in their attempts to get responses to
their questions about the law from what they described as a
disorganized FRS, although some are now getting some
information. According to Raguzina, her FRS interlocutor
said he would be happy to meet with AmCham members to explain
procedures, and such a meeting has been tentatively set for
next week.


4. (C) Public Chamber member Sergey Ryakhovskiy, who tracks
the NGO law, is among several people who have told us
recently that the Justice Ministry is now preparing
explanatory notes to supplement the implementing regulations.
At the May 15 meeting with the Ambassador, Moscow Carnegie
Center Director Rose Goettemoeller speculated that the GOR
was slow to complete those notes because of infighting over
bureaucratic turf. Goettemoeller said she was concerned that
NGOs could be caught in the cross-fire of such infighting,
which she believed had also led to delays in producing the
implementing regulations.


5. (C) Aside from specific issues of compliance, broader
questions persist. At the meeting with the Ambassador, for
instance, Raguzina said she believed that registering with

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the FRS would be sufficient to meet all NGO registration
requirements, whereas Ford Foundation country director Steve
Solnick argued that registering with tax authorities and
others was still required. Similar questions continue to
swirl throughout the NGO community as lawyers and activists
work their way through the law and implementing regulations
and seek clarification from the FRS.
.
DIFFERING EXPECTATIONS
--------------


6. (C) Some Western NGOs see reason to hope that the law will
not adversely affect them. At the meeting with the
Ambassador, Solnick said that, at least for large and
well-staffed organizations like his, the law might not prove
damaging. Well before the new legislation went into effect,
Ford had been dealing with major bureaucratic burdens, and
its accountants felt the new requirements were manageable.
Solnick also believed that because the FRS would be
overwhelmed with paperwork, it would be less prone to go
after organizations like his. Nonetheless, he acknowledged
that the law created potential new threats. Although
Raguzina said she had been assured by FRS officials that it
would not punish NGOs that erred in completing some of the
newly required forms, AmCham Executive Director Andrew Somers
noted that an organization could be shut down under the law
for twice submitting incorrectly completed documentation.


7. (C) Meanwhile, the implementing regulations have
reinforced concerns that many independent Russian NGOs have
long been voicing. Some activists, including Yuriy
Dzhibladze of the Center for the Development of Democracy and
Human Rights, have told us they had been able to influence
the drafting process to eliminate some of the most damaging
regulations. Nonetheless, the sheer number of forms to be
completed and the level of detail that appears to be required
constitute a major source of alarm. Civil society activists
such as Open Russia's Irina Yasina have told us that even
sizable organizations like hers will need to hire new staff
to meet the reporting requirements. Smaller organizations,
including those in the regions, may lack the funds to add new
staff members, forcing them to find creative solutions,
self-censor or risk closure. Michael Harvey of ACDI/VOCA
echoed that theme, noting that some of the forms appear to
require completion in ink or on a typewriter, rather than by
computer, further increasing the burden. Yelena Topoleva of
the Agency for Social Information told us the forms were
prepared without consulting with the NGO community or with
Chair of the Presidential Commission for Assistance to the
Development of Institutions of Civil Society and Human Rights
Ella Pamfilova.


8. (C) Resource implications aside, the law creates
vulnerabilities by requiring a high level of detail in its
reporting requirements, the activists tell us. The FRS could
use even a minor reporting error to punish an organization,
they argue, along the lines of the GOR's use of minor
reporting errors to disqualify some political parties from
running in the March regional elections .
.
GEARING UP TO RESPOND
--------------


9. (C) NGOs have begun to prepare themselves to meet the new
requirements, although many have told us they recognize that
the FRS could find technical reasons to punish even an NGO
that is being meticulous in meeting its reporting
requirements. They also note that the courts might well
uphold arbitrary FRS decisions. In that connection, however,
some are encouraged by recent victories of independent NGOs.
Most recently, NDI scored an almost total victory in a case
brought by tax authorities, which had charged that NDI had
not paid its taxes properly. NDI's position was upheld after
it showed evidence countering the tax authorities' claim, and
it must pay only a small fine for non-payment of a minor part
of its tax obligations.


10. (C) Recognizing that fulfilling their reporting
requirements will reduce their vulnerability, NGOs have begun
beefing up their capacities. Some are hiring additional
accountants, sometimes exploring the possibility of sharing
staff among two or more organizations to cut down on costs.
USAID is funding several coalitions of NGOs -- including U.S.
groups like the International Center for Non-Profit Law
(ICNL),as well as Russian NGOs such as the Center for
Democracy and the Institute for Urban Economics (IUE) -- to
help identify the specific burdens and threats these new
regulations pose to NGOs and to coordinate and expand pro
bono legal aid and other efforts.


11. (C) Some organizations have found that the law creates

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new obstacles to receiving direct funding from foreign
governments. In response, USAID is developing arrangements,
for instance, to channel funds to Internews Russia through
Internews Network (US) rather than directly. Internews
Russia will then work for the Network on a commercial
consulting basis, rather than as a non-profit grantee. Our
contacts at the UK embassy told us they are working on
similar arrangements for their grantees with Internews and
some others. Internews Russia is among several organizations
that may "go corporate" because of the new law. IUE head
Marina Liborakina recently told us her organization has also
begun considering that option.


12. (C) Meanwhile, some Western organizations have stopped
plans to register in Russia, preferring to provide funding to
Russian organizations. Leonid Stonov of the Union of
Councils of Jewry of the Former Soviet Union (UCSJ) told us
his organization had considered opening an office to oversee
implementation of a major project to monitor and counter
extremism, but has now decided to avoid the registration
process, opting instead to channel funding directly to the
Moscow Helsinki Group to implement that project.


13. (C) Some activists have begun planning legal challenges
to elements of the law which they believe to be
unconstitutional. Boris Pustyntsev, head of the St.
Petersburg-based Citizens Watch NGO, told us he is part of an
effort to prepare such challenges, which will either be filed
initially in lower courts or be taken directly to the
Constitutional Court if possible. Pustyntsev saw little
prospect of winning such cases in Russia but saw the move as
preparing the ground for bringing the cases to the European
Court of Human Rights.


14. (C) Various organizations have pledged to monitor the
law's implementation. Among those is the Public Chamber,
whose head, Yevgeniy Velikhov, told us May 15 that this would
be a major focus of the recently formed body's work. Several
Chamber members have sought to take up the mantle. Igor
Chestin, a Chamber member from the World Wildlife Fund,
recently told the Ambassador that he, along with several
other independent-minded members, is on a working group
monitoring implementation. Grigoriy Tomchin, a Chamber
member with a solid reputation for drafting legislation
during his time in the Duma, told us he is poised to draft
amendments to the law or to the implementing regulations.
Tomchin added, however, that it is far too early to draw any
conclusions about implementation. Vyacheslav Nikonov,
Chairman of the Chamber's Commission on International
Cooperation and Public Diplomacy, told us he had intended to
hold hearings this month with domestic and foreign NGOs on
the law's implementation, but had concluded that it would not
be possible to get a useful overview of implementation
problems before September, when the hearings are now
scheduled.


15. (C) In addition to our own tracking of the NGO law's
implementation, other embassies have begun working on that
effort. A Danish Embassy officer told us that after some
internal disagreement among EU member embassies, the EU has
established a working group to monitor implementation.
.
REITERATING OUR CONCERNS
--------------


16. (C) The Ambassador has continued to reiterate to Kremlin
officials our concerns with implementation. He highlighted
that point to G8 Sherpa Igor Shuvalov, noting the damaging
effects that abuse of the NGO law could have on the St.
Petersburg Summit. Shuvalov acknowledged the point and said
it is unlikely the Kremlin will initiate a sweeping attack on
NGOs either before or after the Summit. The Ambassador also
reiterated our concerns to Presidential Aide Sergey
Prikhodko, who said he did not see the Kremlin using the law
to make a broad assault on independent NGOs. We also
suggested to Nikonov that it would be helpful if at least
some of the prominent domestic and foreign NGOs were
registered successfully before the G8 Summit. Nikonov took
the point, but said he thought those working on domestic
issues in the Presidential Administration were not inclined
to "do favors" for the West, which would pocket such steps
and continue criticizing Russia with no acknowledgment of the
positive moves.


17. (C) The Ambassador has also highlighted our support for
independent NGOs, most recently by speaking at the thirtieth
anniversary of the Moscow Helsinki Group. We have also
underscored that foreign assistance has benefited Russia in
concrete ways. The Ambassador held a reception for Junior
Achievement Russia, which gets USG support, to make the
latter point, which was echoed at the event by Public Chamber

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head Velikhov. The Ambassador will make that same point in a
keynote address at a conference, jointly sponsored by the
Moscow Carnegie Center and the Gorbachev Fund, that will
center on the importance of Western cooperation with Russia.
.
COMMENT
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18. (C) There is no question that the new law, its
implementing regulations and above all its extensive and
detailed reporting requirements, give grounds for concern.
The law includes some vague provisions that leave room for
arbitrary application. The lack of clarity about
implementation likely results at least in part from the GOR's
own confusion about exactly how to apply the law, but that
also creates vulnerabilities by making it harder for NGOs to
properly comply with the legislation. Similarly, the
extensive reporting requirements, though no doubt partly a
result of Russia's cultural penchant for highly bureaucratic
procedures, create both logistical difficulties and
vulnerabilities for NGOs. However the law ends up being
implemented, these vulnerabilities are likely to foster
greater self-censorship and dissuade at least some NGOs from
working with foreign organizations and receiving foreign
funding.


19. (C) Nonetheless, we should not assume that a worst-case
scenario will play out either before or after the G8 Summit.
Significant elements of the NGO community are in good faith
preparing for the new challenges, above all by strengthening
their capabilities to fulfill the law's requirements. We are
lending a hand in that effort, although it is important for
Russians to be seen taking the lead so that a "Made in the
USA" stamp is not attached to independent civil society. We
will continue reiterating our concerns, as well as
demonstrating our support for independent NGOs and
highlighting the benefits to Russia of Western cooperation
and assistance, to the degree possible doing so in
conjunction with other governments.
BURNS