A/S LOWENKRON'S MEETING WITH KONSTANTIN KOSACHEV,

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 000868

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/23/2016
TAGS: PGOV PREL KDEM RS
SUBJECT: A/S LOWENKRON'S MEETING WITH KONSTANTIN KOSACHEV,
CHAIRMAN OF DUMA INTERNATIONAL RELATIONS COMMITTEE

Classified By: Ambassador William J. Burns. Reasons 1.4 (b and d).


1. (C) SUMMARY: On January 19 DRL A/S Barry Lowenkron,
Ambassador Burns, and EUR DAS David Kramer met with State
Duma International Relations Committee Chairman Konstantin
Kosachev. Defending the new NGO legislation, Kosachev
insisted that it would clarify the role of NGOs in Russia,
not limit their activities. He conceded that implementation
might be problematic, but said the Duma would intercede if
GOR officials took any unlawful or arbitrary actions against
NGOs. Kosachev also defended recent political reforms --
switching to a party-list-only system, raising the election
threshold from five percent to seven percent, and direct
appointment of regional governors by the President )-
arguing that they would strengthen political parties in the
long run. The West should not pressure Russia on democratic
development, he argued, since it will take time for the
country to reach Western levels of democracy. On foreign
policy issues, Kosachev expressed surprise at the West,s
reaction to the recent Ukraine-Russia gas dispute, arguing
that the U.S. unfairly sided with Kiev. Lastly, he expressed
hope that the G-8 summit would show the world that Russia was
a worthy G-8 member with many positive initiatives to offer.
END SUMMARY.
.
NGO Law
--------------


2. (C) A/S Lowenkron began the meeting with Kosachev by
stressing that the Secretary, along with other senior
officials and NGO representatives in the U.S. and abroad, was
concerned that the new NGO law would have a negative impact
on Russia's 2007-8 elections, particularly on pre-election
training and monitoring efforts. Kosachev replied that NGOs
should not be involved in political activities, although
electoral monitoring was acceptable. In response, Lowenkron
noted that 8political activities8 could be broadly
interpreted and that some "political" activity was in fact
apolitical. He cited the example of National Democratic and
International Republican Institutes offering training and
support to all parties, as long as they respected democratic
precepts and abided by the rules of the election process.


3. (C) Kosachev argued that the text of the new legislation
was not undemocratic -- it was the prospective implementation
that made people nervous. He explained that, previously, a
group of foreigners could establish an NGO, be registered by
the MFA, and then disappear without being held accountable
for their actions. The goal of the new law was not to limit
the activities of NGOs but to regulate their role in Russian
society. Kosachev acknowledged that the new law was
imperfect but hoped it would improve the NGO environment. He
suggested that people take a wait-and-see approach toward
implementation, and that the Duma would be ready to intervene
if illegal action were taken against an NGO.
.
Political Reforms
--------------


4. (C) Turning to broader political issues, Kosachev
maintained that Russia,s main problem was that it still did
not have real political parties, except for the Communist
Party. He said United Russia (YR) was trying to function as
a political party, but was not yet a &true party.8 Most
political organizations were simply built around strong
individuals. He then laid out the rationale behind recent
reforms adopted by the Duma last year to strengthen parties:

--Regarding the switch to a proportional party-list system,
Kosachev noted that in the 2004 Duma elections, YR obtained
only 37 percent of the vote but ended up with 306 (almost
two-thirds) of the 450 seats. This anomaly occurred, he
said, when single-mandate independent candidates opted to
join YR after they entered the Duma. The proportional
party-list system would fix that problem by reducing the
difference between the percentage of votes received and the
percentage of seats taken by a party.

--Turning to the increased entry threshold for parties from
five percent to seven percent, Kosachev asserted that such a
change seemed undemocratic at first glance because neither
the Union of Right Forces (SPS) nor Yabloko had reached the
five percent threshold in the previous national elections
(each received 4.5 percent in 2003). As a result, he said,
the Duma was currently unbalanced. With ten percent of the
population supporting those parties, democratic, liberal
ideas, they should be represented in the Duma. Neither SPS
nor Yabloko was represented, however, because their leaders
disliked each other and were unwilling to cooperate or
otherwise join forces to overcome the entry barrier. When
the two parties temporarily joined forces in the December

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2005 Moscow City election, which required a ten percent
threshold for parties, several of their members were elected
into the local Duma. The national seven percent threshold,
he argued, was beneficial because it forced such parties to
form alliances.

--Kosachev then addressed the elimination of the direct
election of regional governors. He noted that of Russia,s
89 regions, only twelve were economically self-sufficient.
Of the other 77 regions, five received 90 percent and 35
received 50 percent of their revenue from federal subsidies.
The governors in these regions, Kosachev continued, had been
directly elected by the people, partly because they had told
voters they would be able to get money and other assistance
directly. The governors never actually did anything in the
regions to stimulate the local economy, and Moscow was not
able to demand accountability from them. According to
Kosachev, the new system made governors directly responsible
to the President and regional legislatures, which would
encourage them to work harder to improve the situation in
their regions. If they failed do so, the President could
remove them for failure to perform.


5. (C) Lastly, Kosachev addressed a recent legislative
amendment that would give the party that won a regional
election the right to nominate, for presidential
consideration, a candidate for governor. Arguing that such
an arrangement was fair, he noted that any party, including
communists or nationalists, could propose a candidate to the
President if they won a regional election.
.
Russia - Ukraine Gas Dispute
--------------


6. (C) On foreign relations, Kosachev expressed surprise at
Western reaction to the recent gas dispute between Russia and
Ukraine. No one in the West had tried to analyze Ukraine,s
actions, he argued, and all attention had been focused on
Russia, leading Moscow to believe that the West had sided
with Kiev. Kosachev maintained that Russia did not raise gas
prices arbitrarily but simply instituted liberal market
principles. Ukraine had been receiving cheap gas from Russia
(in effect propping up Ukraine,s less developed economy),
while the West demanded that Russia raise its own domestic
gas prices. Kosachev said the U.S. was playing a global
game, and sought to show that Moscow did not control the
rules of that game.


7. (C) Lowenkron responded that he did not see Ukraine as
part of a global game to teach Russia a lesson. What
startled the West was the timing of the action and the method
Russia had used, as well as the price Moscow initially set,
Lowenkron continued. DAS Kramer added that keeping an overly
low price for gas was neither in Ukraine's nor Russia,s
interest. The U.S. had made clear to Ukraine that it should
not continue to subsidize energy because that fed corruption
and undermined conservation measures. Nevertheless, going
from USD 50 to USD 230 per cubic meter immediately was too
abrupt and threatened to destabilize Ukraine,s economy.
Kramer said a phased approach would be better.


8. (C) Kosachev replied that the negotiation process had
started last April. Russia,s first proposal was USD 160,
but in the subsequent eight months, Ukraine never responded
to that offer. Agreeing that USD 230 was steep, Kosachev
argued that Russia had only encountered silence when Ukraine
was informed of the January 1 deadline. He complained that
&all Russia hears is that they were to blame8 and that the
West believes &Ukraine is a new democracy that should be
treated as a special case.8


9. (C) Kramer concurred that the Ukrainian government had not
handled the situation well, but noted that at the end of the
year Ukraine was offering USD 80-85 per cubic meter and
ultimately agreed to USD 95. He said the U.S. was concerned
that what had begun as a bilateral issue between Russia and
Ukraine had ballooned into a much wider politicization of gas
supplies, which affected countries beyond the immediate area.
The U.S. favored strong Ukraine-Russia relations, and Russia
should be commended for ultimately walking back from what
could have been a very serious crisis, Kramer concluded.
.
G-8 Relations
--------------


10. (C) Thanking Kosachev for his frankness and willingness
to discuss differences of views, Lowenkron asked about
Russia,s plans for the G-8. Kosachev answered that Moscow's
chairmanship was a unique chance for Putin to show that &it
is not an accident that Russia is part of the G-8,8 and that
Russia could act as a global state with global

MOSCOW 00000868 003 OF 003


responsibilities. He said there were some who wanted to use
the G-8 as a platform for advancing nationalist issues, but
it was important to avoid such politicization. Kosachev
added that Russia had several very good projects under
discussion in energy, health care, demographics, and high
technology. Lowenkron stressed that Putin had two choices
regarding how the global media would cover the G-8 meeting.
The story could be how Putin is leading G-8 efforts to tackle
global issues, or it could be that democracy is backsliding
in Russia.
.
Democracy, Labor, and Human Rights in Russia
--------------


11. (C) Lowenkron noted the lack of formal bilateral
U.S.-Russian discussions regarding human rights since 1997.
Kosachev said cooperation in that sphere was hindered by the
fact that the U.S. and Russia did not share similar
standards. He compared U.S.-Russian relations with those
between the U.S. and EU. Although the U.S. supported the
death penalty and the European Union did not, for instance,
such a difference had not hurt U.S.-EU relations and the EU
did not try to force its standards on the U.S. By contrast,
Kosachev said, the EU and U.S. sometimes tried to force their
views on Russia.


12. (C) Kosachev claimed that Russia was pursuing a European
model of democracy (i.e., a liberal economy, pluralist
democracy, and government social welfare programs) rather
than the more autocratic Asian or Chinese models of
government. Russia had not reached the level of democratic
development of the EU or U.S. but was moving in that general
direction. Nations with well-developed democracies now
focused on other concerns, such as the environment, while
Russia was still working on developing the fundamentals of a
sustainable democratic system.


13. (C) Kosachev concluded by noting that the U.S. was more
concerned about democracy in Russia than Russians were
themselves. The typical Russian was concerned about
receiving his salary and pension on time or about the Chechen
terrorist threat rather than the status of human rights in
Chechnya or in Russia in general. Kosachev said the ideals
of freedom and liberty had become discredited in Russia since
the harsh reforms of the 1990s, which in the end had achieved
nothing but instability. It would take time for Russia to
reach the same level as the U.S., but pressuring Russia would
not work.


14. (U) A/S Lowenkron has cleared this cable.
BURNS