NORWAY-RUSSIA: KEEPING UP APPEARANCES

C O N F I D E N T I A L SECTION 01 OF 02 OSLO 000406

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/31/2016
TAGS: PREL ENRG SENV EFIS RS NO
SUBJECT: NORWAY-RUSSIA: KEEPING UP APPEARANCES

REF: OSLO 213

Classified By: Pol/Econ Chief Mike Hammer for reasons 1.4 b and d


1. (C) Russian Prime Minister Fradkov's March 28 and 29
visit to Oslo generated extensive press play and further
heightened expectations about Norway's role in developing
Russia's Shtokman gas field, but achieved little movement on
substantive issues like Barents border delineation, the
Russian ban on Norwegian fresh fish, and disputes over
fisheries rights in the Svalbard archipelago. The visit
reflects the current status of the Russian Norwegian
relationship -- lots of public fanfare, some movement where
Russian and Norwegian interests clearly coincide, but little
progress on the hard issues.

PM FRADKOV VISIT: ATMOSPHERICS 10, SUBSTANCE 0
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2. (SBU) The first stop for the Russia PM on his visit was a
red carpet tour of NorskHydro's Ormen Lange gas project near
Molde, on the west-central coast. Gazprom is scheduled to
announce its partners for the Shtokman natural gas project on
April 15, and the Norwegians used the tour as a final
opportunity to pitch their world-class offshore petroleum
technology. While Hydro CEO Eivind Reiten called Norway and
Russia "natural partners," Fradkov was less forthcoming,
telling the press that "the possibility for an important role
for Norway in the project is not diminished."


3. (C) While the growing Norway-Russia energy dialogue
continues to move full throttle, the MFA told us there was
little progress on substantive issues during the visit, with
discussions largely a re-hash of well known positions. On
the Barents border delineation issue, Fradkov reiterated
Russia's suggestion to explore the disputed zone for
petroleum resources while negotiations continue. The
Norwegians insist that the border be clearly determined
before any exploration is undertaken. On fisheries rights in
Svalbard, the Russians maintained their position that flag
states should be responsible for punishing rogue fishing
vessels. The Norwegians claimed the right to regulate
fishing practices and enforce compliance in the Svalbard
archipelago. On Russia's ongoing salmon ban, PM Stoltenberg
told Fradkov that the ban should be lifted and reportedly
served the Russian PM Norwegian salmon. Fradkov said after
meeting Stoltenberg that "there was a willingness to find
compromises on disputes," but neither side offered any real
evidence of progress.


4. (C) The high-level visit was remarkable for its lack of
any substantive agreements. The Norwegian media gave the
visit a positive spin and focused on the countries, good
relations and gas development opportunities, but the most
substantive article on the visit we could find appeared on
the website "FishUpdate.com," which focused on a Memorandum
of Understanding on an information and monitoring system for
Barents maritime traffic. The MFA told us that a mutual
cooperation agreement with the Russian Ministry of Justice
was also signed during the visit, but there was virtually no
public mention of it.

NORWEGIANS TREAD CAREFULLY ON HUMAN RIGHTS
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5. (C) In a briefing to resident Ambassadors on April 3, PM
Stoltenberg's National Security Adviser Ingvard Havnen said
they had raised human rights with Fradkov, specifically the
situation in Belarus. Havnen said Fradkov completely
dismissed the West's claim that the election was a fraud,
rejected calls for sanctions, and instead asserted that it
had been a democratic election. When several Ambassadors
asked if Stoltenberg had raised human rights concerns in
Chechnya, or within Russia, Havnen timidly said no.

NORWEGIAN OFFICIALS OUTWARDLY OPTIMISTIC, PRIVATELY LESS SO
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6. (C) The positive spin given the visit reflects the
center-left government's public line on relations with
Russia. We repeatedly hear that bilateral relations have
never been better and that the Moscow is treating Oslo as a
genuine partner. True, there is evidence that Norway's
engagement is paying some dividends. Bilateral trade
turnover increased by 66 percent in 2005 (with trade in
seafood alone worth $533 million),Russian students are
increasing enrollment at Norwegian Universities, and at least

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one Norwegian energy company will likely take a stake in the
Shtokman project.


7. (C) However, there are clear difficulties with the
partnership. Despite some hoopla and hope several weeks ago
that Fradkov might give a signal of real progress on the
border talks, his comments suggest Moscow has not moved off
its old positions. Privately, MFA officials have told us
that there is little chance that Russia will agree to
Norway's median line approach and that Oslo will (eventually)
have to cut the best deal it can get. There was also no real
movement on Russia's seafood ban, which has now dragged on
for three months with no end in sight. While Russian
scientists are in Norway this week visiting aquaculture
sites, Norwegian firms are scrambling to find substitute
seafood products, like frozen fish, to maintain their
half-billion dollar share of Russia's growing import market.
Finally, as the Elektron fishing trawler incident and
subsequent protests over Norway's continued fishing vessel
inspections show, the Russians have not budged in opposing
the Norwegian position on Svalbard.

COMMENT
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8. (C) The Russians seem to be in no hurry to resolve some
fundamental old differences with Norway, like the maritime
border issue. Nor do the Russians hesitate to create new
difficulties, like the fresh seafood ban, when it suits their
interests. The Russians will no doubt continue to engage
with Norway on these and other leading issues, but the
relationship is clearly imbalanced. The Norwegians need
movement on the Russian side to resolve some issues that are
central to their interests, e.g. fully developing High North
energy, maintaining seafood exports, protecting the Arctic
environment, while Moscow appears to view these issues as
more peripheral.


9. (C) The center-left coalition keeps casting the most
positive light possible on the relationship, noting the
unprecedented number of high-level visits by ministers of
each country over the past several months. And, indeed
bilateral relations and interaction have improved
substantially in recent years, but the government eventually
will have to demonstrate real substantive progress to
maintain the public line. An editorial in Norway's newspaper
of record, Aftenposten, has already called into question what
Norway is really getting out of the relationship, suggesting
that the media is not fully buying the government's spin.
The difficulty is that Oslo has little real leverage over
Moscow to compel progress on the central issues. The
Russians can continue to sit back, engaging when it suits
them (like on developing Shtokman, where they have a genuine
need for Norwegian offshore petroleum technology),and
letting other difficult issues fester. The imbalance poses a
special risk for Norway's High North agenda, every aspect of
which (energy, economic development, the environment, and
security) is tied to its relationship with Russia. For
Norway to pursue this agenda effectively, it must maintain
good relations with the Russian bear.


10. (C) For better or worse, Russia is a necessary partner,
albeit a difficult one, for Norway in the High North. This
partially explains Norway's eagerness to engage us and
European powers on the High North, as we can supply the only
real effective counterbalance to Russian power in the region
on the most contentious issues. The underlying reality, not
publicly voiced, is that Norwegian officialdom is quite
anxious about Russia's future direction. While they all hope
for the best, Norwegians remain unsettled by what could
happen if things turn for the worst. In fact, those within
the Norwegian establishment that most support NATO and strong
relations with us do so in part out of lingering fear that
Norway could end up with an unstable and potentially
threatening neighbor once again.


Visit Oslo's Classified website:
http://www.state.sgov.gov/p/eur/oslo/index.cf m

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