LATVIA/RUSSIA: POSITIVE ATMOSPHERE AT AGREEMENT

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000852

SIPDIS

SIPDIS

E.O. 12958: DECL: 10/18/2016
TAGS: PREL ECON ENRG GE RS LG
SUBJECT: LATVIA/RUSSIA: POSITIVE ATMOSPHERE AT AGREEMENT
SIGNING

REF: A) RIGA 820 B) HELSINKI 1058

Classified By: Ambassador Catherine Todd Bailey. Reason: 1.4 (D)


1. (C) Summary: The Latvian visit to Moscow October 13 to
sign two bilateral agreements went well and the GOL was
encouraged by the positive reception by Econ/trade minister
Gref. Absent was the usual Russian complaints on treatment
of ethnic Russians in Latvia. The Russians expressed a
desire to move forward on several other agreements in the
economic area and the two sides even discussed the
possibility of exchanging Prime Ministerial visits. The
Latvians hope for a short Putin/Merkel/Kalvitis pull aside on
the margins of the EU informal dinner October 20 and would
appreciate USG officials noting to German counterparts our
appreciation for their role in bringing about these
improvements in Latvian/Russian relations. End summary.


2. (C) Pol/econ chief met October 17 with Peteris Ustubs, PM
Kalvitis' foreign policy advisor, to discuss the signing of
the two Latvian/Russian bilateral agreements October 13 in
Moscow (ref A). Ustubs accompanied Economics Minister
Stokenbergs on the trip. Although Russian Economic/trade
minister Gref was late for the meeting with Stokenbergs, he
stayed for a 90 minute conversation ) far more than the
originally planned hour. At the top of the meeting, Gref
made comments to the assembled press on Russia's progress on
WTO accession issues, which were widely reported by
international media. The Latvians were pleased that all the
articles then noted the signing of the agreements, giving
them press visibility they otherwise would not have received.


3. (C) Following the signing of the agreements on
establishment of an intergovernmental commission and economic
cooperation, the two sides discussed next steps. Ustubs
thought it might be possible to arrange the first meeting of
the intergovernmental commission by the end of 2006, but
cautioned it might slip into 2007. The main issue here is
that the Latvians will need to wait until a new government
takes office in November before it can name its members of
the commission. The Latvians would like to move forward on
the previously agreed treaty on double taxation, but there is
a backlog of such agreements in the Duma and the Latvians
sense the Russians don't want to add to list of pending
agreements. The Russians remain interested in a agreement on
pensions that the Latvians are fine with and the two sides
will meet in Riga October 20 to discuss a draft. Both
ministers also expressed a desire to begin negotiations on an
agreement to protect investments.


4. (C) Ustubs said that the tone of the meeting was very
warm. Gref conveyed personal greetings to PM Kalvitis from
PM Fradkov and President Putin and expressed the GOR's thanks
to the Latvians for the very good visits of Russian Patriarch
Alexis to Latvia in May and former President Yeltsin in
August. Ustubs said that Gref did not make any mention of
the status of ethnic Russians in Latvia, one of the few times
the GOR has not raised this issue in bilateral discussions.
Also absent was any mention of the stalled border treaty.
Stokenbergs asked Gref for a signal from Moscow to regional
authorities that it was permissible for them to do business
with Latvia because the Latvians find that the improved
relations with the center are not always reflected at more
local levels. The Latvians feel that Gref was positive in
this request.


5. (C) Stokenbergs raised the possibility of a visit by PM
Kalvitis to Moscow, which Gref was positive about. Gref
volunteered that it was also possible that Fradkov could
visit Riga if invited by the Latvians. Ustubs cautioned that
a Kalvtis visit would make sense only once there was a new
package of agreements to be signed and suspected that Fradkov
visit to Riga would only follow from that.


6. (C) Ustubs said there were a few other interesting nuggets
from the trip. The Latvians were surprised to learn from the
Russians about discussions with the European Commission on
trade issues (nfi) that Ustubs did not think had yet been
briefed to EU member states. Gref also noted that required
upgrades to Russia's domestic energy infrastructure would
likely require increasing the domestic price of gas to $120
per 1000 cubic meters. Gref added that this would not happen
until after the 2008 Russian presidential elections. Gref
was also very upbeat on Russian cooperation with Boeing,
especially on engineering activities.


7. (C) According to Ustubs, the next step is that he hopes
that German Chancellor Merkel will arrange a short pull aside
between herself, Putin and Kalvitis at the October 20
informal EU dinner to which Putin is invited (ref B). He
asked that USG officials, in contacts with German chancellery
officials, express our appreciation for German efforts to

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improve Latvian/Russian relations. (ref A)


8. (C) Comment: The Latvians may be getting a bit ahead of
themselves in their desire to begin negotiating new
agreements even before the ink has dried on these two and
they are put in to practice. Nevertheless, they see a window
of opportunity here that they want to seize. Their
expectations on the possibility of reciprocal Prime
Ministerial visits -- the MFA sees them as 6 - 12 months away
-- strike us as more measured. From this mission's
standpoint, we would appreciate any effort by USG officials
to express to German officials our understanding of their
role in recent events and our hope that they can continue to
play a constructive role in improving Latvian/Russian
relations.
BAILEY