RUSSIA TO FOCUS ON BILATERAL ECONOMIC COOPERATION

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 004490

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/11/2017
TAGS: PREL PINR ECON IQ RS
SUBJECT: RUSSIA TO FOCUS ON BILATERAL ECONOMIC COOPERATION
DURING IRAQI FM VISIT

REF: A. MOSCOW 4305

B. BAGHDAD 3064

Classified By: Ambassador William J. Burns for reasons 1.4(b,d).


1. (C) Summary: MFA Deputy Director of Middle East and North
Africa Department Aleksandr Kinshak previewed for us
preliminary GOR plans for Iraqi FM Zebari's trip to Moscow,
currently scheduled for September 18-21. The GOR will seek a
commitment from Zebari to reactivate the Russia-Iraq
Intergovernmental Commission, which it views as the proper
mechanism for resolving pending oil contracts and boosting
Russian economic activity in Iraq. Kinshak said Russia will
not move forward on debt reduction until the Iraqi government
"acknowledges Russian economic interests." The GOR proposed
that Zebari meet FM Lavrov, Industry and Energy Minister
Khristenko -- the Russian chair of the dormant
Intergovernmental Commission -- and with Russian journalists
and business leaders. Kinshak confirmed that Lavrov will not
attend the UNGA Ministerial on Iraq, but will participate in
the October 31-November 1 Iraq Neighbors Ministerial in
Istanbul. The Ambassador will meet with Zebari on September
19 and reiterated to DFM Saltanov the need to move on debt
relief now -- a point he will also meet stress in upcoming
meetings with Presidential Aide Prikhodko and Finance
Minister Kudrin. End Summary.

Zebari Visit to Focus On...
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2. (C) On September 12, MFA Deputy Director of Middle East
and North Africa Department Aleksandr Kinshak told us the MFA
has yet to finalize a program for Iraqi FM Zebari, who will
be in Moscow from September 18-21. The only meeting nailed
down thus far is a wide-ranging meeting with FM Lavrov;
Kinshak said the MFA is still waiting to hear from Zebari's
office on its list of proposed meetings and topics.

...Political Situation in Iraq
--------------


3. (C) Kinshak noted Russia's interest in Zebari's views on
Iraqi efforts to achieve a political settlement in the
country, including plans for the October 31-November 1
Neighbors Ministerial in Istanbul. Referring to the
possibility of a U.S.-Iraq bilateral agreement on the
presence of U.S. troops in Iraq, Kinshak said the GOR will
query Zebari on GOI deliberations on the extension of the
UNSC mandate for the Multinational Force. Russia will also
solicit Zebari's assessment of Iraq's current relations with
its neighbors Iran, Syria, and Turkey.

...Deepening Economic Ties
--------------


4. (C) Russia will push Zebari to agree to reactivate the
Russia-Iraq Intergovernmental Commission before the end of
the year. Kinshak explained that the Intergovernmental
Commission is the formal mechanism for addressing specific
bilateral political and economic issues; Russian Industry and
Energy Minister Khristenko and Zebari are the co-chairs of
the Intergovernmental Commission. According to Kinshak, the
Intergovernmental Commission has not met since the invasion
in Iraq because the new Iraqi government remains reluctant to
resurrect the forum, claiming that it needs more time to
consolidate its power. If Zebari agrees to meet Khristenko,
he will urge Zebari to view the Intergovernmental Commission
as a useful format to help address the most pressing issues
in Iraq, noting that Russia would be willing to restructure
the forum. Kinshak cited as an example GOR interest in
increasing the number of GOI contracts to Russian companies
to develop Iraq's electrical infrastructure. Kinshak argued
that Iraq is in desperate need of electricity and the
Intergovernmental Commission could address that need quickly
and systematically. He emphasized that Russia would also
seek to "integrate" Russia's pending oil contracts in the
Intergovernmental Commission structure.

...Iraqi Debt Reduction
--------------


5. (C) Noting that Russia's Ministry of Finance has the lead
on debt issues, Kinshak said that Russia and Iraq have
already prepared the paperwork to write off almost 90 percent
of Iraq's multibullion debt, which he pointed out is 10
percent more than Paris Club requirements. Kinshak said the
remaining step is the signing of the agreement. When pressed
to offer a timeline on the signing, Kinshak recognized that
the USG was "applying maximum pressure" on the GOR to
conclude the agreement. (Note: The Ambassador urged DFM
Saltanov on August 30 to move quickly on debt reduction and

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will reiterate this point in upcoming meetings with
Presidential Aide Prikhodko and Finance Minister Kudrin. See
ref A. End Note.) However, he stated that Russia would most
likely sign the agreement "as soon as Iraq addresses Russia's
long-standing economic interests," which included agreeing to
hold an Intergovernmental Commission meeting before the end
of the year. When we said that Russia could improve its
dialogue with Iraq on pending oil contracts and other
possible joint projects by concluding the debt reduction
process, Kinshak repeated the familiar argument that Iraq
could improve the atmosphere on debt reduction talks by
recognizing Russian economic interests in Iraq.

...Press and Business Roundtables
--------------


6. (C) The MFA has asked Zebari about the possibility of
conducting an in-depth press conference with Russian
journalists and a roundtable with representatives of leading
Russian businesses. Kinshak also informed us that Zebari
requested a meeting with Putin, but he doubted Zebari would
receive a positive response from the Kremlin, noting that
Iraq is not Russia's "number one priority."

Lavrov Focused on Iraq Neighbors Ministerial
--------------


7. (C) Kinshak said that FM Lavrov does not plan on
attending the September 22 UNGA Ministerial on Iraq, given
that "it will be nothing more than a talking heads show for
two hours." DFM Saltanov will represent the GOR at the UNGA
Ministerial. Noting the relatively successful September 9
Expanded Neighbors preparatory conference, Kinshak confirmed
that FM Lavrov will attend the October 31-November 1
Neighbors Ministerial in Istanbul (ref B). Kinshak
underscored Russian commitment to the Neighbors framework,
noting that such gatherings can play a significant role in
helping the Iraqi government to establish peace and stability
in the country.

Comment
--------------

8. (C) The Ambassador will meet Zebari on September 19 and
will review options to secure GOR debt relief now.
Burns