FM LAVROV UNDERSCORES ECONOMIC COOPERATION AND "NO

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 004727

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/25/2017
TAGS: PREL EINV ETRD XR RS
SUBJECT: FM LAVROV UNDERSCORES ECONOMIC COOPERATION AND "NO
MORE BACKYARDS" IN LATIN AMERICA

Classified By: Political Officer Bob Patterson for reasons 1.4 (b/d)


1. (C) Summary. The MFA told us that Lavrov's September 11-13
trip to Peru, Uruguay, and Paraguay focused on strengthening
economic development of the region and projecting solidarity
with countries instituting their own models of political and
economic development. Lavrov stressed in his public remarks
that there should be "no more backyards." The MFA noted that
"unlike the U.S.," Russia received a formal invitation to
attend the MERCOSUR summit in Uruguay in December. With few
deliverables, Lavrov concentrated on preparing a framework
for future economic cooperation in the countries these
countries and the region. End Summary.


2. (C) FM Lavrov's September 11-13 trip to Peru, Uruguay,
and Paraguay was Russia's first high-level visit to any of
these countries since the fall of the Soviet Union. He used
the trip as an opportunity to increase bilateral cooperation,
lobby for more investment and trade, and to soapbox familiar
policy viewpoints on Kosovo, the UN, and the OSCE. MFA Latin
America Regional Affairs Section Head Igor Romanchenko
accompanied Lavrov and told us in a September 19 meeting that
the trip was official in nature, and not a working visit.
The MFA considered the trip "successful and fruitful", noting
that the GOR had achieved its goal of initiating high-level
contact with "second-tier" countries and laying the
foundation for further economic development.

Peru
--------------


3. (C) Romanchenko said Lavrov's September 11 visit to Peru
followed on the heels of Putin's meeting with President Alan
Garcia Perez at the APEC summit in Australia, and highlighted
Russia's renewed economic interest in a country where trade
has "lagged" compared with the rest of the region. Peruvian
political counselor Oscar Paredes Loza told us separately
that with bilateral trade turnover at only 100 million
dollars in 2006, both sides took "concrete steps" to improve
trade. For example, Russia is opening a commercial section
at their embassy in Peru, and Peruvian vice-president Luis
Giampietri Rojas will focus his upcoming visit to Moscow on
trade and investment. Although Peru traditionally used
Russian weapons, Loza told us that arms trade with Russia was
focused only on repairing existing weapons, not procuring new
ones.


4. (C) Loza added that as a member of the UN Security
Council through the end of 2007, Peru is currently trying to
"balance" its position on Kosovo between Russia and the
United States. While Peru would like to use its time on the
UNSC to improve relations with Russia, Loza told us they
would side with the U.S. on many contentious issues for
"economically pragmatic reasons." Both Russia and Peru see
APEC--Peru will host the 2008 summit--as the best
multilateral forum for improving bilateral relations.

Uruguay and Paraguay
--------------


5. (C) Lavrov's September 11-13 visit to Uruguay highlighted
the countries' 150th anniversary of diplomatic relations with
the first ministerial visit since the fall of the Soviet
Union. Romanchenko noted that trade was again the main focus
of Lavrov's meeting with President Tabare Vazquez, including
discussion of Russian investment in Venezuelan President
Chavez's proposed Southern Cone Gas Ring, other "more
realistic" regional pipeline projects, the electricity
sector, and commercial fishing. Lavrov also welcomed
Uruguay's treatment of its 10,000 plus community of Russian
immigrants, highlighting the GOR's continuing priority of
preserving Russian-speaking cultural enclaves abroad.


6. (C) In his visit to Asuncion on September 13, Lavrov
marked the 15th anniversary of the resumption of relations
and discussed the opening of a Russian embassy there by the
end of this year. Romanchenko said Lavrov explored
investment opportunities in oil and gas, electricity, and
infrastructure.

Russia Seeks to Expand Influence in Latin America
-------------- --------------


7. (C) Romanchenko told us that Russia already enjoys
"well-established relationships" with regional powers Brazil,
Venezuela, and Mexico. (Note: Russian trade with all three
countries totaled $4.25 billion in 2006, excluding arms
sales. End Note.) Senior GOR officials, including Putin,
regularly travel to the region to meet with the more
prominent leaders, but Lavrov's trip signaled Russia's
intention to strengthen ties with less developed countries.

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Russia aims to deepen economic cooperation with these and
other countries in the region. However, Romanchenko admitted
that the GOR has yet to convince a significant number of
Russian businesses to pay more attention to Latin American
markets.


8. (C) Romanchenko also underscored Russia's strong support
of the developing "political trends" in Latin America. He
said Russia's calls for a multipolar world "dovetail
perfectly" with Latin American countries' interest in
"diversifying" their external relations. He argued that
Latin America is "correctly" cultivating its own development
model and is moving towards greater integration in various
regional organizations. Romanchenko referred to Lavrov's
September 12 speech in Uruguay that emphasized Russia's
active support of a "diversity of forms" of democracy and
market economy and the "real emancipation of sovereign
states" from the shackles of "backyards" or "spheres of
influence." (Note: Lavrov ironically noted that a "similar"
process was unfolding in the CIS. End Note.)


9. (C) Director of the Latin America Institute Vladimir
Davidov shared with us his assessment that the GOR is
expanding its ties with Latin America mainly to demonstrate
its ability to project power worldwide. Davidov contends
that although Russia's economic interest in Latin America is
primarily a pretext for its increased activities, the GOR
does not disparage the chance to create new investment
opportunities and markets for Russian companies. Leaders in
these countries have signaled a political openness to
strengthen relations with Russia, making this an opportune
time for Russia to intensify contact.

MERCOSUR
--------------


10. (C) Romanchenko noted that, "unlike the U.S.," Russia
received an invitation to attend the December MERCOSUR
meeting in Uruguay, its second invitation in three years. He
added that Russia is interested in establishing a "memorandum
of political dialogue" to formalize Russian relations with
the group, pointing out that Russia will hold a meeting of
MERCOSUR political directors in Moscow prior to the December
meeting. Both sides are also interested in an economic
agreement that would elevate trade and investment, but
Davidov cautioned that this still needed more work. Davidov
commented that the idea of a free trade agreement between
Russia and MERCOSUR was not realistic in the short term.

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


11. (C) Lavrov's recent trip to Latin America indicates a
genuine interest in new, if small and distant, economic
markets for Russian investors. However, Latin America will
not be a major foreign policy focus for Russia anytime soon.
For now, Russia seems content to expand gradually economic
ties and, not exerting too much effort, lend moral and
political support to anti-Western tendencies in the region.
Russell