Identifier
Created
Classification
Origin
07MOSCOW5162
2007-10-26 09:50:00
CONFIDENTIAL
Embassy Moscow
Cable title:  

LUKOIL VP PREDICTS CHINESE DOMINANCE AND SUGGESTS

Tags:  EPET ENRG ECON PREL PINR RS 
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ZNY CCCCC ZZH
P 260950Z OCT 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4866
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 4297
RHEHNSC/NSC WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005162 

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DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
DOE FOR HARBERT, HEGBORG, EKIMOFF
DOC FOR 4231/IEP/EUR/JBROUGHER
NSC FOR MCKIBBEN

E.O. 12958: DECL: 10/25/2017
TAGS: EPET ENRG ECON PREL PINR RS
SUBJECT: LUKOIL VP PREDICTS CHINESE DOMINANCE AND SUGGESTS
MORE RUSSIA-U.S. ENERGY DIALOGUE

Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d)

LUKOIL VP LAMENTS STATE OF U.S.-RUSSIAN RELATIONS, CALLS FOR
GRETAER ENERGY DIALOGUE

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SUMMARY
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C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005162

SIPDIS

SIPDIS

DEPT FOR EUR/RUS, FOR EEB/ESC/IEC GALLOGLY AND WRIGHT
DOE FOR HARBERT, HEGBORG, EKIMOFF
DOC FOR 4231/IEP/EUR/JBROUGHER
NSC FOR MCKIBBEN

E.O. 12958: DECL: 10/25/2017
TAGS: EPET ENRG ECON PREL PINR RS
SUBJECT: LUKOIL VP PREDICTS CHINESE DOMINANCE AND SUGGESTS
MORE RUSSIA-U.S. ENERGY DIALOGUE

Classified By: Econ MC Eric Schultz for Reasons 1.4 (b/d)

LUKOIL VP LAMENTS STATE OF U.S.-RUSSIAN RELATIONS, CALLS FOR
GRETAER ENERGY DIALOGUE

--------------
SUMMARY
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1. (SBU) At an October 22 conference session on "U.S.-Russian
Relations and Energy Security," Lukoil V.P. Leonid Fedun
strongly criticized the U.S. for treating Russia as a
"defeated nation." He nonetheless called for more dialogue
as "equal partners," and portrayed China as a common threat,
predicting Chinese control of much of the world's energy
resources as well as its emerging military dominance. End
Summary.

--------------
"PSCHOLOGICAL MISUNDERSTANDING"
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2. (SBU) Speaking at an October 22 conference launching a
partnership between the Moscow State Institute of
International Relations (MGIMO) and the University of Texas's
Strauss Center, Lukoil's outspoken V.P., Leonid Fedun, lashed
out at the U.S. for "failing to notice" Russia's resurgence
following its post-Cold War collapse. He criticized the U.S.
for a "psychological misunderstanding" of Russia and its
interest in being treated as an equal partner.


3. (SBU) Fedun said higher prices have produced a change in
the attitudes of the Russian elite, who were open to foreign
advice because of Russia's economic collapse, but who are now
exerting Russia's resurgent influence globally. This
phenomenon was not limited to Russia. With high margins,
producing countries generally are moving to reduce their
reliance on foreign expertise and capital.

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CALL FOR DIALOGUE
--------------


4. (SBU) Despite strained bilateral ties and Russia,s
growing assertiveness in the energy sector, Fedun called for
more dialogue on energy issues. He claimed that high oil
prices have also resulted in greater economic nationalism in
importing countries as well, specifically citing U.S.
concerns with Chinese investment in its domestic energy
sector. He lamented that engagement between the U.S. and
Russia in the energy sphere is limited, pointing to the
partnership between Lukoil and ConocoPhillips as one of the
few between American and Russian companies. (N.B. A Rosneft
speaker later pointed to his own company's partnerships with
ExxonMobil as another example.).


5. (SBU) Fedun also complained about U.S. laws that affect
investments by third-country companies in Iran and Sudan. He
specifically mentioned that Lukoil, which has gas stations in
the U.S., cannot pursue activities in Iran without risk to
its U.S. assets.

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CHINA THE SUPERPOWER
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6. (SBU) Fedun, a former Lt. Col. in the Soviet army, an
academic, and now a billionaire oligarch, claimed China was
fast outstripping the U.S. as the world,s superpower. He
predicted that China would have the world's most powerful
military in 10-15 years, which could lay the basis for a
"possible military solution" on the issue of Taiwan. He
expected that China, which is aggressively pursuing energy
ties and investments around the world, would soon control
much of the world's energy resources. And he claimed China
could cause the "collapse" of the U.S. economy by selling its
vast dollar reserves.


7. (SBU) According to Fedun, Chinese dominance "might be a
good thing" in and of itself, but nonetheless the demise of

MOSCOW 00005162 002 OF 002


U.S. global supremacy would be economically and politically
disruptive.

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COMMENT
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8. (C) Fedun's speech likely reflects Lukoil,S deep
disappointment with the lack of a resolution of its problems
in Iraq and annoyance with the effects of U.S. sanctions in
other spheres such as Iran. That said, his call for greater
U.S.-Russia dialogue on energy issues is welcome and should
be reciprocated. End Comment.
Burns