UNITED RUSSIA EXPECTS BIG THINGS FROM ROSTOV-ON-DON

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 005548

SIPDIS

SIPDIS

SECSTATE PASS AGRICULTURE ELECTRONICALLY
USDA FAS FOR ACRA/FLEMINGS, OCBD/FOSTER

E.O. 12958: DECL: 11/28/2017
TAGS: PGOV PINR KDEM ECON SOCI EAGR RS
SUBJECT: UNITED RUSSIA EXPECTS BIG THINGS FROM ROSTOV-ON-DON

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

Summary
--------------


1. (C) The Ambassador's November 19-20 visit to
Rostov-on-Don revealed that Russia's fifth most populous
region falls squarely in the ruling party vote bank.
Governor Vladimir Chub, who has ruled Rostov for sixteen
years, appears too busy opening shopping centers and meeting
trade delegations to meddle in party politics, but the local
United Russia party organization seems more than up to the
task of amassing enough votes on December 2 to rival the
party's near-sweep in the 2003 parliamentary elections. Few
expect Chub, who heads the local United Russia list, to take
a seat in the national Duma when elected, but his popularity
should aid the already-dominant party's fortunes. Opposition
parties in Rostov seemed resigned to the ruling party
onslaught. Local opposition leaders complained of the misuse
of administration powers and their own party leaders'
indifferent campaigning, and questioned whether they would
survive locally without a decent showing in the upcoming
elections. As in most of Russia, concerns over rising prices
exist in Rostov along with complaints about the federal
government's development strategies, but they will not be
enough to derail United Russia. End Summary.


2. (SBU) On November 19 - 20, Ambassador Burns visited
Rostov-on-Don and met with civic, educational, and political
leaders. He discussed U.S. investment and Rostov's
development as a regional center for trade and industry with
Rostov Oblast Governor Vladimir Chub. Chub and the
Ambassador also talked about opportunities for U.S.
investment and continued exchange and educational ties
between the U.S. and southern Russia. During a meeting with
Aleksandr Rodin, President of the Rostov Oblast Association
of Peasant Farms and Agricultural Cooperatives, Ambassador
discussed the problems facing local farms and relations with
the different layers of government that affect the
development of agri-businesses. At the American Center at
the Don Regional Library, Ambassador highlighted prospects
for greater U.S. interaction with alumni of USG-sponsored
exchange programs. At Southern Federal University, the
Ambassador stressed how shared interests should keep the
bilateral relationship strong as it enters its third century.

Rostov-on-Don, a City not too Busy to Vote
--------------


3. (SBU) Rostov Oblast is part of the Southern Federal
District, and with 4.4 million inhabitants (over one-quarter
of whom live in Rostov-on-Don) it is the fifth most populous
region in Russia. Numerous start-up companies have
established their headquarters in Rostov-on-Don. The
population's median income is increasing as the city
transforms itself into a modern, industrial and technological
hub with a major port on the Sea of Azov. The Rostov-based
Rosvertol is the only enterprise in the Russian Federation to
produce multi-use helicopters and the local Rostselmash is
Russia's largest producer of agricultural machinery.


4. (C) Vladimir Chub was first appointed Governor in 1991.
In 1996, he won the region's first gubernatorial election and
was re-elected in 2001 with over 78 percent of the vote.
Chub was re-appointed by Putin in 2005 and is leading the
13-member regional party list for United Russia in the
December 2 Duma elections. There are currently 13 members of
the Duma from the region, seven of whom were elected from
single mandate constituencies. Representatives from the
local United Russia office said they wanted to include 16
people on their regional candidate list, but were only given
13 slots by party headquarters in Moscow. According to these
same officials, any additional seat in the Duma earned
because of the high voter turnout and support of Putin and
United Russia in Rostov would be used to send someone from
outside Rostov to the Duma. Putin's popularity and United
Russia's prominence in Rostov will ensure Chub's election to
the Duma. Bucking the trend of some recent polls (septel),
Chub predicted that only three parties (United Russia, The
Communist Party and Zhirinovskiy's Liberal Democratic Party)
will make it past the seven percent barrier. He
characterized Just Russia and the Union of Right Forces (SPS)
as weak, personality-driven parties with no real support,
while Yabloko's Yavlinskiy and SPS's Nemtsov are too
ambitious to garner genuine support among Rostov voters.

Small Parties Down and Perhaps Out
--------------


MOSCOW 00005548 002 OF 003



5. (SBU) Representatives from Yabloko and SPS complained
about the barriers to campaigning against the ruling party.
Throughout the city, the only billboards and advertisements
visible were for United Russia, Just Russia and the Liberal
Democratic Party. Roman Bazikov, Executive Director of the
local SPS branch and a professor at Southern Federal
University, said that government officials forced the owner
of a private hall to cancel the party's reservation at the
last minute last month, forcing SPS to hold the meeting
outside the building. Bazikov said that although actual
turnout for the December 2 Duma elections will actually be 50
percent, the figure election officials will give could be
over 70 percent. (Note: United Russia representatives
"confirmed" that they expect around 75 percent turnout.)
Lidiya Rtishcheva, editor of the local Molot daily newspaper
(circulation 10 thousand) said that as the paper of the
oblast administration, Molot is required to provide free
space twice a week to political parties. She added that two
parties had agreed to delete what the paper had deemed were
incendiary statements from some of their campaign literature.


6. (SBU) Local SPS and Yabloko representatives thought they
had not gotten sufficient support from their parties' central
offices in Moscow. Neither Nemtsov nor Yavlinskiy had spent
much or any time in Rostov, nor had they provided campaign
materials specifically tailored for local voters. Local
Yabloko head Sergey Mironov said that the defection of Duma
representative Mikhail Yemelyanov from Yabloko to Just Russia
had left Yavlinskiy reluctant to visit Rostov. For years
Yavlinskiy had praised Yemelyanov as his local protege. Both
representatives had participated in question and answer
formats on local television and planned to continue to do so
in the days leading up to the election. Bazikov and Mironov
told us that if SPS and Yabloko do not poll between five and
ten percent in Rostov, their participation in the March local
and presidential elections may be in jeopardy. In March 2008
half of the regional duma's 50 members will be chosen by
proportional voting, and half by single-mandate voting. Both
parties will field observation teams for the December 2
elections, but neither will cover all 2,500 precincts in
Rostov oblast. SPS and Yabloko made no effort to work
together to divide the precincts in order to provide wider
monitoring of the voting process.

Rostov Governor is Pro-Business, Pro-Development
-------------- ---


7. (SBU) With the Ambassador, Chub focused on the
development of the local economy, especially investments by
U.S. companies. He bragged that in southern Russia, only
Samara could claim as many well-known firms as Rostov. Alcoa
recently purchased one of the area's largest factories, the
Hyatt chain will develop a hotel and commercial center, and
Coca Cola and Pepsi are also expected to set up production
facilities in the near future. The German supermarket chain
Metro has had a megastore in Rostov for two years, while IKEA
and the French retailer Auchan would open in the near future.
While John Deere and Rostselmash were competitors in the
sale of farm machinery, Chub hoped that Rostselmash could
serve as a distributor for Deere. According to Chub, the
region's largest trading partner is Ukraine, and trade with
Turkey is also increasing.


8. (C) Chub noted with pride that the National Priority
Projects' plan is making a great contribution in Rostov and
that his government had already developed a master plan for
investments in education and healthcare before it was
launched in 2005. With the National Priority Projects' plan,
Chub was able to complete in one year what he had thought
would take up to two or three. He noted that he was now
focusing Priority Project funds on drug addiction and
HIV-Aids. He said that there are now spaces for 4,000
patients in hospices, but lamented that there are not enough
doctors. The oblast has resorted to enticing doctors to the
region with promises of free apartments and positions at the
medical institutes to fill the void.

Agriculture Still Plays a Major Role
--------------


9. (C) Chub admitted that inflation, especially the rise in
prices of certain staples, was a cause for concern locally.
According to him, the biggest problem is the rise in the
price of milk. He blamed his own government for not acting
quickly enough to control the price of milk two years ago.
He also noted reductions in beef production and acute
shortages in sunflower seeds, the latter due, in most part,
to last year's drought which according to a local farmer had
affected Rostov more drastically than neighboring Stavropol

MOSCOW 00005548 003 OF 003


and Krasnodar.


10. (SBU) Farm and Agricultural Cooperative Association head
Rodin told Ambassador that although retail prices for
agricultural products have increased, so have the prices for
agricultural inputs. He noted that although a new bank,
Rosselkhozbank, was created some years ago to provide credit
to agricultural producers, lack of experience meant it could
fulfill only 60 percent of all the applications by farmers
for credit. Rodin did note that the bank is now working
better with farmers' credit cooperatives and hoped for better
results next year. He expressed frustration with the high
rate of turnover of Putin's regional representative. It was
difficult to establish a long-term plan to help local farmers
as part of the new Program for Agricultural Development.
Former Southern Region Polpred Dmitriy Kozak had charged
Rodin with developing a small enterprise development plan in
September, but Kozak changed jobs before Rodin could get the
program off the ground. Rodin hoped a working group he has
set up will be able to begin meeting in order to make sure
that as the new Minister for Regional Development, Kozak
fulfills the government's responsibilities to develop small
businesses, especially small farms, as part of Putin's
National Priorities.

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


11. (C) As a popular governor with administrative resources
at his disposal, Chub will be able to deliver the votes
necessary to guarantee that United Russia will keep its hold
on 11 of 13 Duma members from the Rostov oblast. Rostov has
experienced strong growth during Chub's tenure and both he
and Putin got over 70 percent of vote during their last
elections. United Russia has a strong team in Rostov whose
only problem is ensuring voter turnout on election day. Only
the Communists and the Liberal Democrats appear to have a
chance at gaining any leftover seats.
BURNS