SHANGHAI ACADEMIC ON SCO, RUSSIA, IRAN AND NORTH KOREA

C O N F I D E N T I A L SECTION 01 OF 02 SHANGHAI 000529 SIPDIS SIPDIS STATE FOR EAP/CM, SCA/CEN NSC FOR DENNIS WILDER E.O. 12958: DECL: 8/22/2017 TAGS: PREL ENRG CH RS TI TX UZ KZ IR KN SUBJECT: SHANGHAI ACADEMIC ON SCO, RUSSIA, IRAN AND NORTH KOREA REF: A) BEIJING 5496 B) 2006 SHANGHAI 7043 CLASSIFIED BY: Simon Schuchat, Deputy Principal Officer, , U.S. Consulate Shanghai. REASON: 1.4 (b),(d) ¶1. (C) Summary: In a lunch discussion with DPO on August 20, Shanghai Academy of Social Sciences (SASS) Academic Pan Guang noted Russia's increased interest in energy coordination at the recent SCO Summit in Bishkek and asserted that this represented a slight shift in Russian policy towards the SCO. Russia understood that it could no longer control the placement of gas and oil pipelines in the region and was looking to the SCO to play a coordinating role. Pan doubted that there would be any new SCO members in the near future, including Iran. The one exception was Turkmenistan, which has significant energy reserves. Pan also briefed DPO on his recent tourism trip to North Korea, which he said resembled China of thirty years ago. End Summary. Energy Cooperation -------------- ¶2. (C) DPO hosted a lunch for SASS Center for International Studies and Institute of Eurasian Studies Director Pan Guang and SASS Shanghai Cooperation Organization Institute Deputy Director Hu Jian on August 20 to discuss the recent SCO Summit in Bishkek. Poloff attended as notetaker. Shanghai-based Pan is considered to be one of China's leading experts on Russia and Central Asia as well as the Middle East. DPO observed that many press reports about the summit provided lengthy details on President Hu Jintao's meetings and goals for the summit, but contained little information on President Putin's views. Pan said that this was typical of Russia's attitude towards the SCO. Russia's emphasis has always been on military cooperation. He asserted, however, that in the last two summits, Russia has become more active in pushing for energy cooperation. President Putin called for the creation of a "regional energy club" at the 2006 Summit and pushed for progress in this area during this years summit. ¶3. (C) Pan attributed this shift in Russian policy to a growing understanding by Russia that it could no longer control the pipelines. In the last month, China has signed three separate agreements on building gas and oil pipelines to China with Kazakhstan, Uzbekistan and Turkmenistan. (Note: One agreement involved the final phases of an oil pipeline between Kazakhstan and China which would allow Kazakhstan to ship 1 million of barrels of oil a day to China. The other two agreements related to a project to build a gas pipeline from Turkmenistan to China which would transit Uzbekistan. Both pipelines would bypass Russia. End Note.) Russia wanted more coordination among SCO countries on these issues and was therefore pushing for a regional energy club. No New Members, Except Perhaps Turkmenistan -------------- ¶4. (C) As in previous conversations (ref B),Pan believed that it was unlikely that the SCO would accept any new members in the near future. He did not believe that Iran would become a member. Iran had joined the SCO as an observer under the reformist Khatami government, before Ahmadinejad came to power. At the time, SCO members believed that Iran could be controlled. Currently, many members were uncomfortable with Iran and did not support allowing Iran to become a member. There was also little support for either Pakistan or India becoming full members. While there might be support for Mongolia joining, Mongolia is satisfied to be an observer and has never expressed an interest in membership. The one exception was Turkmenistan. Turkmenistan was a logical choice since it was a former Soviet Central Asian country and had significant energy reserves. It did not join the organization earlier because of its isolationist policies under Niyazov. Now that there has been a SHANGHAI 00000529 002 OF 002 leadership change in Ashgabat, there might be interest in joining the SCO. North Korea Tourism -------------- ¶5. (C) Pan and Hu had recently returned from a trip to North Korea. According to Pan, the trip was purely tourism. Approximately 30 people, mostly academics, were in the group. Pan noted that they had decided that it was better to go as tourists because if they went as an official delegation they would have to reciprocate and pay for North Korean scholars to visit China in addition to paying for their own trip to DPRK. Pan and Hu said the trip was very interesting and North Korea reminded them of the way China was thirty years ago at the very beginning of the reform era. There were very few stores or computers. The stores were located mainly in the "5-star hotel." When asked what North Koreans did to purchase goods, Pan thought that most North Koreans bartered for products. The group also had to pay for everything in cash; no credit cards were accepted. ¶6. (C) Pan found the North Koreans to be a bit naove about money. For example, he had bought white Ginseng in Pyongyang for 200 RMB. When he was in Seoul, he tried to purchase white Ginseng but the cost was more than 10 times of the amount he paid in Pyongyang. They also noted that RMB and Euros were accepted everywhere, but they saw no U.S. dollars in circulation. The North Koreas with whom they interacted with were very talkative and asked a lot about the Six-Party Talks. Surprisingly, they were willing to reveal a certain amount of personal information. One guide claimed to be the son of a Deputy Prime Minister, while the other admitted to be a military dependent. Both spoke Chinese well, according to Pan. JARRETT