U/S JEFFERY'S JAN 30 MEETING WITH DEPUTY PRIME

C O N F I D E N T I A L MOSCOW 000328 SIPDIS SIPDIS STATE FOR EUR/RUS, EEB/IFD, NEA/FO STATE PASS USTR TREASURY FOR MEYER, TORGERSON DOC FOR 4231/IEP/EUR/JBROUGHER NSC FOR WARLICK E.O. 12958: DECL: 02/08/2018 TAGS: ECON ETRD EFIN RS SUBJECT: U/S JEFFERY'S JAN 30 MEETING WITH DEPUTY PRIME MINISTER KUDRIN REF: MOSCOW 141 Classified By: Ambassador William J. Burns, Reasons 1.4 (b/d). Summary -------------- ¶1. (C) During a January 30 meeting with Under Secretary of State for Economic, Energy and Agricultural Affairs Reuben Jeffery, EEB Principal Deputy Assistant Secretary for Elizabeth Dibble, and the Ambassador, Deputy Prime Minister and Finance Minister Kudrin said that the end of Russia's WTO accession negotiations was in sight. He expected negotiations to conclude "before May." While completing WTO negotiations was Russia,s top priority, Kudrin was also instructing the relevant Russian ministries to launch negotiations on a U.S.-Russia bilateral investment treaty (BIT). Kudrin said that Russia would implement Iraqi debt relief in February. He also noted that Russia would play an active role in the IMF and OECD discussions on establishing investment guidelines and transparency benchmarks for Sovereign Wealth Fund (SWF) investments. End Summary. WTO: End in Sight -------------- ¶2. (C) Deputy Prime Minister Kudrin opened the meeting by noting that the U.S. had been Russia's main ally in its WTO accession talks. He highlighted the fruitful discussions he had with Deputy National Security Advisor Dan Price and Deputy Secretary of the Treasury Robert Kimmitt in Davos the previous week and expressed his appreciation for their support. Kudrin expressed hope that the fourth revision of the Working Party report would be out by the end of February and said he was confident that all accession negotiations would be completed "before May." He also expressed optimism that the politically difficult issue of agricultural subsidies would be resolved on schedule. Kudrin conceded that negotiations with Saudi Arabia and Georgia had been rather difficult and that he would welcome any assistance the USG might be able to provide. U/S Jeffery said the USG was committed to helping with Russia,s WTO accession and encouraged the GOR to maintain its implementation commitments. Bilateral Investment Treaty -------------- ¶3. (C) Kudrin said that his discussions with senior U.S. officials in Davos had touched on starting the process of negotiating a U.S.-Russia Bilateral Investment Treaty (BIT). He had directed relevant agencies and the Finance as well as Economic Development and Trade ministries to begin preparing for BIT talks. He said he shared U/S Jeffery's hopes that work on the BIT would proceed quickly after Russia's accession to the WTO and that it would generate greater bilateral investment flows. Iraqi Debt Relief -------------- ¶4. (C) Russia planned to implement Iraqi debt relief in February, according to Kudrin. He shared U/S Jeffery's perspective that, in light of the improving security environment, finalizing the debt relief commitment would allow the GOI to take a critical step forward in its economic policy planning. Kudrin added that the GOR had also initiated programs to provide humanitarian aid and other forms of assistance. Investment Regulation and SWFs -------------- ¶5. (C) Kudrin noted that Russia would be an active participant in discussion with the IMF and the OECD on establishing guidelines and transparency benchmarks for Sovereign Wealth Fund (SWF) investments. He expressed some frustration, however, over what he perceived as a lack of clarity in the U.S. law (Exon-Florio and amendments) governing foreign investments. He said that, despite discussions with his counterparts in the USG, the objectives and decision making standards of the Committee on Foreign Investment in the U.S. (CFIUS) did not seem transparent. Kudrin said the asset allocation rules for the Reserve Fund (reftel) had already been published. He emphasized that the GOR was planning to use assets from the National Prosperity Fund only for non-controlling, portfolio investments. He added that "concerns the U.S. might have about SWF investments have not been generated by our plans." Bilateral Economic Dialogue -------------- ¶6. (SBU) U/S Jeffery briefly outlined the purpose of the CFIUS-related changes that had been adopted last year. He noted that he would meet with Deputy Foreign Minister Denisov the following day to discuss establishing a bilateral economic dialogue. U/S Jeffery added that the economic dialogue, which would foster greater formal as well as informal communication between the public and private sector, would provide an ideal forum for raising economic, business, and regulatory issues, such as CFIUS, of mutual interest. ¶7. (U) This message has been cleared by U/S Jeffery. BURNS