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
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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