Identifier
Created
Classification
Origin
08MOSCOW393
2008-02-13 15:29:00
CONFIDENTIAL
Embassy Moscow
Cable title:  

U/S JEFFERY'S MEETING WITH SEVERSTAL DIRECTOR

Tags:  ECON EINV ETRD WTO RS 
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DE RUEHMO #0393/01 0441529
ZNY CCCCC ZZH
P 131529Z FEB 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 6571
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L MOSCOW 000393 

SIPDIS

SIPDIS

EUR/RUS; EB/IFD/OIA
STATE PASS TO USTR
NSC DPRICE, WARLICK

E.O. 12958: DECL: 02/12/2018
TAGS: ECON EINV ETRD WTO RS
SUBJECT: U/S JEFFERY'S MEETING WITH SEVERSTAL DIRECTOR
MORDASHOV

Classified By: Daniel A. Russell, Deputy Chief of Mission, reasons 1.4(
b/d)

C O N F I D E N T I A L MOSCOW 000393

SIPDIS

SIPDIS

EUR/RUS; EB/IFD/OIA
STATE PASS TO USTR
NSC DPRICE, WARLICK

E.O. 12958: DECL: 02/12/2018
TAGS: ECON EINV ETRD WTO RS
SUBJECT: U/S JEFFERY'S MEETING WITH SEVERSTAL DIRECTOR
MORDASHOV

Classified By: Daniel A. Russell, Deputy Chief of Mission, reasons 1.4(
b/d)


1. (SBU) Summary: Meeting with Under Secretary of State
for Economic, Energy and Agricultural Affairs Reuben Jeffery,
Principal Deputy Assistant Secretary for International
Finance and Development Elizabeth Dibble and EcMinCoun on
January 30, Aleksey Mordashov, General Director of Severstal
Group, expressed optimism about the U.S., Russian and global
economies. He urged Russia's accession to the WTO soon,
stressing the symbolic importance of May 2 -- Putin's final
day as president -- and said that Deputy Prime Minister
Kudrin is committed to taking the steps necessary to join.
Mordashov expressed interest in a bilateral investment treaty
but cautioned that completing WTO negotiations come first.
End Summary.

--------------
MODERATELY OPTIMISTIC ON GLOBAL ECONOMY
--------------


2. (SBU) While not discounting the global financial
situation, Mordashov reported that his companies are strong,
benefiting from a robust demand for steel in China and
elsewhere. He saw no big problems in the U.S. economy and
noted that his two steel mills there were doing well.
According to Mordashov, growth in Asia and the BRICS will
help sustain the United States and he quoted points made by
Henry Kravitz in Davos on the better resilience of the world
economy now that it is less dependent on U.S. growth.


3. (SBU) Mordashov said the Russian economy is doing well,
showing positive growth and little negative impact from the
world situation, but he warned that inflation is a serious
concern since "it is a real problem for the middle class."
He also noted that there were some problems raising finance
in Russia, resulting in pressure on the Central Bank to
increase liquidity, but given the significant reserves of the
GOR and Bank, "fortunately," Mordashov said, "there is lots
of money."

-------------- -
RUSSIA'S WTO ACCESSION - GOOD SIGNALS AT DAVOS
-------------- -


4. (C) Mordashov said he met with DPM Kudrin and Max
Medvedkov, Ministry of Economic Development and Trade's main
WTO negotiator, at Davos. He said that Kudrin's commitment
at Davos to completing WTO accession had raised Mordashov's
optimism. According to Mordashov, the remaining issues fall
into two categories: those more technical and those more
difficult and political. He claimed that compromise was
possible on all issues especially the technical ones:
agricultural issues, IPR, encryption and SPS
(Sanitary-PhytoSanitary). Mordashov said SOEs (State Owned
Enterprises) was the "political" issue and the biggest
remaining obstacle. Russia was reluctant to move too far on
this issue given its natural monopolies and complicated
energy pricing, but he thought that agreement could be
reached.


5. (SBU) Mordashov strongly urged agreement by May 2, the
final day of the Putin presidency. He said that to achieve
this a clear timetable was vital. It would remove a tendency
to "slowdown" and would make other difficulties disappear.
Speaking of outstanding bilaterals, Mordashov described the
checkpoint issue with Georgia as political and complained
that Saudi Arabia was just being difficult on civil aircraft
and access to pipelines and just wanted Russia to meet the
same requirements the Saudis had. On Ukraine, he noted that
they were likely to join only by mid-summer, and that in any
event there was an agreement in place that they would not
complicate each other's accession.



6. (C) In response, U/S Jeffery stressed the importance of
maintaining momentum to resolve the remaining issues and
stressed that in that regard it was essential Russia
undertake the implementation measures that WTO members
expected before accession. He also noted that the WTO is a
consensus organization and Russia had a major task ahead
soliciting final approval from all members, not just those
with whom it had outstanding bilaterals.

-------------- ---
BILATERAL INVESTMENT TREATY - SOUNDS INTERESTING

-------------- ---


7. (SBU) U/S Jeffery and PDAS Dibble noted the U.S.
interest in discussing a bilateral investment treaty (BIT)
with Russia and explained the main advantage was dispute
resolution. Mordashov said he was unfamiliar with such
treaties, but that mutual protection of investment would be
good and helpful. Joking that, "You can't split Max"
(i.e.,Max Medvedkov),he worried about the possible impact in
completing the WTO accession process and warned about the
difficulty of maintaining two sets of negotiations.


8. (U) This message has been cleared by U/S Jeffery.

BURNS