CODEL DELAHUNT VISIT TO ST. PETERSBURG

UNCLAS ST PETERSBURG 000194


E.O. 12958: N/A
TAGS: PGOV PHUM PREL ECON RS
SUBJECT: CODEL DELAHUNT VISIT TO ST. PETERSBURG


1. (SBU) Summary: On December 9-10, Representatives William
Delahunt and Dana Rohrabacher met with several diverse groups of
Russian interlocutors in St. Petersburg. Our interlocutors were
pleased to be able to meet with such high-level representatives
of the U.S. government.

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NGO's: Tough Sledding, But Optimistic
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2. (SBU) A distinguished leader of a major St. Petersburg NGO
met with Representatives Delahunt and Rohrabacher. The NGO
leader said that despite his many mistakes, former Russian
President Yeltsin brought about sufficient change in Russia to
render a return a return to Soviet era repression impossible. He
welcomed the coming of age of the first generation of Russians
who have never lived under a repressive regime, and asserted
that these young people would not likely acquiesce to
limitations on their personal freedoms, such as being told what
to read, what to watch, and what to do - all hallmarks of
previous generations. Despite what our interlocutor
characterized as "difficulties" he and others in the NGO
community presently face, he was optimistic about the future.


3. (SBU) Turning to the issue of the independence of the court
system, our NGO interlocutor stated that the courts were
reluctant to completely surrender the independence they had eked
out in the early nineties. There remains, he stated, an
"obvious" amount of pressure from the authorities on the courts
to rule in a given way, but there is still a modicum of true
independence that will be very difficult to extinguish. Our
interlocutor said that, while St. Petersburg Governor Matviyenko
and President Medvedev were strong supporters of Prime Minister
Putin, they also are politicians and could be expected to look
out for their own best interests. If those interests differ
from Putin's, he continued, then so be it. Congressmen Delahunt
and Rohrabacher asked what the U.S. could do to encourage
political pluralism in Russia. Our NGO contact suggested that
President-elect Obama show support for President Medvedev's
independence by coming to Russia and meeting solely with
Medvedev and, pointedly, not with Prime Minister Putin.

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Russian Mentality - Deeply Ingrained in the National Psyche
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4. (SBU) Representative Delahunt subsequently met on December 9
with a Professor of Social Studies at St. Petersburg State
University. Delahunt asked the professor about Russian
attitudes toward the conflict between Georgia and Russia over
South Ossetia. In response to the question, the professor
provided a lengthy description of his theory of the Russian
mentality, which focuses on the conflict between the individual
and the collective, and between Russian Orthodoxy as a cultural
phenomena and the criminal-clan mentality.


5. (SBU) The professor added that anti-American feelings had
increased as a result of the U.S. response to the conflict
between Georgia and Russia. U.S. policies in Iraq and Kosovo
have also fueled this view among the Russian public. The
professor stated that 25% of Russians now view the U.S. as a
hostile country, and only 10% see the U.S. as a friendly
country.

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Amcham: Russian Economy Will Get Worse Before It Gets Better
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6. (SBU) Representatives Delahunt and Rohrabacher met with the
Executive Director and three board members of the St. Petersburg
American Chamber of Commerce (Amcham). The Amcham
representatives commented on the impact of the global economic
problems on St. Petersburg and described the business climate in
general. They noted that St. Petersburg and Northwest Russia
were beginning to feel the impact of the global economic crisis.
Russian business has begun laying off workers and some American
firms are downsizing. Credit is harder to receive than
previously. Though the country has over 1000 banks in total,
the fifty largest are responsible for over 80% of all banking
business. The Amcham representatives expect numerous smaller
banks to go under and/or be absorbed by the larger ones, though
that consolidation process would not greatly affect the economy.


7. (SBU) Devaluation of the ruble, which the Amcham
representatives said was inevitable, is expected to have a much
greater impact on Russia. With the Russian government currently
spending its hard currency reserves at the rate of US$40 billion
a month, the members believe the ruble will be devalued to
around 40 per dollar, with the majority of the devaluation
expected to occur after mid-January, 2009. They questioned
whether the Russian Government would devalue the ruble
gradually, as arguably it has done in small increments over the
past few weeks, or at one fell swoop. The members nonetheless
remain optimistic with the resiliency of the Russian economy and
expect the economy to fully recover from the current downturn by
the end of 2009 or early 2010.


8. (SBU) Regarding corruption, the Amcham representatives
emphasized that corrupt Russian officials do not attempt to
extort money from American businesses because they know that the
American businesses will not pay bribes. The picture for
Russian businesses is very different. The excessive regulatory
burdens faced by Russian businesses leaves them vulnerable to
extortion and demands for bribes. Many Russian businesses,
faced by arbitrary bureaucratic obstacles, reach the conclusion
that it is easier and more cost-effective to pay bribes than to
try to resolve the myriad obstacles mid- and low-level
bureaucrats can place in their way.

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Importance of U.S.- Russian Exchange Programs
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9. (SBU) At dinner December 10, Representatives Delahunt and
Rohrabacher met with a range of Russian guests, who included the
Editor-in-Chief of a local, 900,000 circulation weekly
newspaper, the Director of a leading art institute, and the Dean
of a prestigious university's School of Foreign Languages.


10. (SBU) The Russian guests lauded U.S. exchange programs and
their impact on improving U.S.-Russian understanding and their
role in the professional development of the Russian
participants. They said that enlargement of the various
exchange programs, both Russians going to the United States and
Americans coming to Russia, was very much in the interest of
both countries as a means of preventing future
misunderstandings. Any such programs, though, would need
substantial preparatory work to be fully successfully, including
ensuring adequate preparation for the exchange participants on
managing their expectations prior to travel and advising them on
the best ways to utilize their experiences upon their return to
their home country.


GWALTNEY