FINLAND: PM PUTIN SETS CHILLY TONE WITH PM VANHANEN

C O N F I D E N T I A L SECTION 01 OF 02 HELSINKI 000211

SIPDIS

NSC TO J. HOVENIER

E.O. 12958: DECL: 06/05/2015
TAGS: EIND ENRG FI PGOV PREL
SUBJECT: FINLAND: PM PUTIN SETS CHILLY TONE WITH PM VANHANEN

REF: 09 HELSINKI 151

Classified By: Charge d'Affaires Michael A. Butler for reasons 1.4(b) a
nd (d)


1. (C) SUMMARY. Russian Prime Minister Putin set a chillier
tone in his June 3 visit to Finland than did President
Medvedev last April. Finnish officials found Putin less
cordial and less engaged than Medvedev on the bilateral trade
matters that dominate high-level Finnish-Russian meetings.
In his meeting with Prime Minister Vanhanen, Putin placed
natural gas high on his agenda, first issuing a warning that
Ukraine's failure to pay up front for gas could create a
"crisis" later this month, then urging the Finns to quickly
conclude an environmental assessment of the Nord Stream
pipeline project. The Finns could offer no promise of a
swift and certain resolution to Nord Stream, and they
received no clarity on their main trade concerns, an increase
in Russian wood export tariffs and a decision excluding trade
via road in favor of rail and ship. The overall lighter tone
of Medvedev's visit over Putin's has not left Finns hopeful
that resolution of persistent bilateral problems would come
from the President's office, as Finnish officials consider
Putin to be in charge. Finnish officials hope that the
twice-annual high-level meetings themselves create pressures
to resolve problems, a hope diminished by Russin policies
they see having little substance and oherence. END SUMMARY.

2. (C) On June 3 RussianPresident Vladimir Putin visited
Finland where h me with Prime Minister Vanhanen and
President alonen. In discussing the Vanhanen-Putin
meetins, various officials from the Ministry of Foreign
Affairs said they focused largely on bilateral economic and
trade matters. Finnish officials found tone of the
Putin-Vanhanen meeting less cordial than President Dmitry
Medvedev's meetings during his first State visit to Finland
last April (REF). Putin also appeared less prepared than
Medvedev and was less talkative, leaving other Russian
officials to address many points. Finnish media described
the meetings as "chilly," and one journalist described
Putin's impatient attitude at a post-meeting press conference
as "strange." The atmosphere likely warmed for the
Putin-Halonen meeting, which lasted well beyond the scheduled
hour. (NOTE: Foreign Ministry officials could only
back-brief on the earlier Vanhanen meeting, not the Halonen
meeting, which ended at roughly 10 p.m. Septel on Halonen's
meeting to follow. END NOTE.)
Putin wants Nord Stream decision
--------------

3. (C) Though bilateral issues dominated, two wider topics
arose. As with Medvedev's visit, the Finns raised the
question of Russia joining the World Trade Organization, and
Putin echoed Medvedev's response that Russia had done what it
could and the matter was in others, hands. Putin raised
energy and natural gas. Putin first spoke of Ukraine, saying
that if Ukraine was unable to meet its obligations Russia
would require advance payment for gas. He then gave a
"strong warning" that there could be a crisis at the end of
June should Ukraine fail to pay.

4. (C) The Finns took Putin's underlining of the problem with
Ukraine as a blunt hint about progress on Nord Stream, the
proposed natural gas pipeline that would pass through Finnish
waters. Turning from Ukraine to Nord Stream, Putin said that
Russia does not need the pipeline, that it is something
"Europe" wants. Nevertheless, he strongly urged the Finns to
quickly conclude their ongoing environmental assessment.
Vanhanen replied that the government would follow the
appropriate environment review process but added they would
try to have a decision by early October. (NOTE: Mikko
Hautala, advisor to Foreign Minister Stubb, told Pol/Econ
Chief officials expected a decision in favor of the project.
However, approval would not conclude the Finnish government's
role, and Nord Stream backers would need to secure a building
permit in a process that would take them into 2010. END
NOTE.) Finnish officials sensed in Putin the irritation of
other Russian officials who have discussed Nord Stream with
the Finns, i.e., the inability to grasp the Finns, refusal
to interfere with or supersede a neutral government process.
Finns frustrated with tariffs and transport
--------------

5. (C) Vanhanen raised with Putin two issues that Finnish
officials say exemplify the complete lack of industrial
policy in Russia. Vanhanen followed up on the Russians,
decision last year (following a Vanhanen request to Putin) to
defer an increase in the roundwood export tariff, which
threatens an already ailing Finnish wood industry. Putin
replied that the government would decide the matter in the
autumn. Later, Finnish officials greeted with great
skepticism Putin's assertion in the post-meeting press
conference that the Russian wood industry had seen
investments since the government imposed the tariffs. They
acknowledge that their wood industry is in dire straits, but

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they see opportunities in matching Finnish expertise and
investments with Russian resources. The officials believe
the export tariffs have hurt investment in the Russian
market, something Russian officials fail to grasp.

6. (C) Vanhanen also raised with Putin his concern about the
Russian custom authority's decision that in six months trade
must move via rail or ship, not via road, a decision Finnish
officials say would be hugely detrimental to their economy
and that they cannot implement in that time frame. Putin
surprised the Finns by justifying the decision on the amount
of "contraband" passing out of Russia through Finland.
According to Finnish officials, Finnish-Russian cooperation
on customs and boarder issues is excellent, and no Russian
official has pointed to contraband as a concern; they also
assert the Russian transport ministry does not support the
custom authority's decision.
Custody case causes a stir
--------------

7. (C) Vanhanen discussed with Putin the custody case of
five-year-old Anton Salonen. Salonen's Russian mother took
him to Russia and his Finnish father sought his return
through the Russian courts. Though the father obtained
official decisions in his favor, border officials prevented
Salonen's return to Finland and father and son sought support
from the Finnish consulate in St. Petersburg. In May a
Finnish diplomat placed the two Salonens in the truck of his
car and crossed into Finland. Finnish officials expressed
surprise to Pol/Econ chief at Putin's harsh public
denunciation of the diplomat. Foreign Minister Stubb
publicly brushed away the comment, stating that "good
neighborly relations" include speaking directly about such
matters. Putin did not call for the boy's return.

8. (C) COMMENT. It appears Putin is more comfortable meeting
with, and speaking publicly alongside, his former counterpart
President Halonen than with his current one, Prime Minister
Vanhanen. Any frustration exhibited in the Vanhanen meeting,
perhaps stemming from a lack of movement on long-standing
bilateral issues like Nord Stream and wood tariffs, and new
ones like proposed transport restrictions and the Salonen
custody case (which Putin acknowledged learning about on the
flight to Helsinki) would not be as strong with Halonen,
given Putin's long and warm relations with the President.
The overall lighter tone of Medvedev visit over Putin's has
not left Finns hopeful that resolution of persistent
bilateral problems would come from the President's office, as
Finnish officials consider Putin to be in charge. Finnish
officials hope that the twice-annual high-level meetings
themselves create pressures to resolve problems, a hope
diminished by Russian policies they see having little
substance and coherence. END COMMENT.
BUTLER