Russian Experts Give Congressman Rogers a Snapshot of

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TAGS: PREL PGOV ECON RS
SUBJECT: Russian Experts Give Congressman Rogers a Snapshot of
Political Debate

Summary
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1. (SBU) On April 10, Russian scholars told Congressman Rogers that
there was little popular opposition to the GOR and that any
challenges to the government would come from elites, rather than the
general populace. However, the leadership could use the threat of
popular dissent to scare factions into supporting government policy.
The analysts said the crisis provided the opportunity for the state
to redefine the membership of the oligarch class, but that there was
little consensus on economic policy. All agreed that a real threat
to the government could be the GOR's inability to arbitrate disputes
between oligarchs, but that the crisis also opened up strategic
industries to foreign ownership on a case-by-case basis, a move that
might improve the Russian business environment. Saying that we were
seeing "a different Putin," the analysts cautioned that a leadership
responsive to the public could be seen as weak. While the analysts
welcomed the improvements in U.S.-Russian relations, they also saw
entrenched Russian interests fighting against it. They shared that
in Russian academic circles, there was increasing discussion on
reducing engagement with the U.S., as Russia had been disappointed
so often before, although they argued Russia does not want to see a
precipitous withdrawal of U.S. forces from Afghanistan. End
Summary.


2. (SBU) In a lively and wide-ranging April 10 roundtable
discussion with Congressman Mike Rogers (MI, 8th district) hosted by
the Ambassador, Boris Makarenko of the Center for Political
Technologies, Andrey Kortunov of The New Eurasia Foundation, Sam
Greene of the Carnegie Moscow Center, Ivan Safranchuk of the World
Security Institute, and Boris Kagarlitsky of the Institute of
Globalization reflected on the developments in President Medvedev's
governing style, the affect of the economic crisis on government
policies and popular support, and the prospects for improved
U.S.-Russia relations.

People Turning to Gov't, Not Agitating Against
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3. (SBU) In responding to Congressman Rogers' question on where
Medvedev stood in the midst of the economic crisis, Makarenko framed
the discussion by citing his center's polling results: while
Russians' optimism regarding the economy had dropped by fifty
points, Medvedev, Putin, and the State Duma had only lost five to
ten points in favorability polls. He underscored that in the
economic crisis, the Russian people were turning to the government,
not agitating against it. Makarenko hypothesized that incidents of
popular social unrest were exceptions, a result of instances where
the government hurt or insulted specific communities or groups.


4. (SBU) Makarenko agreed with the Ambassador that the government
had changed tacks and now sought to talk to the people, compared to
the last seven years, saying that the behavioral style needed to
change. Greene underscored that this approach came with some risks,
as the Russian leadership did not have policy instruments and lacked
structures that it could alter to respond to new policy demands. He
also cautioned that the government was making promises on social
programs and spending but lacked the liquidity to implement them.

Elite Policy Debate on the Economy
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5. (SBU) On the economy, all analysts concurred that the leadership
and elites had no agreement on what to do in the face of the
economic crisis. Kagarlitsky offered that Putin's conservative
approach of maintaining spending levels and using up the reserves
was winning the policy debate. Safranchuk disagreed and countered
that there remained a raging debate on the duration of the crisis --
those who believed the crisis will bottom-out this year and those
who believed Russia would reach bottom next year and take three to
four more years to fully recover. Because of this debate and the
lack of a consensus, he argued that the leadership could not
determine how to spend the reserves. Safranchuk believed that
Finance Minister Kudrin had prevailed in slowing down the spending
of financial reserves for the moment, but this was not a universally
accepted policy.


6. (SBU) Makarenko assessed that Putin's priorities for the
financial reserves were to bolster the financial sector and increase
social spending. However, as these reserves dwindled, he argued
that the competition among elites and oligarchs for limited state
resources would increase. Safranchuk agreed, saying that the GOR
had now changed from looking at preserving the owners of industries
(e.g., the oligarchs) to preserving the industries they owned. He
offered that the crisis offered the opportunity for the state to
redefine the political landscape by determining the new winners --
the members of a new oligarch class.


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Foreign Investment Welcome?
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7. (SBU) Kortunov asserted that on a case-by-case basis, the GOR
would permit foreign investors to seize assets of strategic Russian
companies, something the government had sought to reduce and
eliminate in times of wealth. He welcomed greater foreign
ownership, as it would constrain oligarchs' business practices and
improve the overall business environment. Underlining that this
process would be selective, Kortunov noted the recent dispute
between Oleg Deripaska (CEO UC Rusal) and Alfa Bank, a dispute that
Medvedev needed to resolve in favor of Deripaska by offering
government support to restructure debt and hold off asset seizures.


8. (SBU) Kagarlitsky offered that the crisis had not changed much
in terms of how the government treated foreign investment in
strategic industries, with Greene adding that much of it depended on
the nationality of the investor and the assets or industry.

Political Consequences of Crisis
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9. (SBU) In response to Congressman Rogers' question on whether the
leadership was accountable to the people, Kagarlitsky offered that
the people only mattered if factions within the bureaucracy could
not come to an agreement. Kortunov agreed, but said that there were
those in the elite who would use the threat of the masses to scare
reluctant bureaucrats or members of the elite to support government
policy. The threat of "people pressure" may eventually compel
compromise within the government, added Safranchuk.


10. (SBU) Makarenko disagreed, saying that "parties are not
relevant" in Russian politics and "all those in power would not
appeal to the public to resolve conflicts." Kagarlitsky agreed that
"elections in Russia are formalized" and that public was not engaged
in debate.


11. (SBU) Safranchuk reemphasized that the leadership had changed
its tone and was now making more effort to shape the public's
opinions, but that this approach came with a risk, "being responsive
to the needs of people is a sign of weakness." Makarenko concurred
and noted that "we are seeing a different Putin," someone who is
engaging, listening to critical remarks, delivering fewer lectures,
but this comes as a paradox because they want to reduce interaction
with the public to avoid being perceived as weak.


12. (SBU) However, Safranchuk said that the real test of government
accountability was not by polling the masses, but by determining the
satisfaction of big businesses, especially with the government's
ability to serve as arbiter. If the GOR fails in resolving
corporate disputes, it will create greater tension. The Ambassador
commented that this need for the executive branch of the government
to serve as arbiter was necessary due to the weakness of the
judicial branch within Russia, making the courts the least preferred
venue for conflict resolution.

U.S.-Russian Relations: Reset Possible?
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13. (SBU) Kortunov cautioned that improvement in U.S.-Russian
relations threatened the positions of some in the government,
including agency budgets. "Even if Medvedev and Putin subscribed to
the concept of good relations, there are those in government who
opposed those views," he said.


14. (SBU) Makarenko labeled most anti-American opinion in Russia as
reactionary and usually following an event where Russians felt
slighted. Makarenko and Safranchuk both agreed that the Russian
people and elites do not want a new confrontation, with Safranchuk
assessing that the Russian people have such "low expectations of the
U.S." that many academics have proposed for disengagement from the
U.S., or at most a distant and careful partnership.


15. (SBU) Kortunov argued that the U.S. is a "descending
superpower" and therefore its policies needed to adjust, but that it
was critical that the U.S. do so "without withdrawing" from the
international community. He argued that Russia does not want to see
a precipitous withdrawal of the U.S. from Afghanistan, but that
Obama needed to be stronger in countering European voices pushing
for withdrawal.


16. (SBU) Kortunov also strongly criticized the U.S. for the lost
opportunities to improve relations following September 11, 2001,
when Putin commented on the possibility of Russia joining NATO. He
also said that the U.S. had undermined international trust because
it has worked against the UN. Congressman Rogers pushed back
pointing out that the UN had been used as a venue to air contrarian

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views unrelated to issues of the moment and that the resulting
debate delayed decisions on issues that were important to the U.S.


17. (U) CODEL Rogers has cleared on this message.

BURNS