RUSSIA MAINTAINS POSITIVE ATMOSPHERE AT EU SUMMIT,

C O N F I D E N T I A L SECTION 01 OF 04 MOSCOW 002834

SIPDIS

DEPT FOR EUR/RUS, EEB/ESC/IEC GALLOGLY AND GREENSTEIN,
S/EEE MORNINGSTAR, EUR/ERA
DOE FOR HEGBURG, EKIMOFF
DOC FOR JBROUGHER
NSC FOR MMCFAUL

E.O. 12958: DECL: 11/20/2019
TAGS: EPET ENRG ECON PREL RS SW EUN
SUBJECT: RUSSIA MAINTAINS POSITIVE ATMOSPHERE AT EU SUMMIT,
SURPRISES WITH CLIMATE OFFER, WTO COMMENTS

REF: A. STOCKHOLM 720

B. MOSCOW 1424

Classified By: Econ MC Matthias Mitman for Reasons 1.4 (b/d)

--------------
Summary
--------------


1. (C) Swedish diplomats in Moscow concluded that EU-Russia
relations were "stuck on the major issues" at the November 18
EU-Russia Summit in Stockholm (ref A). However, they and
European Commission (EC) contacts welcomed "surprise"
positive GOR pronouncements on climate change and WTO
accession, and noted a generally positive atmosphere at the
summit. The major concrete deliverable -- the "early warning
mechanism" on energy supply disruptions -- was concluded and
announced two days prior. Our contacts said President
Medvedev also made positive statements regarding the
possibility of Russia "rejoining" the current Energy Charter
Treaty (ECT). The Russian side expressed no concern about
another gas crisis with Ukraine, which also surprised our EU
colleagues. The proposed Partnership and Cooperation
Agreement (PCA) made little headway in the summit, and will
largely depend on Russian accession to the WTO and
ratification of the ECT. In another welcome development, our
contacts reported that Russia did not react to usual EU
admonishments on human rights. Russia's positive tone at the
summit appears to be further evidence of its desire to
re-engage with western Europe and serves our interest in
greater Russian integration with the global economy. End
summary.

--------------
SUMMIT RESULTS
--------------


2. (C) According to local EU contacts, climate change, the
financial and economic crisis, energy, and bilateral
relations were the main themes of a nearly 3-hour morning
meeting of the November 18 EU-Russia Summit in Stockholm.
The morning session was followed by a lunch at which European
security, Afghanistan/Pakistan, and other international
issues were discussed. Our contacts said there were "no
major breakthroughs" at the Summit but all assessed the
overall event as a success with a "positive atmosphere" and
apparent Russian willingness to cooperate.

Climate Change --


3. (C) As reported in the press, President Medvedev
announced in Stockholm that Russia is prepared to take on a
target of a 20-25% reduction of emissions by 2020 from 1990
levels. While Medvedev apparently did not get into details,
our contacts assume that this remains contingent on all other
major emitters making serious reduction commitments (this
conditionality has been expressed most recently by Medvedev's
economic advisor to Dr. Holdren, and publicly by PM Putin in
an appearance with Danish PM Rasmussen). A Swedish Embassy
contact surmised that whether Russia keeps this commitment in
Copenhagen or not, Medvedev's announcement gave Russia "a
head start" on China, India, Brazil, and the U.S. on this
issue.


4. (C) According to a contact at the Ministry of Economic
Development (MED),the GOR had not yet held an interagency
meeting to determine Russia's formal position for Copenhagen.
That said, Medvedev went to Stockholm with two options on
climate change commitments that were acceptable to the
relevant players in the interagency process -- the MFA, the
Ministry of Natural Resources and Environment
(MNRE)/Roshydromet, and MED. The two options were to
announce a target of a 20-25% reduction by 2020 from 1990
levels (the option ultimately chosen),or a 30%-35% reduction
on a cumulative basis between 2013 and 2020. Our contact
said there was a possibility that one of these options could
have been unveiled at APEC, but President Medvedev did not
think the atmosphere in Singapore was ripe. With Minister
Nabiullina (MED) and Minister Trutnev (MNRE) in Stockholm, it
was easier for the President to make the decision to use the

MOSCOW 00002834 002 OF 004


"new" targets as a deliverable. A well-placed NGO contact
who advises the GOR speculated that Trutnev, who may lead the
GOR delegation to Copenhagen, wanted to start negotiations
with a more serious number than the much derided 10-15%
earlier-announced soft target. Our NGO contact said the
delegation has 30% as its fall-back position already. In the
meantime, with a 20-25% target, Russia is comfortably in line
with the rest of Europe, and can even claim it is outpacing
the U.S. (Note: Even a 25% reduction from 1990 represents a
substantial increase from current emissions -- estimates of
which range from 62-70% of 1990 levels. End note.)


5. (C) Our EC Delegation colleagues had heard hints that
Medvedev might make an announcement on climate at Stockholm,
but were pleasantly surprised with the figures (as were our
Russian working level counterparts). They said, however,
that the EU would continue to press for deeper reductions --
in the area of 40%. They will also want to see the details,
particularly on whether Russia will insist on carrying over
substantial unused emission allowances from the Kyoto period.
They hope that Medvedev will decide to lead the delegation
to Copenhagen, with one contact using this as a plug for
President Obama's attendance: "If President Obama goes,
President Medvedev will go, and we'll make more progress."
The EC Delegation's climate expert said, however, that they
are aware of the possibility of backsliding, which they felt
Russia did after the G-8 Summit in Aquila, when GOR officials
said Russia should be held to a lower standard (50% reduction
targets vice 80%) than other G-8 members.

WTO and Trade --


6. (C) Medvedev also surprised the press and our contacts
with positive remarks with regard to Russia's WTO accession
-- "whatever is the fastest route, we will take it."
Although his comment garnered much attention in the media,
Medvedev did not say that Russia would drop the idea of
joining the WTO in conjunction with its proposed customs
union partners, Belarus and Kazakhstan. According to our EU
contacts, Medvedev assured the EU that WTO accession "is a
priority" for Russia. He also said during the meeting that
Russia would remove temporary "anti-crisis measures" (read
protectionist measures) "when the time is right." While our
EU contacts again welcomed the positive tone, they called
Medvedev's comments "nothing new" and did not expect speedy
movement by Russia on WTO accession.

Energy --


7. (C) The major concrete deliverable of the summit was in
fact concluded and announced two days prior, when Energy
Minister Shmatko and Energy Commission Piebalgs signed an MOU
on an "early warning mechanism" related to energy supply
disruptions between Russia and the EU. The non-binding MOU
calls for the two sides to inform each other of a disruption
or a threat of disruption in the supply of oil, gas, or
electricity. It also calls for consultations in case of
differing assessments of the disruption, and for monitors to
be deployed to provide independent assessments of the
situation.


8. (C) According to an EC contact involved in the MOU
negotiations, the Russian side "gave in" on several issues
that the EU was not prepared to accept. He said the Russians
wanted (but did not get) endorsement of the proposed South
Stream gas pipeline, guarantees by the EU of payment by EU
customers for minimum gas deliveries under take-or-pay
contracts, and guarantees of long-term gas contracts. (Note:
South Stream, take-or-pay clauses, and long-term contracts
are all under pressure from a gas glut and competing gas
supplies that are only expected to grow in the coming years.
End note.) According to this contact, the two sides then had
an even more difficult negotiation over the "progress report"
of the EU-Russia energy dialogue, with Russia wanting to
include in that report the items it could not get in the
early warning MOU. Our contact said that although Russia had
long told the EU that Ukraine and President Medvedev's
proposal on a new international legal framework on energy
would be highlighted during the energy dialogue, the issues
were barely raised at all. In fact, the Russian side assured

MOSCOW 00002834 003 OF 004


the EU that "everything is going smoothly" with Ukraine and
that there would be no disruptions this winter.


9. (C) According to a Swedish Embassy readout of the summit,
Medvedev was similarly unconcerned about Ukraine. He did
raise, however, the issue of the international legal
framework on energy. When the EU responded that it is
satisfied with the current Energy Charter Treaty (ECT),
Medvedev (again surprisingly) suggested Russia may be willing
to accept the ECT "if producers' interests" are taken into
greater consideration. In addition, Medvedev, noting
parallel "Energy Dialogues" between the EU and U.S., the EU
and Russia, and the U.S. and Russia, suggested a trilateral
Energy Dialogue. The idea apparently went nowhere -- "We
just let it pass," our contact said.

PCA, Cross-Border Cooperation, Visas, and Other Bilateral
Issues --


10. (C) According to the Swedish Embassy in Moscow, no
breakthrough was made on a new Partnership and Cooperation
Agreement (PCA) which, according to our EU contacts, will be
difficult to move forward without clarity on Russian WTO
accession and without Russian ratification of the ECT.
However, there were advances on several other bilateral
issues, including long-pending cross-border cooperation
agreements (CBCAs) that allow for joint development projects
in border regions. Russia agreed to provide financing for
five of seven joint CBCAs. Both sides also agreed to restart
expert-level talks on emergency management, suspended since

2003. President Medvedev reportedly agreed to EC President
Jose Manuel Barroso's new, but undefined, initiative on
modernization, which our EU contacts noted fit well with
Medvedev's recent public calls to modernize the Russian
economy.


11. (C) The GOR pushed hard for visa liberalization, but the
EU countered that Russia would need to do more on
registration and on illegal migration before it would be in a
position to discuss lifting visa requirements. A Swedish
Embassy contact said that several influential EU members are
strictly opposed to visa liberalization and the issue is thus
unlikely to advance anytime soon. However, the EU offered to
look at ways to enhance the existing visa facilitation
agreement during upcoming negotiations in December. Swedish
diplomats told us that there was little discussion on how the
EU-Russia relationship would change following the Lisbon
Treaty's December 1 entry into force.

Security, AfPak, Iran, Bosnia --


12. (C) Over lunch, both sides discussed a full agenda of
international issues, including European security,
Afghanistan-Pakistan, Iran, South Caucasus, and Bosnia.
Swedish diplomats told us Medvedev shared nothing substantive
and provided no documentation on his concept of a new
European security treaty. Regarding Afghanistan, Medvedev
focused on the challenge of narcotics and called for greater
cooperation in combating drug trafficking, while on Pakistan
he pushed for more efforts at non-proliferation. Medvedev
also "did not close the door on sanctions against Iran," and
reportedly said that sanctions would only be a worst-case
option. Russian FM Lavrov had requested the inclusion of the
Western Balkans on the agenda, but focused exclusively on
Bosnia. Lavrov said that there was broad agreement for the
transition of the Office of the High Representative and the
need for Bosnia and Herzegovina to "stand on its own" -- made
more necessary with its seat on the UN Security Council. Our
Swedish colleagues commented that Lavrov was not harsh in his
treatment of the EU-U.S. Butmir package, but he made it clear
that Russia resented not being included. Neither side raised
Kosovo.

Human Rights --


13. (C) On the issue of human rights, a Swedish Embassy
contact told us that Russia displayed impressive restraint
against the expected EU admonishments. He took it as a sign
of Russia's interest in maintaining a positive atmosphere
that Russia did not resort to its usual retorts on human

MOSCOW 00002834 004 OF 004


rights and merely listened to the EU's concerns without
significant response.

--------------
COMMENT
--------------


14. (C) While the summit resulted in no major binding
commitments or agreements, it was a welcome milestone in
helping the two sides overcome a difficult period following
the Georgia war and the 2009 gas crisis. It contrasted with
the last EU-Russia summit in Khabarovsk, Russia, where the
parties used the event as an opportunity to snipe at one
another over energy, Ukraine, and Georgia (ref B). Both
sides seem to appreciate that neither can afford Russian
isolation. The positive atmosphere of the summit, positive
"surprises" from the Russians on climate change and trade,
and a general willingness to cooperate, should help Russia
improve its standing in Europe. Medvedev's rhetoric
indicates he values Russian integration into the global
economy, which should position Russia well for the EU's
transformation following the Lisbon Treaty's entry into force.
Beyrle