LUZHKOV TALKS BIG ON U.S.-RUSSIAN COOPERATION TO

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 000500

SIPDIS

E.O. 12958: DECL: 02/27/2018
TAGS: PGOV PREL ECON RS CH
SUBJECT: LUZHKOV TALKS BIG ON U.S.-RUSSIAN COOPERATION TO
COUNTER THREATS

REF: A. MOSCOW 455

B. MOSCOW 401

Classified By: Ambassador John R. Beyrle; reasons 1.4(b/d).


1. (C) Summary: During his introductory call on Moscow Mayor
Luzkhov February 26, Ambassador was treated to a tour
d'horizon of global challenges - from the Mayor's lofty
perspective - confronting Russia: the rise of China and its
aspirations for regional power, the potential for conflict
arising from countries contending for access to fresh water,
and the need for proper stewardship of agricultural resources
and technological innovation in order to meet basic needs of
a growing global population. True to his maverick
reputation, Luzhkov lambasted the Russian government's
response to the economic crisis as divorced from the real
economy, for failing to promote the creation of jobs, and
from effectively channeling funds to entrepreneurs for
investment in Russia. He welcomed closer ties with the U.S.
and American cities, noting that he hopes U.S. companies will
participate in forthcoming business fora in Moscow, and that
Washington D.C. Mayor Fenty will travel to Moscow in the
spring. End Summary.

"We Want to Be Your Friend"
--------------


2. (C) Opening a wide-ranging conversation in an ornate
chamber of City Hall adorned with portraits of Russian tsars,
Moscow Mayor Luzhkov warmly welcomed Ambassador February 26.
Ambassador thanked Luzhkov for the assistance his
administration provided, notably the extra security during
the autumn 2008 mass protests in front of the embassy.
Ambassador emphasized the strong desire of the new U.S.
administration to work with Russia on issues of mutual
responsibility, including post-START arrangements, as well as
on enhancing commercial ties and coordinated work to combat
terrorism and other global challenges. He recalled the
contacts Moscow has with Washington, New York and Chicago and
offered to facilitate, if necessary, ties with other U.S.
cities.


3. (C) Luzhkov reminisced over his relations with U.S.
ambassadors during his more than 25 years in city government,
and expressed confidence that constructive relations between
Russia and the U.S., and between Moscow and the Embassy,
would continue under the Ambassador. He noted that he had
escorted then First Lady Clinton during President Clinton's
1995 visit to commemorate the 50th anniversary of the end of
WWII. Though he expressed confidence that the President and
Secretary would be able to rebuild trust in bilateral
relations, he cautioned that the process would be long. The
Cold War has yielded to a "cold wave" in relations which will
require changes in U.S. policies and actions if real progress
is to be made in addressing the challenges the Ambassador
outlined. In spite of this anti-Americanism, and in spite of
leaders' inward focus during the global crisis, Russian
leaders and Russian people "want to be friends with the U.S."
and to cooperate on the major contemporary challenge.

Beware of China
--------------


4. (C) As an example, Luzhkov expounded on the comprehensive
threat that China represents to Russia. Citing former
Secretary Rice's concerns that China is developing military
capabilities that exceed the threats it actually faces, he
voiced the perennial Russian fear that a more powerful China,
emboldened by the relative weakness of neighbors like Russia
and facing internal social tensions, might use military force
to secure more land and resources for its population.
Luzhkov painted a dark picture of an expansionist China
drawing on "its culture of strict discipline and national
superiority, as well as support from a globally dispersed
diaspora" to constitute a serious threat to both Russia and
the U.S. The Ambassador noted that securing China's
integration into the global economy, including adherence to
international norms and laws, was a major strategic challenge
for both Russia and the U.S. Secretary Clinton's early visit
to Beijing underlined our desire for continued constructive
Chinese participation in global economic and political
decision-making structures. Luzhkov was skeptical; China
would play along in the short-term, he argued, but would
abrogate agreements and cease compliance with international
norms when it suited its interests.


5. (C) Luzhkov noted that he does not have close ties with
his counterpart in Beijing. He had declined to attend the
2008 Summer Olympics because he feared (correctly, he added)

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that the festivities would be exploited to support "Chinese
fanaticism." Commercial ties between the two capital cities
are weak, not branching much beyond reciprocal building
projects in each city. He cited his close ties with Central
Asian leaders, including "brotherly" relations with Kazakh
President Nazarbayev, as tokens of his fair-mindedness in
questioning Chinese long-term goals in the region and as a
rationale for closer cooperation, including with the U.S., to
check Beijing's ambitions. Returning to his opening remarks,
Luzhkov said Russia and the U.S. must become friends in such
a way that they do not alarm China, all the while knowing
that one of the purposes of the closer relationship is to
ensure that China does not take further steps to threaten
them both.


6. (C) Warming to his strident nationalism that still
attracts supporters throughout Russia and in former Soviet
countries, Luzhkov stressed his firm belief that Russia,
while a "Eurasian" country, is oriented economically,
politically and culturally toward the west, not the east.
Its geographic position, and the centuries that Russians
lived under occupation by eastern peoples, had left an
indelible legacy which enables Russians to better understand
their neighbors. Russians, together with the Kazakhs and the
Azeris, share this perspective, in Luzhkov's philosophy.
Water and Biofuels
--------------


7. (C) Luzhkov then veered into a discussion of the theme of
his most recent book - availability of, access to and
efficient use of fresh water. Luzhkov proudly cited data
that 24 percent of the world's fresh water supply is located
within Russia (thereby giving the Chinese yet another reason
to consider trying to take possession of Russian territory,
or at least control it). He argued for one of his favorite
projects - changing the northerly flow of Russian rivers (of
fresh water) to a southerly direction, thereby enabling
Russia to use the water to irrigate and to supply water to
Central Asian countries in need of water.


8. (C) Luzkhov argued that through careful use of these
resources, the world could raise additional food to feed the
hungry. He criticized the U.S. for having diverted corn
stocks into the production of ethanol, thereby contributing
to grain shortages and increases in global food prices. He
touted his own plan in Moscow to produce biofuel from hay,
making use of this waste produce while not reducing
stockpiles of grain. In response to Ambassador's suggestion
that new technologies, especially in the field of genetically
modified organisms, could help alleviate food shortages,
facilitate greater production of biofuels and also decrease
the requirement for fresh water, Luzhkov criticized the U.S.
for moving too quickly in the direction of GMO without giving
researchers time to conclusively assess safety.


9. (C) Luzhkov noted that he has for several years brought
together businessmen, scientists and government officials
from Russian and neighboring countries to discuss this
constellation of subjects. He said he would welcome
participation by U.S. experts. Trying to manage a city of 10
million people which, according to Luzhkov's figures,
requires 5 million cubic meters of water per day, but which
is located in a region (the Central Federal District) with
chronic water shortages is a major concern for him. It is
his primary responsibility, he declared, to ensure that all
Muscovites have food/water, shelter/heat and secure/safe
environment in which to live. The city spends a great deal
of its own resources on ensuring the first two, especially
for less fortunate groups in society, such as pensioners.
The city has to think ahead and find new ways to meet these
physical and financial challenges.

Crisis Response: GOR Could Be Doing A Lot More
-------------- -


10. (C) Seizing on this momentary detour back to the here and
now, Ambassador asked for Luzhkov's assessment of the impact
of the economic crisis on Moscow, and of GOR steps to combat
the crisis in general. Luzhkov indignantly rejected the
Ambassador's suggestion that Finance Minister Kudrin had thus
far acted prudently. He argued that GOR resources devoted to
mitigating the effects of the crisis on the financial sector
and in defense of the ruble had either been wasted or had
enabled banks to speculate by purchasing foreign currency and
then cashing in on the ruble's devaluation (Ref A). This had
just led to inflation even while demand was dropping. He
praised the U.S. strategy of channeling funds to key
industries in order to save jobs as well as to stimulate
demand. Low interest rates in the U.S. gave businesses the

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means to expand their operations by removing the issue of
whether they could afford the credit. In Russia the high
rates of interest charged by banks were intended to dissuade
investors from borrowing, freeing up capital to be
transferred abroad. Luzhkov proceeded to tick off mistakes
made by the U.S. in management of its own and the global
economies, including the U.S. decision to drop the gold
standard (in 1971!). While perhaps logical when adopted,
time has shown them to have had disastrous consequences for
the economies of the world. Ambassador responded that a good
debate could be enjoined on these many subjects, but what is
key is that the U.S. and Russia, through the G-8 and G-20,
work closely to address the current crisis.

City-to-City Ties
--------------


11. (C) Luzhkov closed by returning to the matter of
deepening ties with U.S. cities. He said he expects to
dedicate a statue of Walt Whitman on the campus of Moscow
State University in May, and that he would welcome the
presence of Washington D.C. Mayor Fenty at the occasion.
(Note: Luzhkov was invited to the dedication of a statue of
Pushkin on the campus of George Washington University, but
was unable to attend.) He said he looked forward to the
visits of U.S. leaders to Moscow, and that he and his
government were intent on helping the embassy when and how
they could.

Comment
--------------


12. (C) Luzhkov was at his feisty best in this meeting. He
was blunt, true to his nationalist, populist reputation,
offering criticism of both the U.S. and Russian policies.
His emphasis on growing threats to Russia from China parallel
those of other "senior" Russian officials of his generation,
including former PM (and Luzhkov political ally) Yevgeniy
Primakov (Ref B). Luzhkov's concerns that Russia's response
to the economic crisis is ill-conceived and poorly
implemented no doubt reflect the difficulties that he (and
his billionaire wife) face in maintaining access to the flows
of credit essential to continue Moscow's 7-year building
boom. For the time being, he remains solidly in charge of
Moscow and able to communicate via the media his views, not
just in Moscow, but beyond. But like so many of Russia's
power brokers, even those who enjoy great popular support,
Luzhkov knows his ultimate limits are defined by Medvedev and
Putin.
BEYRLE