C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 000898

SIPDIS

STATE FOR EUR/RUS
STATE PLS PASS USTR (HAFNER, BURKHEAD)
COMMERCE FOR MAC (JACK BROUGHER, MATT EDWARDS, JAY THOMPSON)

E.O. 12958: DECL: 04/07/2019
TAGS: ETRD KIPR EINV ECON WTO RS
SUBJECT: DEPUTY ECONOMIC MINISTER WEIGHS IN ON ST.
PETERSBURG FORUM, IPR AND G20

REF: MOSCOW 873

Classified By: Ambassador John R. Beyrle, Reasons 1.4(b,d).

--------------
SUMMARY
--------------


1. (C) In an April 7 meeting with the Ambassador, Deputy
Economic Development Minister Stanislav Voskresensky urged
U.S. Cabinet-level participation in the St. Petersburg
International Economic Forum to be held on June 4-6.
Voskresensky said the GOR was very pleased with the President
Obama-President Medvedev meeting in London and felt that
bilateral economic and trade relations could now deepen. He
downplayed the outcomes of the G20 London Summit and noted
that the challenge would now be to translate the broad
declarations in the G20 Leaders' Statement into concrete
actions. Voskresensky also praised the IPR Working Group and
looked forward to continued bilateral collaboration on IPR
issues, emphasizing that Russia now recognized the damage
that Internet and optical disk piracy was inflicting on
Russian film makers and artists. End Summary.

--------------
St. Petersburg International Economic Forum
--------------


2. (C) Voskresensky urged U.S. Cabinet-level participation in
the St. Petersburg International Economic Forum (SPIEF) to be
held on June 4-6. Tasked with forum preparations,
Voskresensky explained that the event was Russia's marquee
annual economic conference, whereas the Sochi Investment
Forum focused more specifically on direct investment in
Russia, and the Krasnoyarsk Economic Forum concentrated on
Siberian and other regional development issues. Despite the
global economic crisis, Voskresensky still expected strong
participation in the SPIEF from global business leaders and
senior government officials.


3. (C) Voskresensky noted that President Medvedev would open
the forum, along with the Finnish and Spanish PMs, and the

Argentine President. The GOR also hoped that former
President Clinton would agree to open the forum, noting that
there had been a productive and lengthy meeting between PM
Putin and President Clinton during the Davos Forum in January

2009. Voskresensky observed that the agenda for this year's
forum would focus on global economic and financial issues
during the current crisis, which would serve as a useful
follow-on to the G20 London Summit.


4. (C) As with the 2008 SPIEF, Voskresensky said the GOR
planned to host a roundtable of U.S. and Russian business
leaders on the evening of June 4. The 2008 roundtable, led
by then Commerce Secretary Gutierrez and Russian Union of
Industrialists and Entrepreneurs President Shokhin, had
produced a fruitful discussion on bilateral business issues.



5. (C) Voskresensky noted that President Medvedev along with
all of the GOR's senior economic leaders would attend,
including First DPM Shuvalov, DPM and Finance Minister
Kudrin, other DPMs with economic portfolios such as Sergey
Ivanov, and relevant ministers, including Economic
Development Minister Nabiullina and Industry and Trade
Minister Khristenko.


6. (C) The Ambassador said he planned to attend the forum,
and the Embassy had passed to Washington the formal SPIEF
invitations from Economic Development Minister Nabiullina to
Commerce Secretary Locke, Treasury Secretary Geithner and
U.S. Trade Representative Kirk. The Ambassador would
continue to urge high-level USG participation in the forum,
though there had not yet been a decision about which senior
Washington officials would attend the event.

-------------- --------------
Economic Relationship Following the Obama-Medvedev Meeting
-------------- --------------


7. (C) Voskresensky said both he and Presidential Economic
Adviser Dvorkovich (Voskresensky used to serve as

MOSCOW 00000898 002 OF 003


Dvorkovich's deputy, and the two remain close) believed there
was great potential to develop the U.S.-Russia economic
relationship following the April 1 meeting of Presidents
Obama and Medvedev. The Ambassador noted that the economic
component of the Obama-Medvedev Joint Statement had indicated
new directions for the relationship, including the
intergovernmental commission on trade and economic
cooperation and a pledge to finalize Russia's WTO accession
as soon as possible. The Ambassador suggested that the SPIEF
and continued engagement through the U.S.-Russia IPR Working
Group (reftel) could fit well into the deepening bilateral
economic relationship.

--------------
G20 Summit: Moving from Words to Actions
--------------


8. (C) Voskresensky said the GOR was in general satisfied
with the outcomes of the G20 London Summit. (N.B.
Voskresensky noted that he had not attended the London
Summit, but had received a detailed readout from Dvorkovich.)
Voskresensky said he questioned the seriousness of the
summit outcomes, but admitted that the results "could have
been worse," and he cautioned he was expressing his personal
view, rather than an official government position. He
characterized the G20 Leaders' statements on support for IFIs
and strengthened financial supervision and regulation as
"words" that would need to be followed up with concrete
action. In addition, intractable disputes between China and
the EU had led to a weak statement regarding the OECD list of
tax havens and bank secrecy zones. He also noted that
negotiations of the G20 documents had proven more difficult
than similar G8 negotiations, because of the need to
accommodate a larger number of disparate views.


9. (C) The Ambassador asked whether the G20 support for free
trade would help strengthen the position of PM Putin and
senior Russian economic officials vis-a-vis those within the
GOR and in Russian domestic industries who had been urging
greater protectionist measures in response to the crisis.
Voskresensky responded that Russia had lowered more import
duties than it had raised in the past few months, though he
admitted that the GOR had engaged in "bad PR" in regard to
the duty increases on automobiles and harvesters. Putin's
address to the Duma on April 6 had made clear that the GOR
would no longer support inefficient domestic producers, he
added.

--------------
Continued Bilateral Engagement on IPR Issues
--------------


10. (C) Voskresensky said the U.S.-Russia IPR Working Group
meeting on March 23-24 in Moscow (reftel) had been very
positive and led to a plan for future meetings where both
countries could discuss common IPR challenges and ways to
work together to combat global problems such as Internet
piracy. Voskresensky indicated that he was committed to
continued participation in the IPR Working Group, and the
Ambassador expressed his appreciation for Voskresensky's
direct involvement and interest in IPR issues.


11. (C) Voskresensky said the GOR was now starting to "get
serious" about IPR issues, in particular the problem of
Internet and optical disk piracy. He noted that the GOR
recognized the heavy economic damage that Russian film makers
had suffered from piracy. The producers of two blockbuster
Russian films that were released during 2008 ("Stilyagi," or
the Hipsters, and "The Uninhabited Island") had lost millions
of dollars in potential revenue due to Internet and optical
disk piracy not only in Russia, but also in Russian Diaspora
markets in Europe and the U.S. (e.g., Brighton Beach).


12. (C) In response to the Ambassador's question about the
status of the Russian accreditation process for a royalty
collecting society benefiting performers and producers,
Voskresensky acknowledged that the GOR needed to make the
tender and accreditation process more transparent. The lack
of an effective process not only harmed international
performers and producers, but also constrained the
development of the Russian music industry. He added that the
business model for the music industry had been undermined by

MOSCOW 00000898 003 OF 003


rapid technological changes, and Russian recording industry
sales had been precipitously dropping by 30% year-on-year
since 2005. In his view, the music industry would have to
fundamentally restructure over the next two years in order to
survive, even with strong IPR protections and enforcement in
the interim.


13. (C) The Ambassador suggested that it was worth
considering whether the U.S.-Russia IPR Working Group should
be in some way connected with the intergovernmental
commission on trade and economic cooperation outlined in the
Obama-Medvedev Joint Statement. Voskresensky said he would
prefer that the IPR Working Group make further progress as a
separate entity before linking it to the commission.

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


14. (C) Voskresensky will likely be a key Russian player not
only in the revitalized IPR Working Group, but also in
framing the broader economic and trade relationship and
fleshing out the economic component of the Obama-Medvedev
Joint Statement. The SPIEF will be a useful opportunity for
senior-level USG officials to engage with all of the key
senior GOR economic officials, to continue pursuing our
bilateral economic and trade agenda, and to build toward the
economic component of this summer's presidential summit.
BEYRLE