LAVROV AND STOERE TRADE TOUGH WORDS OVER NATO, BUSINESS DISPUTE

C O N F I D E N T I A L OSLO 000216



SIPDIS



E.O. 12958: DECL: 03/31/2019

TAGS: PINR, PREL, EINV, RU, NO

SUBJECT: LAVROV AND STOERE TRADE TOUGH WORDS OVER NATO,

BUSINESS DISPUTE



Classified By: Deputy Chief of Mission, Kevin M. Johnson

for reasons 1.4 b and d



1. (C) Summary: During his March 24-25 Moscow visit FM Stoere

clashed with FM Lavrov over the Telenor-Alfa Bank business

dispute and NATO issues. On the Arctic Council, Svalbard,

Afghanistan, Iran, the Middle East and energy cooperation,

discussions were characterized by the normal positive

atmosphere between the two ministers. Following the

meetings, Norway's Ambassador to Russia briefed Ambassador

Beyrle and the Deputy Director of the Norwegian MFA's Russia

section briefed Embassy Oslo, highlighting the GON's wish for

U.S. attention to the Arctic and the Secretary's

participation in the April 28-29 Arctic Council Ministerial.

The GON is concerned that Russia may drift in a more

aggressive line and believes U.S. presence at the Arctic

Council is necessary to balance this. The GON also seeks a

relaunch of a U.S.-Norway High North dialogue. End Summary



Stoere objects to the Shakedown of Telenor

--------------

2. (C) The MFA's Anne-Kirst Karlsen, Deputy Director of the

Russia section stated that despite their good personal

relationship, Stoere and Lavrov's discussions over the

Telenor-Alfa Bank business dispute were rough and tense. The

GON-owned Telenor (53.9% state ownership) is locked in a

heated dispute with the Alfa Group over control of their

joint company Vimpelcom (Telenor 30% Alfa 40% share),a

Russian mobile phone operator. Telenor has been in the

Russian market since 1992 and in partnership with Alfa from

1998. Trouble between the partners began in 2004 over Alfa's

wish to expand into Ukraine, leading to a series of court

cases which have not resolved the issue. Through

questionable legal maneuvers conducted by a front company,

Alfa won the most recent court case on March 11, resulting in

the seizing of Telenor's shares in Vimpelcom, currently worth

about 1.8 billion dollars (11.8 billion NOK) and their

possible forced sale. Under Russian law these shares could

be sold before the appeal (currently scheduled for May 26) is

heard.



3. (C) Stoere challenged Lavrov to ensure that Telenor's

shares are not sold before their appeal can be heard. He

stressed the damage that Russia's economy would suffer if it

continues to be unpredictable and arbitrary. The abrupt fall

in the Russian stock market on the day the Telenor verdict

was announced was proof of this. Lavrov objected to Stoere's

statement that the Russian economy was unpredictable and

accused Telenor of stopping Russian investment into Ukraine

and other former Soviet states in the interest of limiting

Russian influence over these areas. Lavrov suggested the

TNK-BP model of resolution where BP was forced to cede

control and shares to TNK at less than market values, a

solution which would not be welcome to the GON.



Real and Imagined Tensions over NATO

--------------

4. (C) Pointing to the NATO meeting held in Reykjavik in

January, the NATO Cold Response exercise held in

February-March in Northern Norway, and a Norwegian video

game, Lavrov criticized NATO for unnecessarily increasing

tensions in the Arctic. Demonstrating impressive research by

the Russian Embassy in Oslo, Lavrov objected to the video

game Naval War: Arctic Circle, to be released in 2010 by a

Norwegian company, Turbo Tape Games (which recently received

a substantial grant from the Norwegian Film Institute) and

which depicts Russia as the enemy in a conflict over Arctic

resources. On the NATO Russia Council Lavrov welcomed new

meetings but insisted that they be at the same level as

before the Georgian war. He also asked why there have been

no discussions on human rights violations in Georgia or NATO

shipment of weapons to Georgia.



5. (C) Stoere responded strongly, saying that Norway and NATO

have the right to rehearse military maneuvers and that Lavrov

should look in the mirror before criticizing NATO military

activities in the Arctic, given the substantial increase in

Russian military activities in the area. Stoere also urged

Russian leaders to make an effort to change Russia's image of

the enemy and of the West, particularly in the north where

bilateral cooperation is strong. Stoere also pressed Lavrov

for an explanation on why there has been no substantial

progress in the NATO Russia Council.



Less Tension on High North Arctic / Svalbard Issues

-------------- --------------



6. (C) There was only a brief mention of Svalbard, and

surprisingly Lavrov did not raise any of Russia's standard

issues of principle. The ministers discussed Barents

cooperation issues, including the implementation of visa-free

travel for residents, fishing, the maritime border, and

nuclear safety issues. Although agreeing on the importance

of the Arctic Council, Stoere and Lavrov discussed their

different views of expanding membership, with Russia

objecting to a wider membership, particularly the EU.



Energy and Carbon Capture

--------------

7. (C) In discussions over development of Shtockman Lavrov

maintained that a decision on investment would be taken at

the end of this year. He did not believe the financial

crisis would impact this decision. Lavrov was also very

interested in Stoere's explanation of the GON's carbon

capture and storage program. Lavrov complained to Stoere

that the European Commission had gone behind his back in

making a deal with Ukraine on gas supplies before the

Commission-Russia-Ukraine meeting in Brussels the week of

March 16. The Norwegian MFA feels that the EU-Russia energy

relationship was not good, even claiming that the Russian

purposely created traffic and passport problems to ensure

that Commissioner Ferroro-Waldner missed her flight during a

recent visit to Moscow.



Afghanistan, Iran and the Middle East

--------------

8. (C) Lavrov had just returned from a visit to Afghanistan

and was struck by the bad security situation. He said that

Russia was considering offering training and small arms

assistance to the Afghan police. On Iran, Lavrov welcomed

U.S. engagement and stated that Iran is ready to use its

leverage in the region positively, but needs to know what

they will receive in return. Without prompting, Lavrov

mentioned that if Iran is brought into greater engagement

with the world, Russia would even welcome the Nabucco

pipeline. Lavrov also mentioned Russia's intent to host a

Middle East meeting in Moscow during the summer, using the

Annapolis format.



Will Norway Keep their Russian Rose-Colored Glasses?

-------------- --------------

9. (C) Comment: The GON is growing more concerned about

developments in Russia, although they are careful to

continually stress the positive developments in the bilateral

relationship. The GON continues to (perhaps wishfully)

explain away negative developments in Russia. The latest

example was the dismissal of the long-standing governor in

Murmansk, after accusations of treason for giving away

resources and being too friendly to Scandinavians and

Americans. This was characterized as sad, but not an attack

on the Norwegian-Russian relationship and was not raised by

Stoere in his meetings with Lavrov.



10. (C) It has taken the Telenor business dispute to slightly

sharpen Norway's criticism of Russia. Despite this serious

dispute, the GON wishes to continue good relations with

Russia possibly because it does not see any way to

effectively counter Russian moves without damaging Norwegian

interests. Oil and Energy Minister Riis-Johansen's April

22-24 visit to Russia and PM Stoltenberg's May 19 visit to

Moscow will show if the GON maintains a positive approach to

Russia.



11. (C) Despite the generally rosy outlook, the GON is aware

that the potential for trouble with Russia could be rising.

The decision to directly brief the U.S. Embassy in Moscow on

the Minister's meetings is indicative of the GON wish for the

U.S. to counterbalance increased Russia activity in the

Arctic. Norway and FM Stoere (helped by the Russians

increased activity) have succeeded in raising NATO and U.S.

awareness of the Arctic and Barents region but have been

struggling to determine what steps they would like to see the

U.S. take in the region, beside ratification of the Law of

the Sea. In his April 6 meeting with the Secretary, FM

Stoere will likely ask for increased dialogue with the U.S.

on creative ways to engage in the Arctic and with Russia.

Officials from the MFA are scheduled to visit Washington in

May to speak with the State Department on a possible restart

of the U.S.-Norway High North Dialogue, with a focus on

issues such as climate, shipping, energy, Arctic research and

resource management. End Comment.

WHITNEY