ANNUAL RUSSIAN AMERICAN PACIFIC PARTNERSHIP (RAPP) SEEKS

UNCLAS SECTION 01 OF 03 VLADIVOSTOK 000114 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PREL PGOV ETRD ECIN EAIR KDEM RS US SUBJECT: ANNUAL RUSSIAN AMERICAN PACIFIC PARTNERSHIP (RAPP) SEEKS CLOSER TIES VLADIVOSTO 00000114 001.3 OF 003 ¶1. (SBU) Summary: The Fourteenth Annual Russian American Pacific Partnership (RAPP),entitled "A Meeting of Shared Interests," took place in Yuzhno-Sakhalinsk September 29-30. USG and GOR officials touted the benefits of such fora and the strengthening of U.S.-Russian ties that they fostered. GOR officials said they welcomed U.S. investment and cooperation in projects such as Sakhalin I and II as well as the Sukhoi Superjet 100, while USG officials pointed to concrete steps taken to "reset" U.S.-Russia relations, such as naval ship visits and cooperation on Afghanistan. Ambassador Beyrle emphasized Russian-American "vital links" and reminded that the 21st Century was to be the Pacific Century. Consul General Ambruster said U.S. companies could earn a lot of money in Russia as long as they made good contacts with local government and hired a good lawyer. There was much discussion about how the U.S.-Russia Bilateral Presidential Commission could help bring the two countries closer together, despite the fact the USG had not set aside fund specifically to finance its operations. Several representatives of RFE regions gave presentations to encourage investment. End Summary. -------------- Governor Praises Cooperation with U.S. -------------- ¶2. (SBU) Governor of Sakhalin Region Aleksandr Khoroshavin opened the September 29 meeting by expressing his support for the network building that RAPP facilitated. He said he was hopeful that the "resetting" of relations, including the establishment of the U.S.-Russia Bilateral Presidential Commission, would help increase the level of trade between the two countries. Khoroshavin said Sakhalin welcomed U.S. companies such as Exxon Mobil, and said such projects as Sakhalin I and II helped bring the U.S. and Russia closer together. During this time of financial crisis, Khoroshavin noted, the U.S. and Russia must guard against protectionism and promote trade. -------------- DFM Ryabkov Points to Wide-Ranging Ties -------------- ¶3. (SBU) DFM Sergey Ryabkov passed along greetings from FM Lavrov, and then said the August 2008 conflict in Georgia had prevented any meaningful dialogue between the U.S. and Russia, but a new foreign policy framework was now coming about. The GOR, he said, wanted to address issues before they became problems. Russia also wanted to promote civil society development. The U.S.-Russia Bilateral Presidential Commission, he said, would help realize these goals. ¶4. (SBU) DFM Ryabkov then talked about the long-standing ties between the U.S. and Russia, going back to Russian settlement of Alaska, and thanked California for its decision to preserve Fort Ross. He said that cooperation in such areas as culture and technology needed a push, not only from national but also from regional governments. DFM Ryabkov also suggested that RAPP could become a forum for legal matters and could help small- and medium-sized companies get to know local government. He argued that the main message from RAPP was that the U.S.-Russia relationship was vast and multi-faceted. -------------- Ambassador Talks of Cooperation -------------- ¶5. (SBU) In a prerecorded statement the Ambassador Beyrle emphasized the "vital links" between the U.S. and Russia. Reminding the audience that the Twenty-First Century is to be the "Pacific Century," he said that the U.S. and Russia will certainly grow closer. He stated that Alaska already enjoyed cooperation with Kamchatka and Chukotka, while Montana and Magadan enjoyed close ties. In addition, Boeing provided assistance to Sukhoi as it built its Superjet 100 aircraft in Komsomolsk-na-Amure. The Ambassador also pushed for more direct flights between the U.S. and the Russian Far East (RFE). To conclude his RAPP video, the Ambassador stated that when the U.S. and Russia work together, they can achieve anything. -------------- -------------- Consul General on the Importance of Having Good Lawyers -------------- -------------- ¶6. (SBU) Vladivostok Consul General Armbruster urged investors exploring opportunities in Russia to be aware of the risks involved and to hire a good lawyer. "Optimists build airplanes, VLADIVOSTO 00000114 002.3 OF 003 pessimists make parachutes," he said, arguing that both were needed. U.S. companies investing in Russia should work to build close, personal relationships with their customers and local governments. Companies that follow this advice tend to do well, although some companies, such as Global Forestry Management, have had serious problems. ¶7. (SBU) CG Armbruster also praised the U.S.-Russia military relationship, pointing specifically to the September 16-18 visit of the Coast Guard's U.S.S. SYCAMORE to Vladivostok and the Symposium on Northeast Asia Security, hosted in Vladivostok September 14-16, as tangible evidence of this. He also praised Sakhalin for hosting RAPP four times, and urged other Russian cities to host the event as well. Finally, Consul General called for less talk and more action. -------------- EUR/RUS Director Says Washington Backs Reset -------------- ¶8. (SBU) EUR/RUS Director Kyle Scott reminded the audience that President Obama had favored "resetting" relations with Russia as early as December 2008. The July summit underscored the reset and emphasized the desire of both sides to work on important issues. The transit of lethal goods to Afghanistan and the port visit of the U.S.S. SYCAMORE were both signs that the reset was working. ¶9. (SBU) Scott continued by saying the U.S.-Russia Bilateral Presidential Commission would like to strengthen trade ties between the two countries. U.S.-Russia trade amounted to only USD 36 billion, making the U.S. Russia's 17th largest market, while Russia was the U.S.'s 28th largest market. Fora such as RAPP also helped strengthen trade ties. He added that some U.S. companies that started in Western Russia have since expanded operations to the RFE. -------------- We Were Optimists Once... -------------- ¶10. (SBU) Deputy Plenipotentiary Representative of the President of Russia in the Far Eastern Federal District Aleksandr Levintal said that after the fall of Communism many in Russia were optimists. The economic crisis in 1998, however, changed that. The end of direct flights to the U.S. isolated the RFE even more. The U.S. and Russia now had to work hard to improve ties, he said. For its part, the GOR showed great interest in the RFE, and both Medvedev and Putin have visited the region often. The RFE, he said, should work to build the forestry, mining, aircraft, ship building, oil, and gas industries, while building up infrastructure, including the Vostochniy Cosmodrome. -------------- ECON Counselor Pushes for More Cooperation -------------- ¶11. (SBU) Embassy Moscow ECON Counselor said that the U.S. wanted a strong, prosperous, and peaceful Russia, and so the USG and GOR were looking for ways to expand economic cooperation and build prosperity. He praised Medvedev's "Go Russia" article and said that Russia indeed needed an "intelligent economy" instead of one based on natural resources such as oil and gas. He said that RAPP, along with other fora such as the Sakhalin Oil and Gas Conference, helped the U.S. and Russia exchange views and develop better products and services. -------------- RAPP Fosters Growth -------------- ¶12. (SBU) RAPP Meeting Co-Chair and Deputy Director of the Ministry of Economic Development's Department of the Americas Dmitriy Sazhin said that RAPP has fostered economic growth in the RFE and the Western U.S. over the past 14 years. The U.S., according to Sazhin was a "leading partner" of Russia. He lamented that Russia still sold mostly raw materials while the U.S. focused on exporting finished goods. ¶13. (SBU) RAPP Meeting Co-Chair and Director of the U.S. Department of Commerce's Office of Russia, Ukraine, and Eurasia Jack Brougher reiterated Commerce Secretary Locke's statement that free trade is invaluable to economic growth. Both the U.S. and Russia pledged to avoid protectionism during the financial crisis, and this has helped, he said. Fora such RAPP, he said, strengthened economic ties between the U.S. and Russia. He said VLADIVOSTO 00000114 003.3 OF 003 the U.S. had invested USD 20 billion in Russia, while Russia invested USD 5 billion in the United States. The U.S., he added, would like to see Russia more integrated into the world economy by joining such organizations as the World Trade Organization. This would in turn boost economic growth in Russia. He also pushed for better protection of intellectual property rights (IPR),as IPR violations cost the U.S. about USD 200-250 billion each year. -------------- -------------- The U.S.-Russia Bilateral Presidential Commission -------------- -------------- ¶14. (SBU) In a panel discussion on the U.S.-Russia Bilateral Presidential Commission, participants argued that the Commission's working groups must discuss issues relevant to Russia's regions and U.S. states. This would help businesses grow and spur investment in these areas, it was argued. The Commission's working groups should also report on the progress of their work regularly if they are to be effective. EUR/RUS Director Scott mentioned, however, that thus far the USG had not allocated any additional resources for the work of the Commission. ¶15. (SBU) Panel members urged the U.S. and Russia to encourage youth exchanges and study abroad programs so citizens of both countries could gain exposure to each other's cultures early. They also said the U.S. and Russia should have joint celebrations for the sixty-fifth anniversary of the end of World War II, and warned against "distorting history" for political purposes. -------------- Russian Regions Seek Investment -------------- ¶16. (SBU) Kamchatka Region's Minister of Investment and Entrepreneurship Development Oksana Gerasimova said 40 percent of all tourists to Kamchatka come from the United States. She also praised the region's natural resources and beauty, and said sportsmen, such as hunters, were welcome. ¶17. (SBU) Magadan Region's Head of Representation to the Far Eastern Federal District Leonid Ivanyuta argued that "resetting" the U.S.-Russia relationship was impossible without including Russia's regions. The U.S., he said, was Magadan's second most important trading partner, accounting for USD 257 million in trade. Magadan imported a lot of agricultural machinery and exported a lot of metal, he said. Ivanyuta also extolled the virtues of Magadan's special economic zone and customs and tax zones. ¶18. (SBU) Ivanyuta talked up Magadan's natural resources such as gold, silver, iron ore, and semiprecious gems. Mining, fisheries, explosives, and power generation, including a 500 megawatt power plant planned to come online in 2012, were also important to the region, he said. ¶19. (SBU) Khabarovsk Region's Deputy Minister of Industry, Transportation, and Foreign Relations Sergey Zrazhevskiy said that his region had the lowest investment risk in the RFE in ¶2008. Foreign trade, however, accounted for only 3 percent of the region's income, he said. He pointed out, however, that Boeing assisted Sukhoi in manufacturing the Superjet 100 in Komsomolsk-na-Amure, and the region would welcome similar joint projects and investment. ARMBRUSTER