BILATERAL COOPERATION A BRIGHT SPOT IN AN ECONOMIC

UNCLAS YEKATERINBURG 000027 DEPARTMENT FOR EUR/RUS E.O. 12958: N/A TAGS: ECON PGOV SCUL RS SUBJECT: BILATERAL COOPERATION A BRIGHT SPOT IN AN ECONOMIC BACKWATER Sensitive but unclassified. Not for internet distribution. ¶1. (SBU) Summary: On a visit to Kurgan Oblast April 27-29, the Consul General (CG) found a striking mix of highly visible areas of U.S. -- Russian bilateral cooperation and durable personal relationships forged by exchange programs. Everyone from the Governor on down praised the long-term sister city relationship between Kurgan and Appleton, WI. CG and Embassy Moscow Law Enforcement Section (LES) chief handed over 4 million rubles worth of equipment to the local Federal Narcotics Control Service (FSKN). Green Cross activists in the village of Shchuchye expressed disappointment in the Russian government's failure to realize promises of social infrastructure development upon completion of the nearby chemical weapons destruction facility (CWDF),to which the U.S. made a major contribution. End Summary. Official Meetings Cordial -------------- ¶2. (SBU) Official meetings with Kurgan Oblast Governor Oleg Alekseyevich Bogomolov and Kurgan Mayor Anatoliy Fedorovich Yelchaninov were cordial. The Governor characterized the economic situation in Kurgan as "difficult but not disastrous," though the region remains dependent on Moscow for budget subsidies. Kurgan is the leading agricultural region in the Urals, and according to media reports, agricultural production remains at 99 percent of last year's level. These same sources, however, report that industrial production is down 16.7 percent in the region and freight carried by rail down 41.6 percent. The automotive industry is struggling and state orders for military armored personnel carriers produced by the Kurganmashzavod enterprise are down. Public and private indebtedness stands as a major obstacle to overcoming economic difficulties. According to media reports, the regional government will be required to seek credit from the center to pay off 300 million rubles of debt. Unemployment, which exceeded 9 percent at the end of 2008, continued to grow through the first quarter of 2009, according to media reports. Meanwhile, the Governor stated publicly that he will not accept the economic crisis as an excuse for poor performance from officials and enterprise directors. ¶3. (SBU) Mayor Yelchaninov, a United Russia party member, expressed confidence that he would be re-elected for a sixth term in October. There are indications, however, of increasing opposition to his continuation in office. His relationship with the governor has been contentious in the past. In early April the governor took part in a conference staged by a movement called "This is Our City" that strongly criticized the mayor's performance. According to media reports, the mayor's critics, including some from within United Russia, found fault with the city's small business development program and decried the mayor's failure to attract investment. Others speakers took on the city's land use policies, especially in the "historic" city center, where numerous striking examples of 19th century provincial Russian architecture are deteriorating and in need of restoration or neighborhood development. "This is Our City" describes itself as a civic action movement, but looks more like a political campaign: several full-size billboards featuring the organization's co-chairman Ivan Belykh were prominently displayed in the downtown area. CG, LES Chief hand over equipment to FSKN -------------- -------------- ¶4. (U) Our visit coincided with the visit of Embassy Moscow LES chief and enabled us to participate in the handover of over 4 million rubles worth of equipment to the Kurgan FSKN. A press conference provided the CG with an opportunity to highlight the connections between Kurgan and the U.S. and enabled the LES chief to explain how the contribution of equipment to FSKN units along the border with Kazakhstan strengthens the ongoing partnership between the U.S. and Russia in combating narcotics trade in the region. Two all-terrain vehicles, computer equipment and surveillance equipment formed an excellent background for media photos of the handover ceremony that appeared in the local internet media. Exchange program alumni active -------------- ¶5. (U) Alumni of Sister Cities and Open World and other U.S. Government exchange programs were eager to tell of their experiences and expressed hope for continuation of these relationships. Governor Bogomolov said that his daughter had spent a year in Appleton and that he had personally hosted the family with whom she stayed. Mayor Yelichanov spoke of his two visits to Appleton in the 90's, though he suggested that interest in the relationship had recently waned somewhat. Alumni members of the city's active Rotary Club, however, were anxious for more contact, and the vice rector of the agricultural academy told of plans to visit the U.S. in June on a Fulbright grant. Shchuchye's fate -------------- ¶6. (SBU) Returning to Yekaterinburg we took a side trip to the village of Shchuchye to visit Galina Vepreva, head of the local branch of the Green Cross organization, the contractor that monitors the welfare and rights of citizens residing near the CWDF. The Russian government is obligated to contribute 10% of the total cost of the facility - to which the U.S. contributed USD 1.39 billion through the Cooperative Threat Reduction program - for the development of the region's social infrastructure. Though Governor Bogomolov spoke of the benefits this project brings to the region and praised the U.S. for its cooperation, the deteriorating village of Shchuchye itself reflected very little of this promise. ¶7. (SBU) Vepreva complained that only 70% of the funds designated for social infrastructure development had been spent and that control over some of the benefits, such as a mobile environmental testing unit that was ceded to the military, had been diverted. Though the village received a new school and a new clinic, it remains poor even by Russian rural standards. According to Vepreva, there is no hot water in homes, no sewage treatment facility, and gas is available only to those who can afford to be connected. ¶8. (SBU) We had to take a detour into town because flooding had rendered the main road impassable. The dirt road into the center was in such poor condition that vehicles were forced to run a slalom course to negotiate the crater-like potholes. The administrative buildings in the center of town were in an advanced state of neglect and the main features of the central park were litter and rusted playground equipment. Elderly people sold clothing and household goods at a small flea-market in the central square. Even the modern residential complex that rises above the ramshackle wooden houses of Shchuchye is something of an illusion: According to Vepreva, workers at the CWDF will be housed in this complex for the life of the facility, but apartments will revert to state ownership when the facility is closed, with no clear provision for the occupants. She commented that she fears mismanagement of the social infrastructure program more than she fears the proximity of the CWDF. ¶9. (SBU) Comment: We found the predominantly agricultural region lacking economic dynamism. Though a beautiful theater had recently been built, there was little new construction in the city. In contrast to other regional capitals in our consular district, Kurgan was dusty, run down and provincial, a city where two popular American Wild West-themed restaurants did not seem particularly out of place. Notable aspects of the region's landscape included broad marshlands remarkable for a lack of bird life and birch and pine forests that had been extensively burned by a wildfire that claimed numerous lives earlier this decade. Along with these features, expanses of fields being readied for cultivation emphasized the influence that climate and topography have on Kurgan's economy and its people. SANDUSKY