VZCZCXRO9112
PP RUEHDBU
DE RUEHMO #2927/01 0821117
ZNY CCCCC ZZH
P 231117Z MAR 06
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 2794
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 002927 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/23/2016 
TAGS: PGOV PHUM ECON PINR RS
SUBJECT: FORMER RUSSIAN PRIME MINISTER SAYS "CORPORATION" 
FEARS LOSS OF CONTROL AFTER PUTIN'S DEPARTURE 
 
REF: 05 MOSCOW 15735 
 
Classified By: Ambassador William J. Burns. Reasons 1.4 (B/D). 
 
¶1.  (C) In a March 21 meeting with the Ambassador, former 
Prime Minister Mikhail Kasyanov: 
 
-- Claimed current GOR and Kremlin officials were mainly 
interested in preserving their interests within the status 
quo, which affected policy decisions and the competition to 
succeed President Putin in 2008; 
 
-- Said meaningful structural reform was unlikely over the 
next two years in order to avoid undermining Putin's strong 
popular support, but the government would continue to 
consolidate industries; 
 
-- Thought there was no need to pursue unification of 
democratic opposition parties since most had limited 
political objectives and did not believe in the centrist 
strategy that Kasyanov envisioned; 
 
-- Predicted that the 2007-08 elections would not be free or 
fair but that most of the violations would occur beforehand 
due to lack of equal media access and problems with 
registration of parties and candidates; and 
 
-- Cautioned the West against "giving up on Russia" and said 
it should continue to stay engaged and speak out against 
undemocratic practices.  END SUMMARY. 
 
¶2.  (U) The Ambassador met March 21 with former Prime 
Minister Mikhail Kasyanov.  Also present were Oleg 
Buklemishev, Kasyanov's chief analyst and foreign policy 
advisor, and Konstantin Merzlikin, former Chief of Staff in 
Kasyanov's cabinet.  Both Buklemishev and Merzlikin are 
employees of MK Analytika, Kasyanov's consulting firm. 
Kasyanov said the firm was not doing well but offered him a 
mechanism for keeping a short list of prospective staff and 
advisors on the payroll. 
. 
---------------------------------- 
ECONOMIC AND SOCIAL REFORM STALLED 
---------------------------------- 
 
¶3.  (C) Kasyanov asserted at the outset that the current 
situation in the country was not good despite the semblance 
of economic normalcy and stability (except for some concern 
over inflation).  In particular, Kasyanov said most senior 
GOR officials and Kremlin advisors, sometimes in association 
with leading businessmen -- the "corporation" -- were mainly 
interested in preserving the status quo and maintaining 
control over important economic sectors.  In addition, many 
were blatantly corrupt and had lost all understanding of 
morality or sense of the common good.  Their actions and 
competition for influence often negatively affected policy 
decisions, as had become increasingly apparent in the 
arguments used by supporters of the two front-runners seeking 
to succeed Putin.  In Kasyanov's view, First Deputy PM 
Dmitriy Medvedev and Deputy PM (and Defense Minister) Sergey 
Ivanov were the only candidates at the moment.  He explained 
that it was too soon (and the situation too complicated) to 
speculate about these or other possible candidates, 
especially since Putin himself had not expressed a clear 
preference. 
 
¶4.  (C) The former PM distinguished between senior officials 
who were not sufficiently versed in running a modern 
government and those who were competent and understood the 
need to address Western concerns.  Kasyanov said many top 
officials genuinely wished to earn the respect of the West 
and to avoid the "totalitarian isolation" that would await 
Russia if they pressed too far in exerting control.  These 
latter officials recognized that there should be more 
balance, as well as a more horizontal sharing of power, if 
the country hoped to maintain positive relations with the 
West.  In this context, Kasyanov avowed that the U.S. role 
was crucial.  He suggested, as an example, that the auction 
of one or more state-controlled TV channels to private 
investors might allay foreign perceptions of dictatorship. 
 
¶5.  (C) As part of the need to maintain control, particularly 
in the run-up to the next election cycle, Kasyanov predicted 
there would be no meaningful structural reform for fear that 
it would undermine Putin's popularity and, implicitly, 
support for current senior officials.  He dismissed the 
national priority projects, emphasizing that there was no 
apparent accountability for the implementation costs involved 
or any real effort to explain the program to citizens.  In 
the meantime, Kasyanov added, the government would continue 
to consolidate industries over the next two years, and some 
 
MOSCOW 00002927  002 OF 003 
 
 
former oligarchs and current top officials could become the 
new "industrialists."  He noted that a new president in 2008 
would thus preside over a completely changed environment than 
the one inherited by Putin.  Kasyanov also suggested that 
Putin would return in some position of influence in the 
future.  He described Putin as a person who "did not like 
wielding power, preferring instead to operate in the gray 
areas." 
. 
-------------------------- 
G-8 TURNING POINT FOR NGOs 
-------------------------- 
 
¶6.  (C) Many NGOs are looking toward the G-8 summit as a 
potential "turning point," in Kasyanov's opinion.  Some are 
angry about the government's campaign to proscribe their 
activities and believe that they can no longer ignore 
politics because "there was nobody left to defend them." 
Some groups fear repression of their activities will get 
underway in earnest after the July summit, but Kasyanov did 
not agree with this view entirely.  He said the most 
aggressive NGOs would probably lose much of their current 
influence, but he was not convinced there would be a 
wholesale crackdown in the future. 
 
¶7.  (C) Nonetheless, Kasyanov said there was real pressure on 
the business community, as well as on the burgeoning middle 
class, to avoid political activities.  The strategy was 
effective, and many members of these societal segments heeded 
government -- and presidential -- warnings.  But Kasyanov 
also noted that some businessmen had confided to him that 
they personally supported the democratic opposition, 
including himself, but believed they could not do so openly 
for fear of official sanctions.  In spite of such obstacles, 
Kasyanov said he would continue to press his political 
campaign.  There should be no "revolution in the streets," 
but he thought people should have the opportunity to exercise 
their rights. 
. 
--------------------------------------------- ---- 
NO NEED FOR UNITING DEMOCRATIC OPPOSITION PARTIES 
--------------------------------------------- ---- 
 
¶8.  (C) Kasyanov said he wanted to stake out a centrist 
position as part of his campaign.  Alluding to the 
government's strategy when he was Prime Minister, Kasyanov 
thought his electoral platform could be structured along the 
same lines -- laying down a solid macroeconomic foundation, 
followed by genuine economic and social reform.  Asked about 
prospects for democratic opposition unity, Kasyanov replied 
that his analysis, including via discussions with NGOs, 
indicated that many people had lost faith in the leaders of 
the traditional parties.  In his view, some of these leaders 
had limited political objectives and were content merely to 
cross the seven percent barrier to enter the Duma; they had 
no burning desire to seek executive power before 2012. 
 
¶9.  (C) Thus, Kasyanov saw no need to pursue unification with 
other democratic forces.  Kasyanov preferred a new party or 
mechanism that would, among other things, devote more 
attention to regional issues.  He said his soundings in the 
provinces suggested that people wanted a less 
confrontational, more centrist position, as well as new 
leaders to replace those who had lost the confidence of 
voters. 
 
¶10.  (C) Kasyanov said there was "absolutely no" chance for a 
merger between Yabloko and the Union of Right Forces (SPS). 
He mentioned that supporters from both parties, along with 
some "social democrats" from among Rodina's ranks, had 
gravitated toward his organization.  Kasyanov implied that he 
would continue to try to pick up the remnants of these 
parties as he pursued an electoral strategy, particularly 
regarding SPS members, who seemed to be more in tune with 
Kasyanov's views than were the "intelligentsia" of Yabloko. 
 
¶11.  (C) Looking ahead to the next national election cycle, 
Kasyanov did not believe that the elections would be free or 
fair.  Actual voting will appear to occur normally; any fraud 
will be more "high tech."  He added, however, that the 
government really did not need to manipulate voting machines 
or vote counts since the real violations will occur 
beforehand in the form of unequal media access during the 
campaign and difficulties in registering parties or 
candidates. 
. 
----------------------- 
DON'T GIVE UP ON RUSSIA 
----------------------- 
 
¶12.  (C) At the end of the meeting, Kasyanov referred to the 
 
MOSCOW 00002927  003 OF 003 
 
 
report by the Council on Foreign Relations, characterizing it 
as a "good analysis of the situation" in Russia.  However, 
there was a danger that both Westerners and Russians might 
use such reports to bolster arguments to undermine engagement 
between our two societies and create an even more divisive 
atmosphere.  In this vein, Kasyanov cautioned that the West 
should not give up on Russia; it should stay engaged and 
speak out against undemocratic practices here. 
. 
------- 
COMMENT 
------- 
 
¶13.  (C) As we have noted in previous reporting, Kasyanov can 
be impressively persuasive, and even his critics acknowledge 
that as Prime Minister he was an effective administrator with 
a defined program of goals and objectives.  However, he will 
face a very (perhaps impossibly) steep road back to political 
power.  Apart from persistent allegations that "Two Percent 
Misha" often had his hand in the official cookie jar and that 
he retains close ties to unpopular "oligarchic" interests, 
his centrist, virtually go-it-alone approach will not 
engender the widespread support that he needs to mount a 
credible campaign for the presidency.  Kasyanov's own 
acknowledgement of formidable official pressure on the 
business community and the middle class -- the two sectors 
most likely to support his program -- implies that he himself 
recognizes the shortcomings of his strategy.  To the extent 
that Kasyanov hopes that a sudden collapse of trust in Putin 
might lead the bureaucracy to shift its support to him, the 
Kremlin's current strategy of hounding him (reftel), while 
improving short-term economic prospects for most of the 
population, also limits Kasyanov's prospects. 
BURNS