VZCZCXRO8322
RR RUEHAG RUEHAST RUEHCHI RUEHDA RUEHDBU RUEHDF RUEHFK RUEHFL RUEHHM
RUEHIK RUEHKSO RUEHKW RUEHLA RUEHLN RUEHLZ RUEHNAG RUEHNP RUEHPB
RUEHPOD RUEHROV RUEHSK RUEHSR RUEHYG
DE RUEHVK #0035/01 0720457
ZNR UUUUU ZZH
R 130457Z MAR 09
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1104
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHVK/AMCONSUL VLADIVOSTOK 1206

UNCLAS SECTION 01 OF 02 VLADIVOSTOK 000035 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PGOV
SUBJECT: RUMORS BEGIN AROUND FUTURE APEC SUMMIT 
 
VLADIVOSTO 00000035  001.2 OF 002 
 
 
¶1.  Summary.  In 2006, federal authorities announced plans to 
hold 2012's Asia-Pacific Economic Cooperation Summit in 
Vladivostok.  Plans were made for several large-scale 
infrastructure improvements to prepare the city for the 
international event, which would bring world attention to 
Vladivostok.  Some APEC construction projects are already 
underway in Vladivostok, but others have been delayed and scaled 
back.  Comments by officials have begun to make city residents 
skeptical that the event will be held in their city. 
 
New Infrastructure, Spotlight Would Benefit City 
--------------------------------------------- --- 
 
¶2.  Three years ago Primorye residents first heard of Moscow's 
intention to hold the 2012 Asia-Pacific Economic Cooperation 
Summit in Vladivostok. Authorities announced plans for several 
large-scale infrastructure projects to prepare the city for the 
international event, which would bring attention to Vladivostok 
as a Russian Far East city attractive to foreign business, and 
help integrate the region with the rest of Asia.  Plans also 
call for building Summit facilities on Russkiy Island, just off 
the coast of Vladivostok, which would be used as a new Federal 
University after official meetings have ended. 
 
Change of Plans?  Rumors Abound 
------------------------------- 
 
¶3.  There has been no overt indication the plans to hold the 
Summit in Vladivostok have changed, but rumors have begun 
circulating among official circles.  The first public call of 
doubt was sounded at the Krasnoyarsk Economic Forum in late 
February, when an unnamed Ministry of Finance Official called 
APEC-2012 a 'senseless event' and reminded colleagues about 
existing world-class facilities in Strelna near St. Petersburg. 
Federal Finance Minister Aleksey Kudrin had been against the 
idea from the beginning, voicing concerns about what he 
euphemistically termed 'inappropriate use of funds' (a reference 
to the notoriously corrupt Far East.) In mid-February Nikolay 
Ashlapov, Head of the RFE Directorate of the Rosstroy Company, 
mentioned a likely reduction of construction projects, 
especially at the future summit/university site.  Rumors are 
strong enough that Mayor Sergei Pushkaryov made a statement in 
the March 13 edition of the 'Vladivostok' newspaper assuring 
that the Summit will be held as planned. 
 
¶4.  The construction of a tunnel to the Golden Horn Bay has been 
halted because developers forgot to put in a drainage system. 
Though not a significant detriment to the project, this is not a 
confidence builder for those funding the project.  There have 
also been hints about freezing some Russkiy Island projects due 
to the economic crisis. Bridge construction to the island is 
facing a shortage of special material for the bridge's 
underwater pylons and unavailability of special construction 
vessels for use in icy waters.  Construction inspectors recently 
discovered 283 violations at the two APEC-related bridge sites, 
77 of which remain unfixed. One of the bridge construction 
developers committed suicide after the inspection, leaving a 
note behind that called attention to the safety violations and 
his doubts that the project could be completed on time and 
within government specifications. 
 
'Optimizing' = 'Reducing' 
------------------------- 
 
¶5.  Of the 284 billion rubles budgeted for APEC in Vladivostok, 
22 billion have been spent. Another 62 billion rubles are to be 
transferred from Moscow later this year.  Rosstroy RFE 
Directorate Head Ashlapov promised an 'optimization' -- not 
'reduction' -- of expenses by at least by 20 percent.  Some 
analysts say that announcing a budget reduction may signal an 
intention to eventually cancel the project. 
 
Not Much Enthusiasm for University Idea 
--------------------------------------- 
 
¶6.  Local education experts have criticized plans for the future 
Federal University for 50,000 students on Russkiy Island. 
Professors of several Vladivostok universities say the 
institution will have trouble attracting regional students, who 
are decreasing in number, and foreign students, who already have 
a wide array of choices among more established institutions. 
Aleksandr Latkin, a Consulate contact and a leading professor of 
economics in Vladivostok, stated that he would not accept an 
offer to work at this university and will not recommend others 
to send their children to study there because of the island's 
remote location and extreme weather conditions. 
 
Comment 
------- 
 
¶7.  Vladivostok is now facing a shortage of everything -- 
 
VLADIVOSTO 00000035  002.2 OF 002 
 
 
professional specialists, laborers, and especially time-- to 
prepare for the Summit.  If authorities can find ways to solve 
the problems, holding the summit here would benefit the city by 
focusing attention on the RFE, helping Russians find partners 
who could unlock some of the region's natural riches, and 
integrating the RFE into the Asian economy.  A possible scenario 
is that Moscow will find an appropriate official excuse to split 
APEC-2012 activities into two parts, with Presidential 
delegations meeting in Strelna near St. Petersburg (as other 
members of APEC including Australia requested in 2007) and 
working committee meetings being held in the RFE. However, there 
are high-level commitments that APEC will be held here and money 
has been invested.  The summit could also be held in Vladivostok 
on board cruise ships if the official facilities are not 
completed.  In any case, whether this is the Russian Far East's 
coming out party or simply a chance to get acquainted, the 
region offers many opportunities for American business and there 
are existing successful partnerships worth highlighting.  The 
question is whether Moscow is ready to get in touch with its 
Pacific side. 
ARMBRUSTER