VZCZCXRO5817
RR RUEHIK
DE RUEHMO #2697/01 3060440
ZNR UUUUU ZZH
R 020440Z NOV 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5249
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEHFT/AMCONSUL FRANKFURT 4119

UNCLAS SECTION 01 OF 02 MOSCOW 002697 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: KFRD CVIS CPAS CMGT ASEC RU
SUBJECT:  U.S. EMBASSY MOSCOW'S TOURIST VISA VALIDATION STUDY: A 
LOOK AT HOW THE ECONOMIC CRISIS INFLUENCES TRAVEL PATTERNS 
 
MOSCOW 00002697  001.2 OF 002 
 
 
¶1.  SUMMARY:  This is the first installment of a quarterly rolling 
validation study of B1/B2 tourist visas issued by U.S. Embassy 
Moscow covering the period of March 2008 to May 2008.  It is our 
intent to track adverse incident rates of travelers who were issued 
visas over a fairly tumultuous economic and political period in 
Russia (March 2008-present).  This installment will serve as a 
control group for our study as the full effects of the financial 
crisis did not begin to resonate in Russia until September 2008. 
As expected, the adverse incident rate during this timeframe is 
astonishingly low as evidenced by our results below.   END SUMMARY. 
 
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PREMISE:  RussiaQs Financial Crisis Will Affect Travel Patterns 
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¶2.  Consular officers began to wonder in September 2008 when the 
financial crisis hit Russia how the economic downturn would affect 
the way Russians nationals travel to the U.S. and whether they would 
be more prone to remain in illegally.  Since September 2008, 
uncertainty about the banking sector, the value of the ruble, and 
the price of oil have prompted investors to withdraw significant 
amounts of capital from the Russian economy.  As the higher cost of 
credit that ensued, in conjunction with the global downturn in 
demand for a broad range of products, many Russian firms cut 
production, reduced the workweek, decreased salaries, and trimmed 
staff.  As a result, since November 2008 incomes have declined, 
reversing nearly a decade of real double-digit income growth. 
Unemployment and underemployment in Russia increased.  Official 
estimates for actual unemployment range from ten to twelve million 
with significantly higher risk for workers in Russia's single 
company towns and distressed sectors (e.g., automotives, steel).  In 
addition to currently unemployed workers, more than 1 million 
workers are on idle time, reduced work schedules, or administrative 
leave. Russian workers also suffer from falling real incomes and 
delayed salaries, although the government has stepped up activities 
to reduce the amount of wage arrears to workers.  Despite these 
efforts, wage arrears remain at around 8 billion rubles, primarily 
due to the absence of sufficient funds on the part of employers. 
The Ministry of Economic Development predicted real incomes would 
fall 8.3 percent in 2009, although these estimates are being 
revised, as inflation slows due to the overall decline in economic 
activity. 
 
¶3.  At the close of the first half of 2009, the economy appeared to 
have achieved some stability, thanks to a modest, but steady rise in 
the price of oil.  The ruble has stabilized, the federal budget was 
in surplus (through February), and the stock market has been growing 
again.  However, the economic outlook for the year has never been 
more uncertain, as production continues to contract and banks are 
still grappling with large amounts of non-performing loans.  The 
Russian Government forecasts an economic contraction of 6-8 percent 
for the year.  Economists from academia and the think tank community 
estimate a sharp economic contraction of 5-10 percent, whereas 
investment bankers anticipate a recovery by the end of the year with 
potential growth reaching three percent in 2010. 
 
¶4.  The purpose of our quarterly rolling validation study is to 
chart adverse travel incidents according to the economic situation 
in Russia.  It is our contention that the rate of adverse travel 
incidents (overstays, illegal immigration, working illegally in the 
U.S.) will increase throughout the period of the financial crisis in 
Russia.  Although it is difficult to obtain hard evidence of this, 
our contention is based on circumstantial evidence consisting of an 
increased refusal rate for non-immigrant visa applications as well 
as logical deductions (high unemployment in Russia could lead some 
to seek illegal employment abroad).  This rolling validation study 
is meant to test our thesis with hard evidence. 
 
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Methodology 
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¶5.  Part one of the validation study is based on B1/B2 issued during 
the timeframe of March 2008 Q May 2008.  The total population is 
22,437 with a random sample of 1,019 issuances, which allows for a 
+/-3 % margin for error with a 95% confidence interval.  Adverse 
incidents were confirmed through the DHS entry/exit system ADIS as 
well as subsequent telephone interviews when the ADIS record showed 
no departure from the United States.  Upon completion of the study, 
the sample was grouped as follows: 
Q  Good Travel (returned home and no suspicion of fraudulent 
activity while in U.S.; 
Q  Did not travel on visa; 
Q  Change of Status (Pending or Approved); or, 
Q  Adverse incident. 
 
Furthermore, the adverse incident group is divided into two 
subgroups: a) confirmed overstay and b) inconclusive overstay. 
 
¶6.  A confirmed overstay is defined by having an ADIS record with no 
 
MOSCOW 00002697  002.2 OF 002 
 
 
return and not being able to make contact with the subject in Russia 
or have information from a family member indicating that they are 
still in the U.S.  An inconclusive overstay is defined by an ADIS 
record with no return and when we contacted the family/friend of the 
applicant they claim the subject has returned but we were never able 
to get in contact with the subject themselves.  In other words, we 
still have doubts after a thorough investigation. 
 
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Results: Russians Were Excellent Travelers Pre-Crisis 
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¶7.  This first installment of the rolling validation study revealed 
an adverse incidents rate of between 0 and 4 percent.  This period 
of time between March and May 2008 represents an extremely 
prosperous and relatively stable time in Russian society.  The 
results of our study are as follows: 
 
Q  Good Travel:  90.1% +/- 3%.  (918/1019) 
Q  Did not Travel: 8.5% +/-3% (87/1019) 
Q  Change of Status Pending: .4% +/- 3% (4/1019) 
Q  Adverse incidents:  1% +/-3%. 
 
There were 10 possible ADIS overstays out of 1019 from the random 
sample:  Seven of these were confirmed overstays and 3 were 
considered to be inconclusive.  Of the adverse incidents, 70% are 
female and 30% are male. 
 
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Got a visa, now what? 
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¶8.  One surprising aspect of the study was the high rate of visa 
holders that did not travel.  One would assume that if an applicant 
went to the trouble of applying for a 1 or 2 year visa that they 
would actually travel.  Certainly there will always be incidents of 
travel plans falling through, but the surprising number did not 
travel as planned and an overwhelming majority  of these applicants 
had prior travel to the United States.  Such evidence only 
reinforces the idea that this was a time of prosperity for Russians. 
 Despite travel plans listed on their applications, it appears that 
applicants actually applied without a specific trip in mind. 
 
¶9.  These results tend to reflect the extremely low refusal rate for 
the Moscow NIV section during the time period in question.  The 
refusal rate over this time for B1/B2 visas was 4.5%.  By way of 
comparison, the refusal rate has risen to 9.4% for the month of 
September 2009. 
 
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Gender Play a Role, but not Age 
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¶10.  Among the adverse incidents, there is a statistically 
significant trend of female overstays outnumbering male overstays 
(70% to 30%).  One possible explanation is that on the Qvisa line 
we tend to refuse more males (especially working age with 
transferrable skills). 
¶11.  Age appears to be a statistically insignificant factor for 
overstay.  Generally the adverse incidents are either young (not 
very established) or old (perhaps no longer working or have died in 
the US).  There were no overstays in the middle aged category. 
 
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Next Steps 
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¶12.  The next tranche in our rolling validation study will cover the 
timeframe of June 2008 to August 2008.  It is our hypothesis is that 
as the financial crisis takes hold starting in September 2008 to the 
present the adverse incident rate of travelers will also increase. 
This projected trend would also tend to track with the gradually 
increasing refusal rate.  We look forward to testing our hypothesis 
in the months to come. 
 
Beyrle