VZCZCXRO4669
PP RUEHDBU
DE RUEHMO #0861/01 0271633
ZNY CCCCC ZZH
P 271633Z JAN 06
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 9940
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 000861 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/27/2016 
TAGS: PGOV PHUM PREL PINR RS
SUBJECT: NGOS CHILLED BY SPY ALLEGATIONS 
 
Classified By: DCM Daniel A. Russell.  Reasons: 1.4 (B/D). 
 
¶1. (C) SUMMARY:  Five days after Russian television aired 
accusations by the Federal Security Service (FSB) that four 
UK diplomats and a Russian were caught spying and that one of 
the diplomats was directly involved in transferring funds to 
Russian NGOs, the fallout continues.  The State Duma 
denounced the spying activity in a January 24 resolution, and 
a day later President Putin cited it as vindication of the 
new NGO legislation he had signed earlier this month.  A 
January 26 announcement that the Procuracy had renewed tax 
charges in a long-running case against the British Council in 
St. Petersburg may be the latest twist in the story.  A 
number of NGO representatives told us they see the week's 
events as part of a broader attack on independent and above 
all foreign-funded NGOs, following the passage of the new NGO 
legislation.  Even if the present furor over foreign-funded 
NGOs subsides, the pressure on those organizations will 
likely remain high, with drafting of the NGO legislation's 
implementing regulations yet to come.  END SUMMARY. 
. 
ACCUSATIONS SPARK DUMA, PRESIDENTIAL REACTIONS 
--------------------------------------------- - 
 
¶2. (SBU) State-owned Rossiya television channel's January 22 
report of FSB accusations about spying and links to foreign 
funding of NGOs has sparked a week of activity.  The story 
accused four British diplomats at the UK Embassy of spying in 
conjunction with a Russian citizen, who reportedly has been 
arrested.  The report went on to link the story with civil 
society by alleging that at least one of the four Brits was 
directly involved in transferring UK financial assistance to 
Russian NGOs.  Two NGOs, the Moscow Helsinki Group and the 
Eurasia Foundation, were featured in that and other reports. 
(Other organizations listed among the twelve were the 
Institute of Law and Public Policy, the Nizhniy Novgorod 
Committee Against Torture, and the Center for the Development 
of Democracy and Human Rights.)  On January 23, an FSB 
spokesperson also charged that a number of NGOs had been 
created, financed and supported by the U.S. and other NATO 
countries. 
 
¶3. (SBU) The media reported January 25 that FSB Deputy 
Director Yuriy Gorbunov briefed a select group of State Duma 
deputies, meeting in closed session the previous day.  In 
that session, Gorbunov reportedly alleged that one of the 
four diplomats had authorized official UK grants to twelve 
NGOs.  Duma Speaker Boris Gryzlov emerged from that meeting 
expressing indignation about the situation, saying that he 
was concerned not only with the espionage but also with the 
financing of NGOs by a foreign intelligence service.  On 
January 25, the Duma overwhelmingly passed a non-binding 
resolution condemning the affair, including the UK Embassy's 
alleged role.  The Duma reportedly also called for an 
investigation of the twelve organizations named by the FSB, 
and indicated it would raise the issue of British espionage 
before the OSCE.  Speaking to reporters in St. Petersburg 
that same day, Putin cited the incident as justification for 
the new NGO legislation he signed into law earlier this month. 
. 
COLLATERAL DAMAGE TO BRITISH COUNCIL? 
------------------------------------- 
 
¶4. (SBU) The St. Petersburg Procuracy's January 26 
announcement that it had renewed tax charges against the 
British Council came parallel to the spying charges.  The 
Council has faced a long-running investigation over whether 
it must pay taxes on income received from students paying for 
its English-language training.  The Procuracy had reportedly 
dropped the case, but according to the January 26 
announcement, renewed it on December 22.  Despite the 
Procuracy's statement that the case had been renewed a month 
before the spy story broke, observers speculated that it may 
be connected with the flurry of attacks against 
foreign-funding of activities in Russia, in which the British 
government features prominently. 
. 
NGOS DEFIANT BUT CONCERNED 
-------------------------- 
 
¶5. (SBU) Reaction from NGOs, including the Moscow Helsinki 
Group and the New Eurasia Foundation, were swift and defiant. 
 In a January 25 press conference also attended by Public 
Chamber member Genri Reznik, representatives of both those 
organizations publicly acknowledged that the UK, as well as 
other foreign governments, had long provided support, but 
they vehemently rejected any implication of involvement in 
espionage.  Moscow Helsinki Group head Lyudmila Alekseyeva 
announced at the press conference that 85 Russian NGOs had 
signed a statement charging that the FSB and some media 
outlets aimed to undermine the relationship between the 
authorities and civil society in Russia. 
 
MOSCOW 00000861  002 OF 003 
 
 
 
¶6. (C) Our conversations with NGO activists in recent days 
have revealed mixed views about the implications of the 
week's developments.  Valentina Melnikova of Soldiers Mothers 
told us the FSB had long been keeping close tabs on her 
activities and had contacted her on many occasions, including 
to find out about her 2004 conversations with Chechen rebel 
leader Akhmed Zakayev.  FSB officers had also always been 
very interested in her interaction with foreign diplomats. 
She added, however, that her organization had been thoroughly 
investigated by the Procuracy and had never faced charges, 
leading her to believe that she would not be subject to a new 
attack, at least in the short term. 
 
¶7. (C) In a meeting with us shortly before her January 26 
press conference, Alekseyeva expressed determination to 
continue with her work, including pursuing plans for election 
monitoring.  Animated, although looking tired, she described 
the spy accusations as a GOR attempt to legitimize the new 
NGO legislation and to incriminate organizations like hers. 
 
¶8. (C) Human rights activist Svetlana Gannushkina, a member 
of the Presidential Commission on Human Rights and the 
Development of Civil Society Institutions, told us that NGOs 
were under real threat.  In her view, the Public Chamber and 
the spy scandal were part of a broad GOR strategy to pressure 
independent organizations.  Gannushkina said that identifying 
the Moscow Helsinki Group as having alleged involvement in 
the affair was particularly alarming, given that Alekseyeva 
enjoys broad international prominence and had maintained 
reasonably good ties with Russian officials.  In 
Gannushkina's view, the FSB's message was that if Alekseyeva 
was being targeted, no independent activist could feel safe. 
 
¶9. (C) Aleksandr Petrov of Human Rights Watch echoed that 
view.  He told us the creation of the Public Chamber, the 
passage of the NGO law, and now the spy scandal were all 
interconnected.  While some activists believed the spy 
incident was an FSB "warning" to independent civil society, 
Petrov said, he considered the FSB's depiction of NGOs as 
tools of Western intelligence as an "attack." 
. 
MEDIA REACTION 
-------------- 
 
¶10. (U) The Russian print media largely shared the views of 
Gannushkina and Petrov, with most daily newspapers drawing a 
connection between the spy incident and recent changes in NGO 
legislation.  "Vremya Novostey" observed that the FSB had 
been instructed to find arguments to back Putin's hostile 
attitude toward NGOs.  "Noviye Izvetiyi" reported that "the 
FSB had launched a campaign to discredit human rights 
activists."  "Gazeta" likewise categorized the incident as an 
assault on Russian NGOs, arguing that the initial television 
report depicted human rights organizations as the "de facto 
equivalent of British spies" and adding that once the 
"notorious" NGO law comes into force, life will be much 
harder for these organizations.  A respected commentator 
asserted in "Kommersant" that such a "scandalous documentary" 
could not have been aired on state-run television without 
explicit approval from the station's top management and the 
government-controlled media conglomerate that owns the 
station. 
. 
COMMENT 
------- 
 
¶11. (C) The latest FSB expose has sent a chill throughout the 
independent NGO community.  The developments of the past week 
follow on FSB Director Nikolay Patrushev's warning last May 
that some NGOs, working in concert with foreign backers, 
might attempt to undermine the security of the nation.  Putin 
also expressed reservations about the activities of 
foreign-funded NGOs on several occasions over the last year. 
 
¶12. (C) The entire episode comes at a time when the Kremlin 
is under pressure from the international community regarding 
its commitment to civil society development, with the passage 
of the NGO legislation coming under particularly harsh 
criticism (most recently at the Parliamentary Assembly of the 
Council of Europe).  The accusations against the NGOs appear 
intended to bolster the Kremlin's arguments about the need 
for such legislation to control foreign funding of 
organizations that seek to influence Russian domestic 
politics. 
 
¶13. (C) The furor of the past week will eventually subside, 
although the renewed charges against the British Council will 
keep it bubbling for the moment.  However, the atmosphere for 
independent NGOs, especially those receiving foreign funding, 
will have deteriorated.  Implementing regulations for the NGO 
legislation remain to be drafted, and the effect of this 
 
MOSCOW 00000861  003 OF 003 
 
 
whole episode will not be positive. 
BURNS