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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 RIGA 000852 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 10/18/2016 
TAGS: PREL ECON ENRG GE RS LG
SUBJECT: LATVIA/RUSSIA: POSITIVE ATMOSPHERE AT AGREEMENT 
SIGNING 
 
REF: A) RIGA 820 B) HELSINKI 1058 
 
Classified By: Ambassador Catherine Todd Bailey.  Reason: 1.4 (D) 
 
¶1. (C) Summary: The Latvian visit to Moscow October 13 to 
sign two bilateral agreements went well and the GOL was 
encouraged by the positive reception by Econ/trade minister 
Gref.  Absent was the usual Russian complaints on treatment 
of ethnic Russians in Latvia.  The Russians expressed a 
desire to move forward on several other agreements in the 
economic area and the two sides even discussed the 
possibility of exchanging Prime Ministerial visits.  The 
Latvians hope for a short Putin/Merkel/Kalvitis pull aside on 
the margins of the EU informal dinner October 20 and would 
appreciate USG officials noting to German counterparts our 
appreciation for their role in bringing about these 
improvements in Latvian/Russian relations.  End summary. 
 
¶2. (C) Pol/econ chief met October 17 with Peteris Ustubs, PM 
Kalvitis' foreign policy advisor, to discuss the signing of 
the two Latvian/Russian bilateral agreements October 13 in 
Moscow (ref A).  Ustubs accompanied Economics Minister 
Stokenbergs on the trip.  Although Russian Economic/trade 
minister Gref was late for the meeting with Stokenbergs, he 
stayed for a 90 minute conversation ) far more than the 
originally planned hour.  At the top of the meeting, Gref 
made comments to the assembled press on Russia's progress on 
WTO accession issues, which were widely reported by 
international media.  The Latvians were pleased that all the 
articles then noted the signing of the agreements, giving 
them press visibility they otherwise would not have received. 
 
¶3. (C) Following the signing of the agreements on 
establishment of an intergovernmental commission and economic 
cooperation, the two sides discussed next steps.  Ustubs 
thought it might be possible to arrange the first meeting of 
the intergovernmental commission by the end of 2006, but 
cautioned it might slip into 2007.  The main issue here is 
that the Latvians will need to wait until a new government 
takes office in November before it can name its members of 
the commission.  The Latvians would like to move forward on 
the previously agreed treaty on double taxation, but there is 
a backlog of such agreements in the Duma and the Latvians 
sense the Russians don't want to add to list of pending 
agreements.  The Russians remain interested in a agreement on 
pensions that the Latvians are fine with and the two sides 
will meet in Riga October 20 to discuss a draft.  Both 
ministers also expressed a desire to begin negotiations on an 
agreement to protect investments. 
 
¶4. (C) Ustubs said that the tone of the meeting was very 
warm.  Gref conveyed personal greetings to PM Kalvitis from 
PM Fradkov and President Putin and expressed the GOR's thanks 
to the Latvians for the very good visits of Russian Patriarch 
Alexis to Latvia in May and former President Yeltsin in 
August.  Ustubs said that Gref did not make any mention of 
the status of ethnic Russians in Latvia, one of the few times 
the GOR has not raised this issue in bilateral discussions. 
Also absent was any mention of the stalled border treaty. 
Stokenbergs asked Gref for a signal from Moscow to regional 
authorities that it was permissible for them to do business 
with Latvia because the Latvians find that the improved 
relations with the center are not always reflected at more 
local levels.  The Latvians feel that Gref was positive in 
this request. 
 
¶5. (C) Stokenbergs raised the possibility of a visit by PM 
Kalvitis to Moscow, which Gref was positive about.  Gref 
volunteered that it was also possible that Fradkov could 
visit Riga if invited by the Latvians.  Ustubs cautioned that 
a Kalvtis visit would make sense only once there was a new 
package of agreements to be signed and suspected that Fradkov 
visit to Riga would only follow from that. 
 
¶6. (C) Ustubs said there were a few other interesting nuggets 
from the trip.  The Latvians were surprised to learn from the 
Russians about discussions with the European Commission on 
trade issues (nfi) that Ustubs did not think had yet been 
briefed to EU member states.  Gref also noted that required 
upgrades to Russia's domestic energy infrastructure would 
likely require increasing the domestic price of gas to $120 
per 1000 cubic meters.  Gref added that this would not happen 
until after the 2008 Russian presidential elections.  Gref 
was also very upbeat on Russian cooperation with Boeing, 
especially on engineering activities. 
 
¶7. (C) According to Ustubs, the next step is that he hopes 
that German Chancellor Merkel will arrange a short pull aside 
between herself, Putin and Kalvitis at the October 20 
informal EU dinner to which Putin is invited (ref B).  He 
asked that USG officials, in contacts with German chancellery 
officials, express our appreciation for German efforts to 
 
RIGA 00000852  002 OF 002 
 
 
improve Latvian/Russian relations. (ref A) 
 
¶8. (C) Comment: The Latvians may be getting a bit ahead of 
themselves in their desire to begin negotiating new 
agreements even before the ink has dried on these two and 
they are put in to practice.  Nevertheless, they see a window 
of opportunity here that they want to seize.  Their 
expectations on the possibility of reciprocal Prime 
Ministerial visits -- the MFA sees them as 6 - 12 months away 
-- strike us as more measured.  From this mission's 
standpoint, we would appreciate any effort by USG officials 
to express to German officials our understanding of their 
role in recent events and our hope that they can continue to 
play a constructive role in improving Latvian/Russian 
relations. 
BAILEY