VZCZCXRO8317
OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHMO #3162/01 1791248
ZNR UUUUU ZZH
O 281248Z JUN 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1693
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 MOSCOW 003162 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/RUS 
TREASURY FOR WILKINSON, LEVEY, GLASER 
DEPT PASS USTR FOR DONNELLY 
DOE FOR HARBERT/EKIMOFF/PISCITELLI 
DOC FOR 4231/IEP/EUR/JBROUGHER 
NSC FOR MCKIBBEN 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ENRG EIND PREL PINR IZ KN IR RS
SUBJECT: RUSSIA: DEPUTY TREASURY SECRETARY KIMMITT'S 
MEETING WITH DFM DENISOV 
 
 
¶1. (U) SENSITIVE BUT UNCLASSIFIED.  NOT FOR INTERNET 
DISTRIBUTION. 
 
¶2. (SBU) SUMMARY:  In a June 22 meeting with Deputy Treasury 
Secretary Kimmitt, Russian Deputy FM Denisov expressed 
 
SIPDIS 
interest in cooperating with Iraq for the long term ("we are 
optimists") but indicated that debt relief is currently tied 
up with other bilateral and economic considerations.  On 
bilateral foreign investment, Denisov suggested the U.S. 
climate might be too restrictive (referring to CFIUS) and 
that Russia was on the right path in terms of establishing 
legal clarity for its own investment regime, even if the pace 
is not as quick as investors would like.  On North Korea, 
Denisov agreed that it was Pyongyang's turn to take "concrete 
steps."  Finally, Denisov expressed some concern over the 
growing mandate of FATF.  End Summary. 
 
¶3. (SBU) During their June 22 meeting, Deputy Treasury 
Secretary Kimmitt, discussing the role of Treasury, mentioned 
 
SIPDIS 
progress in our economic relationship with China and 
suggested the need for patience and principle.  In response, 
DFM Denisov suggested that if the word "China" was replaced 
with "Russia," the situation would be similar.  He explained 
that the U.S. and Russia have similar strategic goals but 
differ on the pace of actions.  He quoted Mao, saying "the 
prospects are bright, but the road is winding."  He accused 
the U.S. of "turning the key too tightly" with regard to 
restrictions on foreign investment (a claim the Deputy 
Secretary successfully refuted with statistics), and hoped 
 
SIPDIS 
that regulations would be made "clearer and more acceptable." 
 
¶4. (SBU) Appreciating the "imperfections" of the foreign 
investment situation in Russia, Denisov said that the system 
still needs time to mature.  He said that sometimes the 
government takes actions that "are not comfortable for us or 
our partners," but noted the trend is positive.  He stressed, 
however, that Russia welcomes U.S. investment and suggested 
that recent large inflows of U.S. and other foreign 
investment into Russia are "just the beginning."  He said 
Russia would continue working to make its actions more 
comprehensible.  He agreed with Deputy Secretary Kimmitt's 
suggestion that Russia include both the security and economic 
communities in the regulatory review process on foreign 
investment.  He also viewed positively the suggestion that 
Russian and American companies gather at some agreed upon 
forum to discuss our respective foreign investment regimes, 
once both countries had approved updated laws. 
 
¶5. (SBU) On Iraqi and Afghan debt relief, Denisov started by 
saying the Russian Finance Ministry has the lead, while the 
Foreign Ministry is more involved with the political aspects 
of the issue.  He said he believes a decision on Afghan debt 
relief is "very close," with about $12 billion of debt to be 
given very favorable HIPC terms.  He said debt relief for 
Iraq is still in process, and is part of a larger set of 
bilateral agenda items and of Russia's broader economic 
goals.  He referred to pressure from the business community, 
especially from Lukoil, which has a pending claim on a field 
from pre-war days.  He said many do not want to see Russia 
"give away" something without protecting its commercial 
interests in Iraq.  He suggested that Russia is dealing with 
the debt issue bilaterally because the U.S. has told Russia 
on other issues that Russia needs to deal with Iraq directly 
as a sovereign nation.  He stressed that Russia "is an 
optimist" on Iraq and wants to protect its long-term 
interests there. 
 
¶6. (SBU) Deputy Secretary Kimmitt pointed to China's recent 
approval of debt relief as a model of disconnecting the debt 
forgiveness issue from other considerations, and suggested 
that conversations on other issues will likely progress more 
quickly once the debt situation is set aside.  He added that 
Moscow, the only Paris Club member yet to approve debt 
relief, needs to show commitment to this issue in order to 
widen its participation in multilateral fora.  Deputy 
Secretary Kimmitt and the Ambassador both stressed the U.S. 
 
SIPDIS 
stands ready to help Russia make necessary contacts with 
Iraqi officials and offered to help secure the attendance of 
 
MOSCOW 00003162  002 OF 002 
 
 
Iraqi Ministers at proposed Intergovernmental Commission 
meetings. 
 
¶7. (SBU) Again expressing optimism about the future of Iraq 
and the availability of opportunities, Denisov reiterated 
Russia's interest in debt forgiveness, but clung to the need 
for some assurances regarding the future of Russia's 
commercial interests in Iraq.  Denisov then spoke for several 
minutes about the historical importance of Iraq to Russia, 
citing the fact that Russian-Arabic dictionaries are actually 
specific to the Iraqi dialect (he knows first hand from his 
stint as Ambassador to Egypt). 
 
¶8. (SBU) In response to Deputy Secretary Kimmitt's expression 
of thanks regarding the transfer of funds to North Korea, 
Denisov praised the U.S. effort as "bold." He said the ball 
is now in North Korea's court and they must allow full access 
for IAEA inspectors. 
 
¶9. (SBU) On Iran, Denisov lamented the lack of "finality" 
related to decisions made at the UNSC, saying the situation 
is too ambiguous.  He agreed with Deputy Secretary's "hopeful 
but skeptical" assessment of the forthcoming meeting between 
EU Foreign Policy Chief Javier Solana and Iranian nuclear 
negotiator Larijani. 
 
¶10. (SBU) Denisov also brought up Russia's concern with the 
widening scope of FATF, referring to the latest efforts to 
extend FATF control to WMD proliferators.  He accepted Deputy 
Secretary Kimmitt's assertion that all illicit financial 
 
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transactions are a form of money laundering (the original 
purview of FATF).  He also agreed that FATF has a role to 
play in building up countries' capabilities to take financial 
actions against entities, if the political decision is made 
to do so.  He cautioned however, that new approaches and 
rules need to be carefully constructed. 
 
¶11. (SBU) Denisov also expressed deep concern about the 
"grave situation" in Gaza and the West Bank, saying "no one 
seems to be able to find the exit." 
 
¶12. (SBU) Referring to President Putin's upcoming trip to the 
U.S., Denisov also put in a plug for Russia's bid to host the 
2012 Winter Olympic games in Sochi.  He said Putin was going 
from the U.S.  to Guatemala to ask for support.  He added 
that regardless of the outcome, the government was prepared 
to invest $12 billion in the Sochi region to turn it into a 
world-class resort destination. 
 
¶13. (U) This cable has been cleared by Deputy Secretary 
Kimmitt. 
BURNS