VZCZCXRO5876
RR RUEHDBU RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #3507/01 1991055
ZNR UUUUU ZZH
R 181055Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2155
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 4315
RUEHYG/AMCONSUL YEKATERINBURG 2568
RUEHVK/AMCONSUL VLADIVOSTOK 2263

UNCLAS SECTION 01 OF 02 MOSCOW 003507 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USAID FOR DAA/EE D.LUTEN, A.BREWER, EE/DCHA D.ATWOOD, GC/EE 
M.FITTIPALDI 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PINR EAID RS
SUBJECT: FOREIGN GRANTS BILL AND USG PROGRAMS 
 
 
MOSCOW 00003507  001.2 OF 002 
 
 
¶1. (SBU) Summary:  Some of our official contacts - most 
notably a handful of judges - are concerned that their 
participation in USG-funded programs could contravene Russian 
law.  Many USG-financed technical assistance programs, from 
those of USAID and IMET to Open World and INL, provide funds 
and per diem to Russian officials for in-country and foreign 
travel.  A series of amendments, promulgated in March, 
prohibit a broad range of officials from receiving financing 
exclusively from foreign sources for "pedagogical, 
scientific, or creative activities."  The prohibition does 
not apply if there is an international agreement covering the 
activity or if a Russian source is participating in 
financing. 
 
¶2. (SBU) The intent of the law was to prohibit outside income 
and, to date, only one USG-funded program (a St. Petersburg 
International Visitor Program in which Interior Ministry 
officials refused to participate) has been directly affected 
by this law, and we continue to assert that existing 
bilateral agreements - from the 1992 bilateral agreement on 
technical assistance to the 2006 MOU on university 
partnerships - provide the necessary legal cover for 
participants, despite the fact that these agreements are not 
international agreements ratified by the Russian legislature. 
 End Summary. 
 
--------------- 
The Legislation 
--------------- 
 
¶3. (U) GOR laws generally prohibit GOR officials from earning 
income for activities considered outside of their official 
duties.  There are certain exceptions to this, including for 
those deemed "pedagogical, scientific, or creative 
activities."  The law promulgated in March is a series of 
amendments to existing legislation that prohibits GOR 
officials from being exclusively financed by foreign sources 
for such "pedagogical, scientific, or creative activities," 
except as otherwise provided by RF legislation, RF 
international agreements, or bilateral agreements between 
federal bodies of power and foreign government bodies or 
international or foreign organizations.  Similarly, GOR 
officials are prohibited from serving in governing, 
supervisory, or fiduciary capacities for foreign NGOs. 
 
¶4. (U) The legislation applies to a broad range of government 
officials.  Insofar as legislative intent goes, Duma Speaker 
Boris Gryzlov said that "if a Russian citizen gives money to 
a government employee, it's a bribe; if a foreigner does, 
it's a grant."  While grants, honoraria, etc. will be 
forbidden, further ramifications of this legislation are 
unclear.  Some GOR officials are concerned, however, that the 
airfare, lodging, and other expenses they receive might be 
considered "outside income" under the law. 
 
----------- 
The Effects 
----------- 
 
¶5. (SBU) The legislation affects eighteen other pieces of 
legislation covering various branches of 
government.  More confusing, each piece of legislation is 
amended in subtly different ways, resulting in a lack of 
uniformity.  Even existing legislation prohibits many 
government officials from earning a "second salary," the 
definition of which could be interpreted broadly enough to 
include USG programs. 
 
¶6. (SBU) The law has led to concern among some of our 
official contacts in the judiciary and law enforcement. 
Participants in a USAID "judicial exchange" program with the 
Arbitration Court cited the law and expressed concern that 
the program would contravene it, although an internal court 
resolution seems to have paved the way for future programs to 
go forward.  The only USG program affected to date has been 
an International Visitor Program (IVP) in St. Petersburg for 
law enforcement officials.  St. Petersburg was unable to find 
participants for a "hate crime" IVP when the Ministry of the 
Interior, citing this law, refused to cooperate with the NGO 
with which the Consulate was working.  Other USG-funded 
programs, including those run by NDI and IRI, have been 
unaffected. 
 
¶7. (SBU) The experience of European-funded technical 
assistance programs has mirrored our own.  Although initially 
 
MOSCOW 00003507  002.2 OF 002 
 
 
concerned that their heavily GOR-weighted TACIS programs 
would be seriously and negatively affected, our European 
colleagues have not seen an impact.  It was only in their 
judicial programs, much like USAID, that there was initial 
reluctance to participate, which has now been overcome. 
 
¶8. (SBU) The Embassy continues to assert that the 1992 
bilateral agreement on technical assistance and the many 
bilateral Memoranda of Understanding (MOU) between agencies 
provide the necessary legal cover under the amendments' 
exception clause.  The annual INL and IMET workplans and the 
2006 MOU on university partnerships are but a few examples. 
We note, however, that none of these agreements would qualify 
as an international agreement ratified by the Russian 
legislature. 
 
¶9. (SBU) United Russia Duma Deputy Aleksandr Moskalets 
expressed surprise that the Embassy was concerned about the 
law, saying that it should have minimal effect on USG 
programs.  His assumption tracked with ours: that the various 
Memoranda of Understanding between the Embassy and the GOR 
fit into the exception clause.  Moskalets cautioned, however, 
that such memoranda would only apply to federal level 
agreements. 
 
------- 
Comment 
------- 
 
¶10. (SBU) The intent of the law was likely to prevent 
"opposition" political actors from being financed by 
foreigners.  The practical effects of this law on USG 
programs have been nil, with the St. Petersburg exception 
cited above.  The U.S. Mission has conducted an internal 
assessment and concluded, like our EU colleagues, that we 
will continue to maintain that we have sufficient legal cover 
to conduct our programs and to deal with questions and 
concerns on a case-by-case basis.  At the same time, we will 
continue efforts to brief the Russian Government about our 
programs in an open and transparent manner. 
 
BURNS