VZCZCXYZ0006
PP RUEHWEB

DE RUEHMO #5210 3040726
ZNR UUUUU ZZH
P 310726Z OCT 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 4929
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS MOSCOW 005210 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EUR/RUS; EB/IFD/OIA 
NSC DPRICE, WARLICK 
DEPT PASS TO USTR FOR VERONEAU AND HAFFNER 
 
E.O. 12958: N/A 
TAGS: ECON EINV RS
SUBJECT: RUSSIA: CAUTIOUSLY BITING AT THE BIT 
 
¶1. (SBU) Summary:  In recent meetings with Deputy Trade 
Representative Ambassador John Veroneau and NSC Senior 
Director for Russia Mary Warlick, GOR officials expressed 
support in principle for starting Bilateral Investment Treaty 
(BIT) Negotiations.  In her address to the USRBC October 23, 
Trade Minister Nabiullina also expressed support for a BIT. 
End Summary. 
 
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D/USTR Veroneau's Meetings and Nabiullina's Public Support 
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¶2. (SBU) D/USTR Veroneau visited Moscow October 22-24 to give 
the closing address at the U.S. Russia Business Council's 
(USRBC) annual meeting.  In October 22-23 meetings with 
Deputy Finance Minister Sergey Shatalov and Deputy Trade 
Minister Kirill Androsov, Veroneau raised U.S. interest in 
negotiating a BIT with Russia. (N.B. A previous BIT was 
signed in 1993, but never ratified by the Duma.)  Both 
Shatalov and Androsov indicated that a BIT would be 
attractive to investors from both countries and that the 
Russian government was prepared to begin negotiations. 
Shatalov added that the old model BITs were no longer 
applicable since they did not reflect changes in the Russian 
economy over the past decade, e.g., Russia's full currency 
liberalization and lifting of capital controls, and a new 
treaty would need to be negotiated from scratch. 
 
¶3. (SBU) In her October 23 remarks to the USRBC, Minister for 
Economic Development and Trade Elvira Nabiullina expressed 
public support for a BIT.  Nabiullina said the U.S. was one 
of the few major economies with which Russia did not have 
such an agreement and expressed hope that one would be 
completed soon. 
 
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NSC Warlick's Meetings: Yes to Negotiations but WTO First 
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¶4. (SBU) During her October 12-14 visit to Moscow, NSC Senior 
Director for Russia Warlick raised with senior Russian 
officials the possibility of negotiating a Bilateral 
Investment Treaty (BIT). Arkady Dvorkovich, Head of the 
Experts' Department in the Presidential Administration, 
responded that he saw no problem with starting BIT 
negotiations. Dvorkovich said that Russia had many such 
agreements already and was negotiating still more. That said, 
no additional BITs would be concluded until after WTO 
accession was complete.  He added that the primary 
responsibility for BIT negotiations would fall to the 
Minister of Trade and Economic Development (MEDT). 
 
¶5. (SBU) Warlick subsequently met with Max Medvedkov, 
Russia's lead WTO negotiator, at MEDT.  Medvedkov confirmed 
that Russia was prepared to start negotiations on a BIT and 
that his office would have the lead.  He also confirmed that 
it would not be possible to conclude any such agreements 
until WTO accession was complete but noted that this was a 
policy decision rather than a question of resources.  In 
fact, as WTO negotiations had progressed he had been able to 
reassign personnel to other duties, including OECD accession. 
 Medvedkov added that Russia had its own model BIT and that 
reconciling the U.S. and Russian versions could be 
complicated. 
 
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Comment 
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¶6. (SBU) The GOR appears ready to resume negotiations on a 
BIT, though completion of a WTO agreement is paramount for 
the GOR.  We recommend that Washington move to the next step 
and formally propose such a resumption. 
Burns