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C O N F I D E N T I A L STATE 018214 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 02/19/2018 
TAGS: ECON EAIR AMGT FAA RS
SUBJECT: U.S-RUSSIA STATE FLIGHTS DISPUTE: RUSSIA REMAINS 
A NO-FLY ZONE 
 
REF: 2007 MOSCOW 5311 AND PREVIOUS 
 
Classified By: EUR DAS David J. Kramer for reasons 1.4 (b) and (d) 
 
¶1. (C) Summary: On January 25, Russian and American 
delegations, led by Alexander Neradko, Head of the Russian 
Federal Air Navigation Authority (FANA), and PM Senior 
Advisor Ambassador Jackson McDonald, respectively, 
reviewed and reaffirmed their existing positions regarding 
payment of air navigation and related fees to Russia for 
U.S. state flights.  The deadlock with Russia remains, 
with the Russians seeking quantitative and qualitative 
parity with the U.S. on the number and type of flights 
that can be exempted from fees.  The U.S. maintains its 
position of unfettered freedom to designate state 
flights.  Neradko sought further negotiations, but refused 
to allow U.S. state aircraft to fly to and over Russia 
unrestricted while negotiations continue.  Both sides 
maintain their interest in continuing to try to find a 
solution but, in light of the entrenched position of each 
side, the utility of further consultations with FANA is 
doubtful.  For the time being, since diplomatic clearances 
for state flights landing in Russia are conditioned on the 
payment of air navigation fees, official travelers to 
Russia will need to travel by commercial or charter 
flights; MilAir will not be available. 
 
¶2. (SBU) In a cordial, business-like discussion January 
25, Alexander Neradko, Head of the Russian Federal Air 
Navigation Authority (FANA), and Ambassador Jackson 
McDonald, PM Senior Advisor for Security Negotiations and 
Agreements, reviewed the U.S. and Russian positions 
regarding payment of air navigation and related fees to 
Russia for U.S. state flights.  (NOTE: Since November 1, 
2007, Russia has insisted on pre-payment of air navigation 
fees before it will grant diplomatic clearance.  As it is 
longstanding U.S. policy neither to pay nor to charge 
these fees on state flights, no U.S. state flights have 
flown to or over Russia since November 1, 2007.  END 
NOTE).  Neradko was accompanied by FANA, MFA, and Russian 
Embassy staff.  Ambassador McDonald was accompanied by 
representatives from L/PM, PM/ISO, EUR/RUS and OSD. 
 
Sovereign Principle 
------------------- 
 
¶3. (C) Ambassador McDonald explained that the U.S. bases 
its position on the principle of international law that 
one sovereign does not tax another.  By extension, this 
exempts a sovereign's aircraft from payment of taxes and 
fees, as these aircraft are a sovereign instrument 
carrying out a non-commercial, government function.  The 
Russian system is fine for commercial activity, but state 
flights are in a wholly different category.  It is the 
U.S. position that this issue must be handled on a 
state-to-state basis; ICAO rules do not apply to these 
aircraft.  In response to Neradko's question, the U.S. 
delegation reported that the U.S. does not have a law 
prohibiting payment of air navigation fees on its state 
flights.  Since the United States subscribes to 
international law as it is widely observed on this point, 
a domestic law is not necessary. 
 
Russia Abides By International Law...But the U.S. Must Pay 
--------------------------------------------- ------------- 
 
¶4. (C) Neradko stressed that the GOR fully abides by 
international law, but he claimed that international law 
does not apply to these exclusively economic 
transactions.  He argued that FANA seeks payment for 
services rendered; these are not fees or taxes.  Thus it 
is the Russian Federation's position that the U.S. 
argument that "sovereigns should not tax other sovereigns" 
does not apply.  These service charges cover operating 
costs, including aviation security and maintenance of air 
traffic control equipment, for State Company ORVD, the 
service provider.  Neradko maintained that this company 
(despite its name) receives no budget from the GOR and 
derives its income from the collection of charges for 
services rendered.  All aircraft make use of the services 
and safety functions that ORVD supplies, so all aircraft 
must compensate ORVD.  By FANA's calculation, the current 
U.S. "debt" to Russia for services rendered over 
approximately the last 15 years is $2.3 million. 
 
Political Fallout 
----------------- 
 
¶5. (C) Neradko stressed repeatedly that the GOR is not 
seeking this payment based on any political motivation. 
The Russian goal is only to assist ORVD to recoup its 
losses -- since changes to the Russian tax code in 2005, 
ORVD must pay taxes on services charges, whether or not 
payment is actually received.  Russian law does not 
currently provide for any exception to the charges, 
Neradko said, but then reaffirmed that an international 
agreement with the U.S. would trump existing Russian law. 
 
¶6. (C) Ambassador McDonald welcomed Neradko's statement 
that Russia's decision to charge fees is not politically 
motivated.  He noted, however, that there is already 
political fallout from this economic decision: the United 
States' inability to fly to and over Russia is interfering 
with diplomatic work. 
 
The Heart of the Matter: The U.S. Flies Too Many Flights 
--------------------------------------------- ----------- 
 
¶7. (C) Neradko said that the U.S. flies too many flights. 
He singled out the U.S. Air Force (USAF) in particular as 
having "far too many flights," adding that USAF flights 
also make many technical landings in Petropavlovsk 
Kamchatki en route to Korea.  Only something much closer 
to parity with the type and frequency of Russian flights 
could be acceptable.  Russia would like to meet soon at 
the technical level to try and develop a way forward. 
Ambassador McDonald agreed on the need to find some 
mutually acceptable arrangement but noted that talks to 
date had failed to reconcile our fundamentally opposed 
approaches.  These differences notwithstanding, the 
Ambassador offered to meet again if the GOR would remove, 
while negotiations are underway, the current demand for 
pre-payment of air navigation fees that is effectively 
blocking all U.S. state flights to Russia. 
 
¶8. (C) Neradko politely refused, suggesting instead that 
POTUS, the VP, and the Secretaries of State and Defense be 
exempted from fees; all other flights would have to 
pre-pay while negotiations continue. 
 
¶9. (C) Reiterating U.S. policy that there be no 
limitations on the U.S. sovereign right to designate and 
fly state flights, and noting that this is the USG's 
policy worldwide, Ambassador McDonald rejected the Russian 
counter-offer.  No date was agreed for further talks. 
 
¶10. (C) Comment: The meeting was cordial, but the Russian 
position remains firm: as a starting point for 
negotiations the U.S. must first reduce the number and 
type of state flights, and then all remaining flights must 
pay.  Our position against paying navigation and 
overflight fees remains just as firm.  The U.S. now needs 
to communicate to the Russians whether we intend to pursue 
negotiations and, if so, when and on the basis of what 
text (both we and the Russians have tabled several drafts 
in previous years).  Given the diametrically opposed 
starting points, however, there seems little more to 
discuss with FANA.  For the time being, since diplomatic 
clearances are conditioned on the payment of air 
navigation fees, official travelers to Russia will need to 
travel by commercial or charter flights; MilAir will not 
be available. 
RICE