VZCZCXRO7156
RR RUEHLN RUEHPOD RUEHYG
DE RUEHVK #0129/01 3270348
ZNR UUUUU ZZH
R 220348Z NOV 08
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1047
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHVK/AMCONSUL VLADIVOSTOK 1144

UNCLAS SECTION 01 OF 03 VLADIVOSTOK 000129 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON SENV RS
SUBJECT: APEC 2012, U.S. BUSINESSES, CULTURAL TIES FOCAL POINTS OF 
AMBASSADOR'S VISIT TO RFE 
 
VLADIVOSTO 00000129  001.2 OF 003 
 
 
Summary 
------- 
 
¶1. (U)  There  were many highlights of Amb. Beyrle's November 
16-19 trip to the Russian Far East -- a hike through leopard 
country, jazz concert, trip to the port of Vladivostok and a 
youth protest to name a few -- but if there was an underlying 
theme to the trip it was anticipation.  The Ambassador's visit 
to Vladivostok and Yuzhno-Sakhalinsk displayed anticipation for 
the upcoming Asian Pacific Economic Cooperation (APEC) summit in 
Vladivostok; anticipation for new infrastructure projects 
including new roads and bridges; anticipation and some 
apprehension regarding the incoming Obama administration; and 
anticipation of better economic conditions and renewed growth in 
the Russian Far East.  In all, the multifaceted trip 
demonstrated the resilience of the US-Russia relationship in the 
region and the reservoir of goodwill created by nearly a 
generation now of steady USG engagement.  Other major themes 
included international cooperation, the environment, financial 
crisis, and cultural diplomacy.  End summary. 
 
High Hopes for the APEC Summit 
------------------------------ 
 
¶2. (U) Discussions with various interlocutors showed a region 
that is beginning to see the effects of the financial crisis, 
but is optimistic about the APEC Summit and open to more 
cooperation with the United States.  Primorye Kray Duma Chairman 
Viktor Gorchakov expressed guarded optimism about the upcoming 
2012 APEC Summit to be held in Vladivostok.  In an unusually 
candid assessment of the project, Gorchakov told the Ambassador 
that although he has hopes that Summit-related infrastructure 
improvements will have a lasting positive effect on the 
residents of Primorye, he acknowledged that significant 
reductions to the construction plans are likely.  Contacts at a 
reception held later at the CGR, for example, confirmed that a 
30-km long causeway project has already been cancelled.  The 
list of potential projects is long, from atomic energy plants, 
to new hotels, casinos, and universities.  Many leaders see the 
APEC summit as a chance to remake Vladivostok into a leading 
city in the Pacific region. 
 
¶3. (U) When asked about the attitude of residents in relation to 
the projects, Gorchakov candidly replied "it depends on where 
they live." He noted that while most Vladivostok residents agree 
that the projects, if completed, will be beneficial to the city, 
rural Primorye residents feel ignored, and residents on Russkiy 
Island are worried that the 80,000 ruble per square foot 
compensation for their dwellings will be insufficient for 
relocating if plans to relocate a university on the island are 
realized.  Gorchakov indicated that airport renovation designs 
will be ready by the beginning of next year.  Some projects 
include a "plan B."  The administration is working on an 
alternative construction plan for Russkiy Island, for example, 
if foreign investors prove unwilling or unable to invest. 
 
¶4. (U) Vladivostok Mayor Igor Pushkaryov also discussed 
APEC-related plans with the Ambassador, expressing hope that 
federal funding and foreign investment will have a lasting 
impact on the city.  He noted that because of a lack of 
experienced Russian companies, the Transport Ministry is seeking 
foreign contractors, especially from Korea, Japan, and China. 
So far, US firms have not played a major role in development 
plans, but the city has long talked about a desire for new 
hotels and officials have specifically mentioned Marriott as a 
possibility. Marriott would join firms like Baskin and Robbins, 
Caterpillar, Exxon, and American fruit exporters that have 
already found considerable success in the Russian Far East. 
 
Cooperation and Integration 
--------------------------- 
 
¶5. (U) The Russian Far East is fertile ground for increased 
regional cooperation and integration, and political and business 
leaders expressed enthusiasm for promoting closer ties with the 
US.  Mayor Pushkaryov requested U.S. participation in 
celebrating Vladivostok's 150th anniversary in 2010, and in 
marking next year the 35th anniversary of President Ford's visit 
to the city.  He also expressed interest in the Ambassador's 
offer to assist in refreshing contacts with sister cities 
Juneau, Tacoma, and San Diego. 
 
¶6. (U) Sakhalin Acting Governor Sergey Vilyamov expressed warm 
support for "the many Americans that make Sakhalin their second 
home," noting their importance to the continued economic growth 
of the area.  The number of Americans living in Sakhalin has 
decreased from a high of about 1,000 as the oil companies 
transition from exploration and development to production, but 
there is still a strong American presence.  The Ambassador had 
 
VLADIVOSTO 00000129  002.2 OF 003 
 
 
two give-and-take sessions with expats on Sakhalin.  The 
Americans outlined the challenges of working in the Far East, 
but overall they are succeeding even in this tough economic 
climate and they said they were very pleased with the quality of 
the young workforce on the island, since most of the American 
managers depend heavily on local Russian staff. 
 
¶7. (U) Several interlocutors mentioned the benefit of new direct 
seasonal flights to Alaska, and expressed hope for further 
flights from the Russian Far East to the US West Coast.  Mayor 
Pushkaryov noted that many Vladivostok natives live in Seattle, 
and that a direct flight there would be beneficial to developing 
ties.  VladAvia President Saybel also expressed hopes of 
establishing a permanent link to Seattle, though he pointed out 
that high fees and undesirable landing times there may hinder 
profitability.  He also mentioned plans to increase the number 
of seasonal direct flights to Anchorage, though the 13 Alaska 
flights earlier this year proved to be less profitable than 
expected.  The Director of Sakhalin Air Transport also expressed 
hopes to initiate direct flights to both destinations, but 
stated that the company's lack of Transportation Safety 
Administration certification hinders those plans.  [Note:  The 
Consulate is working with aviation officials to determine next 
steps.  End note.] 
 
US NAVY SHIP VISITS 
------------------- 
 
¶8. (SBU) Duma Chairman Gorchakov expressed strong interest in 
resuming ship visits to Vladivostok and acknowledged the various 
benefits of the visits.  U.S. Navy port calls to Vladivostok 
have become something of a tradition, especially on Victory Day 
in May, when the U.S. and Russia have an opportunity to pay 
tribute to the joint sacrifice of our two nations in defeating 
fascism and to highlight the successful U.S.-Russian cooperation 
through the Lend-Lease program that was instrumental in 
providing the Soviets with the guns and butter needed in the war 
effort.  The U.S. Navy port visits are vital to the Consulate's 
public diplomacy outreach since the sailors visit orphanages and 
veteran's homes and they host joint Consulate-Navy 
representational events onboard ship.  Neither US Navy nor Coast 
Guard port visits have occurred since the Russian incursion into 
Georgia last summer. 
 
Financial Crisis 
---------------- 
 
¶9. (U) Ambassador Beyrle discussed the economic situation with 
local businesses, including Vladivostok Airlines, Primorye 
Transport Company (PTK), Vladivostok Port, FESCO Shipping, 
ExxonMobil, and various smaller businesses on Sakhalin. 
Gorchakov said that the crisis has affected Primorye's economy, 
especially the mining and construction industries.  He used the 
example of DalPoliMetal, which laid off more than 2,100 workers 
and is stockpiling extracted ore in warehouses because 
production costs outweigh world prices.  Construction is largely 
dependent on loans, which are harder to come by now that local 
banks have tightened lending terms.  He assured the Ambassador 
that in general, Primorye banks are in good condition, as most 
banks in the region are branches of large Moscow banks. 
 
¶10. (U) VladAvia's president, Vladimir Saybel, was more 
concerned about fuel prices than the global financial crisis, 
but he did say that international tourism could fall if the 
crisis deepens.  PTK president Vitaliy Subbotin said that 
willing buyers for the company's American made Freightliner 
trucks are facing increased difficulty procuring financing. 
Sakhalin business leaders pointed out that more and more 
contractors and suppliers require payment upfront before 
delivery of goods or services. 
 
¶11. (U) The Ambassador toured the port of Vladivostok where 
FESCO Managing Director Vladimir Korchanov stated that thanks to 
long-term shipping contracts, his company has seen very little 
drop in revenue or volume so far.  However, as many of those 
contracts expire next year, he expects downward pressure on 
fees, and a 15 to 30 percent decrease in volume next year.  Most 
of the loss will be a result of a decrease in automobile imports 
-- container traffic, he says, should remain more or less 
stable.  The credit crunch has forced FESCO to cancel ship 
building contracts and curtail expansion plans. 
 
Environment 
----------- 
 
¶12. (U) Ambassador Beyrle met with Yuriy Darman, the director of 
the World Wildlife Fund's Amur Branch at his 'Land of the 
Leopard' Visitor Center in Barabash, Khasan Region and discussed 
wildlife conservation programs in the Russian Far East.  The 
 
VLADIVOSTO 00000129  003.2 OF 003 
 
 
center and its nature pathway are located in the heart of 
leopard country, and were established to educate local residents 
about the endangered Far Eastern leopard, whose population has 
dwindled to about thirty.  Darman expressed confidence that the 
center will receive USD 100,000 of support pledged by the WWF, 
though he doubted the federal government will come through with 
its promised funding. 
 
¶13. (U) Mayor Pushkaryov mentioned several plans to improve his 
city's dire ecological situation, including the construction of 
Vladivostok's first water treatment and sewage processing plant. 
 The city also has plans to construct a solid waste processing 
facility and co-generation plant which, Pushkaryov said, will 
use American equipment that has already been delivered to 
Vladivostok. 
 
Cultural Events 
--------------- 
 
¶14. (U) Ambassador Beyrle participated in a number of public 
affairs outreach events that attracted significant participation 
and showed that Russians in the RFE are enthusiastic and open to 
increased cultural exchange.  During his visit to the 
PAS-supported exhibit "Eleanor Pray: [American] Letters from 
Vladivostok, 1894-1930", the exhibit organizer noted that the 
project highlights close Russian-American ties dating back over 
one hundred years, and thanked the Mission for its support of a 
number of other projects that highlight common history and 
shared values. 
 
¶15. (U) The Ambassador attended a PAS-funded performance by jazz 
drummer Alvin Atkinson.  Russian jazz musicians who performed at 
the three-day festival met with American counterparts and 
expressed their gratitude to the Ambassador for the opportunity 
to meet American musicians face to face. 
 
¶16. (U) The Ambassador's lecture at the Vladivostok University 
of Economics and Service's International Education Week was 
followed by a lively Q&A where students touched a range of 
topics, including exchange opportunities, the Russian-American 
relationship, and foreign policy issues.  University President 
Gennady Lazarev -- also a Deputy of the Primorye Legislative 
Committee -- expressed his strong desire and readiness to 
continue educational and sports diplomacy exchanges.  The 
Ambassador attended a performance of an American musical 
performed by students of the Vladivostok Fine Arts Academy which 
was staged by an American choreographer and costume designer. 
The performance was part of a Department-funded "Cultural Envoy" 
program, and made a great impact on the Russian faculty and 
students involved. 
 
Media 
----- 
 
¶17. (U) The Ambassador's visit attracted significant -- and 
positive -- press coverage in about forty print, online, and 
broadcast outlets.  PAS arranged a twenty-minute interview on 
the Kray-owned TV station and a front page interview with the 
main Vladivostok daily.  The regional affiliate of the Rossiya 
TV channel reported on the Ambassador's presentation at the 
International Education Week and various Sakhalin media attended 
the Ambassador's lecture at Sakhalin State University.  His 
interview with an independent Sakhalin TV station was broadcast 
several times. 
 
¶18. (U) Many of the issues the Ambassador raised during the 
visit can be advanced at this summer's Russian-American Pacific 
Partnership (RAPP) meeting.  The RAPP meeting will likely be 
held on Sakhalin and it is an excellent venue for promoting 
American business, reducing bureaucracy, and finding ways for 
the U.S. and Russia to come closer to realizing the vast 
potential that exists in this region.  The Consulate appreciates 
the Ambassador taking on some 25 events in just a few days and 
expects that the visit will continue to pay dividends as we work 
on the issues raised in this trip. 
ARMBRUSTER