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PP RUEHAST RUEHLN RUEHSK RUEHVK RUEHYG
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P 160628Z DEC 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 1206
INFO RUEHVK/AMCONSUL VLADIVOSTOK 3035
RUEHYG/AMCONSUL YEKATERINBURG 3391
RUEHLN/AMCONSUL ST PETERSBURG 5151
RUEHTA/AMEMBASSY ASTANA 0221
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RUEHDBU/AMEMBASSY DUSHANBE 0116
RUEHKV/AMEMBASSY KYIV 0311
RUEHSK/AMEMBASSY MINSK
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RUEHUL/AMEMBASSY SEOUL 2759
RUEHSI/AMEMBASSY TBILISI 3903
RUEHKO/AMEMBASSY TOKYO 4206
RUEHYE/AMEMBASSY YEREVAN 0522
RUEHBS/USEU BRUSSELS
RUEHAST/USO ALMATY 0011
RUEKJCS/SECDEF WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 03 MOSCOW 003641 
 
SIPDIS 
 
DEPARTMENT FOR ISN/CTR 
 
E.O. 12958: N/A 
TAGS: KNNP PARM TSPL RS
SUBJECT: ISTC GOVERNING BOARD IN MOSCOW APPROVES STATEMENT ON 
TRANSFORMATION, GETS VERBAL ASSURANCE ON TAXATION 
 
¶1. SUMMARY: At the International Science and Technology Center 
(ISTC) Coordinating Committee (CC), Roundtable, and Governing Board 
(GB) meetings held December 9-11, 2008, the GB agreed on a Statement 
of Principles on Transformation and called for Russia to confirm the 
ISTC's tax-exempt status.  The Russian Party orally reaffirmed that 
status and said that MFA would take action in case of violations. 
The GB also jointly funded three institute self-sustainability 
plans, and added funds to one existing plan, at priority scientific 
institutes.  The U.S. Party encouraged expeditious approval of the 
nominee for the position of U.S. Deputy Executive Director.  The 
U.S. Party also held bilateral meetings with senior officials from 
the Russian Academy of Sciences, state nuclear power corporation 
Rosatom, and state nanotechnology corporation Rosnano on the future 
of the ISTC.  The MFA representative at the GB said that the United 
States and Russia would still need to discuss the details of ISTC 
transformation in a bilateral forum.  END SUMMARY. 
 
¶2. A U.S. delegation led by ISN/CTR Director Matthias Mitman and 
including Department, DOE, and Embassy officials attended the ISTC 
Coordinating Committee, Roundtable, and Governing Board meetings in 
Moscow December 9-11, 2008.  U.S. GB member Victor Alessi and GB 
Chairman Ronald Lehman participated in the meetings and some of the 
U.S. delegation's bilateral meetings with Russian officials. 
 
¶3. Transformation: At the roundtable, the U.S. Party proposed 
language on the transformation of the ISTC for the GB Record of 
Decisions.  The Russian Party said that the original mission of 
redirecting former weapons scientists had been accomplished, and a 
consensus was reached on this point.  The Japanese Party 
successfully proposed a change in the text to delete the term 
"counterterrorism," stating that the text's inclusion of "the area 
of nonproliferation" covered such topics as engagement of WMD 
experts to reduce the risk of onward proliferation to a terrorist 
organization or proliferant state, while still permitting projects 
on counterterrorism.  The GB members agreed to the following 
Statement on Transformation Principles to be included in the GB 
Record of Decisions: "The ISTC Governing Board members recognized 
the success of the ISTC's initial mission of providing economic 
support for the scientific community during the transition from the 
former Soviet Union.  Further, the ISTC Governing Board members 
decided to take measures through joint efforts to transform the ISTC 
into a smaller, more efficient organization that achieves our shared 
global goals of cooperation on science and technology, including in 
the area of nonproliferation." 
 
¶4. Taxation: The U.S. and other Parties noted the uncertainty 
created by Russian Government Decree No. 485 about the tax-exempt 
status of ISTC grants.  The parties to the ISTC Agreement - Canada, 
the United States, the European Union, and Japan - reiterated that 
this decree does not apply to the ISTC because the Center is an 
intergovernmental organization.  The Governing Board requested 
clarification in letters to Russian government officials of the 
tax-exempt status of ISTC grants.  The Russian Party (MFA) responded 
that there had been no violations of the tax-exempt status of ISTC 
grants, and that the MFA would take action if any violations 
occurred in the future.  The Russian Party encouraged the ISTC to 
wait for a response from the Russian tax authorities. 
 
¶5. Institute Self-Sustainability: The funding parties agreed to fund 
institute self-sustainability plans at three priority institutes: 
the Institute of Physics and Power Engineering (IPPE) in Obninsk, 
the Institute of Nuclear Physics (INP) in the National Nuclear 
Center in Kazakhstan, and the Research Institute of Pulse Technique 
(NIIIT) in Moscow.  The EU and Canadian Parties also decided to add 
funds to an institute self-sustainability plan at the Khlopin Radium 
Institute (KRI), which was funded at the previous GB meeting. 
 
¶6. U.S. Deputy Executive Director Nomination Approval: The U.S. 
Party urged the Russian Party at both a bilateral meeting with 
Rosatom and at the GB meetings to approve the nomination of Michael 
Einik to the U.S. Deputy Executive Director position at the ISTC. 
 
MOSCOW 00003641  002 OF 003 
 
 
The Russian Party said that it did not anticipate any problems with 
the nomination, which should be approved by January 1, 2009. 
 
¶7. Russian MFA Perspective on Transformation: On the margins of the 
CC meeting, MFA representative Andrey Krutskikh explained that the 
United States and Russia would still need to discuss the details of 
transforming the ISTC in a bilateral forum.  Separately, Russian GB 
member Lev Ryabev of Rosatom encouraged the U.S. to present Russia 
with a paper on its view of how the ISTC should be transformed, and 
he agreed that Russia would do the same. 
 
¶8. Next GB Meeting: The next GB meeting is planned for March 2009 in 
Moscow, and all parties agreed that, per the tradition of holding 
one GB per year in a CIS country, Belarus would host the summer GB 
meeting in Minsk.  A proposal by the Canadian Party to reduce GB 
meetings from three to two times per year was deferred for decision 
at a later date.  In addition, the GB agreed that the Secretariat 
would work with the GB members to determine the appropriate number 
of GB and other meetings per year, as well as funding cycles, for 
2010 and beyond. 
 
Bilateral Meetings 
------------------ 
 
¶9. Bilateral Meeting with the Russian Academy of Sciences (RAS): On 
December 10, the U.S. delegation and the ISTC GB Chairman met with 
Nikolay Laverov, Vice President of RAS, Boris Myasoyedov, Deputy 
Secretary General for Science, and Yuri Shiyan, Head of the 
International Relations Department.  Laverov stressed the importance 
of using the ISTC to preserve Russian science and technology. 
Calling ISTC the best forum for international cooperation, bar none, 
in his twenty years of leading RAS international relations, Laverov 
stated that those who criticize ISTC have not been involved in 
either science or ISTC.  Although there should be no doubt about the 
value of ISTC in the past, the issue is how to keep ISTC afloat. 
RAS, Laverov continued, did not agree with the position of some 
entities that ISTC should stop its work.  Instead, the mission of 
redirecting Russian weapons scientists should be taken out of the 
charter and ISTC's future work should focus on using its substantial 
experience to organize joint research on issues of global 
significance.  RAS has been allocated federal funding to work in 
priority areas that would enable it to work on climate change, 
energy, biomedicine, environment, and natural disasters. 
 
¶10. On the issue of the Russian lead agency for the ISTC, Laverov 
noted that while Rosatom has been designated as the interim lead of 
the Russian Party, his personal opinion is that RAS and the state 
corporation Rostekhnologii should jointly lead as the Russian Party. 
 He explained that Rostekhnologii had funding which he believed 
could be used to fund projects at the ISTC.  (Note:  Rostekhnologii 
was established in 2007 with the mission "to promote the 
development, production, and export of high-technology products." 
It is a conglomerate of more than 100 entities, most of them 
military suppliers.  It is headed by a close associate of Prime 
Minister Putin, Sergei Chemezov, who formerly headed the weapons 
export corporation Rosoboronexport.  Rostekhnologii is not 
associated with nuclear, chemical or biological nonproliferation 
programs.  End Note) 
 
¶11. Bilateral Meeting with Rosatom: On December 10, Russian GB 
member Lev Ryabev echoed RAS Vice President Laverov's comments. 
Russian agencies are unanimous that ISTC has had a positive role in 
fulfilling its mission.  But they are also unanimous that some parts 
of ISTC's charter are out of date.  For example, there is no longer 
a proliferation threat within Russia.  Some political institutions, 
he explained, have a negative reaction to this language in ISTC's 
charter.  Ryabev expressed concern that the ISTC continues to be 
used to address funding parties' proliferation concerns in Russia. 
The U.S. delegates acknowledged that the original mission of 
redirecting Russian former weapons scientists largely has been 
completed.  Ryabev also explained that the Russian interagency is 
 
MOSCOW 00003641  003 OF 003 
 
 
still determining its position on the details of how it would like 
to see the ISTC transformed, and that the process could take another 
three months.  He conceded that changes in ISTC's mission can be 
made by amending the existing founding documents, rather than 
reconstituting them.  Ryabev suggested that the U.S. Party review 
the ISTC Charter line-by-line and note which elements could remain, 
and which should be changed.  He urged that we find areas of mutual 
interest so that the experience gained over the past 15 years is not 
lost. 
 
¶12. Bilateral Meeting with Rosnano: The U.S. delegation and the ISTC 
Acting U.S. Deputy Executive Director Tim Murray met with Sergey 
Mostinsky, Director for International Cooperation at state 
nanotechnology corporation Rosnano, and with Rosnano Senior Advisor 
Vladislav Chernov, to explore possible mechanisms for Rosnano to 
fund commercialization of ISTC nanotechnology projects.  Murray 
noted that ISTC proposals are pre-approved by host states and 
funding parties, and that the proposals receive multilateral 
scientific reviews.  Murray gave an overview of two proposals 
already submitted to Rosnano for funding.  Mostinsky suggested a 
joint workshop with the ISTC to brief Rosnano officials about 
potential opportunities for collaboration, as well as cooperating on 
the planned visit of Rosnano Chairman Anatoliy Chubais to 
Washington, DC, and Texas in May 2009. 
 
BEYRLE