VZCZCXRO2823
PP RUEHDBU RUEHIK RUEHLN RUEHPOD RUEHSK RUEHVK RUEHYG
DE RUEHMO #1199/01 1330449
ZNR UUUUU ZZH
P 130449Z MAY 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 3222
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC

UNCLAS SECTION 01 OF 03 MOSCOW 001199 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON RS
SUBJECT: Russian Experts Give Congressman Rogers a Snapshot of 
Political Debate 
 
Summary 
------- 
¶1.  (SBU) On April 10, Russian scholars told Congressman Rogers that 
there was little popular opposition to the GOR and that any 
challenges to the government would come from elites, rather than the 
general populace.  However, the leadership could use the threat of 
popular dissent to scare factions into supporting government policy. 
 The analysts said the crisis provided the opportunity for the state 
to redefine the membership of the oligarch class, but that there was 
little consensus on economic policy.  All agreed that a real threat 
to the government could be the GOR's inability to arbitrate disputes 
between oligarchs, but that the crisis also opened up strategic 
industries to foreign ownership on a case-by-case basis, a move that 
might improve the Russian business environment.  Saying that we were 
seeing "a different Putin," the analysts cautioned that a leadership 
responsive to the public could be seen as weak.  While the analysts 
welcomed the improvements in U.S.-Russian relations, they also saw 
entrenched Russian interests fighting against it.  They shared that 
in Russian academic circles, there was increasing discussion on 
reducing engagement with the U.S., as Russia had been disappointed 
so often before, although they argued Russia does not want to see a 
precipitous withdrawal of U.S. forces from Afghanistan.  End 
Summary. 
 
¶2.  (SBU) In a lively and wide-ranging April 10 roundtable 
discussion with Congressman Mike Rogers (MI, 8th district) hosted by 
the Ambassador, Boris Makarenko of the Center for Political 
Technologies, Andrey Kortunov of The New Eurasia Foundation, Sam 
Greene of the Carnegie Moscow Center, Ivan Safranchuk of the World 
Security Institute, and Boris Kagarlitsky of the Institute of 
Globalization reflected on the developments in President Medvedev's 
governing style, the affect of the economic crisis on government 
policies and popular support, and the prospects for improved 
U.S.-Russia relations. 
 
People Turning to Gov't, Not Agitating Against 
--------------------------------------------- - 
 
¶3.  (SBU) In responding to Congressman Rogers' question on where 
Medvedev stood in the midst of the economic crisis, Makarenko framed 
the discussion by citing his center's polling results:  while 
Russians' optimism regarding the economy had dropped by fifty 
points, Medvedev, Putin, and the State Duma had only lost five to 
ten points in favorability polls.  He underscored that in the 
economic crisis, the Russian people were turning to the government, 
not agitating against it.  Makarenko hypothesized that incidents of 
popular social unrest were exceptions, a result of instances where 
the government hurt or insulted specific communities or groups. 
 
¶4.  (SBU) Makarenko agreed with the Ambassador that the government 
had changed tacks and now sought to talk to the people, compared to 
the last seven years, saying that the behavioral style needed to 
change.  Greene underscored that this approach came with some risks, 
as the Russian leadership did not have policy instruments and lacked 
structures that it could alter to respond to new policy demands.  He 
also cautioned that the government was making promises on social 
programs and spending but lacked the liquidity to implement them. 
 
Elite Policy Debate on the Economy 
---------------------------------- 
 
¶5.  (SBU) On the economy, all analysts concurred that the leadership 
and elites had no agreement on what to do in the face of the 
economic crisis.  Kagarlitsky offered that Putin's conservative 
approach of maintaining spending levels and using up the reserves 
was winning the policy debate.  Safranchuk disagreed and countered 
that there remained a raging debate on the duration of the crisis -- 
those who believed the crisis will bottom-out this year and those 
who believed Russia would reach bottom next year and take three to 
four more years to fully recover.  Because of this debate and the 
lack of a consensus, he argued that the leadership could not 
determine how to spend the reserves.  Safranchuk believed that 
Finance Minister Kudrin had prevailed in slowing down the spending 
of financial reserves for the moment, but this was not a universally 
accepted policy. 
 
¶6.  (SBU) Makarenko assessed that Putin's priorities for the 
financial reserves were to bolster the financial sector and increase 
social spending.  However, as these reserves dwindled, he argued 
that the competition among elites and oligarchs for limited state 
resources would increase.  Safranchuk agreed, saying that the GOR 
had now changed from looking at preserving the owners of industries 
(e.g., the oligarchs) to preserving the industries they owned.  He 
offered that the crisis offered the opportunity for the state to 
redefine the political landscape by determining the new winners -- 
the members of a new oligarch class. 
 
 
MOSCOW 00001199  002 OF 003 
 
 
Foreign Investment Welcome? 
--------------------------- 
 
¶7.  (SBU) Kortunov asserted that on a case-by-case basis, the GOR 
would permit foreign investors to seize assets of strategic Russian 
companies, something the government had sought to reduce and 
eliminate in times of wealth.  He welcomed greater foreign 
ownership, as it would constrain oligarchs' business practices and 
improve the overall business environment.  Underlining that this 
process would be selective, Kortunov noted the recent dispute 
between Oleg Deripaska (CEO UC Rusal) and Alfa Bank, a dispute that 
Medvedev needed to resolve in favor of Deripaska by offering 
government support to restructure debt and hold off asset seizures. 
 
¶8.  (SBU) Kagarlitsky offered that the crisis had not changed much 
in terms of how the government treated foreign investment in 
strategic industries, with Greene adding that much of it depended on 
the nationality of the investor and the assets or industry. 
 
Political Consequences of Crisis 
-------------------------------- 
 
¶9.  (SBU) In response to Congressman Rogers' question on whether the 
leadership was accountable to the people, Kagarlitsky offered that 
the people only mattered if factions within the bureaucracy could 
not come to an agreement.  Kortunov agreed, but said that there were 
those in the elite who would use the threat of the masses to scare 
reluctant bureaucrats or members of the elite to support government 
policy.  The threat of "people pressure" may eventually compel 
compromise within the government, added Safranchuk. 
 
¶10.  (SBU) Makarenko disagreed, saying that "parties are not 
relevant" in Russian politics and "all those in power would not 
appeal to the public to resolve conflicts."  Kagarlitsky agreed that 
"elections in Russia are formalized" and that public was not engaged 
in debate. 
 
¶11.  (SBU) Safranchuk reemphasized that the leadership had changed 
its tone and was now making more effort to shape the public's 
opinions, but that this approach came with a risk, "being responsive 
to the needs of people is a sign of weakness."  Makarenko concurred 
and noted that "we are seeing a different Putin," someone who is 
engaging, listening to critical remarks, delivering fewer lectures, 
but this comes as a paradox because they want to reduce interaction 
with the public to avoid being perceived as weak. 
 
¶12.  (SBU) However, Safranchuk said that the real test of government 
accountability was not by polling the masses, but by determining the 
satisfaction of big businesses, especially with the government's 
ability to serve as arbiter.  If the GOR fails in resolving 
corporate disputes, it will create greater tension.  The Ambassador 
commented that this need for the executive branch of the government 
to serve as arbiter was necessary due to the weakness of the 
judicial branch within Russia, making the courts the least preferred 
venue for conflict resolution. 
 
U.S.-Russian Relations:  Reset Possible? 
---------------------------------------- 
 
¶13.  (SBU) Kortunov cautioned that improvement in U.S.-Russian 
relations threatened the positions of some in the government, 
including agency budgets.  "Even if Medvedev and Putin subscribed to 
the concept of good relations, there are those in government who 
opposed those views," he said. 
 
¶14.  (SBU) Makarenko labeled most anti-American opinion in Russia as 
reactionary and usually following an event where Russians felt 
slighted.  Makarenko and Safranchuk both agreed that the Russian 
people and elites do not want a new confrontation, with Safranchuk 
assessing that the Russian people have such "low expectations of the 
U.S." that many academics have proposed for disengagement from the 
U.S., or at most a distant and careful partnership. 
 
¶15.  (SBU) Kortunov argued that the U.S. is a "descending 
superpower" and therefore its policies needed to adjust, but that it 
was critical that the U.S. do so "without withdrawing" from the 
international community.  He argued that Russia does not want to see 
a precipitous withdrawal of the U.S. from Afghanistan, but that 
Obama needed to be stronger in countering European voices pushing 
for withdrawal. 
 
¶16.  (SBU) Kortunov also strongly criticized the U.S. for the lost 
opportunities to improve relations following September 11, 2001, 
when Putin commented on the possibility of Russia joining NATO.  He 
also said that the U.S. had undermined international trust because 
it has worked against the UN.  Congressman Rogers pushed back 
pointing out that the UN had been used as a venue to air contrarian 
 
MOSCOW 00001199  003 OF 003 
 
 
views unrelated to issues of the moment and that the resulting 
debate delayed decisions on issues that were important to the U.S. 
 
¶17.  (U) CODEL Rogers has cleared on this message. 
 
BURNS