VZCZCXRO0027
RR RUEHAG RUEHAST RUEHDF RUEHDH RUEHHM RUEHIK RUEHLN RUEHLZ RUEHMA
RUEHPB RUEHPOD RUEHROV RUEHSL RUEHSR RUEHTM RUEHTRO
DE RUEHBS #0887 1771448
ZNR UUUUU ZZH
R 261448Z JUN 09
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHKV/AMEMBASSY KYIV
RUEHMO/AMEMBASSY MOSCOW

UNCLAS BRUSSELS 000887 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EPET EUN
SUBJECT: ENERGY CHARTER SECRETARIAT CAUTIOUSLY OPTIMISTIC 
ON RUSSIAN PROPOSALS 
 
Sensitive but Unclassified - not for Internet distribution. 
 
¶1. (SBU) Summary.  Ambassador Andre Mernier, Secretary 
General of the Energy Charter Secretariat, told Econ Officers 
June 22 that he is cautiously optimistic Russia will be 
willing to work to add to the existing Energy Charter Treaty 
(ECT) to address their concerns over gas transit, rather than 
withdrawing from the ECT as he had originally feared.  Moscow 
had threatened to "withdraw their signature" from the ECT to 
negotiate a new multilateral energy treaty from scratch.  The 
Russians appear to have reconsidered this position and now 
appear willing to examine the possibility of expanding the 
ECT to include "crisis management" provisions.  Mernier said 
that an Ad hoc Working Group will meet September 22 to "try 
to put some flesh on the bones the Russians have thrown us." 
Mernier agreed Moscow is seriously concerned about the Yukos 
case; he expects UNCITRAL in The Hague to rule shortly on the 
company's claim that Russia's $30 billion-plus tax penalty 
was an illegal expropriation under ECT's "provisional 
application."  End Summary. 
 
¶2. (SBU) On June 23 EMinCouns met with Ambassador Andre 
Mernier, Secretary General of the Energy Charter Secretariat, 
to discuss the recent Russian proposals for a new 
international energy treaty.  Mernier said that the 
Secretariat welcomes the Russian suggestions as negotiating 
points to modernize the Energy Charter Treaty (ECT), but is 
not willing to start from scratch to negotiate a new treaty 
based on the Russian suggestions.  The Russians argue that 
the ECT is insufficient because it does not cover gas transit 
and does not provide mechanisms for crisis management. 
 
¶3. (SBU) Mernier said that the Secretariat is willing to look 
at "modernizing" the ECT to cover these issues.  He said this 
is a reflection of the Secretariat's longstanding goal of 
getting ratification by the Russians.  He also acknowledged 
that the world has changed in the 20 some odd years since the 
ECT was negotiated (principally between Western Europe and 
the then Soviet Union).  At the time the treaty was 
negotiated, gas transit was not the issue for the parties 
that it is today. 
 
¶4. (SBU) Mernier is cautiously optimistic Russia will be 
willing to work to add to the existing Energy Charter Treaty 
(ECT) to address their concerns over gas transit, rather than 
withdrawing from the ECT as he had originally feared.  Moscow 
had threatened to "withdraw their signature" from the ECT to 
negotiate a new multilateral energy treaty from scratch.  The 
Russians appear to have reconsidered this position and now 
appear willing to examine the possibility of expanding the 
ECT to include "crisis management" provisions.  For its part, 
Mernier said the Secretariat is willing to look at ways to 
expand the treaty to cover other areas of concern to the 
Russians such as nuclear, coal, and oil. 
 
¶5. (SBU) From Mernier's viewpoint, the worse case scenario 
would have been if Russia really didn't want any treaty at 
all.  By withdrawing from the ECT the Russians could send the 
international community off on a multi-year, wild goose chase 
after a treaty that would never materialize.  Mernier 
confided that he was quite concerned when, the day before the 
last working group on was to be held on June 16, the 
Secretariat had received no notification that the Russians 
would be attending.  The Russians did, however, send in 
notification at the last minute (18:00 on June 15) that they 
would attend.  And Mernier was pleased with the preliminary 
discussions at that working group.  Mernier said that an Ad 
hoc Working Group will meet September 22 to "try to put some 
flesh on the bones the Russians have thrown us." 
 
¶6. (SBU) Mernier agreed Moscow is seriously concerned about 
the Yukos case; he expects UNCITRAL in The Hague to rule 
shortly on the company's claim that Russia's $30 billion-plus 
tax penalty was an illegal expropriation under ECT's 
"provisional application." Ironically, Mernier said it might 
be good if the case is decided in Russia's favor.  Mernier 
said this would demonstrate to the Russians that 
international agreements are not just there to work against 
them. 
 
Murray 
.