VZCZCXYZ0000
RR RUEHWEB

DE RUEHHE #0223/01 1631321
ZNY CCCCC ZZH
R 121321Z JUN 09
FM AMEMBASSY HELSINKI
TO RUEHC/SECSTATE WASHDC 5014
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHNSC/NSC WASHDC

C O N F I D E N T I A L HELSINKI 000223 
 
SIPDIS 
 
NSC FOR J.HOVENIER 
 
E.O. 12958: DECL: 06/11/2019 
TAGS: ELTN ETRD ETTC FI PREL
SUBJECT: FINLAND WARNS EU ABOUT PROPOSED RUSSIAN TRANSPORT 
DECREE 
 
REF: 09 HELSINKI 211 
 
Classified By: Charge d'Affaires Michael A. Butler for reasons 1.4(b) a 
nd (d) 
 
 
¶1. (C) SUMMARY.  Finnish officials have raised in EU circles 
their concerns that container transport restrictions proposed 
by the Russian Customs Service will adversely impact trade 
bound for Russia through Finland, Estonia and Latvia.  With 
the vast majority of containers crossing the Finnish-Russian 
border by road, the Finnish government considers the proposed 
diversion of container traffic from road to rail or sea as a 
barrier to trade that would constitute a serious blow to 
Finland's export-driven economy.  Finnish officials are 
uncertain about the motives behind the proposed decree, and 
say they have received mixed signals from Russian officials. 
While the Finns hope to place this matter on the EU's agenda 
with Russia, they are pursuing a solution bilaterally.  In a 
June 3 meeting between Russian Prime Minister Putin and 
Finnish Prime Minister Vanhanen, Putin offered no concessions 
and pointed to prevention of "contraband" across the border 
as the reason for the decree, an assertion Finnish officials 
find extremely puzzling.  Nevertheless, the Finns hope the 
pressure to resolve disputes in advance of the twice-annual 
high-level bilateral meetings will resolve this matter.  END 
SUMMARY. 
 
RUSSIA PROPOSES SHIPPING RESTRICTIONS 
 
¶2. (U) On Thursday June 11 Finnish Minister of Transport Anu 
Vehvilainen informed EU transport ministers about the likely 
effects on freight traffic from the EU to Russia of a decree 
proposed by the Russian Federal Customs Service.  According 
to the Finnish government, the proposed decree will require 
containers over 20 feet long to arrive in Russia by rail or 
ship, not by road.  It would apply to container shipments 
arriving via Finland, Estonia, Latvia and Ukraine. 
 
FINLAND: TRANSPORT DECREE IS TRADE BARRIER 
 
¶3. (C) In a June 9 meeting with Pol/Econ Chief, Maimo 
Henriksson (Director of the MFA,s Unit for Russia) 
complained about the decree.  Henriksson said the decree 
constitutes a barrier to trade, as Russian authorities must 
realize that such a shift from road to rail would be 
impossible to achieve in the near future (especially 
considering that the decree would come into force six months 
after formal adoption).  According to Henriksson in 2008 
approximately 196,000 containers crossed the Finnish-Russian 
border, and only 7000 traveled by rail.  She added that the 
decree would hurt certain businesses by hampering their 
ability to choose the most suitable form of transportation; 
she pointed to food producers who require special containers 
and fewest delays, supporting road vice rail transport. 
 
ADVERSE IMPACT ON EU AND FINNISH TRADE 
 
¶4. (C) In a June 9 press release, the Transport Ministry 
stated that "in practice this scheme would paralyze freight 
traffic along the entire eastern border, as railroads do not 
have the capacity or rolling stock to carry such large 
volumes of containers to Russia."  In a June 3 meeting with 
Pol/Econ Chief, Mikko Hautala, advisor to Foreign Minister 
Stubb, said the decree would deliver a serious blow to the 
export-driven Finnish economy.  Hautala said that should 
Russia impose the decree most trans-shipments through Finland 
to Russia would necessarily shift away from Finland; as 
Finnish exporters enjoy lower costs from the high ship 
traffic due to heavy transit through Finland to Russia, the 
diversion of shipping away from Finland would mean higher 
shipping costs for Finnish exporters. 
 
RUSSIAN MOTIVES UNCLEAR: PUTIN BLAMES CONTRABAND 
 
¶5. (C) Finnish officials are not clear about the Russians, 
motives in proposing this decree.  Customs Service officials 
pointed to environmental concerns as the basis.  Repeating 
public comments by Minister Vehvilainen, Henriksson said the 
Finns welcome a shift from road to rail for environmental 
reasons, but they believe such a shift cannot be done 
quickly, and should be done cooperatively and not by 
unilateral decree.  Hautala was skeptical about the Custom 
Service,s claimed environmental motives, and speculated that 
the real motive might flow from reduced trade from the 
economic recession and a desire to increase shipments through 
Russian ports. 
 
¶6. (C)  According to Henriksson Prime Minister Vanhanen 
 
raised the proposed decree during President Putin,s recent 
visit to Finland (REF).  Putin alleged a large amount of 
contraband flowed outside of Russia over the Finnish border 
via road.  This explanation completely surprised the Finn, as 
they had never heard it before and in meetings with Emboffs 
they refer positively to Finnish-Russian cooperation on 
border controls.  Finnish officials took Putin's comment less 
as a sign of a common Russian position and more a sign of an 
unprepared Putin crafting a response on the spot. 
 
STILL SEEKING BILATERAL SOLUTION 
 
¶7. (C) In a conversation with POL/ECON analyst, Silja Ruokola 
(Director of the Unit for Logistics and Russia Cooperation at 
the Ministry of Transport) said the Finnish Government had 
previously informed other EU Member States, including Sweden, 
about the decree.  The letter to EU transport ministers was 
simply the next step in the government's attempts to get this 
matter on the EU agenda and ensure the decree comes as "no 
surprise" to Member States.  The Finns continue to engage the 
Russians directly.  Finnish officials have told Emboffs that 
the Russian Transport Ministry does not support the decree, 
and the Finns hosted transport ministry officials on June 11. 
 Ultimately, Ruokola said, the matter is in the hands of the 
Russian PM and the Customs Service.  The Finns place 
considerable importance on the twice-yearly rhythm of 
meetings with Russian leadership, and hope that the pressure 
to resolve disputes in advance of such meetings will work in 
their favor on the transport decree. 
 
BUTLER