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FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1191
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
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RUEHVK/AMCONSUL VLADIVOSTOK 1296

UNCLAS SECTION 01 OF 03 VLADIVOSTOK 000089 
 
C O R R E C T E D C O P Y - CHANGE TO PARA 7 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD ELTN PGOV PREL TSPA RS CH
SUBJECT: FAR EASTERN INTERNATIONAL ECONOMIC FORUM BLAMED U.S. FOR 
PRESENT, LOOKS FORWARD TO FUTURE 
 
VLADIVOSTO 00000089  001.4 OF 003 
 
 
¶1. (SBU) Summary:  Over 500 people from 13 countries and 16 
Russian regions attended the Fourth Far Eastern International 
Economic Forum.  Few high-ranking GOR officials attended.  The 
low turnout was blamed on the financial crisis.  Much of the 
forum, entitled, "Russian Far East Development Strategy: 
Anti-Recession Guidelines and New Approaches," was devoted to 
the bright future for the RFE regions in 15-20 years.  During 
the forum, the U.S. was blamed for starting the world financial 
crisis.  While many participants said they heard few new ideas 
at the forum, they were nevertheless optimistic for the regions 
economic prospects.  The Khabarovsk Governor offered to postpone 
planned export tariffs on timber products.  The Governor of Amur 
Region said his region was increasing its gold production and 
moving forward with plans for the Vostochniy Cosmodrome.  New 
markets for Siberian coal in Asia, as well as the damage to the 
coal industry caused by the unpredictability of energy prices 
were discussed.  Transportation infrastructure improvements and 
Russia's prospects after the financial crisis ended were also 
discussed.  Chinese officials urged more cross border investment 
and derided corrupt customs officials.  One lone protestor was 
briefly present at the forum.  End summary. 
 
---------------------------------- 
Economic Crisis Reduces Attendance 
---------------------------------- 
 
¶2. (U) Khabarovsk hosted the Fourth Far Eastern International 
Economic Forum on September 8-9.  Approximately 546 participants 
from 13 countries and 16 of Russia's regions attended the forum. 
 About a quarter of the guests were foreigners.  Overall, this 
is a decrease from the more than 700 participants who attended 
in 2008.  Many observers blamed the poor attendance on the 
financial crisis.  The highest-ranking GOR officials were Deputy 
Ministers and Deputy Chairmen of the State Duma, although both 
Medvedev and Putin issued statements of support. 
 
---------------------------------- 
U.S. To Blame For the World's Woes 
---------------------------------- 
 
¶3. (U) While speakers at last year's forum blamed the U.S. for 
the conflict in Georgia, this year Aleksandr Nekipelov, 
Vice-president of the Russian Academy of Sciences, blamed the 
U.S. for the world financial crisis.  During his 20-minute 
speech he discussed the history of the world financial crisis, 
arguing "the roots of the economic crisis are in the U.S. 
mortgage crisis." 
 
¶4. (U) Nekipelov traced the history of the financial crisis in 
Russia, arguing that the fall of 2008 was the most difficult 
time for the Russian economy due to the dramatic decline of oil 
prices.  The Russian government, he said, did its best to 
stabilize the banking sector and continue paying benefits to the 
unemployed and retired. 
 
¶5. (U) Nekipelov posited that Russia's ability to counteract the 
financial crisis was underestimated.  The ruble's further 
devaluation was a risk, as a long term devaluation would likely 
result in a capital outflow from Russia.  He argued the Russian 
economy should be modernized or many economic sectors will be 
ruined completely.  Nekipelov suggested a moratorium for capital 
outflow and other serious changes in Russian policy may be 
required.  Russia, he said, needed to innovate its economy or it 
would continue to rely on the extraction of natural resources. 
 
------------------------ 
Export Tariffs Postponed 
------------------------ 
 
¶6. (U) Khabarovsk Governor Vyacheslav Shport offered to postpone 
export tariffs on timber, originally planned to take effect in 
2010, for three years for companies involved in timber 
processing projects.  Shport emphasized that this measure will 
stimulate timber processing and increase the stability of the 
timber products' regional markets.  He also said it was 
necessary to coordinate export policy affecting regional timber 
companies if effective trade and revenue increases were to be 
achieved.  Some conference participants pointed out that this 
was "too little, too late," as the threat of export tariffs had 
already forced many companies to go bankrupt. 
 
------------------ 
Space Is the Place 
------------------ 
 
¶7. (U) Amur Governor Oleg Kozhemyako discussed the bright 
perspectives for his region's gold mining, agriculture, and 
energy sectors, as well as plans for space launch facilities. 
 
VLADIVOSTO 00000089  002.5 OF 003 
 
 
Currently Amur Region is the fourth largest producer of gold 
in Russia, producing 18 tons of gold in 2008.  He forecasted 
Amur Region would produce 20 tons of gold in 2009 and over 25 
tons by 2012.  This would make Amur Region Russia's third 
largest producer of gold.  He also gave a progress report on the 
proposed Vostochniy Cosmodrome, saying 18 Russian regions have 
expressed their interest to take part in site construction and 
infrastructure development. 
 
------------------------------------------ 
High Interest Rates Damaging Coal Industry 
------------------------------------------ 
 
¶8. (U) General Director of Siberian Coal and Energy Company 
(SUEK) Vladimir Rashevskiy complained that high interests 
charged by banks were an obstacle for the industry's 
development.  He complained that prices for energy usage charged 
by the Federal Energy Commission were not "predictable and 
balanced."  Rashevskiy also mentioned that SUEK has turned to 
Asia to find new markets, as the European market for Siberian 
coal has dwindled.  Because SUEK can ship coal to Asia only via 
rail, the unpredictability of rail shipping prices was also a 
problem, he said. 
 
-------------------------------------------- 
Transportation Infrastructure to Be Improved 
-------------------------------------------- 
 
¶9. (U) Deputy Transport Minister Nikolay Lyamov said the GOR 
would complete construction of a new line of the Transiberian 
Railroad from Berkakit to Yakutia, as well as a new highway from 
Yakutsk to Magadan before 2015.  From 2016 to 2030 a new 
railroad from Yakutsk to Magadan, and from there to Chukotka as 
well as Kamchatcka, would be constructed as well.  Head of the 
Russian Far East Railroad Department Mikhail Zaichenko added 
that all railroad infrastructure problems would be solved by 
¶2016. 
 
--------------------------------- 
Chinese Offer Greater Cooperation 
--------------------------------- 
 
¶10. (U) Le Zhanshu, Governor of the Chinese province of 
Heilongjiang, said he wanted to see a broadening of investment 
cooperation, especially in road and rail construction in the 
Russian Far East.  He also called for border trading centers and 
more cooperation in various forest projects.  He also argued 
"grey (i.e. corrupt) customs clearance" processes were hurting 
cross-border trade. 
 
------------------ 
Post-Crisis Russia 
------------------ 
 
¶11. (U) Director of the National Economy Forecasting Institute 
Viktor Ivanter was open in his vision of Russia in the 
post-crisis period, arguing that "only devil knows how Russia 
will look like when the crisis is over."  Ivanter pointed out 
that the Russian government took some proper steps and made 
correct statements on the crisis, but overall reacted too 
slowly.  He argued that Russia needed to revise its fiscal 
policies, including continuing subsidies for the automobile 
industry.  Russia's financial institutions want Western money so 
they can reinvest in to Western economies because they fear that 
money will be stolen in Russia, he argued.  According to 
Ivanter, the sectors of the economy poised for economic growth 
were housing construction, aircraft and rail car construction, 
agriculture, the defense industry, and medicine. 
 
--------------------------------------------- -- 
Excellent Future Will Not Be Ruined By Protests 
--------------------------------------------- -- 
 
¶12. (SBU) As forum participants were leaving the conference 
center to go to lunch on September 8, a lone man protested 
outside by wearing a sandwich board that read "corrupted power 
kills me."  Plainclothes individuals, presumably police, 
relieved the protestor of his placard and forced him to vacate 
the conference venue. 
 
--------------------------------------------- ----- 
Attendees Optimistic, but Have Heard It All Before 
--------------------------------------------- ----- 
 
¶13. (SBU) Many participants, including General Director of Regio 
Bank Sergey Grebeniuk, said they heard little that was new this 
year.  Many of the proposed infrastructure improvements and 
calls for greater international cooperation were discussed at 
 
VLADIVOSTO 00000089  003.5 OF 003 
 
 
previous fora.  Participants nevertheless seemed optimistic that 
the worst of the financial crisis was over and economic growth 
would improve their lives and business prospects. 
ARMBRUSTER