VZCZCXRO1355
RR RUEHIK
DE RUEHMO #2520/01 2780544
ZNR UUUUU ZZH
R 050544Z OCT 09
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 4982
INFO RUCNCIS/CIS COLLECTIVE
RUEHXE/EASTERN EUROPEAN POSTS COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 MOSCOW 002520 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EINV PREL ECON RS
SUBJECT: U.S.-RUSSIA BUSINESS FRONT AND CENTER AT SOCHI 
FORUM 
 
MOSCOW 00002520  001.2 OF 002 
 
 
¶1. (SBU) Summary: During his trip to Sochi on September 16-18 
Ambassador Beyrle attended the Eighth International Sochi 
Investment Forum (the Forum) where he led a delegation of 
U.S. executives at a meeting with the Krasnodar Region and 
Sochi officials.  He also visited the main venues and for the 
2014 Winter Olympics and he met with the rector and students 
of the Russian State University of Tourism and Service 
(RSUTS).  President Obama's message of U.S. interest in 
partnership with a strong and prosperous Russia, underlined 
by a significant U.S. corporate representation at the Forum, 
was well received by the Russian side and met with assurances 
from the Governor's office that the Krasnodar region is very 
interested in strong partners such as U.S. businesses.  This 
active interest came as no surprise, given the daunting 
infrastructure and development challenges the region faces to 
be ready for the Olympics.  End summary 
 
¶2. (SBU) The Ambassador visited Sochi September 16-18 to 
attend the Eighth International Sochi Investment Forum, 
visited Olympic sites, and met with the Krasnodar Region and 
Sochi government administrations, as well as senior 
executives of the U.S. companies attending the Forum.  During 
these meetings the Ambassador reiterated President Obama's 
message from the July Summit that the U.S. is seeking an 
effective partnership with a strong and prosperous Russia and 
stressed the importance and potential of the Russian-American 
economic partnership represented by a large U.S. corporate 
presence at the Forum this year. 
 
2009 Sochi Investment Forum Highlights 
-------------------------------------- 
 
¶3. (U) The Forum in Sochi, held annually and supported by the 
Russian Government, is Russia's largest regional event to 
present the investment potential of Russian regions.  Since 
2007, when Sochi won a bid to host the Winter Olympics in 
2014, the infrastructure and Olympic construction projects in 
Sochi have been a special focus of the Forum. 
 
¶4. (SBU) This year the plenary session - the central event of 
the Forum attended by Prime Minister Putin - focused on 
Russia's post-crisis investment strategy and featured an 
exclusively U.S.-Russian panel of speakers that included top 
Russian officials and senior executives of the largest 
Russian and U.S. companies.  Sberbank and Avtovaz represented 
Russian business at the panel while Morgan Stanley, General 
Electric (GE), Texas Pacific Group (TPG) and 
PricewaterhouseCoopers spoke on behalf of U.S. business.  GE 
CEO Jeff Immelt and Morgan Stanley CEO John Mack flew in 
specially to attend the Forum. 
 
¶5. (U) Addressing the plenary session PM Putin said that 
Russia was open for foreign investment and attached special 
importance to investment projects involving a transfer of 
technology to Russia.  He singled out the following priority 
sectors and projects for foreign investment: 1) development 
of transport and energy infrastructure; 2) 
telecommunications; 3) digital TV; 4) large regional 
infrastructure projects such as the preparation of 
Vladivostok and Kazan for the APEC summit in 2012 and the 
2013 Summer Universiade; and 5) energy-efficiency projects. 
 
¶6. (U) PM Putin praised President Obama's decision to scrap 
plans for a missile defense shield in Poland and the Czech 
Republic and said that it gave him hope that the U.S. would 
cancel Cold War-era restrictions on trade with Russia, 
including restrictions on the transfer of high technology and 
the Jackson-Vanik amendment, as well as assist Russia, 
Kazakhstan and Belarus in joining the World Trade 
Organization. 
 
¶7. (U) Despite remaining challenges ranging from transparency 
to traffic jams, and the fact that Russia's GDP is forecasted 
to fall this year because of the crisis, U.S. business 
leaders were upbeat about the prospects of Russia's 
resource-rich economy.  TPG expressed cautious optimism about 
Russia as the fund is looking for opportunities for some $30 
billion in uninvested capital, and GE listed Russia among its 
priorities confirming its strong interest in partnering with 
a leading Russian company in a strategic sector. 
 
U.S. Business Seen as Strong Partner 
------------------------------------ 
 
¶8. (SBU) The Ambassador led a group of ten U.S. executives at 
a meeting with First Vice-Governor of the Krasnodar Region 
Dzhambulat Khatuov, Sochi Mayor Anatoly Pakhomov & Chairman 
of the local legislature Vladimir Beketov.  The U.S. 
 
MOSCOW 00002520  002.2 OF 002 
 
 
delegation which included representatives of AmCham, Ernst & 
Young, Honeywell, General Electric Energy and Healthcare, 
Microsoft, PepsiCo, Science-Technique-Security, Coca-Cola, 
and Wal-Mart, expressed a strong interest in exploring 
cooperation and partnership opportunities in both Olympic 
Sochi and the Krasnodar region, receiving assurances from the 
Russian side that the Krasnodar region would like to have 
strong partners such as U.S. businesses. 
 
Olympic Challenges 
------------------ 
 
¶9. (SBU) An official from the Representative office of the 
Sochi 2014 Organizing Committee accompanied the Ambassador on 
a visit to Olympic sites on the coast and in the mountains. 
Although infrastructure and some venue construction has been 
launched in both the coastal and the mountain clusters, it is 
obvious that finishing all venues and holding "test" events 
by 2012 will be a serious challenge.  At a meeting with the 
Ambassador, Russian State University of Tourism and Service 
Rector Alexander Fedulin echoed such concerns, pointing out a 
severe shortage of hospitality industry personnel and hotels 
that meet the International Olympic Committee standards. 
 
¶10. (SBU) Comment: Both the large U.S. corporate presence at 
the Forum this year, and the remarkable fact that the plenary 
session turned into an entirely U.S.-Russian bilateral 
affair, are clear signs of a rebound in the U.S.-Russian 
relationship.  With its strategic location on the Black and 
Azov Seas, its main city - Sochi - hosting the 2014 Winter 
Olympic Games, and the administration eager for more foreign 
investment, the Krasnodar Region presents enormous business 
opportunities for U.S. companies.  Given that Russia's 
leadership has enormous prestige riding on the Olympics, 
active U.S. cooperation and assistance with the project could 
solve a host of problems for regional officials, given the 
daunting infrastructure and development challenges they face 
in the run-up to the Olympics.  End Comment. 
Beyrle