VZCZCXRO4717
RR RUEHIK
DE RUEHVK #0114/01 3360307
ZNR UUUUU ZZH
R 020307Z DEC 09
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1237
INFO RUEHMO/AMEMBASSY MOSCOW 0521
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION COLLECTIVE
RUEHOO/CHINA POSTS COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHVK/AMCONSUL VLADIVOSTOK 1342

UNCLAS SECTION 01 OF 03 VLADIVOSTOK 000114 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ETRD ECIN EAIR KDEM RS US
SUBJECT: ANNUAL RUSSIAN AMERICAN PACIFIC PARTNERSHIP (RAPP) SEEKS 
CLOSER TIES 
 
VLADIVOSTO 00000114  001.3 OF 003 
 
 
¶1. (SBU) Summary:  The Fourteenth Annual Russian American 
Pacific Partnership (RAPP), entitled "A Meeting of Shared 
Interests," took place in Yuzhno-Sakhalinsk September 29-30. 
USG and GOR officials touted the benefits of such fora and the 
strengthening of U.S.-Russian ties that they fostered.  GOR 
officials said they welcomed U.S. investment and cooperation in 
projects such as Sakhalin I and II as well as the Sukhoi 
Superjet 100, while USG officials pointed to concrete steps 
taken to "reset" U.S.-Russia relations, such as naval ship 
visits and cooperation on Afghanistan.  Ambassador Beyrle 
emphasized Russian-American "vital links" and reminded that the 
21st Century was to be the Pacific Century.  Consul General 
Ambruster said U.S. companies could earn a lot of money in 
Russia as long as they made good contacts with local government 
and hired a good lawyer.  There was much discussion about how 
the U.S.-Russia Bilateral Presidential Commission could help 
bring the two countries closer together, despite the fact the 
USG had not set aside fund specifically to finance its 
operations.  Several representatives of RFE regions gave 
presentations to encourage investment.  End Summary. 
 
-------------------------------------- 
Governor Praises Cooperation with U.S. 
-------------------------------------- 
 
¶2. (SBU) Governor of Sakhalin Region Aleksandr Khoroshavin 
opened the September 29 meeting by expressing his support for 
the network building that RAPP facilitated.  He said he was 
hopeful that the "resetting" of relations, including the 
establishment of the U.S.-Russia Bilateral Presidential 
Commission, would help increase the level of trade between the 
two countries.  Khoroshavin said Sakhalin welcomed U.S. 
companies such as Exxon Mobil, and said such projects as 
Sakhalin I and II helped bring the U.S. and Russia closer 
together.  During this time of financial crisis, Khoroshavin 
noted, the U.S. and Russia must guard against protectionism and 
promote trade. 
 
--------------------------------------- 
DFM Ryabkov Points to Wide-Ranging Ties 
--------------------------------------- 
 
¶3. (SBU) DFM Sergey Ryabkov passed along greetings from FM 
Lavrov, and then said the August 2008 conflict in Georgia had 
prevented any meaningful dialogue between the U.S. and Russia, 
but a new foreign policy framework was now coming about.  The 
GOR, he said, wanted to address issues before they became 
problems.  Russia also wanted to promote civil society 
development.  The U.S.-Russia Bilateral Presidential Commission, 
he said, would help realize these goals. 
 
¶4. (SBU) DFM Ryabkov then talked about the long-standing ties 
between the U.S. and Russia, going back to Russian settlement of 
Alaska, and thanked California for its decision to preserve Fort 
Ross.  He said that cooperation in such areas as culture and 
technology needed a push, not only from national but also from 
regional governments.  DFM Ryabkov also suggested that RAPP 
could become a forum for legal matters and could help small- and 
medium-sized companies get to know local government.  He argued 
that the main message from RAPP was that the U.S.-Russia 
relationship was vast and multi-faceted. 
 
------------------------------- 
Ambassador Talks of Cooperation 
------------------------------- 
 
¶5. (SBU) In a prerecorded statement the Ambassador Beyrle 
emphasized the "vital links" between the U.S. and Russia. 
Reminding the audience that the Twenty-First Century is to be 
the "Pacific Century," he said that the U.S. and Russia will 
certainly grow closer.  He stated that Alaska already enjoyed 
cooperation with Kamchatka and Chukotka, while Montana and 
Magadan enjoyed close ties.  In addition, Boeing provided 
assistance to Sukhoi as it built its Superjet 100 aircraft in 
Komsomolsk-na-Amure.  The Ambassador also pushed for more direct 
flights between the U.S. and the Russian Far East (RFE).  To 
conclude his RAPP video, the Ambassador stated that when the 
U.S. and Russia work together, they can achieve anything. 
 
--------------------------------------------- ---------- 
Consul General on the Importance of Having Good Lawyers 
--------------------------------------------- ---------- 
 
¶6. (SBU) Vladivostok Consul General Armbruster urged investors 
exploring opportunities in Russia to be aware of the risks 
involved and to hire a good lawyer.  "Optimists build airplanes, 
 
VLADIVOSTO 00000114  002.3 OF 003 
 
 
pessimists make parachutes," he said, arguing that both were 
needed.  U.S. companies investing in Russia should work to build 
close, personal relationships with their customers and local 
governments.  Companies that follow this advice tend to do well, 
although some companies, such as Global Forestry Management, 
have had serious problems. 
 
¶7. (SBU) CG Armbruster also praised the U.S.-Russia military 
relationship, pointing specifically to the September 16-18 visit 
of the Coast Guard's U.S.S. SYCAMORE to Vladivostok and the 
Symposium on Northeast Asia Security, hosted in Vladivostok 
September 14-16, as tangible evidence of this.  He also praised 
Sakhalin for hosting RAPP four times, and urged other Russian 
cities to host the event as well.  Finally, Consul General 
called for less talk and more action. 
 
-------------------------------------------- 
EUR/RUS Director Says Washington Backs Reset 
-------------------------------------------- 
 
¶8. (SBU) EUR/RUS Director Kyle Scott reminded the audience that 
President Obama had favored "resetting" relations with Russia as 
early as December 2008.  The July summit underscored the reset 
and emphasized the desire of both sides to work on important 
issues.  The transit of lethal goods to Afghanistan and the port 
visit of the U.S.S. SYCAMORE were both signs that the reset was 
working. 
 
¶9. (SBU) Scott continued by saying the U.S.-Russia Bilateral 
Presidential Commission would like to strengthen trade ties 
between the two countries.  U.S.-Russia trade amounted to only 
USD 36 billion, making the U.S. Russia's 17th largest market, 
while Russia was the U.S.'s 28th largest market.  Fora such as 
RAPP also helped strengthen trade ties.  He added that some U.S. 
companies that started in Western Russia have since expanded 
operations to the RFE. 
 
------------------------- 
We Were Optimists Once... 
------------------------- 
 
¶10. (SBU) Deputy Plenipotentiary Representative of the President 
of Russia in the Far Eastern Federal District Aleksandr Levintal 
said that after the fall of Communism many in Russia were 
optimists.  The economic crisis in 1998, however, changed that. 
The end of direct flights to the U.S. isolated the RFE even 
more.  The U.S. and Russia now had to work hard to improve ties, 
he said.  For its part, the GOR showed great interest in the 
RFE, and both Medvedev and Putin have visited the region often. 
The RFE, he said, should work to build the forestry, mining, 
aircraft, ship building, oil, and gas industries, while building 
up infrastructure, including the Vostochniy Cosmodrome. 
 
------------------------------------------ 
ECON Counselor Pushes for More Cooperation 
------------------------------------------ 
 
¶11. (SBU) Embassy Moscow ECON Counselor said that the U.S. 
wanted a strong, prosperous, and peaceful Russia, and so the USG 
and GOR were looking for ways to expand economic cooperation and 
build prosperity.  He praised Medvedev's "Go Russia" article and 
said that Russia indeed needed an "intelligent economy" instead 
of one based on natural resources such as oil and gas.  He said 
that RAPP, along with other fora such as the Sakhalin Oil and 
Gas Conference, helped the U.S. and Russia exchange views and 
develop better products and services. 
 
------------------- 
RAPP Fosters Growth 
------------------- 
 
¶12. (SBU) RAPP Meeting Co-Chair and Deputy Director of the 
Ministry of Economic Development's Department of the Americas 
Dmitriy Sazhin said that RAPP has fostered economic growth in 
the RFE and the Western U.S. over the past 14 years.  The U.S., 
according to Sazhin was a "leading partner" of Russia.  He 
lamented that Russia still sold mostly raw materials while the 
U.S. focused on exporting finished goods. 
 
¶13. (SBU) RAPP Meeting Co-Chair and Director of the U.S. 
Department of Commerce's Office of Russia, Ukraine, and Eurasia 
Jack Brougher reiterated Commerce Secretary Locke's statement 
that free trade is invaluable to economic growth.  Both the U.S. 
and Russia pledged to avoid protectionism during the financial 
crisis, and this has helped, he said.  Fora such RAPP, he said, 
strengthened economic ties between the U.S. and Russia.  He said 
 
VLADIVOSTO 00000114  003.3 OF 003 
 
 
the U.S. had invested USD 20 billion in Russia, while Russia 
invested USD 5 billion in the United States.  The U.S., he 
added, would like to see Russia more integrated into the world 
economy by joining such organizations as the World Trade 
Organization.  This would in turn boost economic growth in 
Russia.  He also pushed for better protection of intellectual 
property rights (IPR), as IPR violations cost the U.S. about USD 
200-250 billion each year. 
 
--------------------------------------------- ---- 
The U.S.-Russia Bilateral Presidential Commission 
--------------------------------------------- ---- 
 
¶14. (SBU) In a panel discussion on the U.S.-Russia Bilateral 
Presidential Commission, participants argued that the 
Commission's working groups must discuss issues relevant to 
Russia's regions and U.S. states.  This would help businesses 
grow and spur investment in these areas, it was argued.  The 
Commission's working groups should also report on the progress 
of their work regularly if they are to be effective.  EUR/RUS 
Director Scott mentioned, however, that thus far the USG had not 
allocated any additional resources for the work of the 
Commission. 
 
¶15. (SBU) Panel members urged the U.S. and Russia to encourage 
youth exchanges and study abroad programs so citizens of both 
countries could gain exposure to each other's cultures early. 
They also said the U.S. and Russia should have joint 
celebrations for the sixty-fifth anniversary of the end of World 
War II, and warned against "distorting history" for political 
purposes. 
 
-------------------------------- 
Russian Regions Seek Investment 
-------------------------------- 
 
¶16. (SBU) Kamchatka Region's Minister of Investment and 
Entrepreneurship Development Oksana Gerasimova said 40 percent 
of all tourists to Kamchatka come from the United States.  She 
also praised the region's natural resources and beauty, and said 
sportsmen, such as hunters, were welcome. 
 
¶17. (SBU) Magadan Region's Head of Representation to the Far 
Eastern Federal District Leonid Ivanyuta argued that "resetting" 
the U.S.-Russia relationship was impossible without including 
Russia's regions.  The U.S., he said, was Magadan's second most 
important trading partner, accounting for USD 257 million in 
trade.  Magadan imported a lot of agricultural machinery and 
exported a lot of metal, he said.  Ivanyuta also extolled the 
virtues of Magadan's special economic zone and customs and tax 
zones. 
 
¶18. (SBU) Ivanyuta talked up Magadan's natural resources such as 
gold, silver, iron ore, and semiprecious gems.  Mining, 
fisheries, explosives, and power generation, including a 500 
megawatt power plant planned to come online in 2012, were also 
important to the region, he said. 
 
¶19. (SBU) Khabarovsk Region's Deputy Minister of Industry, 
Transportation, and Foreign Relations Sergey Zrazhevskiy said 
that his region had the lowest investment risk in the RFE in 
¶2008.  Foreign trade, however, accounted for only 3 percent of 
the region's income, he said.  He pointed out, however, that 
Boeing assisted Sukhoi in manufacturing the Superjet 100 in 
Komsomolsk-na-Amure, and the region would welcome similar joint 
projects and investment. 
ARMBRUSTER