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Cablegate: Senator Hagel's January 16 Meeting with Former Russian

VZCZCXYZ0000
RR RUEHWEB

DE RUEHMO #0156 0221410
ZNR UUUUU ZZH
R 221410Z JAN 08
FM AMEMBASSY MOSCOW
TO SECSTATE WASHDC 6233

UNCLAS MOSCOW 000156

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/RUS,

E.O. 12958: N/A
TAGS: ECON PREL RS
SUBJECT: SENATOR HAGEL'S JANUARY 16 MEETING WITH FORMER RUSSIAN
DEPUTY PRIME MINISTER YEGOR GAIDAR


1. This message is sensitive but unclassified and not for Internet
distribution.

Summary
-------

2. (SBU) In a January 16 meeting with Senator Chuck Hagel
(R-Nebraska) and the Ambassador, Former Deputy Prime Minister and
Director of the Institute for the Economy in Transition (IET) Yegor
Gaidar offered his candid perspective on a wide range of issues
affecting U.S.-Russian relations. Although he extolled the years of
economic growth under Putin, he expressed concern that the country's
political development had not kept pace. Gaidar also urged the U.S.
to seize the opportunity that might arise after the Russian
presidential inauguration in May to find common ground on issues
such as missile defense and Iran's nuclear program. End Summary.

Russia's Domestic Policy Outlook
--------------------------------

3. (SBU) Gaidar observed that Russia's current economic health was
an achievement of long-term efforts but was in danger of becoming a
victim of its own success. On the one hand, senior economic policy
officials deserved credit for fostering growth and for working to
integrate Russia into the global economy. On the other hand,
however, the political elite had not prepared the country for the
difficulties brought on by economic expansion. For instance, Gaidar
said, decision makers overreacted last fall to concerns about
higher-than-expected inflation by adopting a price controls program
in the run-up to the Duma elections. He speculated that, in light
of the stream of real GDP growth results averaging 6-7 percent per
year since 2000, decision makers might overreact again if economic
growth were to be slower than expected in the next year or two.

4. (SBU) Gaidar also said he was uneasy about the upcoming
presidential election and the transfer of power. Fear of low voter
turnout had already prompted the beginning of a nationwide campaign
to increase participation. Duma delegations from regions that had
furnished high voter turnout during the December elections had been
rewarded with prestigious committee assignments, Gaidar noted, and
might expect similar treatment for the March election. He cast
doubt on the presumptive next president's potential for successfully
managing his oversight responsibility of the country's security
ministries and agencies. He speculated that First Deputy Prime
Minister Medvedev's relative lack of experience with that side of
the government might require further organizational changes.

Gaidar's View of U.S.-Russian Relations
---------------------------------------

5. (SBU) Gaidar said that the U.S.-Russian relationship was at a
critical juncture. He explained that many in the liberal camp who
were sympathetic to strengthening bilateral ties had become
frustrated by the perception that the U.S. tries to dictate "what
Russia should and should not do." Discussions with this kind of
"intonation" had proved to be "a big help to the opponents of
liberal elites." He urged both governments to continue cooperating
on security issue and to foster greater informal ties through
increased cultural, educational, and business exchanges.

6. (SBU) Gaidar cautioned that U.S. policy makers needed to
consider the scope of Russia's negative sentiment toward the U.S.
He emphasized that reaching common ground was possible on critical
issues such as Iran and missile defense, and suggested that U.S.
policy makers be more cooperative approach on these and other policy
questions. The country's anti-American environment, part genuine,
part rhetoric, stemmed from a perception of excessive U.S.
unilateralism and had been on the rise since Operation Allied Force
in the Balkans in 1999. He said that, despite official expressions
of this sentiment, the presidential advisors and Cabinet officials
who would take office in May would be willing to work with their
U.S. counterparts to find common ground.

7. (U) This message has been cleared by Senator Hagel's staff.

BURNS

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