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Cablegate: Apec 2012, U.S. Businesses, Cultural Ties Focal Points Of

VZCZCXRO7156
RR RUEHLN RUEHPOD RUEHYG
DE RUEHVK #0129/01 3270348
ZNR UUUUU ZZH
R 220348Z NOV 08
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1047
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHVK/AMCONSUL VLADIVOSTOK 1144

UNCLAS SECTION 01 OF 03 VLADIVOSTOK 000129

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV ECON SENV RS
SUBJECT: APEC 2012, U.S. BUSINESSES, CULTURAL TIES FOCAL POINTS OF
AMBASSADOR'S VISIT TO RFE

VLADIVOSTO 00000129 001.2 OF 003


Summary
-------

1. (U) There were many highlights of Amb. Beyrle's November
16-19 trip to the Russian Far East -- a hike through leopard
country, jazz concert, trip to the port of Vladivostok and a
youth protest to name a few -- but if there was an underlying
theme to the trip it was anticipation. The Ambassador's visit
to Vladivostok and Yuzhno-Sakhalinsk displayed anticipation for
the upcoming Asian Pacific Economic Cooperation (APEC) summit in
Vladivostok; anticipation for new infrastructure projects
including new roads and bridges; anticipation and some
apprehension regarding the incoming Obama administration; and
anticipation of better economic conditions and renewed growth in
the Russian Far East. In all, the multifaceted trip
demonstrated the resilience of the US-Russia relationship in the
region and the reservoir of goodwill created by nearly a
generation now of steady USG engagement. Other major themes
included international cooperation, the environment, financial
crisis, and cultural diplomacy. End summary.

High Hopes for the APEC Summit
------------------------------

2. (U) Discussions with various interlocutors showed a region
that is beginning to see the effects of the financial crisis,
but is optimistic about the APEC Summit and open to more
cooperation with the United States. Primorye Kray Duma Chairman
Viktor Gorchakov expressed guarded optimism about the upcoming
2012 APEC Summit to be held in Vladivostok. In an unusually
candid assessment of the project, Gorchakov told the Ambassador
that although he has hopes that Summit-related infrastructure
improvements will have a lasting positive effect on the
residents of Primorye, he acknowledged that significant
reductions to the construction plans are likely. Contacts at a
reception held later at the CGR, for example, confirmed that a
30-km long causeway project has already been cancelled. The
list of potential projects is long, from atomic energy plants,
to new hotels, casinos, and universities. Many leaders see the
APEC summit as a chance to remake Vladivostok into a leading
city in the Pacific region.

3. (U) When asked about the attitude of residents in relation to
the projects, Gorchakov candidly replied "it depends on where
they live." He noted that while most Vladivostok residents agree
that the projects, if completed, will be beneficial to the city,
rural Primorye residents feel ignored, and residents on Russkiy
Island are worried that the 80,000 ruble per square foot
compensation for their dwellings will be insufficient for
relocating if plans to relocate a university on the island are
realized. Gorchakov indicated that airport renovation designs
will be ready by the beginning of next year. Some projects
include a "plan B." The administration is working on an
alternative construction plan for Russkiy Island, for example,
if foreign investors prove unwilling or unable to invest.

4. (U) Vladivostok Mayor Igor Pushkaryov also discussed
APEC-related plans with the Ambassador, expressing hope that
federal funding and foreign investment will have a lasting
impact on the city. He noted that because of a lack of
experienced Russian companies, the Transport Ministry is seeking
foreign contractors, especially from Korea, Japan, and China.
So far, US firms have not played a major role in development
plans, but the city has long talked about a desire for new
hotels and officials have specifically mentioned Marriott as a
possibility. Marriott would join firms like Baskin and Robbins,
Caterpillar, Exxon, and American fruit exporters that have
already found considerable success in the Russian Far East.

Cooperation and Integration
---------------------------

5. (U) The Russian Far East is fertile ground for increased
regional cooperation and integration, and political and business
leaders expressed enthusiasm for promoting closer ties with the
US. Mayor Pushkaryov requested U.S. participation in
celebrating Vladivostok's 150th anniversary in 2010, and in
marking next year the 35th anniversary of President Ford's visit
to the city. He also expressed interest in the Ambassador's
offer to assist in refreshing contacts with sister cities
Juneau, Tacoma, and San Diego.

6. (U) Sakhalin Acting Governor Sergey Vilyamov expressed warm
support for "the many Americans that make Sakhalin their second
home," noting their importance to the continued economic growth
of the area. The number of Americans living in Sakhalin has
decreased from a high of about 1,000 as the oil companies
transition from exploration and development to production, but
there is still a strong American presence. The Ambassador had

VLADIVOSTO 00000129 002.2 OF 003


two give-and-take sessions with expats on Sakhalin. The
Americans outlined the challenges of working in the Far East,
but overall they are succeeding even in this tough economic
climate and they said they were very pleased with the quality of
the young workforce on the island, since most of the American
managers depend heavily on local Russian staff.

7. (U) Several interlocutors mentioned the benefit of new direct
seasonal flights to Alaska, and expressed hope for further
flights from the Russian Far East to the US West Coast. Mayor
Pushkaryov noted that many Vladivostok natives live in Seattle,
and that a direct flight there would be beneficial to developing
ties. VladAvia President Saybel also expressed hopes of
establishing a permanent link to Seattle, though he pointed out
that high fees and undesirable landing times there may hinder
profitability. He also mentioned plans to increase the number
of seasonal direct flights to Anchorage, though the 13 Alaska
flights earlier this year proved to be less profitable than
expected. The Director of Sakhalin Air Transport also expressed
hopes to initiate direct flights to both destinations, but
stated that the company's lack of Transportation Safety
Administration certification hinders those plans. [Note: The
Consulate is working with aviation officials to determine next
steps. End note.]

US NAVY SHIP VISITS
-------------------

8. (SBU) Duma Chairman Gorchakov expressed strong interest in
resuming ship visits to Vladivostok and acknowledged the various
benefits of the visits. U.S. Navy port calls to Vladivostok
have become something of a tradition, especially on Victory Day
in May, when the U.S. and Russia have an opportunity to pay
tribute to the joint sacrifice of our two nations in defeating
fascism and to highlight the successful U.S.-Russian cooperation
through the Lend-Lease program that was instrumental in
providing the Soviets with the guns and butter needed in the war
effort. The U.S. Navy port visits are vital to the Consulate's
public diplomacy outreach since the sailors visit orphanages and
veteran's homes and they host joint Consulate-Navy
representational events onboard ship. Neither US Navy nor Coast
Guard port visits have occurred since the Russian incursion into
Georgia last summer.

Financial Crisis
----------------

9. (U) Ambassador Beyrle discussed the economic situation with
local businesses, including Vladivostok Airlines, Primorye
Transport Company (PTK), Vladivostok Port, FESCO Shipping,
ExxonMobil, and various smaller businesses on Sakhalin.
Gorchakov said that the crisis has affected Primorye's economy,
especially the mining and construction industries. He used the
example of DalPoliMetal, which laid off more than 2,100 workers
and is stockpiling extracted ore in warehouses because
production costs outweigh world prices. Construction is largely
dependent on loans, which are harder to come by now that local
banks have tightened lending terms. He assured the Ambassador
that in general, Primorye banks are in good condition, as most
banks in the region are branches of large Moscow banks.

10. (U) VladAvia's president, Vladimir Saybel, was more
concerned about fuel prices than the global financial crisis,
but he did say that international tourism could fall if the
crisis deepens. PTK president Vitaliy Subbotin said that
willing buyers for the company's American made Freightliner
trucks are facing increased difficulty procuring financing.
Sakhalin business leaders pointed out that more and more
contractors and suppliers require payment upfront before
delivery of goods or services.

11. (U) The Ambassador toured the port of Vladivostok where
FESCO Managing Director Vladimir Korchanov stated that thanks to
long-term shipping contracts, his company has seen very little
drop in revenue or volume so far. However, as many of those
contracts expire next year, he expects downward pressure on
fees, and a 15 to 30 percent decrease in volume next year. Most
of the loss will be a result of a decrease in automobile imports
-- container traffic, he says, should remain more or less
stable. The credit crunch has forced FESCO to cancel ship
building contracts and curtail expansion plans.

Environment
-----------

12. (U) Ambassador Beyrle met with Yuriy Darman, the director of
the World Wildlife Fund's Amur Branch at his 'Land of the
Leopard' Visitor Center in Barabash, Khasan Region and discussed
wildlife conservation programs in the Russian Far East. The

VLADIVOSTO 00000129 003.2 OF 003


center and its nature pathway are located in the heart of
leopard country, and were established to educate local residents
about the endangered Far Eastern leopard, whose population has
dwindled to about thirty. Darman expressed confidence that the
center will receive USD 100,000 of support pledged by the WWF,
though he doubted the federal government will come through with
its promised funding.

13. (U) Mayor Pushkaryov mentioned several plans to improve his
city's dire ecological situation, including the construction of
Vladivostok's first water treatment and sewage processing plant.
The city also has plans to construct a solid waste processing
facility and co-generation plant which, Pushkaryov said, will
use American equipment that has already been delivered to
Vladivostok.

Cultural Events
---------------

14. (U) Ambassador Beyrle participated in a number of public
affairs outreach events that attracted significant participation
and showed that Russians in the RFE are enthusiastic and open to
increased cultural exchange. During his visit to the
PAS-supported exhibit "Eleanor Pray: [American] Letters from
Vladivostok, 1894-1930", the exhibit organizer noted that the
project highlights close Russian-American ties dating back over
one hundred years, and thanked the Mission for its support of a
number of other projects that highlight common history and
shared values.

15. (U) The Ambassador attended a PAS-funded performance by jazz
drummer Alvin Atkinson. Russian jazz musicians who performed at
the three-day festival met with American counterparts and
expressed their gratitude to the Ambassador for the opportunity
to meet American musicians face to face.

16. (U) The Ambassador's lecture at the Vladivostok University
of Economics and Service's International Education Week was
followed by a lively Q&A where students touched a range of
topics, including exchange opportunities, the Russian-American
relationship, and foreign policy issues. University President
Gennady Lazarev -- also a Deputy of the Primorye Legislative
Committee -- expressed his strong desire and readiness to
continue educational and sports diplomacy exchanges. The
Ambassador attended a performance of an American musical
performed by students of the Vladivostok Fine Arts Academy which
was staged by an American choreographer and costume designer.
The performance was part of a Department-funded "Cultural Envoy"
program, and made a great impact on the Russian faculty and
students involved.

Media
-----

17. (U) The Ambassador's visit attracted significant -- and
positive -- press coverage in about forty print, online, and
broadcast outlets. PAS arranged a twenty-minute interview on
the Kray-owned TV station and a front page interview with the
main Vladivostok daily. The regional affiliate of the Rossiya
TV channel reported on the Ambassador's presentation at the
International Education Week and various Sakhalin media attended
the Ambassador's lecture at Sakhalin State University. His
interview with an independent Sakhalin TV station was broadcast
several times.

18. (U) Many of the issues the Ambassador raised during the
visit can be advanced at this summer's Russian-American Pacific
Partnership (RAPP) meeting. The RAPP meeting will likely be
held on Sakhalin and it is an excellent venue for promoting
American business, reducing bureaucracy, and finding ways for
the U.S. and Russia to come closer to realizing the vast
potential that exists in this region. The Consulate appreciates
the Ambassador taking on some 25 events in just a few days and
expects that the visit will continue to pay dividends as we work
on the issues raised in this trip.
ARMBRUSTER

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