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Cablegate: Pro-Right Hand Drive Rallies Take Place Throughout Eastern

VZCZCXRO9994
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSR RUEHYG
DE RUEHVK #0130/01 3310853
ZNR UUUUU ZZH
R 260853Z NOV 08
FM AMCONSUL VLADIVOSTOK
TO RUEHC/SECSTATE WASHDC 1050
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNCIS/CIS COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 0209
RUEHYG/AMCONSUL YEKATERINBURG 0214
RUEHVK/AMCONSUL VLADIVOSTOK 1147

UNCLAS SECTION 01 OF 02 VLADIVOSTOK 000130

SIPDIS

E.O. 12958: N/A
TAGS: PGOV ECON RS
SUBJECT: PRO-RIGHT HAND DRIVE RALLIES TAKE PLACE THROUGHOUT EASTERN
RUSSIA

VLADIVOSTO 00000130 001.2 OF 002


Summary
-------

1. On November 22, demonstrators throughout the Russian Far
East (RFE) staged rallies to protest the National Duma's
proposal to ban the import and limit the use of right-hand drive
vehicles from Japan. The largest demonstration -- which took
place in Vladivostok -- attracted seven thousand participants
including the Mayor and blocked traffic for much of the day.
The proposal to ban the import of used cars older than five
years and to increase customs duties for all foreign second-hand
cars by 30 per cent would make used cars from Japan -- which
make up 90 percent of passenger vehicles in the Russian Far East
and 60-80 percent in Siberia -- as much as USD 3,000 more
expensive. The Duma justifies the measure as necessary for
supporting domestic automobile producers and dealers.

Demonstrations Throughout Eastern Russia
----------------------------------------

2. Demonstrators throughout the Russian Far East and parts of
Siberia staged rallies to protest a proposal put forward in
October by the National Duma's Tariff and Customs Committee to
ban the import of used cars older than five years and to
increase customs duties for all foreign second-hand cars by 30
per cent. Though it applies to all foreign cars regardless of
country of origin, the measure most severely impacts cars from
Japan and has the greatest detrimental effect on residents of
eastern Russia.

3. The new measure would make the Japanese cars -- much
preferred by Far East Residents -- as much as USD 3,000 more
expensive. Over 90 percent of passenger vehicles in most cities
in the Russian Far East are imported used cars from Japan.
Residents of the region prefer the imports because they are less
expensive and considered of higher quality than other cars
available locally. In Vladivostok, for example, there are so
many right-hand drive vehicles that parking facilities place
their ticket dispensers on the right hand side of lot entrances.
The Duma justifies the measure as necessary for supporting
domestic automobile producers and dealers. The federal
government rescinded a similar proposal in 2005 after automobile
owners and dealers in dozens of cities staged demonstrations
against it.

4. The Vladivostok rally attracted seven thousand participants
and blocked traffic for several hours. Vladivostok Mayor Igor
Pushkaryov and city Duma Deputy Dmitry Penyaz, who supported the
protests, assured the demonstrators that the petition signed by
angry automobile owners will be delivered to President Dmitriy
Medvedev. Pushkaryov even signed the petition. Similar actions
took place in other cities of the Russian Far East and Siberia,
including Khabarovsk, Petropavlovsk-Kamchatskiy, Barnaul,
Novosibirsk, as well as St. Petersburg and Moscow. In Nakhodka
more than 1,000 drivers staged a mock funeral for the right-hand
drive and carried a coffin along the main city street. In
Khabarovsk, 300 motorists gathered on the central square to sign
a petition and delivered it to Polpred Oleg Safonov's office.
Petropavlovsk-Kamchatskiy did not grant a permit for a
demonstration, and authorities ordered traffic police to patrol
the city streets and disperse groups of potential protesters.

5. Though the Vladivostok Mayor and City Duma are in support of
the protesters, the Krai leadership has been notably silent on
the matter. No Primorye Duma members appeared at the rally, and
TV reporters and journalists representing federal media were
absent, reportedly after being advised by authorities not to
cover the event. As a result, there was only a five second spot
shown on regional news that day.

Just the Latest Import Restriction
----------------------------------

6. The latest proposal, which will be voted on in December,
comes after a series of import restrictions implemented starting
in the late 1990's. The most recent regulation closed a
loophole which allowed inexpensive 'konstructor' automobiles.
Many importers hoping to reduce import customs bought used cars
in Japan, disassembled them there or on the ship on the way to
Vladivostok, and imported them as parts. After clearing
customs, importers would then reassemble the parts and save
approximately USD 2,000 on import fees. Recently increased
tariffs on car bodies, however, made the process less
profitable. Authorities had initially banned the import of cars
over seven years old, then reduced the age to five years.

Comment
-------


VLADIVOSTO 00000130 002.2 OF 002


7. Although several such bans have been proposed in the past,
the RFE has so far been granted extensions allowing continued
use of right-hand-drive vehicles. Residents of the Russian Far
East have expressed disappointment with the federal government,
which on one hand develops grandiose development strategies for
the region, yet continues to pass resolutions which make life
for residents here more inconvenient and expensive. Though
residents do not often take to the streets in political protest,
they have shown that they are willing to take a stand against
initiatives that affect their economic interests. The issue of
imported cars highlights a practical issue which hinders
region/center relations. Though Moscow talks about increasing
trade with Asia, and highlights the advantages of the Far East's
proximity to Asia, this proposal would dampen RFE-Asia trade.
Of the various import-restricting measures to be discussed in
the Duma in December, an outright ban of Japanese second-hand
imports is unlikely, though the continued, yet gradual,
restriction of Japanese automobiles will likely continue.
ARMBRUSTER

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