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Cablegate: Foreign Grants Bill and Usg Programs

VZCZCXRO5876
RR RUEHDBU RUEHLN RUEHPOD RUEHVK RUEHYG
DE RUEHMO #3507/01 1991055
ZNR UUUUU ZZH
R 181055Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 2155
INFO RUCNCIS/CIS COLLECTIVE
RUEHXD/MOSCOW POLITICAL COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 4315
RUEHYG/AMCONSUL YEKATERINBURG 2568
RUEHVK/AMCONSUL VLADIVOSTOK 2263

UNCLAS SECTION 01 OF 02 MOSCOW 003507

SIPDIS

SENSITIVE
SIPDIS

USAID FOR DAA/EE D.LUTEN, A.BREWER, EE/DCHA D.ATWOOD, GC/EE
M.FITTIPALDI

E.O. 12958: N/A
TAGS: PGOV PREL PINR EAID RS
SUBJECT: FOREIGN GRANTS BILL AND USG PROGRAMS


MOSCOW 00003507 001.2 OF 002


1. (SBU) Summary: Some of our official contacts - most
notably a handful of judges - are concerned that their
participation in USG-funded programs could contravene Russian
law. Many USG-financed technical assistance programs, from
those of USAID and IMET to Open World and INL, provide funds
and per diem to Russian officials for in-country and foreign
travel. A series of amendments, promulgated in March,
prohibit a broad range of officials from receiving financing
exclusively from foreign sources for "pedagogical,
scientific, or creative activities." The prohibition does
not apply if there is an international agreement covering the
activity or if a Russian source is participating in
financing.

2. (SBU) The intent of the law was to prohibit outside income
and, to date, only one USG-funded program (a St. Petersburg
International Visitor Program in which Interior Ministry
officials refused to participate) has been directly affected
by this law, and we continue to assert that existing
bilateral agreements - from the 1992 bilateral agreement on
technical assistance to the 2006 MOU on university
partnerships - provide the necessary legal cover for
participants, despite the fact that these agreements are not
international agreements ratified by the Russian legislature.
End Summary.

---------------
The Legislation
---------------

3. (U) GOR laws generally prohibit GOR officials from earning
income for activities considered outside of their official
duties. There are certain exceptions to this, including for
those deemed "pedagogical, scientific, or creative
activities." The law promulgated in March is a series of
amendments to existing legislation that prohibits GOR
officials from being exclusively financed by foreign sources
for such "pedagogical, scientific, or creative activities,"
except as otherwise provided by RF legislation, RF
international agreements, or bilateral agreements between
federal bodies of power and foreign government bodies or
international or foreign organizations. Similarly, GOR
officials are prohibited from serving in governing,
supervisory, or fiduciary capacities for foreign NGOs.

4. (U) The legislation applies to a broad range of government
officials. Insofar as legislative intent goes, Duma Speaker
Boris Gryzlov said that "if a Russian citizen gives money to
a government employee, it's a bribe; if a foreigner does,
it's a grant." While grants, honoraria, etc. will be
forbidden, further ramifications of this legislation are
unclear. Some GOR officials are concerned, however, that the
airfare, lodging, and other expenses they receive might be
considered "outside income" under the law.

-----------
The Effects
-----------

5. (SBU) The legislation affects eighteen other pieces of
legislation covering various branches of
government. More confusing, each piece of legislation is
amended in subtly different ways, resulting in a lack of
uniformity. Even existing legislation prohibits many
government officials from earning a "second salary," the
definition of which could be interpreted broadly enough to
include USG programs.

6. (SBU) The law has led to concern among some of our
official contacts in the judiciary and law enforcement.
Participants in a USAID "judicial exchange" program with the
Arbitration Court cited the law and expressed concern that
the program would contravene it, although an internal court
resolution seems to have paved the way for future programs to
go forward. The only USG program affected to date has been
an International Visitor Program (IVP) in St. Petersburg for
law enforcement officials. St. Petersburg was unable to find
participants for a "hate crime" IVP when the Ministry of the
Interior, citing this law, refused to cooperate with the NGO
with which the Consulate was working. Other USG-funded
programs, including those run by NDI and IRI, have been
unaffected.

7. (SBU) The experience of European-funded technical
assistance programs has mirrored our own. Although initially

MOSCOW 00003507 002.2 OF 002


concerned that their heavily GOR-weighted TACIS programs
would be seriously and negatively affected, our European
colleagues have not seen an impact. It was only in their
judicial programs, much like USAID, that there was initial
reluctance to participate, which has now been overcome.

8. (SBU) The Embassy continues to assert that the 1992
bilateral agreement on technical assistance and the many
bilateral Memoranda of Understanding (MOU) between agencies
provide the necessary legal cover under the amendments'
exception clause. The annual INL and IMET workplans and the
2006 MOU on university partnerships are but a few examples.
We note, however, that none of these agreements would qualify
as an international agreement ratified by the Russian
legislature.

9. (SBU) United Russia Duma Deputy Aleksandr Moskalets
expressed surprise that the Embassy was concerned about the
law, saying that it should have minimal effect on USG
programs. His assumption tracked with ours: that the various
Memoranda of Understanding between the Embassy and the GOR
fit into the exception clause. Moskalets cautioned, however,
that such memoranda would only apply to federal level
agreements.

-------
Comment
-------

10. (SBU) The intent of the law was likely to prevent
"opposition" political actors from being financed by
foreigners. The practical effects of this law on USG
programs have been nil, with the St. Petersburg exception
cited above. The U.S. Mission has conducted an internal
assessment and concluded, like our EU colleagues, that we
will continue to maintain that we have sufficient legal cover
to conduct our programs and to deal with questions and
concerns on a case-by-case basis. At the same time, we will
continue efforts to brief the Russian Government about our
programs in an open and transparent manner.

BURNS

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