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Cablegate: Long Truck Lines Likely to Continue Along Latvian-Russian

VZCZCXYZ0005
RR RUEHWEB

DE RUEHRA #0794/01 2971042
ZNR UUUUU ZZH (CCY AD216378 UTS3844-695)
R 241042Z OCT 07
FM AMEMBASSY RIGA
TO RUEHC/SECSTATE WASHDC 4461
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS RIGA 000794

SIPDIS

SENSITIVE
SIPDIS

C O R R E C T E D COPY CAPTION

E.O. 12958:N/A
TAGS: ECON PBTS PREL ETRD EUN RS LG
SUBJECT: LONG TRUCK LINES LIKELY TO CONTINUE ALONG LATVIAN-RUSSIAN
BORDER

1. (U) Summary: A combination of factors, specifically, a
significant increase in trade from the EU to Russia; a lack of
action thus far to modernize and increase the capacity and
efficiency of Russian checkpoint operations; and the lack of
attractive alternative routes, have caused extended delays for truck
drivers in recent months who have been forced to wait, sometimes
more than three days, to transport goods from Latvia into Russia.
Customs officials expect long delays, which began last year, to
continue into the foreseeable future with the summer months and
October to November experiencing peak traffic flows. Latvian
officials in the near term are focusing efforts and resources on
improving the conditions for truck drivers and local residents at
the three major crossing points, Terehova, Grebneva, and Vientuli,
while leaders at the national and EU level negotiate a resolution.
End Summary.

2. (U) As in Finland and Estonia, long lines of trucks have formed
at Latvia's border with Russia. This is a problem that has been
growing in recent years. PolEconOff recently visited the border
crossing points Terehova, Grebneva, and Vientuli and discussed the
issue of long truck lines and inspection delays with Latvian Customs
and Border Guard officials. A record line of more than 2000 trucks
in August with drivers waiting an average of 23 hours at Terehova
and approximately 20 hours at Grebneva prompted the visit. Vientuli,
which has been closed to truck traffic since 2004, may be reopened
and expanded to help alleviate congestion at the other two border
posts. PolEconOff also met with Valdis Trezins, President of the
Latvian Association of Road Carriers (Latvijas Auto), a trucking
association, to better understand the issue from the truck driver's
perspective.

3. (U) According to Eurostat, EU exports of goods to Russia between
2000 and 2006 more than tripled in value, from 22.7 billion euro to
72.4 billion. Russia is now the third most important trading partner
for the EU, after the United States and China. As a result, land
cargo shipments from the EU to Russia have increased. According to
Latvijas Auto, truck flow in August 2007 increased 50 percent since
the same month last year. However, while EU-Russia trade flow has
increased significantly, Russia has failed to modernize and increase
the capacity of its border crossing points and to improve the
efficiency of its inspection process. The two Russian checkpoints
Burachki, which is located at Latvia's major crossing point
Terehova, and Ubylinka, the corresponding border post to Latvia's
second busiest crossing point Grebneva, were built in the 1990s and
are equipped to handle a maximum flow of 450 and 250 trucks per day,
respectively. To meet that potential, the duration of the inspection
process on the Russian side, if inspections were carried out 24
hours a day, would have to average 3.2 minutes at Burachki and 5.8
minutes at Ubylinka. However, according to Latvian Customs
officials, the inspection process for each truck crossing from
Latvia to Russia takes two to three hours. A spokesperson from
Latvia's Ministry of Transportation said publicly that inspection on
the Russian side can sometimes take up to eight hours per truck. In
comparison, inspections from Russia to Latvia take about two to
three minutes per truck.

4. (U) The lack of attractive alternative truck routes has also
contributed to an increase in traffic at the Latvian-Russian border.
According to Customs and Trucking Association officials, Western
companies shipping to Russia prefer to keep their goods in the EU
for as much of the journey as possible. Truck drivers, for example,
who used to cross Belarus, say they no longer do because the risk
that Belarusian Customs officials will confiscate their cargo for a
minor infraction has become too high. Scandinavian and Estonian
routes are possible alternatives, but they are farther and more
expensive than routes through Latvia.

5. (U) Shipping via railroad poses its own problems. The routes are
more complicated and more expensive as Russia charges high tariffs
on railroad transportation from abroad. In 2005, Latvijas Dzelzcels
(Latvian Railways) had a cargo turnover of 54.9 million tons, but in
2006 cargo turnover fell by 11.2 to 48.7 million tons, according to
official statistics. The continuing asymmetry between European and
Russian rail gauges (which are used in the Baltic States from Soviet
days) makes it impractical to imagine much increase in rail traffic,
except for items that enter Latvia by sea and are then transferred
to rail. The recent unveiling of new container trains for the
transport of Chinese transit goods arriving by sea at the ports of
Riga and Liepaja, which are destined for Moscow, will reduce
somewhat the number of containers transferred to trucks. However, at
the moment, the new container trains are only carrying 82 containers
from Riga and 50 containers from Liepaja once a week.

6. (U) Until Russia improves the efficiency of its inspection
process and the capacity of its border posts, Latvia is limited to
improving the management of the ongoing problem of long truck lines
on its side of the border. For example, construction of freight
vehicle parking lots has already begun, and more portable toilets
and trash receptacles along the lines have been installed. To reduce
air and noise pollution and to give truck drivers a rest, drivers
are organized based on the perishability of their cargo and allowed

to turn off their engines and sleep until a specified time. We saw
no signs of trash or criminal activity during our visit and road
conditions allowed us to pass the lines easily. According to press
reports, Latvia's Ministries of Transport, Finance, and Interior
would need to jointly spend LVL 307.6 million (roughly 628 million
dollars) until 2010 to modernize and rebuild the crossing points at
Terehova, Grebneva, and Vientuli to improve conditions for truck
drivers as well as local residents. They plan to receive more than
half of that sum, LVL 153.9 million (roughly 315 million dollars),
from EU structural funding.

7. (U) Latvian and Russian government officials have focused on
reopening a border crossing point in Vientuli, which was closed to
trucks in 2004 due to the weak infrastructure of a bridge on the
Russian side and has since handled only passenger traffic.
Construction of a much larger inspection facility at Ludonka,
Russia's corresponding border post to Vientuli, was visible from the
Latvian side of the border. However, truck drivers do not view
Vientuli as an attractive option to Grebneva, which is about 70km
south, because of its narrow roads; unreliable bridge; and its
isolated location, which is difficult to access and too far north
for shipments destined for Moscow, where 95% of cargo trucks from
the EU are directed, according to the president of Latvia's Trucking
Association. Seventy-five percent of the most direct road from
Grebneva to Vientuli is gravel.

8. (U) A more attractive option for truck drivers is the border
crossing point in Opuli, where the Latvian government also plans to
build a modern border post to better handle truck traffic. Located
70km north of Terehova, it is a closer and a far easier alternative
route to access when backups occur at Terehova, which has
experienced the highest volume of traffic since long truck lines
started to form in 2006. We, however, did not see any construction
work at Mogili, Russia's corresponding border post.

9. (U) At Terehova, most of the truck drivers come from Lithuania
(45-51%), Latvia (20-22%), Russia (15%), and Poland (8-10%). At
Grebneva, truck drivers from Lithuania account for about 42% of all
trucks, followed by Latvia (about 31%), Russia (about 16%), and
Poland (about 6%), according to Customs. While most trucks from the
EU to Russia are full of goods, from machinery and chemicals to
manufactured goods and transport equipment, trucks transiting from
Russia to the EU are often empty, according to Latvian Customs
officials. Truck drivers add that while road conditions in Latvia
are not good, allowing for speeds of up to 70km per hour, road
conditions on the Russian side are much worse, allowing for speeds
of 50km per hour or less.

10. (U) Officials in Latvia's Ministry of Foreign Affairs tell us
that improving the situation is a key task of the Latvian-Russian
intergovernmental commission. The Latvians are willing to consider
expanding existing checkpoints, opening new ones, and modernizing
the inspection process. At present, the GOL is considering projects
such as advanced electronic information sharing among the various
border crossing points. The Latvian State Revenue Service and other
government institutions plan to announce project approvals in early
2008.

11. (SBU) Comment. As we can see, the causes behind the ongoing
issue of long truck delays at the Latvian-Russian border are more
pragmatic than political. Although, as the president of Latvia's
Trucking Association pointed out, the political will to improve
Russia's checkpoint operations at Burachki and Ubylinka, in the near
term at least, probably suffers from a lack of any strong power clan
in the region to lobby for greater commitment from the Kremlin.
Also, with businesses unlikely to find cheaper, more efficient and
direct routes to deliver their products to the Russian market, and
with Latvia due to join the EU's Schengen border-free zone on
December 21, long truck lines look set to continue, if not worsen,
over the next two years as trade flow from the EU to Russia
continues to grow. In the mean time, Russia's failure to modernize
and increase the capacity of its border crossing points and to
improve the efficiency of its inspection process will delay the
development of the region as a whole and dampen Latvia's desire to
build itself as a transit economy between East and West.

SELDOWITZ

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