Cablegate: Usaid Team Examines Situation On the Ground in North

VZCZCXRO8085
PP RUEHLN RUEHVK RUEHYG
DE RUEHMO #3076/01 2911207
ZNR UUUUU ZZH
P 171207Z OCT 08
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 0415
INFO RUEHSI/AMEMBASSY TBILISI 3895
RUEHKV/AMEMBASSY KYIV 0297
RUEHYG/AMCONSUL YEKATERINBURG 3340
RUEHVK/AMCONSUL VLADIVOSTOK 2978
RUEHLN/AMCONSUL ST PETERSBURG 5096

UNCLAS SECTION 01 OF 05 MOSCOW 003076

STATE F FOR THE DIRECTOR OF FOREIGN ASSISTANCE, EUR/ACE
AIDAC STATE FOR AID/E&E ASSISTANT ADMINISTRATOR MENARCHIK; AID/E&E
FOR BREWER, ROBINSON; AID/DCHA FOR HESS AND KVITASHVILI

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID PREL KDEM RS GG
SUBJECT: USAID Team Examines Situation on the Ground in North
Caucasus, Ongoing Program Needs

Sensitive but unclassified, not for internet distribution.

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SUMMARY
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1.(SBU) From September 29 to October 3, USAID staff including USAID
Deputy Assistant Administrator for the Bureau for Democracy,
Conflict and Humanitarian Assistance traveled to North Ossetia and
Kabardino-Balkaria: to assess any outstanding humanitarian needs as
a result of the recent conflict in South Ossetia and to lay initial
groundwork for an assessment of the possible future direction of
USAID's current North Caucasus Program which is focused on
stabilization and conflict mitigation. The team held roundtables in
Vladikavkaz (9/30) and in Nalchik (10/2) to interface with USAID
partners, other local Russian NGOs, and local government officials.
The team also visited community revitalization projects and met with
local officials in mixed Ingush/Ossetian communities in the
Prigorodny Raion of North Ossetia, where USAID projects have formed
public councils to solve community problems, supported
reconstruction efforts, and provided resources, equipment, and jobs
to develop the local economy. Prigorodny witnessed ethnic conflict
between the Ingush and Ossetians in the early-1990s and is home to a
significant number of South Ossetians from the 1992-93 conflict with
Georgia.

2.(SBU) The Children's Fund of North Ossetia, the Caucasus Refugee
Council, and other organizations affirmed a continued need for
substantial international support to South Ossetia in light of
depleted housing stocks, the approach of winter, the rising cost of
construction materials due to increased demand, and the ongoing
handover of reconstruction efforts to South Ossetian authorities not
well-prepared to take on this responsibility. While the residual
dislocation of refugees in North Ossetia from the recent conflict is
minimal (estimates range from 1,000-5,000), the authorities noted
that the refugees are often staying in areas inhabited by the waves
of refugees from the earlier conflicts in South Ossetia in the
early-90s. Infrastructure is incapable of supporting even the
current population. The head of the North Ossetian Department of
External Affairs noted that Moscow's instruction to support South
Ossetian development is also placing budgetary and administrative
burdens on North Ossetia at a time when it faces its own economic
and security challenges. End Summary.

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BACKGROUND ON USAID ACTIVITIES IN NORTH CAUCASUS
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3.(SBU) USAID's development assistance efforts in Russia seek to
advance critical U.S. interests and help Russia become a stable,
democratic, and reliable partner with the United States in
addressing global issues. Its program in the North Caucasus (NC),
begun nearly four years ago, is a critical component of this
overarching assistance goal, and one of the most sensitive and
operationally-challenging parts of the USAID/Russia portfolio.
Assisting in the stabilization and reconstruction of the NC is vital
to the overall stability of the entire Caucasus region if we are to
reduce the potential for a spread of violence partly attributed to
home-grown extremism on the one hand, and deepening youth
frustration on the other.

4.(SBU) The NC continues to face a number of very complex
socio-economic challenges, including high rates of poverty,
unemployment, displaced populations, and deep and multi-layered
corruption. According to multiple individuals with regular access
inside Chechnya (including up through Shatoi and Itum Kale) with
whom USAIDOFFS spoke, Chechnya seems to be stabilizing, despite the
often deadly feuding between clans competing for access to resources
and hence power, while Ingushetia is an increasingly Islamicized
powderkeg with a new mosque and Islamic University courtesy of
financial support from Ramzan Kadyrov.(N.B.: according to our well
placed interlocutors, young people from Chechnya and Ingushetia are
"leaving for the mountains", in larger numbers than accounted for in
the recent past.) The Elbruz raion of Kabardino-Balkaria also
appears to be a "hot zone" owing to the number of "boiviki"
(fighters) who live in the foothills leading up to the mountains.
Ethnic, religious and clan issues are deeply entrenched, and a
"military economy" - characterized by the Russian military's
complicity with local militants, dealing weapons, trading narcotics
and trafficking in persons - may be thriving. One interlocutor
indicated that in Ingushetia, the FSB is "out of control" and that
the trends are all negative given increased criminality, increased
clan competition, increased (violent) political competition and

MOSCOW 00003076 002 OF 005

increased activities on the part of the jamaat (comment: it's not
clear if it's the Ingush jamaat or the larger united Caucasian
jamaat with Ingush representation. End comment.) The NC region is
poorly integrated into the Russian Federation, and governance bodies
lack capacity at all levels. Nevertheless, there are opportunities
to work effectively in the region, including a relatively improved
security environment, Chechen efforts to rebuild, and the desire of
the Russian government to support programs that will limit conflict
from spreading to neighboring regions.

5.(SBU) Current projects in the region, which primarily came from an
open-ended Request for Application (RFA) issued in 2006, include
conflict mitigation, job creation, local governance and policy
reform, civil society, community development, infrastructure,
tolerance-building, health, social services, psycho-social
rehabilitation, combating terrorism, and anti-corruption. Many
projects focus on at-risk groups and youth. USAID's geographic
focus is in four key regions - Chechnya, Ingushetia, North Ossetia
and Dagestan - as well as the five neighboring regions of
Krasnodarsky Krai, Adygeya Republic, Karacheyevo-Cherkassia
Republic, Stavropolsky Kray, and Kabardino-Balkarskaya Republic,
with a total population of about 7 million. USAID's key partners
include with programs in the North Caucasus include: the
International Rescue Committee (IRC), World Vision, Keystone, IREX,
the Children's Fund of North Ossetia (CFNO), Russian Microfinance
Center, UNICEF, ACDI/VOCA, the Southern Regional Resource Center
(SRRC), the Center for Fiscal Policy (CFP), the Center for
International Private Enterprise (CIPE), the Institute for Urban
Economics, "Faith, Hope, Love" (FHL), the International Federation
of the Red Cross (IFRC), and the Fund for Sustainable Development
(FSD).

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THE SITUATION IN SOUTH OSSETIA
AS SEEN FROM NORTH OF THE BORDER
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6.(SBU) Despite initial restrictions in movement in North Ossetia
and a wave of approximately 37,000 refugees from South Ossetia, in
North Ossetia little evidence remains of their presence. According
to the head of the UNHCR Office in Vladikavkaz (Mary-Jane
Meierdiercks-Popovic) on September 30, all but approximately
1000-2000 of the refugees have returned to South Ossetia (Note:
Other sources state the number of those remaining as high as 5,000).
UNHCR, NGOs, and the Ministry of Emergency Situations (EMERCOM)
predict that that number may grow by as much as 1,000 as winter
approaches given the slow pace of reconstruction efforts in South
Ossetia. UNHCR anticipates that the needs will be modest during
that period for those staying in North Ossetia and that
approximately 90% are Russian citizens.

7.(SBU) By the accounts of international aid agencies and NGOs,
EMERCOM's response to the crisis was swift, effective, and
substantial in meeting immediate humanitarian needs in South Ossetia
and in North Ossetia. EMERCOM coordinated the relief effort for the
Russian government, setting up a task force in Tskhinvali and
Vladikavkaz to coordinate response efforts and providing nearly 3000
staff; hundreds of pieces of emergency response equipment including
trucks, helicopters, and aircraft; and 11,500 metric tons of
humanitarian aid (Source: EMERCOM Report of 9/24/2008). EMERCOM
Minister Sergei Shoigu stated that operations in South Ossetia to
mitigate the humanitarian crisis were completed on September 15, to
be followed by a period of large-scale construction, infrastructure
repair, and peace keeping. The bulk of the responsibility for
reconstruction efforts has been passed back to the South Ossetian
authorities and on October 4 South Ossetian President Eduard Kokoiti
signed a declaration establishing a South Ossetian EMERCOM. The
Russian construction agency SpecStroy continues to provide materials
and labor to continue the construction efforts, but the
infrastructure in South Ossetia was in a state of disrepair before
the conflict and will need a substantial investment of resources and
time to address basic community needs. (Note: EMERCOM in North
Ossetia canceled our scheduled meeting two days before our visit).
(N.B.: Both UN and NGOs reps indicated that while no requests for
assistance had been received officially, specific kinds of
assistance, such as limited amounts of food and emergency blankets,
when offered, was welcomed.)

8.(SBU) On October 1, representatives from NGOs that have visited
South Ossetia, including the Caucasus Business and Development
Network and the Caucasus Refugee Council (CRC) told us that
substantial reconstruction work remains to be done in South Ossetia.

MOSCOW 00003076 003 OF 005

Separately, EMERCOM reported on September 24 that 2522 residential
buildings had been destroyed in South Ossetia, 1121 of which were
beyond repair. EMERCOM reported that 29 educational institutions,
17 healthcare facilities, 68 km of gas lines, 160 km of water lines
and 458 km of electrical lines were also damaged. Currently, 51 of
55 schools are reported operational. UNHCR told us that they expect
the report for the UN SecGen from the visit of UNHCR High
Commissioner Antonio Guterres to South Ossetia to be released
shortly.

9.(SBU) The number of NGOs and international groups providing aid to
South Ossetia remains small. UNHCR reported that only the
International Committee of the Red Cross was operational in South
Ossetia, with approximately 50 staff equipping a trauma unit and
providing insulin supplies and food stuffs. On September 30, the
deputy head of the CFNO told us of their plans to open an office in
South Ossetia in October to coordinate the delivery of humanitarian
aid. CFNO helped to place children in temporary foster care in
North Ossetia and in Moscow, provided educational supplies, and
basic clothing. CFNO is a key partner with USAID in rehabilitating
community infrastructure in mixed Ingush/Ossetian communities in the
Prigorodny Raion and other parts of North Ossetia and has close
relations with the Republican Government in North Ossetia. The CRC
also plans to undertake some operations in South Ossetia and was
seeking international sources of funding to support its efforts.

10.(SBU) Ossetian NGO groups and the government of North Ossetia
stated that the process of integrating South Ossetia into Russia
will likely be swift (this, despite the fact that South Ossetia has
been recognized as "independent" and not a part of the Russian
Federation). The CRC said that by necessity strong economic links
are developing, combined with strong cross-border family ties. The
government of North Ossetia has also been tasked with helping
develop the governmental institutions in South Ossetia and Prime
Minister Putin has set aside 10 billion rubles (USD 400 million) for
South Ossetia. Comment: When asked, a South Ossetian with whom we
spoke indicated South Ossetians wanted independence while North
Ossetians want the South integrated within Northern Ossetia. None
of our interlocutors spoke of a greater independent Ossetia, but
clearly that was on some people's minds. End comment.

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THE OPERATING ENVIRONMENT IN THE NORTH CAUCASUS,
RELATIONS WITH LOCAL GOVERNMENT
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11.(SBU) According to UN Department of Safety and Security (UNDSS)
specialists and USAID partner organizations, the security
environment in the NC republics of Dagestan, Chechnya, Ingushetia,
North Ossetia, Kabardino-Balkaria, and Karachay-Cherkessia remains
dynamic and challenging for aid organizations. Dagestan, Chechnya,
Ingushetia, and the five southern districts of Stavropol Krai remain
pegged by UNDSS as Security Level IV (Insecure), which according to
UN policy requires armed escorts with no overnighting for
international staff. Most of North Ossetia, Kabardino-Balkaria, and
Karachay-Cherkessia are Level III (Transitional), although a request
to downgrade to Phase II is in New York for consideration. In 2008
the modest improvements in the security environment in Chechnya have
been accompanied by a steep decline in the security environment in
Ingushetia and Dagestan. USAID partner IRC closed offices in
Ingushetia following the shelling of a UNDSS post in 2007 and
threats to the security of some members of their local staff, along
with the UN. Ambush attacks occur several times each week on
Ingushetian government officials and members of the security forces.
While North Ossetia has remained relatively quiet aside from a high
level of economic crime, during our visit on October 1, the head of
the criminal investigation unit of the North Ossetian police and his
20-year old son were killed in Vladikavkaz when their vehicle came
under small arms fire. UNDSS and the CRC noted an increase in the
availability of arms due the formation of Ossetian militias that
volunteered to fight against Georgian forces. UNHCR commented that
this trend combined with the increase in numbers of civilians with
exposure to combat may have a negative impact on stability in North
Ossetia. That said, AIDOFFS noticed a more relaxed security
presence than over the last 4 years (Kvitashvili has traveled
repeatedly to the North Caucasus over the past four years), with
little to no visible military presence and no road blocks or
security checkpoints along roads traveled. Perhaps due to Bayram
(the end of Ramadan), the streets of Vladikavkaz and Nalchik were
full of pedestrians until late at night.

12.(SBU) In addition to security precautions, the travel
restrictions imposed by Russian authorities have generally expanded

MOSCOW 00003076 004 OF 005

due to the introduction of the Russian Anti-terrorism Law which
permits the Federal Security Service to restrict access to large
areas on short notice. Similarly for the duration of the conflict
in South Ossetia, movement of internationals in North Ossetia was
restricted to the two cities, Vladikavkaz and Beslan, along Route
155. UN staff reported that Russian officials did not want
international staff observing troop movements along the border.
When asked about the movements of Russian forces in advance of
August 7, staff reported that it was difficult to discern whether
the movements were associated with the large Russian military
exercise or a tactical troop buildup. Programmatically the
difficulty for certain USAID partners including WV to receive travel
permission from the North Ossetian Department of External Affairs
has complicated project implementation efforts.

13.(SBU) During our October 1 meeting with the head of the
Department of External Affairs Vladimir Tabolov, we discussed USAID
program activities in North Ossetia and the region in the areas of
community development, interethnic tolerance, agriculture, economic
development, and education. Tabolov, who clearly represents Moscow
interests, spoke generally supportively of international aid efforts
in North Ossetia focused on infrastructure support, agriculture, and
economic development. On the subject of education, he said that it
was his republic's job to teach its children and that international
groups should stay away from the subject. Tabolov spoke positively
of USAID's work with CFNO. (Note: Prigorodny witnessed a brief
interethnic war in 1992 between the Ingush and Ossetians that drove
most of the Ingush out. The settlements were then inhabited by
South Ossetian refugees from Georgia before a 1995 Russian-mediated
Ossetian-Ingush agreement induced the North Ossetian authorities to
allow a limited number of Ingush families from four settlements in
the Prigorodny Raion to return.)

14.(SBU) On October 1 we visited two USAID projects implemented by
World Vision in Prigorodny in the settlements of Kurtat and
Dachnoye. The communities are close to the border with Ingushetia.
The projects there involve the establishment of public volunteer
councils to identify problems in the community, the identification
and selection of community projects, and the formation of teams from
the community to carry out the work. The communities have
identified and undertaken work on several activities to date
including the refurbishment of a community space around a mosque,
the renovation of a community center, and facility improvements at
the main school in Dachnoye. While the projects themselves were
very simple, the process brought Ossetian and Ingush community
members together in a unique forum to make decisions. In a
community where Ingush and Ossetians do not formally gather
socially, the mixed Ingush and Ossetian public council determined
that the mosque was an important community project. On October 2,
we visited a CFNO project site in the Prigorodny settlement of
Gizel, where CFNO has worked with a local bakery to provide
equipment to improve production and increase the number of jobs in
the economically depressed area. Work is also underway to provide
running water to housing units in Gizel to avoid the use of
contaminated shallow dug wells. The head and deputy head of the
Prigorodny Raion accompanied us on the site visits and conveyed
strong support of USAID's continued work in the district.

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OPPORTUNITIES AND CHALLENGES TO U.S. ASSISTANCE
--------------------------------------------- --

15.(SBU) USAID held roundtables on September 30 in Vladikavkaz and
on October 2 in Nalchik (Kabardino-Balkaria) to discuss broadly the
impact of USAID programming, opportunities to refocus programming to
areas of greater traction, and implementation challenges.
Participants focused on several key themes, including:
--maintaining a focus on youth as a source of positive change and
the key risk group for conflict;
--the enabling environment for creating and providing economic
opportunity and education;
--coordination of programs and information throughout the NGO
community and donor organizations, and with local government;
--the challenge of efficiently managing projects throughout the
region given the travel restrictions and security precautions; and
--the sustainability of development interventions and NGO capacity
building in the region.
The participation of a Republic Duma Deputy in Kabardino-Balkaria
led to some heated questioning of U.S. interest in the region
against the backdrop of recent events in Georgia. At the same time,
we observed an interest in work with USG partners given the
magnitude of the social and economic challenges facing the region.

MOSCOW 00003076 005 OF 005

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COMMENT
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16.(SBU) The immediate humanitarian crisis has passed, however, the
region continues to face a deficit of resources, political will, and
economic opportunities to improve stability and the economy. The
new burden of South Ossetia will only further draw down the region's
limited economic and administrative resources. USAID's upcoming
assessment will help us identify what opportunities exist for our
future programs under these conditions. With the downward spiral of
violence in Ingushetia, USG programs are well placed to reduce
interethnic conflict, provide modest local improvements in economic
opportunity, and engage at-risk youth but the challenges to making
progress are immense and the needs in each republic unique. USAID's
ability to forge and maintain productive relationships with local
officials will remain key to ensuring access for and the
effectiveness of programs. While local officials face some
pressures to control and limit international engagement in the
region, the positive disposition of some officials and at least the
pragmatic inclinations of others will hopefully provide a stable if
not particularly strong access point for our work in the region.

BERYLE

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