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Cablegate: Russian Intellectuals Present Bearish Outlook to U/S Burns

VZCZCXRO4112
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHMO #0140/01 0211453
ZNY CCCCC ZZH
P 211453Z JAN 10
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC PRIORITY 5991
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 000140

SIPDIS

E.O. 12958: DECL: 01/21/2020
TAGS: PREL PGOV RS
SUBJECT: RUSSIAN INTELLECTUALS PRESENT BEARISH OUTLOOK TO U/S BURNS

Classified By: DCM Eric S. Rubin for reasons 1.4(b, d)

SUMMARY

1. (C) During a January 13 discussion with U/S Burns, four
prominent Russian intellectuals agreed the current Russian
leadership is not successfully tackling the immense economic
and social challenges facing the country. Despite Medvedev's
progressive "modernization" rhetoric, vested interests that
profit from Russia's continued dependence on resource rents
will likely block genuine reform. The GOR's crackdown on
public protests stems from fear of a repeat of the Orange
Revolution and concerns about the reliability of the security
forces. Putin remains the dominant force in the GOR with the
resources and cadres to back him; on foreign policy, Medvedev
is using different tactics for the same policies, which are
simultaneously friendly and hostile to the West. All agreed
Putin will most likely return to the presidency in 2012. End
summary.

2. (SBU) On January 13, the Charge hosted a discussion on
Russia's current political and economic situation for U/S
Burns, NSC Senior Director for Russia McFaul, and EUR DAS
Russell with XXXXXXXXXXXX, XXXXXXXXXXXX, XXXXXXXXXXXX and XXXXXXXXXXXX.

MODERNIZATION/REFORM

3. (C) XXXXXXXXXXXX said the business community is giving up on
Medvedev's promises of modernization and noted that Putin's
presidency had also begun with ambitious targets to be met by
2010 -- known as the Gref plan -- only 27% of which have been
implemented. While there is widespread acknowledgment of the
need for reform, the elite who control the economy are
content with the status quo, in which they receive a secure
slice of the pie based on their control of rents gained from
natural resource exports. Reform, even if it promises to
increase dramatically the size of the pie, is not in their
interest if it threatens their slice. As a result, there is
a strong bias towards inertia. XXXXXXXXXXXX seconded this analysis but said the problem is systemic and not tied to the Putin
government, noting that dependence on natural resources (a
feature of Russia's economy for 300 years) destroys the
demand for modernization. Moreover, the current generation
of leaders believes oil prices will stay high so there will
be sufficient rents to sustain them. XXXXXXXXXXXX said another
factor mitigating against reform is that Putin's team
believes the global economic crisis will end in 2011,
triggering a resurgence in oil prices. In the meantime, the
government will borrow and spend to keep the economy going.

POLITICAL APATHY, OFFICIAL FEAR

4. (C) Despite the lack of demand for reform and
modernization and widespread political apathy, XXXXXXXXXXXX
contended the ruling elite is fundamentally insecure about
its position. Citing opinion surveys, she claimed that even
among high-ranking officials there is widespread disgust for
government corruption and support for reform, especially rule
of law, suggesting a strong, silent constituency for change
exists. She also claimed that in last fall's municipal
elections, even in central Moscow (home to bureaucrats and
other beneficiaries of the status quo) the ruling United
Russia party received only 12%, while 47% of the ballots were
spoiled intentionally, i.e. people opted for "none of the
above." (The official results showed overwhelming support
for United Russia.) Moreover, the catastrophes caused by
ageing infrastructure (such as the collapse of the Siberian
hydro station last summer) and imminent regional budget
crises which threaten to cut off salaries to teachers and
other public workers could also serve as triggers for
instability.

5. (C) XXXXXXXXXXXX concurred, noting the leadership remains
frightened of a repeat of the Orange revolution in Ukraine,
which is why there is a ban on public demonstrations. In
addition, local police are not trusted to quell disorder, so
when there were large protests in Vladivostok, special police
were flown in from Moscow and the Interior Ministry uses
police from surrounding regions to deal with protests in the
capital. XXXXXXXXXXXX said that, despite the bad press abroad, the
rough treatment of demonstrations has succeeded in sending a
strong message to students: if you participate in this
activity, you could get beaten up and/or spend time in jail.
XXXXXXXXXXXX said that, as a result of the stifled political
climate and sense of stagnation in the economy, a large
percentage of people are voting with their feet (or trying
to) by seeking to move abroad.

TANDEM: PUTIN CALLS THE SHOTS

6. (C) XXXXXXXXXXXX said the baseline assumption is that Putin
intends to return to the presidency in 2012 and remain there
until 2024. He noted that Medvedev had made some important
moves independent of Putin, but they were not sufficient to
suggest he could become Putin's rival. XXXXXXXXXXXX said
Medvedev is not prepared for a struggle for power; he has not
created institutions to support his position and he does not
have a pool of cadres to work for him. In his first year in
office, he has placed fewer than 1000 loyalists into the
government. Putin, with his protgs in the security
services, could fill 7000 jobs overnight if he needed to,
XXXXXXXXXXXX said.

7. (C) On foreign policy, XXXXXXXXXXXX said Putin's paradigm remains in force whereby Russia acts as both a friend and a foe of the West and NATO continues to be demonized. The tactics, she said, have been modified under Medvedev, but he has no leverage on the overall strategy. Putin, according to XXXXXXXXXXXX and XXXXXXXXXXXX, continues to exercise control on foreign policy through FM Lavrov and his own foreign policy staff, led by Yuriy Ushakov. XXXXXXXXXXXXadded that Putin probably did not even see the need for a "reset" in relations with the U.S. since in his mind there was no problem in the relationship. Putin, he said, continues to blame the U.S. for Russia's failure to enter the WTO and for destabilizing the relationship by rolling out plans for missile defense. Putin's goal, according to XXXXXXXXXXXX, is to have Medvedev change as little as possible pending Putin's return to the presidency.

8. (U) U/S Burns has cleared this message.
Beyrle

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