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Viewing cable 06MOSCOW4572, 4.5M U.S. Investment, Andy Warhol and American Corner
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 06MOSCOW4572 | 2006-04-27 12:59 | 2011-08-24 01:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Moscow |
VZCZCXRO6654
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHMO #4572/01 1171259
ZNR UUUUU ZZH
R 271259Z APR 06
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5023
INFO RUCNCIS/CIS COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 2862
RUEHYG/AMCONSUL YEKATERINBURG 1576
RUEHVK/AMCONSUL VLADIVOSTOK 1360
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS SECTION 01 OF 04 MOSCOW 004572
SIPDIS
SENSITIVE
SIPDIS
USDOC for 4231/ITA/MACK/RISD/JBROUGHER/MEDWARDS
E.O. 12958: N/A
TAGS: ECON EINV PGOV SOCI PINR RS
SUBJECT: $4.5M U.S. Investment, Andy Warhol and American Corner
Reopening in Samara
MOSCOW 00004572 001.2 OF 004
¶1. (U) Sensitive But Unclassified - Not for Internet
Distribution.
¶2. (SBU) SUMMARY: Ambassador Burns' visit to Samara April 17-18
revealed a city ripe for additional U.S. investment and eager for
increased contacts and exchanges with American academic and
business counterparts. The Ambassador participated in a ribbon-
cutting ceremony for a new production line at the local Alcoa
plant, reopened the American Center, and visited the Alcoa-
sponsored Andy Warhol exhibition. Government, business, civil
society representatives and students uniformly emphasized:
-- The region's desire to attract more U.S. investment and
partnerships with U.S. firms, as well as the difficulties faced
by U.S. companies as they expand beyond Moscow;
-- The economic and social benefits that various exchange
programs and partnerships bring to Samara; and
-- The need for greater access to information about studying in
the United States and the student visa application process. END
SUMMARY.
------------------------------
U.S. BIGGEST FOREIGN INVESTOR
------------------------------
¶3. (SBU) Ambassador Burns, accompanied by Emboffs from the
Foreign Commercial Service and Public Affairs section, visited
Samara April 17-18. In Governor Titov's absence, the Ambassador
met with acting Vice Governor and Minister of Economic
Development, Trade and Investment Gabibullin Khasaev, and
Minister of Education Valeriy Putko. (Khasaev is considered one
of Governor Titov's closest confidants and a personal friend.)
Khasaev emphasized the importance of U.S. investment, stating
that U.S. companies were involved in both direct investment and
joint ventures and represented the largest percentage of foreign
investment in the region. Asked about plans to increase
transparency within the taxation system and improve overall
stability in the regional market place as a stimulus for further
foreign investment, Khasaev replied that the regional government
had established an office to provide advice and information on
proposed legislation and how its implementation might affect
business.
¶4. (SBU) Khasaev also discussed the creation of a special
economic trade zone in nearby Togliatti. He hoped that the trade
zone, along with its associated infrastructure development,
including construction of a super highway, would bring more
foreign investment to the region and enhance access to markets
for regional agricultural goods and local small businesses. The
Ambassador observed that such a wide range of projects would
create many opportunities for our two countries and referred them
to the Embassy's Commercial Section to further develop these
opportunities.
-------------------
EXCHANGES WIN-WIN
-------------------
¶5. (SBU) Commenting on the implementation of Putin's education
initiative, one of the country's four national priority projects
-- other areas include health care, affordable housing, and
agriculture -- Khasaev said the goal was to improve access to
higher education for future generations of Samara citizens. In
this context Regional Minister of Education Valeriy Putko
discussed the plan to create a national university in Samara that
would have greater ties with U.S. universities. Putko mentioned
that a meeting with representatives from the U.S. State of
Georgia had led to a discussion about the possibility of an
exchange program that would send Russian mathematics teachers to
schools in that state. Speaking more broadly of the success of
U.S.-Russian exchange programs; Khasaev commented that many
residents in the region had received training through Open World
and other programs focusing on political development. He said
such programs were instrumental in developing the region's
management capabilities, including governmental affairs. He and
the Ambassador discussed other programs that have promoted
bilateral cooperation, including the Ambassador's participation
in an "Education for All" roundtable and a future program being
created through Embassy Moscow and U.S. and Russian businesses to
encourage and support young entrepreneurs.
--------------------------------------------- ------------------
ALCOA OPENS NEW PRODUCTION LINE AND SPONSORS WARHOL EXHIBITION
--------------------------------------------- ------------------
¶6. (SBU) The centerpiece of the Ambassador's visit was his
participation in the ribbon-cutting ceremony for a new production
line at Alcoa's Samara facility. The USD 4.5 million slitting
line is part of an overall USD 80 million commitment that Alcoa
MOSCOW 00004572 002.2 OF 004
will invest in capital improvements and technology and
environmental, health, and safety programs at its Samara and
Belaya Kalitva (Rusal) plants. Alcoa purchased the two
facilities last year and the USD 80 million will serve to
strengthen the global competitiveness of both plants. It is
estimated that new slitting line will pay for itself in two years
due to a projected increase in demand in the can sheet market.
The Ambassador, Alcoa Russia's President, Bill O'Rourke, Khasaev,
and the Speaker of Samara's Regional Duma, Victor Sazonov, opened
the new production line.
¶7. (U) Alcoa employs 5,751 people at its Samara facility and has
a reputation for being socially responsible. Alcoa Russia has
provided support to veterans of WWII in Samara, established
charity and health funds, and recently collaborated with the
Samara Museum of Art to host the city's first Andy Warhol
exhibition. Alcoa's latest initiative is its Technical Education
Support Program, which provides a number of scholarships for
Russian students, including those studying at the Samara State
Aerospace University (SSAU). The purpose of the program is to
boost the prestige of technical education, which was undermined
by dramatic changes in Russian society following the breakup of
the Soviet Union. (The lack of sufficiently qualified workers
in both vocational and technical fields was a concern also raised
during the Ambassador's meeting with local representatives of
U.S. firms.)
¶8. (U) At an evening reception in honor of the Warhol
exhibition, the Ambassador commended officials from Alcoa, the
Samara Museum of Art, and the Ministries of Culture and Education
for working together to make the exhibition a reality. He called
on other U.S. and Russian firms to join forces and resources with
Samara's civil society and government entities to further
cooperation on future public-private projects that would benefit
the broader community.
--------------------------------------------- ------------
GOOD NEWS FOR BIG US FIRMS BUT CLIMATE STILL NOT PERFECT
--------------------------------------------- ------------
¶9. (SBU) Ambassador Burns hosted a roundtable April 18 for U.S.
companies in the Samara region. Representatives from GM AvtoVaz,
Packard Electrical Systems (Delphi), Tenneco Automotive, Pepsi,
Coca-Cola, CitiBank, ExpoPul (New Sensor), Marriott Renaissance
Hotel, Samara Cable Company (Corning), and Amerada Hess
attended. (Note: Amerada Hess is 80% owner of SamaraNafta, a
small oil producer with a very promising production future -
currently producing approximately 7,000-8,000 b/d and aiming for
50,000 b/d. Amerada Hess believes it is the largest American
investor in the Samara region with around $500 million invested.)
The majority of the companies reported growth in the region and
said local officials seemed supportive of foreign investment.
All were very interested in the latest status concerning Russia's
WTO accession and how it might affect commercial relations
between the U.S. and Russia. Several companies voiced concerns
about the vagaries and inconsistencies of Russia's tax system.
Other issues of concern included: lack of qualified workers with
needed vocational, technical and analytical skills, unfair
customs duties, high inflation, and lack of access to financing.
The dean of the group, General Manager of GM/AvtoVAZ Richard
Swando believes the next important step for development of their
businesses would be availability of financing. The ExpoPul
Director General, Vladimir Chinchikov, updated the Ambassador on
the company's current business dispute with RBE Saratov, noting
that ExpoPul continued to seek the support and assistance of the
U.S. Embassy to resolve the situation. Overall, company
representatives seemed pleased with how their businesses were
growing/operating in the Samara region.
---------------------------
AMERICAN CORNER REOPENING
---------------------------
¶10. (SBU) The Ambassador reopened the American Corner - now known
as the American Language and Cultural Center - in its temporary
location at the Regional Research Library. (Note: The previous
Director of the Regional Research Library closed the Corner on
January 1, 2006 when PAS refused to meet her rent demands.) Over
70 USG exchange program alumni, the Library Director, and other
officials gathered for an informal reception celebrating the
reopening of the Center and introducing the recently hired
Director, Yelena Lugavaya. In FY05, prior to being closed, the
Corner served about 185 visitors a month, the majority of whom
were USG exchange program alumni. With over 1000 alumni, the
Samara region has one of the largest concentrations of alumni
outside Moscow and includes participants of Open World, FLEX and
MOSCOW 00004572 003.2 OF 004
Business for Russia/Community Connections exchange programs. The
club includes politicians, lawyers, accountants, business people,
professors, and teachers. The Samara alumni are actively
involved in community service projects, including the adoption of
a city park on Earth Day and raising money and gathering supplies
for children at a local orphanage. It was due in large part to
alumni complaints about the unfair closing of the Corner that the
new Regional Library Director, Tatyana Kolokolova, allowed the
Center to reopen. (Note: An Open World alumna Kolokolova has
been extremely positive in her dealings with PAS, and, in
addition to reopening the Center in a temporary location, has
agreed to help identify a more prominent, long-term space in the
library's main building. The new Center will expand services by
offering English language classes and educational consulting.)
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AEROSPACE UNIVERSITY STUDENTS KEEN TO STUDY IN US
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¶11. (SBU) Ambassador Burns met with over 80 faculty and students
at Samara State Aerospace University (SSAU) for a frank
discussion on U.S.-Russia relations, U.S. foreign policy, and
opportunities to study in the U.S. Students' questions focused
mainly on the opportunities to study in the U.S. and comparisons
between the education systems of the U.S. and Russia. They
expressed interest in learning more about studying in the U.S.
and changes to the student visa application process. The
Ambassador provided students with information about a proposed
exchange program that would allow young Russian and U.S.
entrepreneurs to gain on-the-job experience by working for a set
amount of time for American or Russian companies. He also
suggested that students visit the reopened American Center to
meet with the Center's Education Advisor. Students also asked
pointed questions about U.S. policy, the U.S. invasion of Iraq
and withdrawal of troops, U.S. interest in Russia and its
neighbors, and Russia's current economic situation and future.
SSAU is one Russia's leading academic institutions with 10,500
students studying at ten faculties in 27 specialty areas
including: aircraft construction, aerospace engineering, radio
engineering, information science and its newest faculty -
economics and management. The university has more than 700
teachers and boasts 64 members of the Russian Academy of
Sciences.
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MEDIA OUTREACH; PHOTO REPORT: DAY IN THE LIFE OF THE AMBASSADOR
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¶12. (SBU) The Ambassador met with representatives from five local
media outlets. In response to questions about the future of
Russian accession to the WTO, the Ambassador said he expected
Russia to be able to enter the WTO prior to the G-8 summit in
July. (Note: Subsequently, his answer was run by Interfax
throughout Russia and abroad.) Other issues discussed included
the future of U.S. cooperation in the field of space exploration,
exchange opportunities between the U.S. and Russia, the Alcoa
investment, and the Warhol exhibition. Local media gave
considerable play to the Ambassador's trip to the region and the
Alcoa ribbon--cutting ceremony. A photojournalist from the
Moscow-based "Ogonyok" weekly magazine accompanied the Ambassador
throughout the trip. On April 24 "Ogonyok" published a photo
report entitled, "A Day in the Life of the U.S. Ambassador to
Russia."
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EQUAL ACCESS TO EDUCATION FOR ALL
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¶13. (SBU) On April 17, the Ambassador spoke at an "Education for
All" roundtable to raise awareness of the importance of equal
access to educational opportunities for people with disabilities.
"Association Desnitsa", the leading local NGO that defends the
rights of children and adults with disabilities and which
receives support from USAID-funded Perspektiva, organized the
roundtable. Samara's Deputy Minister of Education, Yuriy
Zalepukhin, representatives of Samara disability rights NGOs,
parents' groups, and educational institutions, along with
disabled adults and youth participated in the forum. All
participants voiced their willingness and readiness to move
forward to resolve issues relating to the integration of disabled
children into mainstream schools and to open new opportunities
for all disabled children in the Samara region. The event was
well covered in the media, including TV news spots on April 17
and 18, which highlighted the Ambassador's participation, as well
as interviews with some of the disabled persons in attendance.
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MOSCOW 00004572 004.2 OF 004
Comment
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¶14. (SBU) During his visit, the Ambassador found that Samara is
doing well in attracting substantial U.S. investment, including
companies such as GM, Delphi, Alcoa, Amerada Hess, Pepsi, Coca-
Cola, Citibank, Marriott Hotels, and Corning. Regional leaders
recognize Samara's importance as one of Russia's top industrial
regions and appear keen to take further steps to improve
opportunities for foreign investment. Only time will tell
whether the Special Economic Zone planned for Togliatti and other
regional initiatives, including creation of a national university
and construction of a super highway will be implemented in a way
that brings greater transparency, stability and economic benefits
to the region and its citizens.
ADDITIONAL CLEARS: DOE: MWHITNEY, USAID: TMYERS
BURNS