Discussion on Russia/G8 Issues

Thank you very much for inviting me to participate in your discussion today to talk with you a bit about issues surrounding Russia and its G8 Presidency. The issue has certainly been in the news recently, with no shortage of commentary about whether the U.S. should participate in the St. Petersburg G8 Summit or continue to support Russia’s G8 membership.

But first, I’d like to step back for a moment and talk about our broader relations with Russia, both the positive areas of cooperation as well as some of the challenges we face in the political and economic spheres. These are, I admit, challenging times in U.S.-Russia relations. There are worrying trends, both internally and in Russia’s relations with its neighbors. The promise of strategic partnership, particularly in the immediate post 9/11 period, has not been fulfilled.

However, a little perspective is helpful, too. The changes of the past 15 years are profound. Russia is a market economy, poverty is declining, the middle class is growing, and gone are the days of nuclear threats or blackmail. We have many areas of continued cooperation with Russia, whether on non-proliferation, counter-terrorism, health, or space. Though the high hopes of 2001 may be behind us, Russia is now a partner with whom we work on major issues of the day through the P5, the Middle East Quartet, the Six-Party talks, just to name a few areas.

Under the leadership of Secretary Rice, our Russia policy is based on a realistic appraisal of Russia and our relations with Russia. We cooperate with Russia wherever we can, and push back when we must. Russia cannot be ignored or isolated or treated as an enemy. While our hopes of strategic partnership may have been overly-optimistic, we do not seek, nor are we carrying out containment or strategic competition between our two countries. In fact there are many areas where we can and must continue to work with Russia.

The issue of Russia holding the G8 Presidency has generated a lot of discussion by those who favor a boycott or disengagement so as not to appear that we accept non-democratic trends occurring within the country. But you are probably familiar with President Bush’s remarks at Freedom House last month, when he said his strategy with President Putin is to be in a position where he can talk freely with him and be very frank about our concerns. Making sure that we are in a position to express our concerns, to keep the dialogue open, is an important objective for the President in arriving at the decision to attend the St. Petersburg summit in July. It is not a favor to Russia. As the President said, it is important for him to go so we can make our case with President Putin. The two presidents have a personal relationship that allows for candid conversation, and the opportunity to build on that relationship would be lost if we were to boycott the Summit.

We are making progress on each of the three main Summit topics: energy security, infectious diseases, and education. We’ve had very constructive discussions about Russia’s views on its own position in global energy markets. Clearly, Russia chose this topic to highlight its role as a major oil and gas supplier to world markets. At the same time, the discussions of energy security have allowed us to raise concerns about the need for transparency in Russia’s investment climate, the urgent need for technological upgrades and infrastructure development within Russia to reverse flattening or declining oil and gas production, as well as the need to trust market signals to guide policy.

On infectious diseases, we are working with Russia and other G8 leaders to promote an effective and well-coordinated global response to Avian Influenza and the threat of a human pandemic. One of our goals here is to encourage Russia and other countries to commit to full transparency in reporting outbreaks of the disease, and in sharing virus samples in accordance with internationally established norms. We hope that the G8 statement will also reinforce and lend fresh impetus to ongoing international campaigns against other infectious diseases, such as HIV/AIDs, TB, malaria, and polio.

This is the first time that education will be treated as a major agenda item at the G8. Previous summits have discussed briefly the importance of lifelong learning, building a knowledge society, primary education and integrating technology into classrooms. We expect the St. Petersburg Summit to also address these themes, primarily under the rubric of building innovation societies. To advance innovation worldwide, one of our principal goals for the education agenda is to promote collaboration and partnerships among higher education, government, and business research networks. Although the Russian higher education sector is still heavily regulated (and hence not ready-made for cooperation with the private sector), Russia has been quite supportive of a dialogue on innovation. The G8 education agenda we have been working on should also support several of the Administration’s initiatives, including our commitment to the Millennium Development Goals on education. It should also help reaffirm our commitment to UNESCO’s "Education for All" agenda, which supports universal primary completion and gender equality at all levels of education. We have been pleased with the level of Russian engagement on education so far, and we feel there is an opportunity for real progress in this area during the Summit.

I should comment that the U.S. government’s approach to the G8 has never been to passively accept the agenda placed before it by the rotating Chair. We seek to use the G8 as a forum for generating consensus for action on key global issues among likeminded partners who have the resources to back up their commitments. This year is no different. We fully expect that the G8 will address corruption, a huge impediment to development, for example. We are working with the other G8 members to find common ground on other pressing issues as well.

In addition to the areas described above, we can expect the St. Petersburg Summit will address a range of other topics the G8 has addressed in the past. For example, we will continue to work together on the central challenge of fighting terrorism and the proliferation of WMD. It would be hard to imagine not having some discussion on issues such as: the Broader Middle East and North Africa (BMENA) initiative, development, trade issues and protection of intellectual property rights.

Beyond the formal G8 Summit agenda, I would like to highlight for you several areas of positive bilateral cooperation, some of which have been given additional impetus through the G8 process.

Our cooperation on non-proliferation efforts is strong. For example, the Nunn-Lugar Cooperative Threat Reduction Program has been in place since 1992 with the goal of dismantling the former Soviet Union’s WMD and associated infrastructure, consolidating and securing WMD and related technology, increasing transparency and encouraging higher standards of conduct. More recently, during their February 2005 meeting in Bratislava, Presidents Bush and Putin jointly declared their commitment to enhance cooperation in increasing nuclear security and preventing the acquisition of fissile material by terrorists and other dangerous entities. The Presidents committed to jointly develop an emergency response capability to deal with a nuclear or radiological incident; have a dialogue on sharing best practices for nuclear security (as well as fostering an overall ‘security culture’); jointly develop low-enriched-uranium fuel for U.S. and Russian designed research reactors in third countries; establish a prioritized timeline for returning fresh and spent fuel from U.S. and Russian-design research reactors in third countries; and develop a plan of work through 2008 and beyond for cooperation on security upgrades of nuclear facilities. The bilateral commitment to cooperate on nuclear security enjoyed an early success with the April 13 passage by the U.N. General Assembly of the International Convention for the Suppression of Acts of Nuclear Terrorism.

In order to strengthen the existing nuclear non proliferation regime, we are working with Russia and other allies to strengthen the hand of the International Atomic Energy Agency (IAEA), most notably on Iran. We believe that any state that wants to import equipment for avowedly civilian nuclear programs should have signed and implemented the IAEA Additional Protocol, which ensures that the IAEA receives the additional information and access to facilities necessary to verify peaceful intentions. Russia has stated that it shares our strategic goal of persuading Iran to abandon its pursuit of a nuclear weapons capability. That shared goal explains why Russia voted with us to support the IAEA Board’s February 4 resolution that reported Iran to the UN Security Council. Iran’s recent announcement that it had enriched uranium despite IAEA and Security Council Requests to suspend such activity further isolates Iran and is a step in the wrong direction. We continue to work closely with Russia, other members of the Security Council, and other allies on how to persuade Iranian leaders to change course. Our experience with Iran and North Korea shows why we can no longer give countries the benefit of the doubt.

More broadly, we continue to talk with Russia about its integration into the global economic system, a key priority for both the United States and Russia. We support Russia’s bid to join the World Trade Organization. American and Russian experts are currently working very hard to conclude a commercially fair, mutually beneficial package that would promote Russia’s integration into the world economy. But, concluding a strong, commercial agreement on WTO accession will require Russia to take some hard decisions on key issues. In particular, Russia will need to curb strong protectionist forces, which have been especially evident in the agricultural, aircraft and financial services sectors. Russia will also need to resist the temptation of taking non-transparent trade measures, , such as those introduced in connection with the recent ban on Georgian and Moldovan wines and other agricultural exports. Such behavior can and does raise questions about Russia’s real level of commitment to WTO principles.

In addition, Russia still needs to do more to protect intellectual property rights by cracking down, in particular, on rampant piracy of DVDs and computer software. While Russia has enacted stricter IPR legislation and made some strides on enforcement, much more needs to be done to tackle this problem in a meaningful way. The WTO negotiations provide an opportunity to emphasize with Russian officials that strong intellectual property protection is essential to attract more foreign investment and free up the productive capabilities of the Russian people. Good progress has been made in strengthening Russian laws and court practices, and most importantly, raising public awareness of the problem. There is also a growing appreciation of the critical importance of strong intellectual property protection for Russian industries and IP rightsholders, too.

Russia is becoming a more important global energy player and sees its vast oil and gas reserves as one of its greatest strengths. In the wake of the Russia-Ukraine gas dispute, many countries have begun to take a closer look at their energy relationships with Russia. I think we all agree that what we would like to see is a Russia that is fully integrated into global energy markets, with clear, transparent rules of the road for both domestic and foreign investors. We have been discussing this with Russia as part of the G8 process and will continue to raise our concerns bilaterally and in other fora. Remaining engaged on these vital issues is essential.

In addition to its oil and gas reserves, Russia has tremendous potential in other areas of its economy, and U.S. companies are eager to invest. We and they are eager to see more clarity emerge on Russia’s foreign investment regime and are closely following the emergence of a new law on investment in strategic sectors and a law governing subsoil investment, and new policies to attract investment to special economic zones. These laws are all being considered by the Russian government and in the Duma, and these are complicated processes, as we all know. But, we hope that the end result will be a stable, predictable investment climate, including guarantees for property rights that will provide opportunities for foreign investment that will ultimately benefit the Russian economy. Having Russia as the G8 President has allowed us and other G8 partners to raise these concerns alongside our discussion of other issues.

We also hope to develop more bilateral people to people exchange programs to help facilitate communication and greater understanding in the private and public sector. Presidents Bush and Putin agreed to this initiative at Bratislava, and we are working with various organizations to follow through.

Russia holding the G8 Presidency has also provided an opening for us to discuss bilaterally many issues that are not on the formal agenda, but are important in their own right. Russia’s relationship with its neighbors has raised particular concerns in recent months. Our challenge is to try to overcome the propensity for "zero-sum" thinking and instead work together to promote stability and political and economic reform. We have repeatedly emphasized that it is in Russia’s own interest to have stable and prosperous democracies on its borders.

Moreover, we have stressed that the promotion of democracy in the region is neither destabilizing nor counter to Russia’s interests. Reform in the countries in the region on the political, economic, security, and social levels makes for more stable countries, which serves everyone’s interests.

Russia’s internal political transformation poses perhaps the greatest area of concern in the U.S.-Russia relationship. While President Putin enjoys strong support from the Russian people for his efforts to reassert order through a stronger Russian state, the trend has been a steady weakening of the institutions of democratic society – the legislature, the media, and the courts – that had begun to promote greater transparency and accountability. The President has had a regular dialogue with President Putin on these issues and, as he mentioned in his Freedom House remarks, we believe the concerns we and others expressed about the new NGO law last November had some impact on the way it which it was later modified. We remain concerned about its effect on Russian civil society, however, and continue to speak with Russian officials about the importance of the way in which the law is ultimately implemented.

Despite all of these concerns, it is also important to recognize that Russia’s transformation from its Soviet past has not stopped, though in some respects it has slowed down. The Russian print media, in contrast to the broadcast media, continue to air a diversity of views. NGOs, though under increased pressure, continue to speak out forthrightly for human rights and to promote the growth of a strong civil society. Russia is not the Soviet Union. But the slowdown in progress is evident and is widely commented on, with great concern, by many of the most perceptive and long-time observers of Russian affairs, both inside the country and out. Still, we believe that by continuing to promote civil society in Russia, we can help, over the long run, to support Russia’s democratic transformation into a country where our values, as well as our interests, increasingly converge. Russia’s membership in the G8 and the historic opportunity of its G8 Presidency gives us an important opportunity to be underscore the importance of this important transition for Russia and the Russian people.

Our private and public messages as well as our assistance and public diplomacy programs will continue to support development of a democratic Russia, focused on the goals of: ensuring broader access to information; strengthening judicial integrity and independence; maintaining vital support for human rights groups; increasing exchanges in both directions; and, providing Russia’s youth with more opportunities to learn democratic skills and values.
Although many challenges still lie ahead and many opportunities remain to be seized, we should not forget the distance we’ve already traveled and the successes we have achieved. The President said in his Freedom House remarks that he has not given up on Russia, and that he still thinks that Russia understands that it is in her interest to work with the West and to act in concert with the West. So, we will remain actively engaged with Russia and the Russian people at all levels, cooperating wherever we possibly can, and pushing back where we must, while striving to achieve the kinds of results that may ultimately lead to the more durable partnership to which we still aspire.

Thank you.