The U.S. and RussiaDavid Kramer, Deputy Assistant Secretary for European and Eurasian Affairs
Remarks to the Baltimore Council on Foreign Affairs
May 31, 2007
Frank [Burd, President of the Baltimore Council On Foreign Affairs], thank you for that kind introduction and for inviting me here today. It's a pleasure and an honor to be here and good evening to all of you. It's great that you've turned out in such numbers to hear someone speak about U.S.-Russia relations, a difficult subject full of nuances and details, and now devoid of the comforts of black and white absolutes.
Russia is no longer, as Ronald Reagan once famously said, the Evil Empire, let's start off with that assertion. In fact, over the past 15-plus years, Russia has become more free than at any time in its history.
Let me hasten to add, however, that that is an incredibly low threshold-far too low for a great nation. Far too low for Russia's own aspirations to greatness, and far short of our own hopeful -- and yes, perhaps giddy and even unrealistic --expectations of 16 years ago, when the world was encouraged by the collapse of the Soviet Union.
For Russia does give us pause; it gives pause to those who follow its evolution with interest, like you; to those who would want to invest there or do business with it, which probably includes many of you as well; and to those of us who deal with it diplomatically, like me.
Just yesterday the White House announced that President Bush will host President Putin July 1-2 at the family compound in Kennebunkport. Given the tendency of pundits to find a quick explanation, we've already seen the meeting described as everything from a kiss-and-make-up weekend to a trip to the woodshed. In the world in which we really live, it's more likely to be a chance for the two leaders to get some issues on the table, agree on some and disagree on others.
Now let me move to a disclaimer of sorts. I realize that the theme of my speech is "Where is Russia Headed" so before continuing I should warn you that if I could reliably predict the future, I wouldn't be here today. With the wealth I would have earned, I would either be the owner of the Boston Red Sox (my hometown team and with no disrespect to the Orioles) or at least doing laudatory volunteer work somewhere. As former Russian Prime Minister Viktor Chernomyrdin once said, "Predictions are hard, especially about the future."
And yes, predicting the future is hard, especially when it comes to Russia. Better men than I have crashed on those shoals.
In 1982, for example, the noted historian Arthur Schlesinger, Jr. warned that -- and I quote -- "those in the United States who think the Soviet Union is on the verge of economic and social collapse are … wishful thinkers who are only kidding themselves."
James Reston, a columnist at the New York Times, wrote three years later, in 1985, that the Soviet Union was no closer to collapse than the U.S. because "It is clear that the ideologies of Communism, socialism, and capitalism are all in trouble."
And, in 1989, barely months before the Soviet Union finally broke up, MIT economist Paul Samuelson -- a Nobel Laureate no less -- said "the Soviet economy is proof that...a socialist command economy can function and even thrive."
Ladies and Gentlemen, I guess what I'm trying to say is, I won't be peering into the crystal ball here tonight. Rather, I will speak to you about the here and now, and how we see it. Believe me, that will be complicated enough.
First, a bit of background. My boss, Daniel Fried, the Assistant Secretary of State for European Affairs, likes to say that Russia's relations with the West have been problematic since Peter the Great, who was the Tsar at the turn of the century-the turn of the 17th century, that is. One can even go further in history, and say that Russia's foreign relations have been prickly since Ivan the Terrible, in many ways the founder of Russia in the mid 1500s.
U.S. relations with Moscow go back less than that, but still a long way, and have had their ups and downs. Official diplomatic relations are 200 years old this year, as diplomatic notes were exchanged in 1807. Two years later, our future sixth President, John Quincy Adams (a Massachusetts native), arrived in St. Petersburg to present his credentials as our first ambassador to Tsar Alexander I in 1809.
Many people don't realize that, back then, Russia was our number one trading partner. And many people may also not know that -- whatever the disagreements we have on some important issues, and I don't mean to minimize them -- our business with Russia today is also important. Any assessment of where we are bilaterally has to take this into account.
While the latest figures aren't in yet, we know that U.S. investment in Russia shot up by 50% in 2005. Many of our top companies are increasing their stake in the Russian Federation, including such mainstays of our economy as Alcoa, International Paper, Coca-Cola, GM, Proctor and Gamble, which employs more than 20,000 Russians, and Boeing, which employs 1,300 and last year signed an $18 billion deal (that's billion, with a "b") to buy titanium from Russia. And just the other day, Boeing initialed a contract valued at as much as $2.4billion with Russian airline S7, Russia's second largest, for the purchase of at least 15 long-range jets. Many firms that vowed they'd never go back to Russia after the 1998 financial meltdown are damn glad they did -- for the Russian market has been an incredibly lucrative one in recent years.
And these horizons will considerably broaden once Russia joins the World Trade Organization. It is estimated that WTO accession leads to a several billion dollar jump in foreign direct investment in the very first year of membership. The World Bank estimates that the boost to Russia's GDP from accession would be around 3%.
I give you these figures as a way of background, and the history to put the present in its proper context. The reality is that our relationship is multifaceted, even very complicated, and every criticism we have of Russia has to be understood within the following paradigm.
We want Russia to be a partner in the world. In fact, we want Russia to be strong, and by that we mean a Russia with strong, democratic and independent institutions, both in and out of government.
That includes a strong civil society, free press, an active opposition, genuine elections with real competition between candidates, and a pluralistic political scene backed up and supported by strong and independent middle and entrepreneurial classes.
Those, like you, who are interested in our relationship with Russia should bear in mind that we do not exempt Russia from our belief in the universal potential of freedom, and we also have Russia in mind when we say that we seek an open world characterized by partnerships with like-minded countries.
The result of this view is our policy to Russia, which is this: cooperate wherever we can; push back whenever we have to. If you're looking for a bumper sticker of our Russia policy, that's it.
Our preferred approach, naturally, is cooperation, always seeking to expand the scope of that collaboration where our interests overlap.
And we push back when we must. We do so privately when possible, but publicly when necessary, in defense of our values, national interests and friends. It is in that spirit that I was disappointed to read reports of rather unhelpful comments by President Putin during a press conference in Moscow just a few hours ago, in which he accused us of starting a new arms race and used the words "dictat" and "imperialism" to describe our efforts in developing a missile defense shield in Europe.
In all these endeavors, at all points, we work with our European allies and friends to coordinate our approaches and articulate the common values underlying our policies.
Let me sketch out for you today, briefly, I hope, the areas where we do cooperate, the areas where we have some disagreements, and the areas in between.
Let's first talk about the important areas where we work well with Russia, and first among these should be counterterrorism. This is an area of solid cooperation. Our intelligence services have useful exchanges. President Bush and President Putin announced the Global Initiative to Combat Nuclear Terrorism at last year's G8 Summit. We will meet again in a few months, to continue and deepen cooperation on intelligence, law enforcement, Weapons of Mass Destruction, terrorist financing, counternarcotics, Afghanistan, issues at the United Nations involving terrorist designations, MANPADS (dangerous anti-aircraft missiles we try to keep out of the hands of terrorists), and transportation security.
Nuclear cooperation and non-proliferation cooperation are all in the positive category. They are progressing well. We are negotiating, for example, a so-called 123 Agreement to promote civilian nuclear energy cooperation. Under the START Treaty and the Treaty of Moscow, 7,000 nuclear warheads have been deactivated, 600 ICBMs and 600 SLBMS destroyed.
Last year, together with Moscow, we renewed until 2013 the Cooperative Threat Reduction (CTR) program, which was launched in 1992 to facilitate dismantlement of weapons of mass destruction in the former Soviet Union. We and Russia have agreed to accelerate some elements; nuclear security upgrades are on track for completion by the end of 2008.
With the expiration of the START Treaty in 2009, we have begun positive discussions about a post-START arrangement. There have been several high-level visits to Moscow in recent months, including those of Secretary Rice and Defense Secretary Gates. We share with Russia many common global nonproliferation goals.
We work closely with Russia and others to address the nuclear ambitions of North Korea and Iran. Moscow has sometimes voiced disagreement with our approach to sanctions and other measures, but for the most part these are more tactical differences; we share the same goals of keeping Iran from acquiring nuclear weapons capability. Russia voted for UN Security Council Resolutions 1718 on North Korea, and 1737, and 1747 on Iran. These called, respectively, for the denuclearization of the Korean peninsula and imposing Chapter VII sanctions on North Korea, as well as imposing sanctions against Iran until Tehran suspends its nuclear enrichment program and comes into compliance with its NPT obligations.
All I can say is that we look forward to the full implementation of those resolutions.
On trade and investment, as I said, we have a growing relationship. We support Russia's accession to the World Trade Organization, and conclusion of our bilateral agreement in November was an important step forward. We look to Russia implement its obligations under this agreement, especially on intellectual property rights protection and market access for agricultural trade. Progress on these issues since we signed the bilateral agreement in November, I must tell you, has been frustratingly slow. But we support Russia's entry into rules-based international organizations -- that is good for everyone.
The United States also continues to support Jackson-Vanik graduation for Russia. I should add that the Chairman of the House Foreign Affairs Committee, Tom Lantos, also recently expressed his support, an important signal given that Congress holds the key on this issue.
Lastly, we continue to pursue cooperation through the NATO-Russia Council, which this year marks its fifth anniversary and will be marking the anniversary next month in Russia. We have a broad range of cooperative NATO-Russia initiatives: these range from Russian participation in Operation Active Endeavor to counternarcotics programs in Afghanistan. There is more we can and should be doing, however, to face common threats and preserve global security.
Overall, as you can see, there are many areas of good cooperation. We must always keep these in mind. But since I just referred to NATO-Russia relations, I must now segue into the second broad area: those issues where we frankly have disagreements with Russia.
The meeting April 26 of the Foreign Ministers from the NATO-Russia Council in Oslo, Norway, made clear that there are some important differences between Russia on the one hand and NATO Allies on the other. You see, President Putin had earlier that day, in his "State of the Nation" Address, suggested he would consider suspending Russia's obligations under the Treaty on Conventional Armed Forces in Europe (CFE Treaty) if no progress was made on ratification of the Adapted CFE Treaty by NATO Allies.
As it usually happens, such saber-rattling only succeeded in unifying the Alliance. In Oslo, NATO Ministers universally responded that we continue to regard the current CFE Treaty as a cornerstone of the European security.
The Administration and NATO Allies are very serious about our support for Adapted CFE: the Adapted Treaty, signed in 1999, replaces the bloc-to-bloc structure of the original Treaty with a more flexible system of national and territorial equipment limits. But before we can ratify the Adapted CFE, Russia must fulfill commitments it made in Istanbul in 1999 to withdraw its forces and munitions from Georgia and Moldova. At the heart of the Adapted CFE Treaty lies the clear principle that no state can station troops on another's territory without the latter's consent.
Both Georgia and Moldova have asked the Russian forces stationed there to leave, as is their right as sovereign, independent states. In Georgia, Russia has made major progress in fulfilling its commitments; in Moldova, by comparison, it has done nothing since 2003. Absent further progress on fulfilling Istanbul -- and we have offered to help -- we unfortunately will not be able to move forward on Adapted CFE Ratification.
We also seek to advance cooperation with Russia through the Organization for Security and Cooperation in Europe (OSCE), but Russia's attitude toward the OSCE remains a cause for concern.
Speaking in February to the Munich Security Conference, President Putin branded the OSCE a "vulgar instrument designed to promote the foreign policy interests of one or a group of countries." Under the guise of demanding reforms and seeking to place more emphasis on security and economic issues, Russia has proposed changes to the OSCE. Let us be clear, the effect of these reforms would be to cripple the OSCE's democracy promotion efforts.
The Administration strongly defends the OSCE's mandate to advance democratic reforms, including election monitoring. Washington and Moscow committed to these efforts when we signed the Helsinki Final Act in 1975. The elections monitoring efforts of the OSCE's Office of Democratic Institutions and Human Rights, known as ODIHR, constitute nothing less than the international "gold standard" in this area.
In fact, we look forward to the OSCE's involvement in monitoring the conduct of Russia's upcoming Duma elections in December 2007 and Presidential elections in March 2008. I should add, incidentally, that the United States accepts and welcomes ODIHR monitoring of U.S. elections.
I suppose we cannot avoid the fact that differences with Russia over the OSCE reflect negative trends on human rights and democracy inside Russia itself. We hope that the slide in these areas we have seen for the past few years will not deepen, and in fact, will reverse itself -- optimists would point to Russia's history of swings of the pendulum and express hope that things will soon begin to swing in a more positive direction. But we do no one any favors, least of all the Russian people and even their government, by abstaining from speaking out when necessary. We do so, I should point out, as a friend worried about the trends we see unfolding, not simply to wag our finger in a lecturing way. We also do so as a matter of principle.
Suppression of genuine opposition, abridgement of the right to protest, constriction of civil society, and the decline of media freedom are all serious setbacks. They are inconsistent with Russia's professed commitment to building and preserving the foundations of a democratic state.
The State Department has publicly protested the recent police brutality employed to break up opposition marches in Moscow, St. Petersburg, and Nizhny Novgorod, and just the other day in Voronezh. The European Union also protested those actions.
Russian authorities sought to prevent the marches from taking place at all: they denied permission to stage the events or tried to marginalize them by changing their venues. They also harassed and detained Russians traveling to participate in these peaceful rallies; on the day of the events, a disproportionate police presence wielded undue force against the protestors as well as journalists reporting on the events.
And at the EU-Russia Summit just a couple of weeks ago, similar efforts were directed against members of the Russian opposition seeking to express their opinions in Samara. While there was no crackdown at the march itself, where several hundred people protested, organizers and journalists covering the event faced significant harassment. This included officials preventing "Other Russia" activist Garry Kasparov and some 20 others from flying from Moscow to Samara because they might have been carrying "counterfeit" plane tickets.
Again, as with Russian intransigence over CFE and at the OSCE, such ham-fisted behavior has only managed to forge a stronger consensus between us and our Allies. The Russian government must simply realize that it does itself no favors when it uses these strong-armed tactics.
It was interesting to note that Presidential Administration deputy press spokesman Dmitry Peskov acknowledged that the police response to last month's protests merits review. St. Petersburg Governor Matviyenko and the official Human Rights Ombudsman, Vladimir Lukin, have both called for investigations.
President Putin's own chairperson of the Civil Society Institution and Human Rights Council, Ella Pamfilova, has said that Interior Minister Nurgaliyev should resign.
Such calls indicate that, even within official Russia, there is not a monolithic façade on human rights.
Having said that, the backsliding is multifaceted. We are concerned about the increasingly narrow and controlled space within which NGOs are forced to operate. We also continue to monitor the implementation of the new NGO law enacted in April 2006.
And the increasing pressure on Russian journalists is likewise troubling. Simply put, a vigorous, independent and probing media is indispensable in a democracy. In Russia today, unfortunately, most national broadcast media-the primary source of news for most Russians -- are either in the hands of the government or of individuals and entities allied with the Kremlin.
And one cannot talk about the state of journalism in Russia without making mention of recent attacks on journalists, including the brutal and still unsolved murders of Paul Klebnikov and Anna Politkovskaya, among others. These brave and talented journalists cared deeply about Russia, wanted to make it a better place, and lost their lives because of those attributes. The Litvinenko case in London, sadly, raises further serious questions about Russia's record. We believe that Litvineko's murder was a horrible crime that posed a threat to many others who might have been exposed to polonium, and we strongly support British efforts to bring to justice those who perpetrated this dastardly act.
That all this is happening, that Russia is regressing in these areas, ahead of parliamentary and presidential elections, may not be entirely coincidental. The Kremlin is bringing its full weight to bear in shaping the environment in favor of its preferred outcome. What is most disturbing is the apparently selective use of the law to disadvantage a number of political parties, for instance by precluding their registration and thus their ability to put forth candidates.
You should know that the U.S. and its European Allies continue to support Russian democracy and civil society. These issues are regularly taken up in our bilateral and multilateral consultations. Capacity building for civil society and support for the rule of law are key priorities in our assistance to Russia.
President Bush, when he was in St. Petersburg last summer, hosted an event with NGO and civil society leaders, sending a powerful message of American support and solidarity. Just this month, Secretary Rice took part in Moscow in a roundtable discussion with leaders of civil society and other figures.
And because a country's foreign policy can only reflect its internal situation, you should not be surprised to hear that Russia's relations with its neighbors and with Europe remain an issue of considerable concern. This is another area where we are pushing back.
Here's the problem: Moscow still tends to approach its neighbors with a zero-sum mentality, particularly when it comes to those countries, such as Georgia and Ukraine, which choose to pursue closer Euro-Atlantic ties.
Russian-Georgian relations, after a period of extreme tension, have shown tentative signs of improvement, but still remain tense. Russia maintains the economic and transportation sanctions it imposed against Georgia last fall. On the positive side, Russia seems to have resumed issuing visas to Georgians only in the last few days, which if confirmed, would be a notable and positive step.
Yet, Russia continues to take actions that call into question its professed support for Georgia's territorial integrity. Moscow, for example, supports separatist regimes in Georgia's South Ossetia and Abkhazia regions.
And Moscow also gives support to the corrupt, separatist regime in Moldova's Transnistria region, a regime that has avoided engaging in conflict resolution talks for over a year. This is an issue I personally have spent lots of time on, including regular visits to Moldova.
I should add that on one separatist conflict, the one over Nagorno-Karabakh between Azerbaijan and Armenia, the United States and Russia work well together in trying to facilitate a resolution.
But in general, the United States continues to call on Russia to end its support for separatists, and work with our European partners to implement confidence-building measures designed to bring the sides in each conflict closer together. We are working to advance a resolution to all of these conflicts.
Regrettably, Russia has adopted a hostile attitude toward U.S. plans for placing elements of a limited missile defense system in Poland and the Czech Republic.
These systems are intended to shield the United States and its European Allies against missile threats from the Middle East. We have held numerous briefings and consultations with Russia on our missile defense plans for more than a year, both bilaterally and in the NATO-Russia Council, so Russia cannot claim -- as it does -- that we are not being transparent. More than that, we have offered ways to work together in confronting this mutual threat from Iran and rogue regimes, but Russia so far prefers unhelpful rhetoric over actual collaboration.
The very modest system we have in mind poses no threat whatsoever to Russia. This is why, speaking at the NATO Ministerial in Oslo and again just the other day, Secretary Rice described as "purely ludicrous" the idea that somehow 10 interceptors and a few radars in Eastern Europe are going to threaten Russia or somehow undermine the effectiveness of its arsenal of thousands of nuclear weapons. In fact, it's not even designed to confront a threat from that direction.
We and the Russians simply do not agree on missile defense, but we will continue to work to be transparent and reach a better understanding between our two countries on this important issue.
And to round out joint U.S.-European efforts to get Russia to moderate its behavior toward its neighbors, we and our European allies have spoken out against Russia's proclivity to use energy as a political and/or economic lever against neighbors, such as in the case of Ukraine in 2006 or Belarus this year. In both cases, we spoke out clearly against cutoffs of Russian energy to these countries, and encouraged resolution of differences by transparent, commercial means over a gradual term. Hastily shutting down oil and/or gas flows to neighbors in the middle of winter -- and in the process, disrupting supply to other European countries further downstream -- is damaging to Russia's reputation as a reliable supplier of energy resources, and is not an effective way to bolster global energy security.
We are concerned by apparently political interference with infrastructure, as in the case of prolonged "repairs" to an oil pipeline to Lithuania, or the closing of Russia's only legal border crossing with Georgia last year or alleged structural deficiencies that restricted traffic on a bridge to Estonia this month. The recent cyberwarfare against Estonia is additional cause for concern. Restricting traffic to Estonia is but one example of a heavy-handed approach toward that country and is the most recent cause for concern about Russian behavior toward its neighbors.
The reference to energy brings me to my last point, which is the area in the middle, energy security.
Russia holds the world's largest natural gas reserves; second largest coal reserves and seventh largest oil reserves. It is the largest exporter of natural gas, and it is tied with Saudi Arabia as the world's largest oil exporter. Energy is literally fueling Russia's economic growth and growing Russian confidence and assertiveness. At the same time, however, Russia's energy industry is plagued by decaying infrastructure and requires significant new investment to maintain current production levels.
We are concerned about trends here. The Russian government will have to address its decision to exert more state control over strategic industries. Our bilateral energy dialogue was launched with high hopes in 2003. There were some results, such as the ConocoPhillips-Lukoil deal, the success of ExxonMobil in Sakhalin-1 in Russia's Far East, and the continued presence of U.S. energy services companies in Western Siberia and the Volga-Urals, but less than hoped for despite strong interest shown by American companies in this area.
We continue to work with our partners to convey the message that despite continued strong economic growth, Russia must look to the long-term and work with far greater urgency to attract investment into its energy sector in order to reverse production growth stagnation.
Greater U.S. investment in this sector would be a win-win outcome for both countries: American companies have the capital and high technology Russia needs to exploit many of its oil and gas fields. This is increasingly important, as Russia's new fields are located in remote areas, like the Arctic, Eastern Siberia and the Far East, and many future fields will be off-shore.
Although the investment climate has improved on some fronts, investment in energy is still a mixed bag, rife with uncertainties. Overall, many structural improvements remain necessary -- judicial reform to strengthen rule of law, banking reform to improve the capacity of the financial sector, accounting reform to promote greater transparency and integration into international business standards, improved corporate governance, and reduction of government bureaucracy.
Improving the investment climate will establish a strong basis for long-term economic growth both in the energy and non-energy sectors.
The U.S. Government does not support monopolies or cartels. We believe in free markets for energy and transport of oil and gas. Across the board, we encourage further investment to expand production and transport options. Countries in the Caucasus and Central Asia have significant resources and are helping provide more product to market, particularly in Europe.
America's Eurasian energy security policy promotes diversification, and that includes efforts to advance reliable, long-term flows of natural gas from the Caspian region to European markets. Reliability requires sustained investment, multiple sources of energy imports and multiple pipeline routes. These points are not new; they were endorsed by G8 heads of state during their summit in Russia last July, when leaders committed to the St. Petersburg Energy Security Principles, including development of transparent, efficient, and competitive energy markets. During the last U.S.-EU Summit, the United States and the European Commission pledged to seek diversification of energy types, sources, and supply routes, with a particular focus on the Caspian region as a key source of diversified supplies of oil and natural gas.
Now, this month, the Presidents of Russia, Kazakhstan, and Turkmenistan issued a declaration pledging to cooperate on increasing natural gas exports from Central Asia to Russia. This declaration attracted considerable attention and misplaced speculation in the press. But in reality, the three presidents' statement need have no direct impact on our effort to develop multiple gas pipeline routes from the Caspian Sea region to Europe.
The presidents' statement is not surprising. It points up the fact that the Caspian region is ripe for further development. For us and Europe, the key question is what form this further development will take. Clearly, Russia will be a player in Central Asia's energy sector. We believe that Central Asian countries would be wise to court more than one customer.
Before summing up, let me mention briefly one last issue lurking over not just our relations with Russia but also Europe's relations with Russia and that is Kosovo, an issue where there is not yet full cooperation but neither is there, yet, complete disagreement. Stability in Kosovo and elsewhere in Southeast Europe has been a joint project among Russians, Europeans and Americans for over a decade, and a successful one. Now the UN Security Council must exercise its responsibility for international peace and security, looking at the fact that the parties are irreconcilable about Kosovo's status and that President Ahtisaari has presented a compelling compromise. We hope that Russia will support the draft resolution we and the Europeans have presented to establish international supervision of Kosovo in its transition to independence.
We see Kosovo as sui generis -- a set of circumstances not found in any other conflict -- and we also hope that Russia does not invoke Kosovo as a basis for intervention in other places along its borders -- for that would be a most dangerous game to play. Kosovo is an issue of utmost importance to us and to Europe; we and our allies have troops on the ground and we host refugees desiring to return home. The time, however, has come, to move forward with a resolution to the final piece of the Balkan puzzle. While we understand Russian reluctance to embrace the way forward, we also expect Russia not to impose continued stagnation on Kosovo. The answer to this test may be forthcoming over the next few days.
As you can see, our relations with Russia cannot be simplified to a sound bite, which is why I've spoken at such lengths. They are complicated and multidimensional.
With apologies for going on so long, let me now turn it over to you and your questions. Thank you for your kind attention.
Released on June 1, 2007