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| Speakers: | Eberhard Sandschneider, Otto Wolff Director of the Research Institute, German Council on Foreign Relations |
|---|---|
| Harry Harding, University Professor of International Affairs, George Washington University | |
| Thomas Gomart, Director, Russia/Newly Independent States Center, French Institute of International Relations | |
| Angela E. Stent, Professor and Director, Center For Eurasian, Russian, and East European Studies, Georgetown University | |
| Author: | Andrew Kuchins, Director and Senior Fellow, Russia and Eurasia Program, Center For Strategic and International Studies |
April 23, 2008
Council on Foreign Relations
This symposium was made possible by the generosity of the European Commission and the German Marshall Fund of the United States.
JIM GOLDGEIER: We're going to go ahead and get started. Thank you all very much for joining us today. I'm just delighted to have such a distinguished group, both up here and in the audience; really just delighted to have everyone here.
I want to thank in advance all the speakers and presiders who have agreed to work for us today. We greatly appreciate it. I also want to give a special thanks to the staff here at CFR -- my RA, Katy Robinette, and Scott McMurdo (sp), whose e-mails you've been receiving for quite some time now, and the rest of the meeting staff have all just been outstanding, so really appreciative to them, and very appreciative both to the German Marshall Fund of the United States and to the European Commission for their funding of this symposium.
The idea behind the symposium was to look at how America and Europe are doing in terms of dealing with issues that aren't necessarily within the transatlantic area but more global issues. And what we've done is to ask each of our speakers, as well as the presiders, to take a look at three sets of issues.
One, how important is transatlantic cooperation in the areas in which their expertise lies? So, for example, in Russia and China, how important is it to have transatlantic cooperation dealing with these sets of issues?
Secondly, where are the commonalities and where are the differences as Americans and Europeans look out to dealing with these issues -- economics, the environment, and other issues that we're going to be dealing with today?
And then, finally, what kinds of prescriptions do folks have about how to move the transatlantic relationship to a more cooperative relationship, if they believe that's necessary in order to deal with the many challenges that we face across the Atlantic?
So with that, I will turn things over to my good friend Andy Kuchins, who's presiding over the first session. And I asked Andy to preside because he has tremendous expertise, not just in Russia but in Russia's relations with China. And so I suggested to him that after we hear about America's relations with Russia and China and Europe's relations with Russia and China that he might say a couple of words about the impact of Russia's relations with China itself on this whole set of issues.
Because the bios are in the folders, we have told our presiders they don't need to go into long introductions about your life, so I hope you won't be insulted if he just turns it over to you. But we greatly appreciate everybody coming today, so thank you very much.
ANDREW C. KUCHINS: Well, thanks very much, Jim. It's a great honor to be here today and to preside over this panel of really distinguished experts. And since I don't need to spend a lot of time introducing our panelists and talking about their lives, I thought I'd tell you a little bit about my life. (Laughter.) Just kidding, Jim. Just kidding.
So, indeed, we're going to be looking at the transatlantic relationship and two of the rising powers of the world, two of the BRICs, so-called, BRIC grouping, Russia and China, in some ways perhaps the two most dynamic of the BRICs, although that is debatable for sure.
I think when we look at these countries, we're looking at a broader phenomenon that is going on in the world, and that is over the last five, 10 years in particular, especially the last five years, there's a massive wealth transfer going on. And the beneficiaries of this wealth transfer have been large, emerging-market economies and the producers of hydrocarbons. And, of course, Russia falls into both of those categories. China is certainly the preeminent, I think, example of a country in the first category.
There's been a lot of discussion in journals and in think tanks and in academia in the last couple of years about this phenomenon of authoritarian capitalism and the potential for common interests that such authoritarian capitalist states like China and Russia may share or not share. I think this is a good opportunity to try to -- for us to ferret that out and think about the commonalities and the differences of U.S. and European interests there.
The real reason why Jim asked me to preside over the panel is to perform like the Il Duche and make sure the trains run on time. So one thing I will make sure is that we finish at 10:30. We will have a minimum of a half-hour of break or a half-hour opportunity for discussion, so our panelists will stick to about 15 minutes each in their presentations. That will be enforced.
We'll go ahead in the order of the panel -- the schedule here. We'll talk about china first, and we'll give our European colleague, Eberhard Sandschneider, who's come a long way here and is the Otto Wolff director of the Research Institute of the German Council on Foreign Relations, an opportunity to speak first.
Following will be our homegrown Harry Harding here at George Washington University, where he's the university professor of international affairs. Then we will turn to Russia and we'll again let our European guest, Thomas Gomart, the director for Russia/Newly Independent States at IFRI, the French Institute of International Relations, go first, and then turn to a local lady, Angela Stent from Georgetown University, where she is a professor and director of the Center for Eurasian, Russian and European Studies.
So, with no further ado, Eberhard, the floor is yours.
EBERHARD SANDSCHNEIDER: Thank you so much.
First of all, good morning, ladies and gentlemen. It's, of course, a great honor to be here on this podium debating an issue which is keeping all of us pretty busy these days. And yesterday evening we have learned how difficult it can be to understand democracies. And I suggested to Angela a few minutes ago, maybe we should ask Mr. Putin how to elect president. They're certainly more efficient in organizing that. (Laughter.) But that is the challenge for us, from a western democratic standpoint.
Let me start by looking at this debate. Take the very title of this panel, "Managing Rising Powers." Are we assuming that we are still in a position to manage them to do what we want them to do? If that conference would take place, say, in Beijing, perhaps even in Moscow, they would certainly take another title -- "How to Prevent Them Dominating Us." And they know what they're talking about.
So maybe we are debating a little bit in the framework of all of us being in danger of self-delusion. The world has changed around there, and they have a different perspective. And what is concerning me, I ran into one of these sentences yesterday in a debate on China; the first to say that sentence or use that sentence was, to the best of my knowledge, Nick Burns: How can we help them better to understand our policies?
Think about the approach behind the sentence: How can we help them? They have a different perspective. And, by the way, there's ongoing debate -- my apologies to the president of the Council on Foreign Relations. The ongoing debate about multipolarity, nonpolarity, unpolarity, whatever polarity, is a debate those of us who are concentrating on policy aspects should easily leave to historians to decide.
In 10 to 20 years, they may get a clearer picture whether this is a multipolar world or still a unipolar moment for the United States, whether Europe will be the dominating power of the 21st century, as one of my European colleagues wrote in a book title. We have to leave it to historians. The fact, however, that this obvious change in international relations is going on beyond the surface of what we see when it comes to official distribution of power is obvious.
My second aspect I want to draw your attention to is the dilemma we are facing. Take China and the recent debate about Tibet and the Olympic Games, for that matter. It is in our interest -- that's an aspect we certainly agree on -- that China continues to change, to improve human rights, to stick to international rules, to respect intellectual property rights. It is in our interest that China keeps changing.
At the same time, it is also in our interest that China maintains stability. This huge country is so much interwoven into a global economy that whatever should happen in terms of destabilization in China would immediately affect us, certainly our economies. And obviously -- the second aspect characterizing this dilemma -- we do seem to expect that China's rise will go on.
Now, frankly, I have my doubts; yes, an impressive success over the last 25 years. The Chinese premier, to the best of my knowledge, is the only politician in the world who promises less economic growth to his population -- 8 percent after the 11 --
KUCHINS (?): But can he deliver? (Laughter.) Not so far.
SANDSCHNEIDER: He's not been quite successful. It was 11.4 percent last year. And it may be more than 8. Some economists must have told them, "As long as you grow by 8 percent, you will manage to maintain stability." Ever since, China's economy is growing roughly around 8 percent, usually more. Anyway, but never forget, at the same time, they have created an almost unbelievable amount of problems.
Wherever you look in China, be it regional (disparities ?), be it social unrest, be it unemployment, be it labor market, you name it, they have huge, huge problems. And they have been walking on this very thin line on the verge of maintaining stability, on the one hand, and imploding, on the other hand. There's no guarantee that it will happen tomorrow. It could go on for another 20 years. But it could happen tomorrow. That's the risk we are all taking.
And, of course, they do insist on maintaining their stability, for good reasons. Let me remind you that we have been debating these issues before, in the 1980s, on the rise of Japan, and we were afraid that Japanese companies would take over at least the core elements of our economies. It didn't happen when Japan ran into its structural crisis.
We have been debating western versus Asian values in the 1990s, and some Asian politicians insisted that Asian values, focused not on individualism, would be much better to handle and to deal with than western values of individualism and decay. The debate went with the financial crisis of 1997-'98.
Could it be, let us ask ourselves, that this China (hype ?) debate will go the very moment China is running into serious economic difficulties? It would be close to a wonder in world history if China's rise would just continue over the next decades unabated, with their problems playing no role whatsoever.
But still, my third aspect, obviously there is a shifting power base in international relations. And we find it difficult to adjust to these new challenges, because it always starts in your mind. And what we still seem to primarily use is the way of thinking about global relations as we learned it during the Cold War and shortly afterward. There were quite optimistic times shortly after, right? We had won the Cold War, finally. And our model, we believed, democracy (plus ?) market, would, quote-unquote, "dominate" the world.
But if you design a research project focusing on military strength, the outcome is obvious. You would get a simple answer. The United States is still the sole dominating power all over the world.
But if you take a broader perspective -- you mentioned the shift of wealth -- and ask, "Where does the money sit?" you would see that you have a huge deficit. The Europeans also have huge deficits in their national budgets. China doesn't -- $1.5 trillion. You add -- even if it's only petro-dollars, but remember, non olet is the old Latin saying -- money doesn't stink. Even if it's petro-dollars, it doesn't smell like oil. It's money.
Russia has a huge command of foreign reserves. Does it mean anything to the shift of power in international institutions if nondemocratic, autocratic countries have the financial means to follow their own interests? And in my perspective, this is perhaps one of the most difficult challenges for us. They are playing according to a different rule.
Any political system always has to balance its policies between two poles. One is legitimacy and the other is efficiency. And we, in our democracies, have learned to stress the legitimacy pole first and then try to create efficiency via democratically legitimated positions.
They are doing it exactly the other way around. The model of China is create wealth, create efficiency, and thereby forgetting even about their ideology. They don't need ideology anymore, and thereby creating legitimacy. That is the 8 percent rule. As long as the government delivers, they assume that they may be able to maintain stability. It is exactly the opposite element or strategy compared to ours.
And let me give you an anecdote which is not related to China but to one of China's closest partners. The emir of Dubai, Mr. Maktoum, is a very impressive man. For whatever reason, I don't understand, he received the freedom medal at the Free University of Berlin. He gave a speech. At the end he said, "Listen, we know that democratically elected politicians have a tendency of making promises. We do not make promises. We do deliver." And then he left. That is the message. And our Chinese friends certainly would join him in exactly taking the same position.
What effects do we have to face? Of course, it is about controlling western institutions, like, for example, the United Nations. Does it mean anything that the World Health Organization is being run by a Chinese? Does it mean anything that the incoming chief economist of the World Bank is one of the closest economic advisers to Hu Jintao? Does it mean anything?
Could it be that those who have the financial means slowly but continuously start taking over positions originally dominated by us? Is this kind of a change we are watching? And aren't they already on track with very careful first steps to win support in other parts of the world where we dramatically lost in terms of image of the West? Our institutions, our values.
Here's my example. In November 2006, the biggest event ever of that kind took place in Beijing, the China-Africa summit. Never before had 42 heads of state and government been together in China. They all came from Africa and were happy with all the contracts they could sign with the Chinese leadership.
Last December, after seven long years, because we couldn't agree on whether Mr. Mugabe should be sitting at the table or not, the EU had an Africa summit. And believe it or not, as you may know from the press, we signed a paper saying, "Now we have a strategic partnership." I'm joking; only the Antarctic can be sure not to be offered a strategic partnership by the European Union. It doesn't mean anything.
But when it came to signing the economic contracts, all African leaders got up, said, "No, thank you," and left. They don't need to sign our suggestions based on political conditionality and good governance anymore. They have an alternative, as they had during the times of the Cold War, when they were either looking either to Moscow or Washington. But Beijing does have the money to invest in Africa.
Just as a joke, as a sideline, Germany is still giving 68 million Euros, developmental aid to China -- 68 million. China itself is investing roughly $1.3 billion a year in developmental aid around the world, in Latin America and Africa.
Certainly we are focusing on issues like energy and climate change. But here comes the next major rivalry. If you take the perspective of China's government and insist on maintaining stability, here is the riddle you have to solve, this growing curve of GDP growth. If you continue that for the next 10 to 20 years and you try to match it with the energy need curve, it just won't work -- within the next five years, by the way. They won't find -- even if it's high pricing, they won't find enough energy to sustain and maintain their present course of economic development.
So what types of rivalry will we see with China on oil markets in Central Asia, in Africa, in Sudan? Will they react when we complain about human rights violations while they definitely need the oil? What could the options be? I would argue that we are still ill-prepared generally across the Atlantic to think about and meet these challenges.
But in order not to finish without having something to offer, here is my central policy recommendation. I certainly do not believe that we should be too optimistic about translantic cooperation and coordination when it comes to meeting these challenges. We do have dialogues. We have different interests. Most of the time we do not agree.
It really struck me a few weeks ago -- Angela was there as well -- in Bucharest, when Don Rumsfeld finally was proved right -- old Europe, new Europe -- when it came to enlargement towards Ukraine and Georgia. There you were with old Europe saying no and new Europe saying yes, and the president of the United States on his way into the history books, flying all over, with a complete change, obviously, in his position while he was in thin air over the Atlantic.
Now, what we need is what I would describe -- we have successful models, but to some extent forgot about it, because we were dreaming of being in a position to dominate these debates. I would argue we are not. And you'd better think back to the times that we didn't like our, quote-unquote, "partners," but we talked to them. That was what you described as (hospitality ?).
Keep communication channels open. Talk to them. Negotiate. Don't blame and shame them, as we are doing with China now and as we are doing with many other complicated and dangerous actors in international relations as well, whether it is Iran, North Korea or Syria, for that matter. And even if Mr. Mugabe in Africa is able, given our blaming and shaming policy, to organize support among other African leaders, does it tell us anything?
I think it's about time to really think on how we best approach these issues. And in my perspective, it would make a lot of sense to not accuse them of not following our rules, but to keep communication channels open and talk to them.
By the way, I'm not buying into any assumption that the West is bound to decay in the next decades. That has been forecast ever since Oswald Schwenger (sp) wrote his famous book. And it never was really true. But it is about time to start work. And maybe this debate today will at least help us a little bit better to understand these issues.
Thank you so much.
KUCHINS: Terrific presentation, Eberhard. And I'm willing to grant you the fact -- I would agree that Don Rumsfeld was right about one thing. (Laughter.) The rest of the record is up for debate.
SANDSCHNEIDER: I absolutely agree.
KUCHINS: I think that you've asked exactly the right question: Does the shift in power really mean something for the future of global institutions and global governance? I know what Vladimir Putin's answer to that question is, and it's yes. I imagine that Hu Jintao's answer is also yes, but I'm not sure whether they agree about the details.
Harry, the floor is yours.
HARRY HARDING: Thank you very much.
Building on the marvelous base that Eberhard has created for us, let me try to answer the three questions that Jim Goldgeier and the organizers of this symposium laid out for us. How important is coordination between the EU and the U.S. in dealing with -- I won't say managing -- dealing with the probable, not certain, rise of China? What are the areas of convergence and divergence in U.S. and EU policy toward China? And then are there any practical recommendations that I might give about improving coordination?
How important is coordination, transatlantic coordination, on this issue? I think it's extremely important. The more that China feels that it's facing a united front on major international issues rather than simply idiosyncratic demands from Americans, which it will always dismiss as reflecting the so-called Cold War mentality of the United States, the better off all of us will be.
And I assume that the opposite is true. The more that Europeans have the backing and support of the United States, when they reflect their concerns to Beijing, the better off they will be as well. In other words, the more we can work together, the more effective we can be.
However, the Chinese response to the current crisis over Tibet and the Olympics indicate some important corollaries or amendments to that general and, in a sense, obvious proposition. First of all, when we, separately or together, make our representations to China to express our interests, it's very important that what we say is seen as broadly reasonable; in other words, that it's seen as legitimate, reasonable, based on a balanced understanding of the situation, and should be accompanied by offers of cooperation and conciliation where appropriate, not simply presented as demands that the Chinese must necessarily accept.
Second, and even more important, the united front that we would create transatlantically, and presumably also with friends in Asia, should, whenever possible and appropriate, include members of the developing world as well as members of the developed world or else it may be seen, or at least portrayed by China, as an attempt by the powers of the past to keep China in its place.
In that regard, one of the most promising developments of the last several days is the apparent inability of a Chinese ship filled with arms for Zimbabwe to find any African country that would allow it to dock. And it looks, as of this morning, that it has to return to China.
That is a very promising development, because it indicates that the resistance to Chinese arms sales to rogue states and to oppressive dictatorships, the resistance comes not just from the former imperial powers but from the countries of the region that are not necessarily always going to accept Chinese blandishments, and in some cases -- (inaudible). It depends on not necessarily where it came from but the purposes to which it's being put.
Now, having said that, what are the areas of divergence and convergence between the U.S. and the EU in dealing with China? This is a difficult question for me to answer, because I'm not an expert on this. My colleague at GW, David Shambauer (sp), is far more qualified to talk about this than I.
But I was just at a conference in Berlin in February with Eberhard, so at least I bring what might be called kindly a fresh perspective; in other words, the preliminary conclusions of the novice to this issue. So it's a difficult question for me to answer, but I think it's a difficult question for anyone to answer, in part for some of the reasons that Eberhard already alluded to.
First of all, there's a great variety of opinion, both within the EU and the United States, about where China is going and how we should deal with it. We have the differences between the new states and the old states of Europe. In the United States we have the differences between the blue team and the so-called panda huggers about how to deal with China. So trying to identify the mainstream of policy in each place to be compared with the other is not always easy.
And, of course, the situation is very fluid. The distribution of opinion in the U.S. and in the EU is changing and is likely to continue to change over time. With the addition of the Central and Eastern European states under the EU, with the change of governments in Europe, particularly in such places as France and in Germany, and the upcoming election in the United States, there could very well be changes in the balance of opinion in both sides of the transatlantic relationship.
Still, despite these uncertainties, I think we can give the following general answers. In the past, there may have been a broader divergence in the transatlantic community over China than there is today. Eberhard, in a marvelous presentation at that conference in Berlin, described the Europeans as huggers and the Americans as hedgers. In other words, the Americans tended to be concerned about the down-side risks of China. The Europeans were more aware of the up-side possibilities, and therefore European policy tended to be more accommodationist than the American.
That may very well have been true over time. But I think that the situation has changed in recent years, in part for some of the reasons that I've mentioned. Europeans are becoming more concerned about the rise of China, as recent public opinion polls in Europe have demonstrated, and less optimistic about its future.
In that sense, they are converging with the United States in this sense of uncertainty, if not necessarily pessimism, about where China is going. And, while not necessarily engaging in a hedging policy, largely because Europe is far less of a player in Asia, which is where the hedge would primarily occur -- (inaudible) -- they are certainly becoming far more skeptical about a policy of unconditional and unrequited hugging. And many people feel that they have been too accommodating to China and have gotten relatively little in return.
I'm not sure what present European views are about accommodating China in international institutions. I think that Americans have always indicated that China should play by existing rules, but Europeans have been more willing to modify those rules. I'm not sure the Europeans are necessarily still enthusiastic about this, but as Eberhard has said, they may begin to believe that it is now inevitable that some accommodation is going to have to be made.
Now, that's just the general framework. Let me be more specific about the areas of convergence and divergence that I see in the relationship. On economic issues, trade and investment, the relative appreciation of the Euro against the Renminbi has brought Europe into closer alignment with the United States on trade issues. The growing deficit that the EU runs with China is making European views on these issues quite similar to those of the United States, and greater willingness to cooperate, at least potentially, in the WTO on these issues.
But, of course, there is going to be competition between European and American firms and among European firms that the Chinese can utilize to their advantage to try to weaken the (united front ?) of governments. And there will be less resistance in Europe to export controls on advanced technology and even arms sales to China than there is in the United States.
This is because Europe assigns less priority to security issues than does the United States, simply because Europe is no longer, in any significant way, directly involved in Asian security in terms of deployment of force. But I'll come back to an important qualification on that when I talk about policy recommendations.
To be sure, Europe is concerned if, as in the case of the Chinese ship looking to dock on the coast of Africa, is concerned about Chinese arms sales or technology transfers to other parts of the world, where Europe continues to have significant interest. But in general it places less emphasis on Asian security than does the United States. And perhaps because of this, Europe has been far more willing than the United States to build and maintain extensive military-to-military relationships with China, although, again, the payoff from those relationships is now increasingly challenged and questioned by some in Europe.
Similarly, I think it's fair to say that Europe assigns somewhat less priority to the generalization -- and certainly there are exceptions within Europe -- of less priority to human rights or at least to democratization than does the United States. Europe talks about it but does not maintain anything like the sanctions that we continue to have in place with regard to our relations with China. So Europe has been willing to give aid to China.
The United States does not -- Eberhard says one can question it on economic grounds, but people don't seem to question it on political or human rights grounds -- and to fund cooperative programs between their governments and Chinese government than has the United States.
And some in our conference in Berlin said that in general China may assign greater priority to political stability in China than to political liberalization. If there's a tradeoff, the Americans will tend to argue, especially under the Bush administration, against stability; no compromises for democratization. The Europeans think somewhat differently.
There's a growing interest on both sides of the Atlantic in Chinese energy security policy and its related ODA policy, its development assistance policy, and I think growing convergence between the United States and the EU on those issues.
There is a significant divergence between the United States and the EU on issues of global governance and climate change, but this says more about the United States than it does about China. And perhaps this is an area where the new administration will involve some changes.
Let me conclude, then, with some steps that might promote greater cooperation between the United States and the EU, which I think is important. It will be difficult because of the mix of convergence and divergence that both Eberhard and I see.
First of all, obviously, we need greater consultation on development in China and on policy towards China at both the track one and track two levels to deal with the very serious dilemmas that Eberhard has identified, dilemmas that I agree are likely to get worse in the future. There will be different dilemmas if China stumbles or if China continues to succeed, but we need to anticipate these and to figure out how we can deal with them to promote whatever common interests we can identify.
Secondly, and relatedly, we need far more policy-relevant research on the most effective ways of promoting our common interests in China. I don't know about Europe, but I know that in the United States we have an awful lot of policy advocacy coming out of think tanks and universities. I believe at this point the supply of such advocacy far exceeds the demand for it.
What we have a shortage of is informed research on what actually has worked in the past, detailed case studies of where we have identified our interests wisely or foolishly and where we have used strategies and tactics that have effectively or counterproductively advanced our interests. That research is not done, because it takes far more time to actually do policy-relevant research than to write op-eds and four-page, one-space, single-space, bold-point position papers.
Third, we need greater coordination between our governments to promote common interests through such institutions as the ASEAN Regional Forum on Security and the WTO. Europe says that it is somehow not involved in security matters in Asia.
If that were really true, it should resign its seat on the ASEAN Regional Forum forthwith, because it is a member of the major regional institution on security. And it seems to me that if Europe is to remain, as it should, a member of the ASEAN Regional Forum, it should then coordinate, whenever possible, with the United States on what position it will take there.
Europe does have a stake in European security even if it does not have troops on the ground in the region. Security is far more than an issue of alliances and troop deployments. It deals with many other issues in which Europe still plays a central role.
I think that the ARF is a very important forum where Europe and the United States can promote their common interests. The WTO, more obviously, is an institution where we can pursue common concerns about China's trade, and perhaps at some point Chinese investment policy as well.
Fourth, we need greater cooperation to strengthen the institutions that we expect to constrain the behavior of all countries, including China. I make a distinction between what we need to do not about China but perhaps because of China, where China illustrates problems in our own domestic economic situations or about the weaknesses of global institutions. And it warns us that if we don't fix those problems, rising emerging markets such as China and Russia are going to be more difficult for us to do.
So we need to strengthen the institutions into which we want China, Russia, India, Brazil, the other BRICs, to fit. That means, among other things, U.N. reform, including the reform of the U.N. Security Council, completion of the Doha Round, appropriate changes in the structure and policies of the World Bank and the IMF, and in general to make sure that the balance of power in Asia, in the Asia-Pacific region, remains as vibrant and vital as possible.
And finally, I think we also need coordinated efforts with Japan and with the advanced economies of Asia, as well as with our European partners, perhaps through such institutions as the OECD, as well as the G-7, to promote the economic vitality and political effectiveness of advanced democracies and to create a model of economic aid and political development for the developing areas that works in practice and not just theory.
In other words, I think that what we really need to be sure is that China faces few opportunities to be disruptive, that it faces vital institutions, vibrant balances of power in Asia and elsewhere, and only then, I think, will we have a chance of successfully coping with the challenges and the opportunities of a successful rise in China.
Thank you.
KUCHINS: Thanks very much, Harry. That was a brilliant example of analytical concision, with the exception of your false modesty, referring to yourself as a novice. If you are a novice, my friend, I'm a kindergartner.
I like -- in making the transition from China to Russia, I like your citation of Eberhard's dichotomy of huggers and hedgers over China.
HARDING: I had hopers too.
KUCHINS: Hopers. Well, I think, if we think about Russia, at least in this town, I don't think you're going to find any huggers. You may find some hopers. You'll find a lot of hedgers and I think you'll find a lot of haters. (Laughter.) In the European context, you may find something similar, although you may find some huggers there.
But Thomas, why don't you take the floor and help to lay out that map for us?
THOMAS GOMART: Thank you, Andy, for giving me the floor. And thank you to the organizer of this conference. It's a real pleasure for me to be here this morning.
My initial remark will be the following. In fact, we are -- it was said there is a political trend to put today Russia and China in the same bag. And, for instance, President Bush, in June 2007, in Prague explained that the U.S. will continue to press nations like Egypt and Saudi Arabia to open up their political systems. And according to him, in fact, President Bush intends to apply that lesson to -- sorry, the teaching of its relationship with Russia and China as well, the idea that the U.S. can maintain a friendship and push a nation towards democracy at the same time.
This trend is also present in the intellectual debate. It was said by Andy the debate on authoritarian capitalism has consequences in terms of power. The main argument is to say autocracy is making a comeback due to the link between growing wealth and political restrictions; the second argument is to say usually that Putin looks at China as modern; and thirdly, that such autocratic regime will compete with democratic governments in international affairs.
In my view, you know, this new division of the world will be clearly crucial between the EU and the U.S. in the coming years. And my argument this morning, you know, will be the following. First of all, Russia is not China. It would be both a political and an ethical mistake to engage them with the same policies, in my mind.
Russia is less, according to me, an emerging country than a country which is past middle age. Putin's Russia was obsessed by -- (inaudible). A lot of its policies could be explained by his wish to restore Russia. And maybe there is a chance, from this point of view with Medvedev, we have no real Soviet background compared to Putin.
Secondly, I think that the U.S. will increasingly think of Russia through the Chinese challenge. The basic fact is that the Chinese-U.S. relations are evolving rapidly and are clearly more lucrative than the relations between the U.S. and Russia, not to mention the relations between Russia and China.
Thirdly, seen from Europe, I think we should underline the fact that Europe cannot avoid Russia, where the U.S. can do it. The EU-Russia-U.S. triangle is increasingly unbalanced. The EU is the first trade partner of Russia. I remind you that more than 57 percent -- Europe isn't much more than 57 percent of Russian trade. Russia is today the first partner of the EU, beyond the U.S. and China, but Russia represents only 1 percent in the U.S. trade.
Russia is no more a strategic priority for the U.S. And seen from Moscow, the EU is, I would say, only a huge market today. It has no credibility as a strategic player. And once again, I think that Washington is a strategical reason for Russia, which is claiming now for sort of grid bargaining. So how to deal, you know with this tricky balance.
So I would like to raise this issue and to try to give my points by responding to the questions raised by Jim in making his presentation -- (inaudible). So how important is transatlantic cooperation in accomplishing the foreign policy goals of Europe?
First of all, obviously it's European security. Some member states are looking for new security guarantees against Russia. And it is absolutely understandable, given the recent history and because of the EU inability to do so.
And let's have a look, for instance, on Poland. The basic point is that Poland, for instance, doesn't feel threatened by Iran, but Poland would like to be involved in the missile defense system because it's a means for Poland of enhancing security vis-a-vis a re-emergent Russia. Added to this, some other state members, such as Greece, Bulgaria, Romania and Turkey, would like to be protected by this system.
And as you know, since the Bucharest Summit, this project has been supported by NATO, and it has contributed to real serious tensions with Russia. From other state members' point of view, mainly Germany, to a lesser extent France, but also to NATO members like Norway, this project dramatically undermines the European capability as a nascent strategic player.
Second point related to European security, obviously Balkans in terms of Kosovo independence. Three response -- response, sorry, if I may. The first one is to say that, according to me, the westerners underestimated the Russian opposition to the Kosovo independence; secondly, on the other hand, Russia underestimated the western unity on this topic and the support given to Kosovo; and thirdly, we are now in the very tricky situation -- and this situation will continue -- because of the Russian wish to expand its influence in the Balkans through the energy power and its wish to support Serbia.
Within the EU, we will have in the coming year a strong Russian channel, and obviously transatlantic cooperation will be required to deal with this unstable situation.
Second point now on the transatlantic cooperation; I would say the need for realism. We are, between the EU and the U.S., similar interpretation on Russia. Basically, we see Russia as a much more assertive country, a sort of classic power. And obviously transatlantic cooperation is needed for analyzing, as critically as possible, the Russian power in terms of motivation, in terms of capabilities, in terms of organization.
Our future ability to shape a joint relationship with Russia depends clearly on our current ability to assess Russia properly. That's involved, you know, Potemkin all the time, within Russia. Russia tends today to forget its vulnerability and enjoys its comeback on the international stage. And very clearly the Russian behavior is sort of soft revenge.
But according to me, the U.N., the U.S. should be prepared to deal with Russian leaders when they are inclined to reassess the benefits of cooperation with the West. And we will see, but maybe there will be a window of opportunity with Medvedev.
At the time being, according to me, transatlantic cooperation is very important to avoid a sort of set isolation by Russia. This need for realism is clearly required on Iran. Russia is deeply involved in the civil nuclear program in Iran. Russian elites are strongly against a nuclear Iran, and Russia is a key partner to dealing with Iran in the nuclear field, but also I would say in all the description of the original stability.
And at the same time, I think it's very important for the Westerners to understand that now civil nuclear is a tool for the Russian foreign policy or that, you know, it's a tool like -- however, for the French foreign policy. And it's become -- it will be used more and more by the Kremlin, I mean, the idea that if it's not Russia, we will deal -- you know, its nuclear facilities, it will be made by -- (inaudible) -- especially by the westerners.
Now, what about the convergence and what about the divergence between America and Europe in dealing with Russia? Clearly, we have joint interests, and at the same time there are clearly also divergent interests in dealing with Russia.
First of all, geopolitics of energy. The convergence between the U.S. and the EU is well-known. On the oil market, it's an integrated market protected by the U.S. And to some extent, European economies benefit from its protection. But the problem is that we are attending to sort of -- (inaudible) -- you know, of the -- (inaudible) -- production and oil production in particular.
Only 15 percent of the worldwide oil production is produced by the majors and we have now the coming back of the so-called national oil company. And obviously this comeback is very, very -- (inaudible) -- on the -- in the gas field. We have no -- (inaudible) -- market for the gas. We have three regional markets -- North America, Europe and South Asia. And obviously Russia is key to connect or to disconnect them in the near future.
For some experts, you know, Russia is supposed to become a sort of Saudi Arabia for the gas market. And obviously, as you probably know, there is a strong interdependence for gas activities between the EU and Russia. And obviously this interdependence will increase, irrespective of the warning of the so-called Russian energy imperialists.
And I think that the big challenge for the EU is to be able to set up a closeness with Russia in the gas field by avoiding political and -- by avoiding, you know, sort of to close links or to avoid a sort of corruption, you know, organized by the Russian side with the European companies.
I think that with the European point of view, it's important to underline in the U.S. that, you know, for us, clearly Russia -- you have some risks when you are dealing with Russia in the energy field, but it's no more a threat. And it's clearly also inherited from our past because, for instance, you know, at the beginning of the '80s, you had big strategic deals between the USSR and, for instance, France, Germany and Italy -- (inaudible) -- against the U.S. administration.
I think that, you know, it's important also to understand that Russia wants to be seen as a reliable partner, and to some extent, benefits from the current situation, benefits from uncertainty. For European elites, you know, Russia is less reliable, obviously, than Norway, but is more reliable, you know, than countries such as Israel, not to mention an opportunity for Iran exporter.
So obviously diversification of supplies is required. But I think that explaining, for instance, that Azerbaijan could be an alternative energy supplier for the EU, which is strongly supported, you know, by some think tanks in the U.S., is simply, from a European point of view, a joke.
Second point. You know, for the divergence, of course, of so-called -- we are not very comfortable with this expression, the so-called post-Soviet space, which is seen as a zone of special interest by Russia. It is seen in the U.S. as we should be making a clear distinction between Eastern Europe -- (inaudible) -- and Central Asia.
Just a point on Central Asia because it was -- the Chinese influence was mentioned in Central Asia. I made some interviews, you know, with Kazakh leaders, and we should not underestimate our -- you know, the China expansion. And also it's clearly room for maneuver for the westerners, from my point of view.
I continue, you know, on the zone of special interest. Clearly there is some divergence between the EU and U.S. in these links, because the U.S. certainly thinks it's possible to transform these areas rapidly. On the European side, there is much more caution about this, and the feeling that the Russian influence should be taken into consideration, which should not mean -- should stop, you know, any move, but maybe we should be much more able to involve Russia in this transformation.
And clearly also the basic question for this so-called, especially for Central Asia, about the future of Afghanistan. And it's important to understand that for the Russian elites now, the clear idea is to say that NATO will be defeated in Afghanistan, and the fact that the more western troops will be engaged, the better it is for Russia, because they are fighting Taliban, and at the same time they will lose some military prestige and to -- they will accelerate by compensation the Russian recovery.
It was said also that obviously there is this division between new and old members within the EU. And it was said about Georgia and Ukraine. I think that, you know, it's important to understand that the reluctance coming from Germany and France regarding, you know, a new NATO enlargement should be maybe interpreted in a different way. In my view, you know, it's less the Russian factor which explains the position during the Bucharest summit about their deep doubts about NATO's future.
First of all, in Germany and France, it seems to me that the idea is that everything will be decided by the evolution in Afghanistan, so the real issue is not NATO enlargement, but the situation in Afghanistan. And the second idea is to say the more NATO is expanded, the less it will be efficient in military terms and will become a sort of political club, which is inappropriate in the German and French view.
And, obviously, there is divergence about Ukraine and Georgia. And my point is to say that probably the divergence will be to disconnect Georgia and Ukraine. That should -- however, will doom, sooner or later, NATO. But the real divergence is to clearly understand that the situations in Ukraine and in Georgia are not at all similar. And clearly, I'm not sure that it's a good idea, you know, to welcome Georgia in the current context.
Now, let me conclude, you know, with particular steps to improve transatlantic cooperation very briefly, if I may. First of all, I think that the real issue is not now to know how to engage Russia but how to engage Russians. I mean, it's very important, in my mind, to initiate a joint project between the EU and the U.S. In the education field, for instance, we have good expectation from a European point of view on the Berlin protocol, for instance, and maybe it would be useful to add the U.S. to this protocol.
Secondly, it's obviously a much more political issue and much more tricky one. It's all to connect or to disconnect the democracy promotion with the situation -- I mean, how to disconnect democracy and war, because, like the U.S., Russia is at war -- considers itself at war. And I think that we should think about the way to reconsider what does it mean, democracy promotion, what does it mean, democracy support, and what does it imply. And it's implied, first of all, to reassess ourselves, according to me, given the fact that the U.S. political system, as well as the European ones, are no more seen as model by the Russian elites.
And last point. You know, as you probably understood, I don't think it's a good idea to put Russia and China in the same bag, because -- my point is to say that Russia fears China a lot, and there is no strategic alliance, according to me, in preparation. So maybe it's for -- maybe debating is the word -- the real issue is to know what should be the transatlantic reaction to an increasing tension between Russia and China and to a possible conference in the coming decade.
Thank you very much.
KUCHINS: Thanks very much, Thomas. I think you put your finger on a very important point on the asymmetries in the European and American trade and economic relationships with China and Russia, which make the interests and the stakes very different.
I would submit, I think there are also contrasts in the security relationships with these two countries. It's kind of ironic that in the case of China, despite this, you know, symbiotic economic relationship, or what Larry Summers described as mutually assured destruction, it is possible to imagine a military conflict between the United States and China, whereas, in the case of Russia, despite the fact that we certainly don't have a symbiotic economic relationship and are far from it -- that's one of the major reasons I hope to explain the continued existence of the Jackson-Vanik Amendment -- it's very hard for me to imagine a military or a security context in which case we would actually go to war with the Russian Federation.
The other difference I would point to, I think, is that when we talk about European security, Russia looks to be much more problematic. If we look at, I think, from our perspective, you know, on global security issues -- the war on terrorism, weapons of mass destruction, even Iran -- I think we've found Russia to be a more -- well, a more -- a better partner, a responsible stakeholder, so to speak.
But let me turn the floor to Angela and take off --
ANGELA STENT: Thank you very much, and thank you for inviting me to this conference. I really agree with most, although not all, of what you said, Thomas. (Speaks sentence in French.) But I think you will see the difference between a European and an American, or one American view here.
I'm also reminded, Andy, when we think about China, that you and I sat at a dinner with President Putin in Sochi last fall where he said there are only a few truly sovereign countries in the world. He said Russia, China, India. And I think back on my notes, and I can't find the word United States in there, but maybe I just didn't write it down. (Laughter.)
Anyway, when I looked at the title of this --
KUCHINS: We're too highly indebted.
STENT: We're too highly -- we're not a truly sovereign power.
When I looked at the title of this panel, I wondered why Russia and China were put in exactly the same category, because China is certainly a rising power, although we've heard about the problems that it has. I would say Russia is a recovering power. It is a BRIC.
I think the new Russian reality that we face can be encapsulated by the two speeches to the Munich security conference that we had last year and this year. In 2007 we had President Putin's speech, which I don't have to go over with you; you know, pretty confrontational towards the United States, pretty assertive. And many in the audience, including apparently many of the Germans, agreed with it.
This year Sergei IVanov gave a much lower-key talk, I mean, for a man -- he had lost out, I guess, in the succession question. And he said, "We don't export ideology anymore. We export goods and services." So what we have -- the rising Russia is a Russia, of course, that's done fantastically well out of energy prices. Remember when Putin came to power, oil was $27 a barrel. Today it is -- I don't know if it's $113 or more.
It had an economic growth rate of 7 percent per annum for the last seven, eight years. It has, what, $470 billion in currency reserves, $140 billion, give or take a little change, in stabilization funds. It's poised to be an outward investor. So we know that economically it is a rising power. And, of course, we've had the more confrontational, the more assertive rhetoric, and some more assertive policies.
But I'd just point out to you that some of the domestic fundamentals are really not that good. You said Russia is a middle-aged power -- middle-aged and going south. Demography -- you know, life expectancy, 59 years for men and a shrinking population, crumbling infrastructure. Dimitri Medvedev's stewardship of these national projects, as far as I can see, has produced very little. And that was supposed to deal with the physical and, if you like, the human infrastructure of Russia.
You have a military that really isn't performing that well. And even though they've resumed their strategic bomber flights -- they do the spectacular stuff -- but the military itself, according to the experts, is really not in very good shape.
So I'm not sure that the longer-term fundamentals in Russia would really have us agree that it's a rising power, particularly if you look at what's happening in Russia's Far East. And I won't say any more about that, because that touches Russia and China, where it's being depopulated. And guess which people are, you know, dominating the economy in parts of the Russian Far East? Yes, it's the Chinese.
So, I think a rising Russia has to be really seen in this context. Plus, I would say, what we are now facing with this two-headed succession -- the two-headed eagle, the two leaders, it causes a great deal of uncertainty. We don't know what's going to happen; how this transition is going to work itself out, this succession. I'd bet you that most Russians don't know.
And if you look at some of the things underneath what's going on, you could question, again, how stable this system is. We heard that China has some questions about its stability. I think there are questions about Russia too.
All right, just a few preliminary remarks. Now, is transatlantic cooperation important in managing the relationship with Russia? Yes, it's vital. I have done two stints in the U.S. government, and in both stints we've always said, must work better with the Europeans on Russia; must coordinate better. I've also been writing about these things, as an academic, for more years than I care to tell you about, and we usually fall short of it.
And I think today, and for the past few years -- and, again, I don't want to repeat what others have said, we have, there's a real issue now within Europe itself about dealing with Russia. And the issue is, of course, between "old" and "new" Europe. Now, I'm -- it's fine to quote Rumsfeld because he's already been quoted, and I don't have to apologize. We saw that at the NATO summit --
(Off mike comment.) (Laughter.)
STENT: -- that's all right; I was going to say it was politically incorrect, but you already did it -- we saw that at the NATO summit -- I might add that the German Marshall Fund had its own conference at the same time as the NATO summit in Bucharest, and we certainly saw it there in many of the discussions.
So there -- and here I would say that, to some extent, there is a coalition, a loose coalition between the United States government and Central -- some Central European, not all of them -- countries, and the Baltic states on the one hand, and then, sort of, the rest of Europe. I also just want to reiterate what Andy said, and others have said: Of course there is no unified U.S. view on Russia. There may be a few huggers, not too many. (Laughter.) But we have a big debate in this country about, a) how to interpret what's happening in Russia, and b) what we should do about it. And Andy and I spend a lot of time, probably more time than we would like to say, sitting in rooms where we try and hash this out. And that's going to become, I think, even more true as we go into a presidential succession here.
Now, I would agree with you, Thomas, that government-to-government -- and on the analytical level too, in terms of academics when we get together, I think we more or less share with all Europeans, including the Germans and French, an analysis of what's happening inside Russia. I think the difference is what you do about it, and how you deal with it, and what's your expectations of Russia?
You know, we've already heard about China. Our expectations of what's happening inside China are very different from those of what's happening inside Russia. As you pointed out, Andy, our economic stake is much bigger in China. So, you know, often Russians will come and say, why doesn't the U.S. deal with Russia as it deals with China? And there are reasons for this.
But, I think we do -- I think, broadly, the Euro-Atlantic community shares an understanding of what's happening inside Russia, but they disagree, on different levels, about how to deal with what's happening inside Russia. And you've also said that.
I think our allies do not believe, by and large, in megaphone diplomacy -- on the idea of standing up and criticizing Russia publicly for its democratic deficits, and for making democracy promotion as a major element in the, in the conduct of relations with Russia.
Now, I think even this administration has somewhat changed that. You don't hear very many public comments anymore about what's happening in Russia, but I think that's another reason -- area where we sometimes disagree with our European allies.
Now, we did get three questions -- no, four questions from Jim Goldgeier. And the first question is: To what extent can the -- are the Europeans really on the same page as the United States, in terms of its goals and interests in Russia? And so that made me sit down and think, hmm, now what are our goals and interests with Russia?
I think there are two major issues where we need Russian cooperation. And here I think we are in sync with our European allies. And we do have, unlike with China, you know, we have an institution where we and Europe can work together, vis-a-vis Russia, and that's, of course, NATO. So, the first -- and, of course, the United Nations, which we all have.
But, the first issue is Iran. And here I would say Europe and the U.S. have cooperated very well in trying to persuade Russia that it should take more seriously Iran's nuclear ambitions. And we have had some success in cooperating with Russia in the United Nations in producing somewhat more robust sanctions.
And the second one is Afghanistan. Neither the West -- and I think we do have to use the word "West" now, the U.S.-Europe, neither we nor the Russians want the Taliban to come back to power in Afghanistan. And even though we may differ on what's happening there -- and within NATO, obviously, as you alluded to, we have major disagreements on what NATO should be doing in Afghanistan -- on the Russian-Western cooperation angle, that's working better too. We've had more agreement now from Russia to facilitate some of the transportation of material things that are going to Afghanistan. So, that has worked pretty well.
Now, beyond those two issues -- Iran, Afghanistan, there are a number of issues where, I would say from the U.S. side we have a double-edged policy. On the one hand we would like Russian cooperation on these issues, but if we can't get Russian cooperation, we want to minimize the damage that Russia can do to our own interests. And so these issues, again, have already been alluded to.
They are Kosovo; they are missile defense; they are the CFE Treaty; and a host of issues -- and, most importantly, also the post-Soviet space. Again, we have no word to describe this area. It's not politically correct to say "post-Soviet space." We can say Eurasia. But I ran a conference last week with Ukrainians and they said, we don't consider ourselves Eurasians; don't put us in Eurasia. So, I'm still going to use "post-Soviet space" and, you know, that, I think, indicates the problem.
So, on all of these issues we have cooperated with some European countries -- most European countries, on trying to encourage Russian cooperation; and then, if not, then trying to deal with these issues when Russia doesn't cooperate. Kosovo, you know, as you said, is really one of the most pressing ones.
And we hadn't seen solidarity within Europe on this. And we do now see the Russian reaction to this, and partly what's happening now in terms of Abkhazia and South Ossetia. But these are issue where we do -- we cannot go it alone, we need European cooperation.
Are there any bilateral U.S.-Russian issues where Europe doesn't play a role? I don't think so. I mean, strategic arms control is obviously a bilateral issue between the United States and Russia, and we have to negotiate these things. But Europe is very vitally interested in these issues too. So, even though they may not have that much of an input, they are certainly affected by it.
And then the other side of the coin -- and you've already talked about energy, is energy. We're not dependent on Russian energy, but we have a great interest in energy security for Europe. We have concerns -- I think, sometimes exaggerated, about Europe's dependence on Russian energy, and we like to encourage the Europeans to diversify their sources of energy. By the way, we now hear rumors -- getting louder and louder, that a gas OPEC will be announced rather soon -- which is not going to make this task any easier.
And so what the U.S. is doing, obviously -- and you've alluded to this, is trying to promote alternative pipelines that bypass Russia in oil and gas. The problem here, obviously, are the Central Asian states -- the limited capacity, as you said, of Azerbaijan. And so, we do have an interest there. We do talk to Europe. But, obviously, Europe's dependency on Russia is a fact -- energy dependency, gas dependency, and there's not too much the United States can do about that.
I think the final thing where we and Europe do have similar concerns is how Russia is going to deploy its sovereign wealth funds. And both the European Union and the United States now are working on and developing their legislation to try and ensure that the deployment of these -- the investments that Russian entities will make in Europe and the United States, do not have adverse effects on our societies, our rule of law, et cetera, et cetera. And that's a big challenge, and we are talking to each other on that.
Now, next question was "convergences and divergences." And I think we've heard quite a lot about that. Let me just very briefly say that the business community -- both in the United States and in Europe, takes a rather similar view of Russia, and that is a much more optimistic view -- even people involved in the energy sector. Again, you pointed out why.
And so they see a Russia that -- yes, it's maybe not developing in a Western sense, vis-a-vis democracy, but it's a growing market. And, in the longer run, it's going to become more transparent probably; it's going to become -- it's going to, it's going to develop the rule of law. And there I think you have a convergence of views, although, again, our stake in this relationship is much less than that of the Europeans.
Now, the political class. And there again, I would say, it divides between different groups. It's not always the U.S. versus "old," versus "new" Europe, it's different groups within all of those issues that might have similar takes on things, but obviously has much more questions about the domestic trajectory of Russia -- about whether Mr. Medvedev himself will, in the end, introduce a more liberal economic regime or whether, in fact, it's going to be something completely different.
So, again, I think that convergences and divergences cross a -- cut across countries. But, I think, in general -- and I just make the point that you made, and others have made, Europe is Russia's neighbor -- (laughs). Even, you know, particularly the new Europe -- the Baltic States. They're Russia's neighbor. They have to live with Russia. This is a long-term project. However difficult the neighbor, you've got to live with them and you've got to keep trying to engage them.
We do not have the same perspective from the other side of the Atlantic. We're that much more removed. I mean, it's just a fact of life. And so that colors a lot of issues. Europe's also much more affected by some of the, sort of, soft security threats that emanate from Russia than we are. So, I think they have to constantly deal with Russia and they're going to remain involved in Russia, whatever happens in Russia. And they're going to keep trying to pursue more productive politics of engagement. You said that yourself. That's not a view that's universally accepted in the United States. It still isn't. I mean, again, it cuts across different groups.
Now, unfortunately from the U.S. point of view, you know, there is no unified European policy toward Russia. And what we see Russia doing is practicing competitive bilateralism, both in the energy fields and in political and other economic fields too. And so when you talk about the U.S. and Europe interacting, there's no European energy policy toward Russia, there's barely a European energy policy -- there's a climate change policy that we have.
Again, the difference is between new and old Europe. And so we do, we tend to see here a group of countries led by Germany and France -- Germany being the most vocal about this, if you like, at the Bucharest summit saying, you know, wait a minute, let's look at this question of further Euro-Atlantic enlargement.
It may be for the reasons you said that there's a questioning about NATO. I think it's also because, up until now, NATO membership has basically implied EU membership too. And the one thing, clearly, that the European Union doesn't want to face at the moment is the prospect of Ukraine, and even Georgia, joining the European Union.
So, you have that group of countries, and then you have the small groups of countries that would like to encourage their Euro-Atlantic integration. But, I know that even Poland, under the new government -- we've had visits by both the foreign minister and the new prime minister of Russia (sic), and they're talking about a more productive relationship with Russia. So, even the countries that we would say are new Europe, understand that they have to coexist with and improve their relationship with Russia. So there are differences here.
Okay, now let me just get to the final point here because I know I'm running out of time, and that is, as the Russians would say, "chto delat'?" -- "what shall we do about this?" "What can we do?" I think, for the U.S. and Europe, the biggest challenge now would be to sit down and have a structured, sober and reasonably objective discussion about how we define our interests in the Russian neighborhood, in the post-Soviet space; to be explicit about where we agree and disagree, and who agrees and disagrees.
And we also, I think, need to have a discussion among ourselves about what we believe to be Russia's legitimate interests in this region. Because all of the other problems that we have with Russia -- be they missile defense, Kosovo, CFE -- they all emanate from this fundamental disagreement about this area.
And I should note, from the Russian point of view, you know, Russia looks at the United States and believes that a great power -- coming back to President Putin -- has the right to have its sphere of influence in its own neighborhood. And they look at the United States, you know, in Central and Latin America.
And I was at a meeting a few months ago at CSIS with Europeans -- I'm not going to name officials, but there was one German official who said that the United States suffered from an empathy deficit disorder vis-a-vis Russia. (Laughter.) In other words, we do not have enough empathy for this former super-power recovering --
AUDIENCE MEMBER: Only Russia?
STENT: -- well, I'm just talking about Russia now -- you know, for a super-power recovering from the collapse of the Soviet Union, from the humiliation of losing an empire. And so we had a big debate about this.
And I think it is something where we -- we, the United States, writ large -- have, probably haven't sat down and thought enough about what it's like, or what it might be like. You know, put yourself in the minds of the people sitting in the Kremlin. That doesn't mean that you have to agree with what they say, but at least I think you do have to maybe think about it more.
So I do think that we need to try and have a discussion with our allies about what we would consider to be Russian legitimate interests and what the red lines are. I would argue that when Chancellor Merkel stood up and said Georgia cannot have a Membership Action Plan because Abkhazia and South Ossetia are unresolved, I mean, this is an encouragement, an incentive to make sure that they're not resolved -- (laughs).
And we already see now the Russian government, you know, establishing formal relations with these two entities. Again, I won't go on about this, but it would be good if we could sit down and discuss this and have a more unified allied position on Russia's neighborhood and then all the issues that belong either -- that form part of this problem that we both, Europe and the United States, are having with Russia.
And I think our real challenge is, as we -- as we have entered this period of uncertainty on the succession, to what extent -- and this is a final question for the Alliance -- should our actions, our policies towards Russia be oriented toward trying to encourage Dmitry Medvedev to pursue a less confrontational policy, if we believe that our actions will have any impact on that? Or should we say, we don't know, we have very little insight into this untransparent system, and we just have to go ahead and do what we wanted to, and not hold our breath, wait to exhale, until we see what happens there? And I think that's another area we're going to have a lot of arguments. Thank you.
KUCHINS: Angela, and all panelists, thanks for a terrific presentation.
Before we turn to the audience, I'd like to take one minute to make a quick comment, as Jim has allowed me to. I did spend last week in Moscow, and there were two things that I came away with -- actually, I was a fellow traveler and attended the United Russia Party Congress (laughter), and saw the big show.
It's interesting that while we have no certainty in this country about who will be the president on January 20th, for Russians there was no uncertainty about who would be the president on May 7th. But, there is total and complete uncertainty about what will be the division of labor and the division of power between Mr. Putin and Mr. Medvedev. Nobody in Moscow could give me any degree of certainty about that.
The message conveyed by the United Russia Party Congress was pretty clear, in that, "Well, Dmitry Anatolyevich, you may be president, Vladimir is the man." So, we'll see how that plays out. And I think there's just a lot of -- lot of questions there.
Maybe more relevant to this panel, and one thing that made me somewhat more heartened, was coming away from a read-out of the Sochi discussions. Since this meeting is on the record, I will not identify my source, but it's a credible source. And the one thing that both Mr. Medvedev and Mr. Putin were concerned about in their discussions with President Bush in Sochi a couple of weeks ago -- and was not on the agenda for discussion, was, what's going to happen with the U.S. dollar? Where is that going? Because that has a real impact on things that Russians are concerned about a lot.
And this is a very, very different kind of situation than what we faced, you know, 10 years ago in the 1990s with where Russia was, let alone where Russia was 20 years ago in the Soviet Union. And that this is a country which is integrated into the world economy more than it ever has been in their history, and what happens here, and who behaves as a responsible stakeholder, I think this notion is an important one -- what Robert Zoellick has, you know, urged the Chinese to do.
Well, it's something that certainly we have been trying to urge the Russians to do. I think the Russians want to urge us to be a responsible stakeholder on both economic and security issues. And I think there are significant differences between us -- and the Europeans, and the Russians, and the Chinese over what actually constitutes a responsible stakeholder in the emerging institutions and practices of global governance, which are all in question, I think, at the heart of this, of this conference.
One thought I'll leave you with before turning it over to the, to the audience. I was struck, when giving a talk for a group of investment bankers in London in February, where I was making the argument about Russia's engagement in the international system, and the stakes they have there -- and it's a, it's an argument that's laid out in a recent piece I did with Cliff Gaddy in Washington Quarterly, but I read on the news wires that morning the testimony made by Admiral McConnell to the Senate on national security threats, and what he identified as national security threats.
And this was really striking to me: He went through the usual threats that we know about -- weapons of mass destruction, terrorism, et cetera. And then he said -- I'll have to paraphrase -- that there is a new set of threats that we face, and that is the accumulation of economic wealth of countries like Russia, China and those in the Middle East, and the use of that economic wealth for political purposes. I said, wow, what a novel idea, using economic wealth and power for political purposes. You know, who, in world history would have ever thought of that? (Laughter.)
MR. : (Off mike.) (Laughter.)
Okay, we'll proceed in this manner. Let's take three questions, comments at a time. Please be brief. Please identify yourself. And then we'll give a chance for our panelists to respond. And then we'll continue as long as we have time.
Yeah, Wayne?
QUESTIONER: Thank you. I'm Mike Holdsell --
KUCHINS: Sorry.
QUESTIONER: -- from Johns Hopkins SAIS. And I think all four presentations were absolutely superb. I mean, really on target and -- I'd like to concentrate on the last two because I really don't know a heck of a lot about the first two.
And, I guess, just one quick point that I differ with Thomas on. I don't think there's any objective evidence that NATO enlargement -- the last two rounds, have led to inefficiency at all. I mean, I think the problems occurred because of the Iraq war, but that wasn't a result of NATO enlargement.
And, in fact, the new members have been -- have shown themselves to be extremely willing to take part in Alliance operations. And, if anything, if your country joins the -- rejoins the integrated military command, as I expect that it will next year, it seems to me you're going to have a more efficient NATO, and there's more, there's more cooperation now with the EU than anybody would have thought possible. So, I just disagree factually.
I'd like to just focus on what Angela said. It seems to me the "how" is the big question. I think everybody would love to know how to engage Russia more in the post-Soviet space, whatever you want to call it. But it just strikes me that there's -- I'm, I'm terribly pessimistic about it.
There's a fundamental gap in mentality. The folks in the Kremlin, I think, are -- have a 19th Century mentality that says you want to have weak neighbors, when, in fact, the 21st Century has shown that the last thing you need -- in an era of transnational crime, and epidemics, and trafficking in human beings, et cetera, et cetera -- the last thing you want to have is weak neighbors.
They don't seem to understand that. And at the Bucharest summit, that several of us were at, I posed the question to one of the Russian speakers: What exactly worries you about Georgia and Ukraine getting MAPS? -- you know, forget about membership, that can be 10 years down the line. And, admittedly, this is just one person, and a very emotional person at that, but the answer I thought was quite revealing nonetheless.
It was this great riff about minority rights in Estonia; and we want to preserve democracy in Ukraine, and everything. But there was never anything about a threat from NATO, because he knew very well that Russia cooperates with NATO, and sits on a joint council with NATO.
So, one last comment -- so, the "how" is the big question -- one very quick last comment: Angela mentioned NATO and the U.N. as multilateral organizations fora in which we do engage the Russians.
There's one other one, which I think is also instructive, and that's the -- that's the OSCE, which, for a brief period almost 20 years ago looked like the great hope for post-communist Europe, as a result of the Copenhagen Conference. 1990 there was -- a charter for new Europe came out, which all the, all the members signed onto. It outlines -- it's still the basic document outlining democracy, human rights, civil rights.
The fact is, it was too successful. Its sub-organization, ODIHR, which has been monitoring elections -- post-Soviet space, has done a good job. And what's the ultimate result on this? The Russians have essentially de-financed it, and are trying mightily to essentially undermine the whole OSCE structure. So, I guess I just can't be terribly optimistic about that.
And as far as American empathy disorder. I mean, I think there we can turn back to Eberhard's native language. It's a -- it's a difference between (speaks German). I mean, you know, in English we say, "understand." In German, there's a differentiation between understanding and having, you know, sort of, buying into the logic. And I really think that that's a fundamental difference with many of our West European friends.
So, I'd like to hear more about how we engage Russia.
KUCHINS: (Off mike.)
QUESTIONER: Gail Maddox, from the U.S. Naval Academy.
I also join Mike in saying this was an excellent panel. My question dovetails somewhat with your comments, Andrew, and that is on -- and I would direct my questions to Harry and Eberhard on China.
If you delve deep into the DOD -- well, you don't have to delve too deep, but the DOD documents, and putting the Middle East aside -- which I agree is difficult to do, China rises very big on the horizon. And if you look at some of the steps that we're taking -- for instance, the enlargement of Guam, and some of the other military steps that we're looking at, I mean, it's clear that for the United States, at least for the military, sees that as the, as the big threat in the Pacific.
What kind of divergences can we expect, or should we expect with Europe? Does this -- will this pose a longer term problem? Or will this, will we have the traditional: the United States takes the lead in the security area -- which actually in the economic area has no -- is no longer the case, what used to be? Thank you.
KUCHINS: Okay, and right here next to Michael.
QUESTIONER: Thank you. I'm Gerry Livingston, from the German Historical Institute.
I've got two quick questions to Professor Sandschneider. The first one is about his last sentence. He concluded by saying, what we have to do is talk to "them." Now, who is them? Is them just the autocratic government? Or does them also include the democrats within a country like China?
Take the example of scores of thousands of Chinese students in this country, many of whom have picked up American values while they're here; many of whom, last week were involved, on both sides, on the arguments about Tibet. Are we going to continue to talk to "them," as well as to the autocratic government? That's my first question.
My second one is a little bit off the point. In your argument about talking to them, you used Aus Politik of the 1970s as an example. Now, during Aus Politik of the 1970s, Germany was in the forefront of arms control, with all sorts of interesting initiatives.
Can we expect Germany again to be in the forefront of arms control initiatives? Or, as one German official recently said to me, we can't do anything in that field because the American administration won't go along.
KUCHINS: Okay, thank you.
When I hear the question, who is "them," I want to respond, that was the first great Irish rock band, which Van Morrison was the lead singer of. (Laughter.)
Sorry, let's turn to our China specialist first, for the last couple of questions -- having to do with who is the "them," and the arms control question, as well as the divergences over security issues. And then turn -- there's a direct question to you, Thomas, about the efficiency of NATO. And Angela, you may want to say something else also about Michael's comments.
So, about as concise as possible, please.
SANDSCHNEIDER: Okay.
Let me first turn to -- (inaudible) -- question, that is a very important difference between the EU and the U.S. In EU -- the EU perspective there is no security strategy towards China. We just don't have it. And, to some extent, we feel that we don't need it. We do not have a Taiwan relations act, which might bring us into direct military conflict with China -- which makes a big, big difference.
I would argue Europe should have -- definitely should have a security perspective on China, but in a broader sense of security, not in the -- in the narrow military sense. Militarily speaking, China is obviously not a threat to us. But when it comes to energy security, when it comes to economic security, when it comes to health -- all these wonderful little pandemics like SARS, they are originating in Southern China. That's where they are coming from, so they are affecting our security in a broader sense.
We do not have a security strategy, which is a major difference to the United States, but I would also argue -- take a Chinese perspective for a moment. If you find yourself as ranking number two, in terms of military threats for the U.S. in -- (inaudible) -- defense support here, what kind of advice are your giving to your government in Beijing if you were in the position to give advice to them? Don't worry, the Americans don't mean it? Probably not. So, if you -- if you focus too narrow, on military threats only, again it's a kind of a distortion of what's coming up in the future.
And, concerning Mr. Livingston's question on Aus Politik, don't overdo it with -- it was not my intention to argue that what we did in the early '70s we should exactly do the same way again. Topics and challenges have shifted. The principle, however, to talk to "them" -- yes. And "them" is, first and foremost, those elites who are in a position to take political decisions affecting us.
It does not mean exclude civil society, as we would say. But, don't underestimate, or overestimate, civil society. There is a major open debate about democracy in China, within China. One of our problems is we do not read their debates; they do read ours -- very, very -- in a very, very detailed way. But just -- we obviously just concentrate on what the foreign policy spokesman is saying on day-to-day basis -- not that important.
They are having an open, and critical and controversial debate on what to do with democracy -- whether at all, introduce democratic elements; whether keep it at the local level; how far to take it in the hierarchy of their political system, and to what effects? So there are democratic elements. They have local elections. They're very, very careful -- and, by the way, one of our assumptions doesn't, just doesn't work. I'll give you the example. China has built middle classes over the last 10 to 20 years impressively. Some say up to 150 million people belong to these middle classes.
Now, all those of you who have ever studied modernization theory might lean back now and just wait for the next process of democratization in China to start. They are about ripe to make the next step, with 150 million.
But have you ever thought about a simple context: What in the world should convince these 150 million people that they should take their political fate, and their political interests, and put them into the hands of 800 million peasants with completely different interests? It just doesn't work.
So, I'm afraid we will have to wait a little bit more for a democracy finally coming to China. Their major concern is stability. And whatever they can do, and have to do, they are doing pretty effectively, even if we do not like it, when it comes to introducing and maintaining human rights, legal systems and so on. I'll leave it at that -- (inaudible).
KUCHINS: Harry?
HARDING: Well, again, I agree with what Eberhard has said. On the first question, of basically U.S. and EU views on security in Asia. As I said, I think that the Europeans have many more interests with regard to Asian security than sometimes they let on. This does not necessarily involve having troops on the ground and participating in a military balance, but I think it's very important to add those interests to the, to the equation.
Perhaps we under -- we overestimate the importance of China's military modernization, especially relative to other aspects of China. Like Eberhard, I'm absolutely amazed that those who spend their lives being concerned about the rise of China -- the coming conflict with China and the threat of China, have not, to my knowledge, even noticed the fact that a Chinese economist has been named the chief economist at World Bank, because they don't consider that to be relevant.
They focus so narrowly on an irrelevant -- largely irrelevant set of challenges, that they completely miss the point about what the real challenges and opportunities of China's course are. So, I agree: We overstate. Europe tends to understate. We need better dialogue and coordination to deal sensibly with the entire range of the ways in which China affects the whole panoply of security concerns -- from conventional military security, to food security, energy security, financial security, and so forth.
Secondly, talk to them? Of course. But I think we might be very surprised at what they tell us -- (laughter) -- these younger, these younger Chinese students and scholars in the United States. Keep in mind that the Chinese entering college this Fall will not even have been born at the time of Tiananmen in 1989. This was not their formative experience.
I think many Americans are shocked at the Chinese response to the demonstrations in Tibet. It certainly is entirely different to the Chinese response, at the time, to the demonstrations in Chinese cities in 1989. I think that if we're expecting the young people of China to be pro-democracy, in the sense of pluralistic Western style institutions -- if they are welcoming American pressure on human rights, welcoming American calls for a boycott of the Olympics, I think we will be very, very sorely disappointed.
Of course, we'll find some. In a society of 1.3 billion people you're going to find a significant number who believe that the earth is flat, and who believe that China should restore the Ming Dynasty, and restore just about any other point of view. But, if we think that this is the mainstream of opinion in China today, I will be extraordinarily surprised, and I think we will be extraordinarily disappointed.
KUCHINS: Thomas.
GOMART: Thank you.
So the -- (inaudible) -- over NATO, very briefly, and efficiency. I don't want to to focus on France comeback. I don't think it's important, you know, according to me, it's much more public diplomacy. We are only able to send, you know, 700 troops to -- over to Georgia, in Afghanistan. And Georgia also, for instance 500 troops. So, you know, I don't think that's -- the comeback of France is very important.
Much more important is the perception of NATO by Russia. First of all, it's absolutely clear that, seen from Moscow, you know, NATO is the more credible security actor in Europe. (BSDP ?) is absolutely impossible to understand. Seen from the -- seen from the Kremlin, something too complicated and not at all credible on their side.
The second point is, rightly or wrongly, the Kremlin does think that NATO did not respect its engagement, in terms of enlargement -- regarding, you know, the announcement in 1995 -- no troops, no nukes, no new facilities. And for the -- for the Russians, NATO did not respect what was said at that time.
So, it explain also their reluctance for new, for new enlargements. It is also related to the civilian-military relation in Russia, because the Russian military does need, you know, a NATO threat to justify their massive army, to continue to have its balance -- its balance of power between political and military leaderships.
A third point, you know -- I think that Angela made the point, we should seal our red line regarding Russia. But clearly, the red line for Russia -- in terms of NATO enlargement, it is not Georgia. It is clearly Ukraine. For Georgia, they are -- they are telling us, please enjoy -- take Georgia -- (laughter) -- and deal with BDC-- it will, it will be very good -- (laughter) -- for Ukraine, but clearly -- that's clearly another business, because it's -- obviously the links between the two countries are so close, and obviously the -- in terms of capabilities, it's -- it's another business.
And last point, Afghanistan -- and more generally, Central Asia. As I said, it's very important for them that there is a fight against Taliban. They do not want to be involved for comprehensive reasons. But, at the same time, I think that fear, you know, as sort of, NATO, a long-term presence in Central Asia. And they are -- they are very involved, you know, in the Shanghai cooperation group that is -- will reject the NATO presence in 2005.
So, I think that it's important in -- on all sides to understand that they are thinking on Afghanistan in itself, but also related to the situation in Uzbekistan and Kazakhstan, which is sometime difficult on all sides to understand.
STENT: I will -- I will be very brief. On the OEC -- I'm sorry I didn't mention it. I'm glad you did. And I think you summarized it very well.
I mean, you make the point that you're very pessimistic about having any kind of dialogue with Russia on its neighborhood. Yes, it's very difficult. But we have to, because the alternative is -- of some of the things we're seeing now, we could see more, sort of -- I mean, you know, there's a chance that there could be some kind of military conflict between Russia and Georgia. I mean, one hopes it doesn't happen. I don't think that would happen with Ukraine. But there are other, you know, there are other areas where the absence of at least trying to come to some agreement, you know, could be a low level, or maybe not such a low level, security threat.
This administration did, a few years ago, start such a dialogue with Russia. It didn't go very far. But I come back to what I said before, before either the United States or the European Union would do such -- would engage in such a dialogue, we need, we and the Europeans need to try and be on the same page on that.
And then we do need to try and engage the Russians. It won't be easy. I don't know how productive it would be, but the absence of doing that, I think, in the long-run, does pose, you know, some security challenges.
KUCHINS: Okay, thanks.
I've got -- the next question is right here; then to Rich Harold (sp); and right there. Catherine, I saw your hand up. And I think that may be all we have -- we're going to have time for.
QUESTIONER: Allen Wendt (sp).
Professor Gomart, you mentioned a dispute between the United States and Europe in the early 1980s over Europe's dependence on Soviet gas. My recollection is that, as a result of that dispute, Europe agreed to cap its dependence on Soviet gas at about 25 percent, which, I think, is just about where Europe is today. So, one could say Europe has lived up to that commitment.
But it's ironic that the Soviets never really employed the gas weapon. But the current Russian regime has done so. So, this is still a very live issue. I believe Professor Stent said that Europe doesn't have an energy policy. That is also what I read.
What can Europe do -- what should Europe do to deal with this issue, which I think is looming larger and larger?
KUCHINS: Right here, Rich? Harold?
QUESTIONER: Thanks to everybody for all the brilliant analysis. Brilliant though it was, I have to admit I don't think that we've heard too many themes that are very new today in U.S.-E.U. relations with either China or Russia.
This, sort of, leads me to conclude -- which may be quite dangerous, that, sort of, the current trend of muddling on without much more, or less agreement, is likely to continue regardless of who's elected in Washington, and regardless of how the new administration in Moscow plays out.
A couple of -- a couple of new themes, besides this wonderful concept of "empathy deficits disorder," which I will steal in the future. (Laughter.) I mean, I think rising energy prices and energy competition was identified. We didn't get into possible implications of that, such as how rising energy prices may affect economies around the world; and how, if food prices continue to rise -- because of high energy prices and growing use of biofuels, may tend to destabilize politics.
And the other, I thought, newer and dynamic concept was the use of sovereign wealth funds. So, my question is, beyond these two areas, what's looming out there in the next few years that could shake up, you know, what is, sort of, this ongoing trend of conventional wisdom I see. What shakes up the balance between U.S., E.U., Russia, China? Crises? What's looming on the horizon?
KUCHINS: Okay, that's a small question.
Yes, right here in the red tie, next to Michael.
QUESTIONER: My name is Mike Polt, I am with the German Marshall Fund and, until last year, the U.S. ambassador in Serbia.
And, aside from disagreeing with Thomas about the importance of France rejoining the military structure of NATO -- which I'll leave aside for a moment, I think it's very important and most welcome, when and if it does occur. You spoke about the post-Soviet space, and about the underestimation of -- by the West, by the United States and Europe -- of Russian objection to Kosovo's independence.
I would submit to you, from -- at least, from my own experience, that we never underestimated Russian objection to the likely outcome of Kosovo's status. But, it was extremely important to draw a line -- you talked about drawing red lines somewhat farther east than Serbia and Kosovo -- I think it is far more important to draw a very clear red line in the case of Serbia and the Kosovo independence, that it will be Europe, mostly, together with the United States, as allies, to set the standard as to what constitutes European -- a unified Europe, or a Europe whole, free and at peace, however you would like to describe it.
And given the fact that our beginnings together at the Balkans -- or, our beginnings apart in the Balkans, and the breakup of Yugoslavia -- were quite a considerable disaster, we ended up at a very good place in the end result, where we were together in American and European cooperation in dealing with this crisis. And it will be very, very important now to see this through until the end.
And I think it could be used as an example of showing our Russian friends that a certain amount of European-U.S. resolve on issues such as these can be ways to deal with us in a constructive fashion, and not -- and not have to engage into the, into the exercise of whether you are, whether you are haters or huggers. Thank you.
KUCHINS: Thanks for the comment.
Okay, last comment, question. In the back of the room, Catherine Kelleher (sp).
QUESTIONER: Thank you. I'd like to challenge, particularly the Russian end of the table, to a somewhat farther-reaching analysis. And, specifically, how would you both look at the problem of, what Russia needs the EU and the U.S. for in the longer run? Let me give you a scenario out of the energy sector.
There's quite a race going on -- if you look at it in millennial terms, between Russia's ability to modernize, and its ability to depend on energy wealth. It's going to be affected by rising energy prices too. It uses about half of its own output in the oil sector for its own production. It's facing increasingly high prices that its formerly closely-allied Central Asian states are charging it for gas, that it then sells to others.
It needs -- almost all of its oil and gas reserves, which are still considerable, are hard to exploit; or it's going to need European, or American or somebody's money and technology to carry out. So, it's not all golden days ahead for Russia. And, in fact, you could say, given the amount of time that's needed to build pipelines eastward, or to solve the gas transport problem, that, in fact, Russia is as dependent on Western Europe and European markets -- at least for the foreseeable future, as those markets are dependent on Russian supplies.
How do without manage this, and how do we deal with this dependency in a way that doesn't lead to increased tensions? A common policy would be a good idea, but so far we've managed not to be able to do that.
KUCHINS: Okay. There are lots of large questions and comments on the table. The only thing that stands between your coffee break, of 15 minutes, and my successful execution of my job as moderator, and ending on time, will be your responses. So, you may -- we will turn to Thomas to begin with. And think in 30-second CNN Headline News responses, and you are not obligated -- in fact, you may not -- respond to all questions and comments. (Laughs.)
GOMART: Okay, so, very briefly. And I will focus only on energy issues. To start with the past, clearly, you know for instance, it was one of our concerns in Norway in December I re-read all the articles published by American experts, you know, in political -- (inaudible) -- the beginning of the -- ideas. And it strikes -- I was struck, you know, by the similarity of arguments.
The basic fact is that for France, Germany and Italy, at that time, and probably today as well -- energy is a factor for cooperation with Russia, it's not a factor for confrontation. And if you have a look on the people who decided, you know, the big deals between France and U.S.S.R. at that time, you will be surprised to see they are very active at the time being, still.
The second point is, obviously, the interdependence will continue. And, at the same time, a choice on some problems within the EU. I think the main problem is the fact that European countries are not at all the same energy mix. If you compare, you know, the French energy mix, with the German one -- not to mention the Polish one -- the situations are not at all the same.
So -- but the basic reason, that's why the European energy policy is so difficult to settle -- to settle. I don't want to -- if you want some figures afterwards, I can elaborate more, but we have no time.
Your question about how to change, or how to deal in the energy field with Russia. I think, basically, there is energy efficiency, which is probably the larger -- the largest room for cooperating/ and secondly, we have to change our energy behavior. And, in a large part of the job -- sorry to say that -- is in the U.S.
Now, the question, you know, about the gas production in Russia, the pricing and so on. Basically, the Russian gas production is 650 BCM a year, and there is approximately 180 BCM for exportation. The idea -- the debate is, if we -- if the EU urge Russia to up its domestic price, what will be the incentive to export of its gas?
And the answer -- given, for instance, by people like Valoshin (sp), is to say we will be back strongly for coal production; to have coal production for the domestic market; and to, and to keep, you know, a large gas reserve for the exportation.
So, part of the debate is to see the joint venture between, for instance, Gazprom and Suek will be successful. And, obviously, it means that, according to me, Russia will not be -- will not be very -- how to say it, pushing for Kyoto protocol in the coming years.
KUCHINS: Angela.
STENT: Rich, you, of course, ask a very central question. Just two things that might change the trajectory: One of them is, you know, a serious global economic crisis -- that obviously does. And then how it affects which countries -- that clearly can change all this conventional wisdom; how it affects all of the four actors we're talking about.
The second thing would be, you know, regime change generated by some kind of internal instability. I mean, I won't say any more about that. It may be less likely in Europe and the United States but, you know, maybe more likely in the other two countries, we don't know. But, those things are possible -- maybe not immediately, but looking to the future, and you've already heard about that.
And on the energy, Catherine, first of all, you never got into the discussion of what does Russia need the United States for? And the answer is: not much. I don't have any time to discuss them. And that's one of the issues -- you know, we don't have that much leverage; there's not much that really that the current Russia wants or needs from us.
And on the, on the question of Russian domestic energy production -- just to reiterate that even the Financial Times has now come out and had articles about that very recently, I mean, there's really a looming crisis because Russia has not invested enough in developing new oil or gas fields; and because it's restricting, or has restricted, the ability of foreign companies to assist it in doing so. And it's going to have to obviously rethink that with rising energy demands.
And the second point is -- about this interdependence. Of course, there's mutual interdependence between Russia and Europe, in terms of -- let's talk about gas now, because that's much more important than oil -- and there is, what someone has described as the particularly intimate relationship between people who are supplied by pipeline gas, as opposed to other gas.
I would submit that there's an asymmetrical vulnerability. And that is the cause of so many of the concerns, which are sometimes exaggerated -- which is, to put it bluntly, you know, if you're a householder in Munich, depending on Gazprom to provide you with everything that enables you to live in the winter, and you have the prospect of a possible gas, and electricity and everything else cut-off, that is a different kind of vulnerability than if you're Gazprom, and you're facing the loss of some revenues if you don't export the gas.
I'm not saying that would happen, but I think that this asymmetrical vulnerability does have political implications.
KUCHINS: Eberhard, last comment.
SANDSCHNEIDER: Very briefly --
KUCHINS: Very.
SANDSCHNEIDER: -- again, Richard, most probably you are right. Muddling -- but not through, will continue. But, that's a very negative way to put it. If you describe it as a process -- since we have lost all our reliable enemies and structures after 9/11, and 11/9, it will be a process. And muddling, hopefully through -- or at least in some direction, will continue. It will be characteristic for trans-Atlantic relations.
Now, look at this debate this morning. We obviously all agree we need more transatlantic coordination. It will be good for you. It will be good for us. So, why not have it? That's the ideal world. It very much reminds me of this wonderful debate on transatlantic values, as we had it during the Iraq conflict. Well, we have them. They don't help us. (Laughter.)
We need more when it comes to interests, of course. We need more trans-Atlantic coordination. It would be perfect. Yes. On the other hand, muddling through also means we should be prepared to run into a series of really deep and challenging conflicts -- social unrest not only in their countries, but potentially also in ours, is just one. Wars for energy -- we are talking about prices, and supply and demand, and market approaches.
They have a different approach. They are willing to fight if necessary to maintain their stability. I would certainly argue in the case of China, if it's necessary. We will see conflicts over water and food.
And maybe -- Angela already mentioned it, and just to give you a final acronym for this debate -- the "BRICs" of today might turn out to become "CRICs" of tomorrow. I'm stealing that from Chalmers Johnson, a "CRIC" is a collapsing, recently industrializing country." (Laughter.)
HARDING: Well, Rich Harold (sp) has asked, what's new about the discussion? Probably as much as new in most discussions here in Washington of top policy issues. (Laughter.)
But, I think that importantly we are talking about greater trans-Atlantic cooperation on China. That is not something that has been that common in the past. But as we do it -- I think Eberhard is absolutely right, we'll find that there are lots of differences between Europeans and Americans, as well as similarities.
That's important, as one of our presidential candidates had talked about creating a council or concert of democracies, and the husband of one of our other candidates created, or tried to create such a council in the past. I think the idea that this will be the kind of firm, united front on every issue is incredibly naive.
And so I think we are expressing a warning that having a coordinated policy on either Russia or China is going to be more difficult than the idealists -- who believe that common values decide everything, can possibly imagine.
As to what might be the disruptive issues -- the big trigger events in the future? Angela has mentioned two very important ones. Let me mention a third, and that is an inability for all of us -- including the Chinese, the Indians, and other large emerging markets, to come to an agreement on how to handle climate change. Could very easily lead to a trigger for various kinds of protectionism -- that would be involving, basically, carbon tariffs at the border, that could be a very, very serious challenge to political relations and to the vitality of the international economy.
KUCHINS: I think that is a perfect segway to the next, to the next panel. My response to your question, Rich, is what is new to me is that both Europe, Russia -- and China all have an interest in seeing responsible global economic leadership from the United States, which we're not getting right now. And that's a serious concern.
Cracks in the BRICs, equals CRICs. I like that. (Laughter.)
Okay, let me thank our panelists for a terrific panel, and the audience as well. And go drink some coffee and fuel-up. (Applause.)
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