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Foreign Affairs Media Call With Michael McFaul

Speaker: Michael A. McFaul, Hoover Fellow, Stanford University
Presider: Justin Vogt, Deputy Managing Editor, Foreign Affairs Magazine
March 24, 2014
Council on Foreign Relations

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VOGT: Hello, everyone. Justin Vogt here, the deputy managing editor of Foreign Affairs. We are delighted to have on the line Michael McFaul, a Hoover fellow at Stanford University, who was until very recently the U.S. ambassador to Russia, to discuss the crisis in Ukraine. Of course, we've all been following events there very closely.

Earlier today, Foreign Affairs published an e-book titled "Ukraine in Crisis" that collects the best of our extensive coverage of this story. And also earlier today, Ambassador McFaul published a fascinating op-ed in the New York Times titled "Confronting Putin's Russia."

And I think that that piece, Ambassador, gives us a good place to start this conversation. So thank you very much for joining us.

MCFAUL: Thanks for having me.

VOGT: In this piece, you wrote that the post-Cold War era in Europe is over and that we are now in a new era of confrontation and ideological clashes, because, as you put it, the United States did not fully win the Cold War. And I thought I might ask you to sort of elaborate a little bit on that, about what you meant by that.

MCFAUL: Yeah, I knew that line would get a lot of attention. And I would have rephrased it to say that the Western societies and Russian society together did not win the Cold War, which is to say, you know, what I meant by that was like other periods of conflict and postwar settlements, there were lots unanswered questions, there were lots of grievances within Russia about that post-Cold War settlement, and the transformation within Russia towards democracy, you know, consolidating democracy and consolidating capitalism, which was the promise that, you know, the revolutionaries of that period were striving for, were not fully achieved.

So the ability for Russia to integrate fully into the West was also constrained and left this lingering set of grievances that eventually coalesced into a political backlash, a counterrevolutionary ideology, as I called it in the piece, which percolated on the margins from time to time over the last 20 years and then became more front- and-center during the era of President Putin.

But I want to stress one thing that there was not enough space in that piece to write.

VOGT: Sure.

MCFAUL: I in no way thought and still don't believe that this was inevitable, that it had to end this way. I even think the current crisis was not inevitable, which is to say I don't -- it was the -- it was the result of short-term circumstances, and in particular Putin's responses to them, not the result of some kind of long-thought-out strategic vision of what Russia needed to do to counter the West.

But it happened the way it did. And I think Putin, therefore, has pivoted in a very different direction. He vacillated between joining the West and confronting the West. I think it's pretty clear now that he's comfortable to be in this more confrontational period vis-a-vis the West and vis-a-vis the rest of the world, by the way. I shouldn't use the word "West."

What's not clear to me is how, you know, Europe, the United States, and the rest of the world will respond. I think that's still in motion.

VOGT: You say that you felt this wasn't inevitable and that, you know, mostly it was -- that's the result of how Putin has responded. Were there things that could have been different -- done differently on the -- on the part of the United States and the part of Washington's European allies to have avoided this kind of outcome, do you think? Or is this simply a matter of Putin's initiatives, you know, driving the shape of this?

MCFAUL: Well, again, it depends on where you pick up the story. So if you start the story back at the collapse of the Soviet Union, and that obviously did happen -- that was a part of the end of the Cold War -- you know, I think if you look over that period, I think it is fair to say that more could have been done to help develop markets, to decrease the pain of an incredibly difficult economic depression that Russians experienced through the 1990s, which gave democracy a bad name and gave anything associated with the West and capitalism and democracy a bad name.

And, you know, I compare it to what the level of effort that we gave after the end of World War II, where there were lots of fragile states -- it was -- there's no way that anybody in 1945 would have predicted, you know, the incredible rise of Germany as a democratic political system and as a capitalist powerhouse. But because then there was an external enemy, that focused the mind about the necessity of completing, if you will, to use the analogy, the end of the Cold War and to make sure that Germany and other countries were integrated, to make sure that fragile states after World War II, the ones on the other side of the Iron Curtain, were shored up and not allowed to be victims of an external threat.

At the end of the '90s, everybody thought there was no external threat, you know? It was the end of history. There was no country in the East threatening, if you will, to take advantage of that, and so we were not as focused on completing that. So that's the big -- that's the big story.

VOGT: Sure.

MCFAUL: The very technical, short-term story, I do believe that if -- you know, well, let me take a little bit -- go back a few months. Sorry, I think the context here is really important.

VOGT: Sure.

MCFAUL: So, you know, Putin -- I believe, and this is somebody I've dealt with for several years in my last jobs -- did not have a vision of recreating the Russian empire through annexation several years ago. On the contrary, he had a vision of creating Russian influence in the former Soviet Union through maybe coercive, maybe not, but through instruments of power such as the European -- Eurasian Economic Union.

The key to making that work was to have Ukraine, all of Ukraine -- not just Crimea -- all of Ukraine to be a part of that. And so last fall, he felt rather victorious -- believe me, I remember all the, you know, "We told you sos," Michael, from my Russian government officials when Yanukovych didn't sign the agreement with the European Union. And he felt like he was winning that strategy, and that's his most important foreign policy objective.

Speed forward to February, and February 21st, when the -- after lots of demonstrations on the street, there was a pacted agreement between President Yanukovych and the opposition, which, by the way, the Obama administration fully supported -- I think this needs to be understated, because it's getting lost in some of the stories -- and the next day, Yanukovych fled. He ran. And it's clear that the Russians didn't want him to run, because they stopped him from coming into Russia a couple of times. And once that happened, the government -- the coalition government collapsed, there was no negotiated way forward, and that is the precipitant, that is the trigger that brought Putin into Crimea, not some grand strategy.

So that's tragic in one sense. The good news, though, is I think it leads hope open that it is not inevitable that he marches into eastern Ukraine.

VOGT: Well, that was going to be my next question for you, which is, how -- I mean, if you had to rate the likelihood of that, putting aside or keeping in mind, rather, how we got to where we are, looking forward, how nervous are you about whether he's going to stop at Crimea?

MCFAUL: I'm really nervous, but not because I think he's sitting there looking at invasion paths right now. Maybe he is. I don't know that, of course. But I don't think his intention is to do that right now.

However, his intention was not to move into Crimea, when I was sitting at the opening of the Olympics. I mean, if look at his behavior up to that point, he was not planning this pivot against the West. He was doing exactly the opposite. He released Khodorkovsky. He released the Pussy Riot singers. And he spent upwards of $50 billion to impress us all with the new Russia. So that's, again, more evidence that this was not inevitable.

Right now, I think he's focused on consolidating and digging in for, you know, the confrontation with the West. It's clear to me in my interactions with Russia, including government officials now as a private citizen, that's where they're at. They fully expect it. And that's what they're doing.

However -- and let me say one more thing. And they appreciate, of course, that it will much more difficult to move into eastern Ukraine for the simple fact that those eastern regions out there are not divided neatly between Russians and Ukrainians on the east and the west. Rather, the Russians are concentrated in the big cities. The countryside are surrounded by ethnic Ukrainians. And if he does move in there, I think there will be resistance.

I don't know. I doubt it'll be organized military resistance, but you'll have guerilla warfare for months, if not years, and so he's got to calculate that into his analysis, as well. But...

(CROSSTALK)

VOGT: That's interesting. Go on.

MCFAUL: ... there are unintended consequences that happen when there's lots of people running around with grievances on their minds, with guns in their hands. Most certainly, the nationalistic fervor in Russia has met -- is now feverish. I mean, it is unlike anything I've ever seen, and I first went to study there in 1983.

And likewise, don't forget nationalists in Ukraine are very discontent with the recent turn of events and are very critical of the way their government has handled this crisis so far. So that creates a kind of -- the kindling for, you know, a spark that really could lead to something greater.

VOGT: Well, that's -- yeah, passions are certainly running high. Yeah, and I wonder, what do you think, you know, the United States and European allies should be doing to prevent, you know, that fire from starting that hasn't already been done?

MCFAUL: Well, there's the short term and the long term. And I did write about some of this in the piece you mentioned, in the New York Times. I mean, the short term, of course, is to stabilize the Ukrainian economy, to make sure that there is not, you know, complete economic collapse. Second, to help make sure, to the extent possible, that the upcoming elections are free and fair and transparent and monitored so that the new government has the maximum legitimacy possible, because they're going to need that legitimacy and that authority moving forward with what I think are, you know, necessary, very serious economic reforms and reforms against corruption.

And, you know, as I wrote in that piece, you know, the Ukrainians have had a couple of shots at breakthrough already and -- you know, in my own -- my personal view is that they squandered those, especially in 2004, really cannot afford to squander it again after the next election.

VOGT: Let me ask you about sanctions, quickly. How likely is it, do you think, that the kind of sanctions that Washington has put in place against a select group of Russians and -- and the kind of things that are continuing to be discussed now, do you think that those will really have the impact that is hoped for and that they'll influence Putin's decision-making?

MCFAUL: It all depends on how you define that passive language you used in your sentence just now, "is hoped for." So the question is, who is hoping and what are they hoping for, right? And the more -- I think the specificity on that is important.

So the way I look at it, the sanctions that have been announced so far are intended by the Obama administration -- and I think in parallel by the Europeans, as well -- to inflict punishment on Putin and those around Putin for aggressive behavior that we've already witnessed.

I do not think the sanctions we have in place right now will change Putin's decision-making about what's happened in the past. And I don't think the Obama administration is naive enough to think that, as well.

So will sanctions work? If you mean, will sanctions get Russia to leave Crimea, the current sanctions, I think the obvious answer to that is no. It's designed to make people pay a price, but it's not designed to change their behavior.

However, in the president's remarks before he left for Europe, he explained to us all that he had signed another executive order, which gives him the power to sanction companies and sectors of the economy. And what he did was he said, I now have the power to do that, and I'm threatening to do that, if there is further Russian aggression in eastern Ukraine.

So the way I interpreted that sentence by the president to mean is that the specter of new sanctions are designed to deter further escalation into eastern Ukraine. So that has a very different intended effect than the ones that have already been announced.

And, you know, I think that I agree with that strategy. I would also just remind your listeners here that when it comes to deterring Russian aggression in Eastern Europe, the American track record is pretty poor. If you start in '56, '68, martial law in Poland '80, '81, go through Georgia and then Ukraine, whether Democrat or Republican, whenever Russia has decided, whenever Moscow has decided -- because it wasn't always Russia -- that they're going to use military force in Eastern Europe, our instruments for deterring that have not worked.

VOGT: That's interesting to -- interesting to recall. I'm going to open this up now. We have quite a large group of media on the call, and I'm sure that there are people who'd like to ask Ambassador McFaul questions, so I'm going to turn this over to the operator to open the call up at this point.

OPERATOR: Yes, sir. At this time, we'll open the floor for questions. If you would like to ask a question, you can press the star key, followed by the one key on your touch-tone phone now. Questions will be taken in the order in which they are received. And if at any time you would like to remove yourself from the questioning queue, you can press star, two. Once again, that is star, one to ask a question.

VOGT: OK, if we have a bit of a lull waiting for the first question, I think I will -- I'll just ask you -- oh, no, and actually -- no, I'm sorry. There's our first question right here. This is from Congressional Quarterly.

QUESTION: Jonathan Broder here. Ambassador McFaul, I notice that in your New York Times piece and in your remarks just now you call for a number of things that the administration hasn't done yet, for example, energy diversification, providing military hardware to frontline states, more training and integration of forces, new efforts to reduce, as I said before, NATO countries' dependency on Russian energy, no more membership in the Group of Eight, and so on.

I'm just wondering whether the -- the sanctions that you've seen so far, whether you think they've gone far enough and whether the administration, in your view, should get even tougher?

MCFAUL: Well, I mean, with respect to the piece and the things I outlined, I obviously don't work for the Obama administration anymore. I'm a free man at Stanford University. And so I just -- you know, these were my views. I've been asked, because you can imagine 100 times to say what I think, and so I decided to say what I think in kind of a big -- a big -- the big stretch of time, not just in the tick-tack of the day-to-day. So that's why I wrote what I did.

And we'll see over the coming weeks and months and years whether the Obama administration -- and I fear, unfortunately, given what I think about where this is going -- I fear the next administration, what they'll do. That's a debate for the future. I can tell you, you know, not surprisingly, I've had lots of interaction with senior officials over the course of what they've done so far and what they're planning to do.

And the sense I get is, you know, a real kind of disgust, lament that we're where we're at in terms of U.S.-Russia relations. They assign almost all of the agency, almost all of the blame, if you will, to Putin in this, and so do I, and I'd be interested if others have different views, but I think that there's a reason for that.

As to how far they should or will go, you know, my own view would be -- I saw the logic of those that were put on the list initially -- you know, early last week in terms of people -- economic actors that are close to Putin. And I know that there are other actors that are close to Putin that could easily qualify, if I rightly understood the principles, the criterion that were used to make that list. So my answer would be, yes, there should be more sanctions.

QUESTION: Can I just follow up with one quick follow-up?

VOGT: Sure.

QUESTION: How -- can you give us your thoughts on how stronger sanctions would play in Europe, given the divisions there over sanctions?

MCFAUL: Well, of course, there's different dynamics in Europe in different parts of Europe, right? On this issue, Europe is not united. They obviously are more exposed to the Russian economy than the United States are, so these are more -- it's more costly for them to implement sanctions. And, you know, the sense I get from observing it is that there's been a debate within Europe and then coordination and debate between the United States and Europe with -- you know, with hesitation, because I think on the one hand all the leaders of Europe and the West -- and the United States, the administration, want to inflict punishment, as I said before, but they also don't want to disrupt, you know, macroeconomic trends, and finding that right balance, I think, is, you know, what they're struggling over.

With respect to the specifics, I would just add a couple of things. I mean, I always had felt that Chancellor Merkel was one of -- you know, if not the best interlocutor with Putin, in terms of understanding him, definitely at the top of the list, and I am struck by the level of frustration that she's expressing publicly. That's new. That's different. And I think that shows you just, you know, how different this moment is from other episodic crisis in Russia's relationship with the West.

VOGT: Operator, can we take the next question, please?

OPERATOR: We have a question from Lawrence Durrell (ph) with USA Today.

QUESTION: Yeah, hi. Thanks for doing this call. My question -- you know, basically it looks like the West and Europe, like they've invested a lot more in working together with Russia than in blocking its potential for aggression in the past few years. So I'm wondering if, you know, kind of taking it a step further from the last question, does the United States and Western Europe, are they prepared to do -- are they able to do, you know, what it's going to take to block at this point? You know, and I'm speaking, you know, in terms of, you know, diplomatically, economically, militarily.

MCFAUL: Well, obviously, I don't know the answer to your question. And I would just say I agree with your analysis of the last several years. I mean, I was part of the administration. That was our strategy. The idea was a Russia integrated into the West will be a more stable partner with the West. And that was, you know, why we pushed to get them into the WTO. That's -- you know, that's why there were accession agreements moving forward at OECD. I mean, that was the strategy, without question.

And I would emphasize, it's been the strategy going back to Ronald Reagan and Mikhail Gorbachev. That's when the pivot began towards this engagement and integration strategy on both sides, and it's, you know, Democrat or Republican, there's been margins, ups and downs, you know, slightly different ways to approach it, and then even George H.W. Bush slowed it down for a year, you know, after Ronald Reagan retired. But more or less, I would say that's the way historians are going to look at this period.

I think this is a new period. I think Putin has made it clear that he doesn't care about what the West thinks. He's not -- he's indifferent to integration. And he's prepared to pay the costs of going a different direction. What I don't know is whether the West, one, understands that. I mean, when I say the West, we're talking about, you know, hundreds of millions of people and leaders all over the place. And, you know, the way this crisis feels in, you know, Spain, for instance, is very different than it feels in Estonia. So when we say Europe, we need to be careful not to have a, you know, theory of how Europe responds to this.

But, you know, the reason I wrote the piece I did today was to say, in my view, this is a new period that demands a new strategy. Whether or not the West adopts it, I can't predict that.

VOGT: Let's take the next question, please.

OPERATOR: Our next question comes from Jared Rizzi with SiriusXM Satellite Radio.

QUESTION: Hi, Ambassador. Thanks for doing the conference call. Justin, thanks for doing the most of the Q&A so far. My unique is, right now we've seen ramping up of these sanctions over the last few weeks. What do you imagine the off-ramp will be for Russia to get out of these sanctions in the future? I know that this is -- you know, I sure couldn't get an answer out of a current administration member about that, so I'm asking you. Hopefully you can try to think it out and -- I certainly haven't been able to extrapolate what it would be.

MCFAUL: I think for the current sanctions...

(UNKNOWN): ... fifty-seven, for a...

MCFAUL: I think for the current sanctions in place, I don't think people are planning for off-ramps. That's not the intention, because they're not seeking a change in behavior. And the off-ramp analogy, that was all before annexation. That was all a strategy, you know, a strategy that I thought was well-needed and I applaud both the president for engaging and Secretary Kerry for flying all over the place to try to make it happen, but they did that with -- knowing that they were playing against very long odds, and now it's over.

So I think if you're on that sanctions list, I think you're going to be there for a long, long time. I don't think they're looking for certain kinds of changes in behavior. And most certainly, I'll be surprised if anything happens in the Obama administration, for instance, right? Maybe a new administration might take that a second look, but I don't see -- I don't see it changing.

What I don't know is whether there will be new names added to the list for what I call the punishment part of the sanctions. And let me just elaborate a little bit more on this. You know, it's partly also to make people over the long time question the wisdom of being isolated, right? So -- and it's having that effect. I mean, look at what's happened internally, in terms of the stock market, in terms of the value of the ruble, in terms of money moving out. Already in a week, you've had that effect.

So that already makes people nervous in Russia about this new moment. And, yes, people are rallying around the flag, as people always do during times of crisis, but other people -- I mean, the same people who are doing that are worried about their rubles and their spending power that has just, you know, dropped dramatically in a week as a result of this. So it's designed to fuel that debate, as well, inside Russia.

VOGT: Let's take the next question, please.

OPERATOR: Yes, sir. Our next question comes from Gopal Ratnam with Bloomberg.

QUESTION: Yes, hi. Thanks for taking my question. Ambassador McFaul, I wanted to ask you, in your op-ed piece, you mentioned the point about trying to nurture the Chinese distance from the revisionist Russia and how that's important. I was wondering if you had any thoughts about how you might do that. And I have one more follow-up after that.

MCFAUL: Well, it's just -- you know, the simple fact that -- and I think China is not a revisionist power, at least not right now. And I want to confess, I'm not an expert on China, Chinese foreign policy or internal dynamics, but they have played, you know, a different kind of strategy for decades now, and so I think we want to keep them in the grand coalition that believes in the international system and believes in the -- in the rules of the game. And I say that knowingly -- knowing fully well that there have been times that the United States has not. And, you know, I acknowledge that in the piece. I think that hurts our reputation and our ability to move abroad, but -- to move forward with that.

I do want to emphasize that in my opinion President Obama went way out of his way to, you know, re-up again, you know, re-ante up again to that system and to those rules and to play by them, including being constrained by the Security Council with respect to the use of force in Syria, which, you know, obvious evidence that he was doing that.

He also went way out of his way to address the grievances that President Putin outlined in his speech last week. And, you know, I would just encourage you all to go back and read his doctrinal statement on U.S.-Russian relations that President Obama gave in July of 2009. You know, I think that speech was a dramatic break with past presidents and the way they talk about Russia. So, you know, when I hear that somehow it's, you know, Obama's fault that -- you know, that he -- he wasn't -- excuse me -- that he wasn't listening enough to Russian concerns, I just don't think there's any evidence for that.

But back to China. I'm sorry, I cut off there. You know, I don't think the Chinese have an interest in, you know, enclaves having referendums and talking about, you know, changing borders. And I would, if I were still in the government, remind them why the system has worked for China and not to be part of this. And, obviously, I would just note the Chinese abstained. They did not support the resolution over the weekend previously. That vote was 13 against the referendum's legality, one abstention and one veto, which I think was a pretty accurate illustration of how isolated Russia is right now.

QUESTION: If I may ask just one more question, sir.

VOGT: Actually, we were just going to move -- go ahead.

(CROSSTALK)

QUESTION: Sorry. Just one question. There are some who are criticizing the Obama administration. I know you said this is not inevitable. But there are some who are saying that because the administration decided that Europe and Middle East were safe and, therefore, they could rebalance or pivot toward Asia, this opened up an opportunity for someone like Putin to engage in this. Could this have been prevented had that direction or change in strategy not been in place the last couple of years?

MCFAUL: I find that analysis just to be utterly unconvincing. First of all, the pivot to Asia, you know, we -- we can spend a different call on that with people more expert than I, but in no way affected our -- you know, our position in Europe in the short term. I mean, it's just been a couple of years.

But number two, the more important point is what I alluded to earlier. If that were the case, then, you know, your theory -- if that's your theory -- would have predicted that George W. Bush, who did not pivot from Europe, would have prevented Russia from invading Georgia. He didn't.

And Ronald Reagan, nobody would accuse Ronald Reagan of abandoning Europe or of being naive or weak with respect to Moscow, yet when Brezhnev colluded with General Jaruzelski to, you know, bring about the most dramatic and awful crackdown against democracy, maybe ever, I mean, because the 10 million strong movement in Solidarity, and when that happened in December 1981, President Reagan failed to stop that.

You know, and I'd go back to Dwight D. Eisenhower, General Eisenhower, who was elected with a policy that he trumpeted his administration, roll back communism. Just Google it, and it'll pop right up. That was their policy. And yet despite that tough talk and that commitment to roll back communism in Eastern Europe, when Khrushchev made the decision to roll tanks into Budapest, General Eisenhower, President Eisenhower failed to stop him. And even going back to Roosevelt, Roosevelt couldn't get the Red Army to go back to Soviet borders.

So for me, as -- you know, somebody who -- a comparative politics person here at Stanford who -- you know, this is the way we construct our theories, right? If you can see a pattern -- you know, Democrats in power, Russians invade, Republicans in power, Russians don't invade -- that would be a powerful theory, but the evidence doesn't support that theory. The evidence doesn't support any pattern. Democrat or Republican, allegedly strong, allegedly weak, the United States going all the way back to 1945 or most certainly '56 has been ineffective in preventing Russia from invading in that part of the world.

The responses have been different, right, in terms of how they pay a price and whatever. We could talk about that later. But the idea that somehow Obama's weakness is a factor in this intervention, I just don't see the evidence.

VOGT: We're going to move to the next question. Before we do, I just want to remind everyone, we do have a long queue. Let's just try to keep it to one question each, because there are a lot of people that want to ask Ambassador McFaul.

MCFAUL: All right. I'll try to be shorter, too, on my part.

VOGT: No, no, that's all right. You're giving some great answers. We'll just try to move it along.

Next question, please?

OPERATOR: Yes, sir. Our next question comes from Matt Zeitlin with Buzzfeed.

QUESTION: Hi, Ambassador McFaul. I'd like to ask you about...

MCFAUL: Where are you, Matt?

QUESTION: ... an article -- I'm in Kiev.

MCFAUL: OK.

QUESTION: Can you hear me?

MCFAUL: Yeah, I can. Just wondering where you're at.

QUESTION: I'm in Kiev. The -- this article in the Wall Street Journal today, which -- while not mentioning it explicitly, basically the U.S. officials quoted in this piece were hinting quite strongly that Edward Snowden's revelations and subsequent time he spent in Russia made it more easy for the Russian government to evade U.S. surveillance and that was why the U.S. was so slow to wake up to the invasion of Crimea. Was that the case? Can you comment in any way? What kind of capacity does the U.S. have for intercepting the Russian leadership's communications? And have they got worse since Snowden started making his revelations and then wound up in Russia? MCFAUL: Yeah, Matt, I can't comment on that. I'm not in the government, but I'm also still not allowed to talk about classified information. What I would say more generically is, you know, I was ambassador when Mr. Snowden showed up in Moscow. And, you know, I have a long experience both as a government official and as an observer watching how Russian intelligence works. And I'll say, honestly, I respect their work. I'm impressed by what they can do. And no one should have any illusions about their capacities and their abilities and their intentions to use it, right?

I mean -- and nor do they have any shame to do it and then put it up on the web, as they did with my colleague, Assistant Secretary Nuland, and as they did with me from time to time when I was ambassador. And I would just note the absence of any uproar by anybody when they do, and they don't -- they not only do that, those intercepts, they then prove that they do, and nobody seems at all interested in that.

But what I would say is, I don't think it's an accident that Mr. Snowden has been in Russia and has been there as long as he has. And anybody who's learned anything about Russian intelligence from other unclassified sources would not be surprised that they would have a major interest in somebody with Mr. Snowden's knowledge to have him in residence in Moscow.

VOGT: Let's take the next question, please.

OPERATOR: Yes, sir. Our next question comes from Will England (ph) with Washington Post.

QUESTION: Hi, Professor.

MCFAUL: Hey, Will. How are you doing?

QUESTION: I'm all right. How are you? On -- if I can get back to sanctions just for a moment, of course you're right that the ruble has dropped in value since mid-February, but actually since the sanctions went into place, it's gotten a little bit stronger, as has the Moscow stock market, and -- which makes me wonder how much pain they're inflicting and it gets to my question, which is, George Soros has said that, you know, sanctioning the oligarchs is exactly the wrong thing to do, because it actually plays in Putin's strategy of cutting off Russian businesspeople from the West. It'd be better to persuade them to take as much money as possible out of Russia and put it in the West and give them a stake in, you know, kind of Western relations in a sense.

So I'm curious what you think about that.

MCFAUL: Well, a couple of things. I mean, first of all, these are drops in a pool, you know, stones in an ocean compared to the Russian economy. So, you know, to expect a reaction for the entire economy after just one week of having, you know, just a handful of names on a sanctions list. That's incorrect, right? Nobody, I think, assumes that. I think it raised -- the idea is to raise the specter that more could come, that you could be susceptible, and that you should think about whether this is good for Russia in the long term.

Number two, sanctions never work in -- when measured in days and weeks and months. They only work in terms of the macroeconomic impact over years. And just for -- you know, look at the -- look at what the Obama administration and their allies and partners around the world did with Iran. Those were sanctions that went way beyond anything that's been announced so far, and even those against a much weaker economy took years -- literally years -- to have the impact that they did and it -- there needed to be an electoral cycle for the impact to be debated in the margins that they could within that polity, but that's how it worked, right? It doesn't happen overnight. So the ups and downs, you know, the immediate -- I take your point. And there's always a rallying, again, when there's a crisis.

With respect to your specific question about oligarchs, I just want to emphasize this is my own view. This is -- I'm not -- I'm not pretending to know what the administration is thinking. But as I said in my piece in the New York Times, I do believe in isolating those businesspeople that are instruments of the state and embracing those businesspeople -- and note I'm using the word businesspeople, not oligarchs -- businesspeople who are truly independent and performing as capitalists.

So in that respect, I agree with Mr. Soros. And as I hinted in the New York Times piece, I was -- you know, help that money move out. I think that's good. And even those people move out, if they're feeling threatened. I think that has to be part of the strategy, a long-term strategy, I want to emphasize, not a short-term, for having this impact inside the economy.

And I can just say anecdotally, irrespective of the macro numbers, the number of individuals I know, Russians and Americans, who are extremely nervous about, you know, investments in Russia is quite -- it's a big number. I'll just put it at that. So I don't think anybody is treating this new period with any complacency. I feel a lot of anxiety.

VOGT: Let's take the next question.

OPERATOR: Yes, sir. Our next question comes from Kathleen Hennessey with Los Angeles Times.

QUESTION: Hi, thanks so much for doing the call. I just wanted to ask a little bit on the news of the day. It looks like the G-8 will likely suspend Russia's participation in the G-8, becoming the G- 7. And I'm just wondering if you could analyze that decision. What sort of impact will that really have? Is it mostly symbolic? How will that be received in Moscow?

MCFAUL: Well, if it happens, yes, obviously, it's mostly symbolic, but the symbols do matter. And I think it's important -- you know, we're in this -- this moment right now of inside Russia, in my view -- although, you know, I'm no longer in Russia, I'm just meeting and interacting with people virtually, so I'm not the greatest expert.

But, you know, we're in this "Damn you, we could give a damn" moment right now, right? That's what Putin's doing. People are rallying around that, and that's the moment we're in now.

I just want to remind everybody, a month ago we were in exactly the opposite. We were in a different period where Putin wanted the world, including President Obama, to come to Sochi and to see the new Russia. The Russian government was very disappointed that President Obama did not come and see the show in Sochi. So you don't invest that kind of money to put on that kind of display for the world if you don't care about what the outside world thinks. That's just not logical to me. That's irrational. And I don't think Putin is that irrational.

I think he's torn between these two, that he wants respect, but he doesn't want -- you know, he wants to play by his own rules. And sometimes I think he and others around him think you get respect by being a bully and that people will respect you more, but it bounds back and forth.

So in that context, the G-8 was something they wanted to be a part of. Boris Yeltsin, you know, desperately wanted to be a part of that. And even going back to Gorbachev, when he came as an observer in London back in 1991, I believe it was, this for them was a symbol of being part of the -- you know, the big boy club, the great power club, and the club of democracy, some might add. That's a very specific piece of that club that in previous eras was very important to them.

So the symbolism is just a marker in the road, I think, for the word that the aspiration that leaders had back in the '90s, when they accepted Russia to join the G-8, you know, those -- those aspirations are at least over or at least -- are over or at least put on hold for now.

And different Russians will react differently to it. I mean, but I think it's -- you know, it's -- for me personally, it's a tragic moment. I mean, this whole thing is tragic for me personally, because I do think the world would have been a better place with Russia in the G-8, in the OECD, moving in a European direction, moving in a democratic direction. That's a more stable world, and that's a world that, in my view, serves American national interest better. The world we're entering now does not.

VOGT: Let's take the next question, please.

OPERATOR: Sir, our next question comes from Oliver Grimm with Die Presse. QUESTION: Yes, hello, Ambassador. My question actually goes back to the point that was raised earlier. Many people in Europe had the impression that the president is not really engaging in the transatlantic relationship. I mean, he's only now traveling to his first E.U.-U.S. summit in Brussels in the fifth year of his tenure. So do you think that if you would have -- would have invested more energy and interest in the transatlantic relationship, do you think that the Ukrainian situation could have been managed better, starting with putting more pressure on Yanukovych to sign the agreement and so forth and so forth? Thank you.

MCFAUL: Well, I don't have the view that President Obama didn't invest in the transatlantic relationship. Maybe it's his first time to have an E.U. summit in Brussels, but he's attended many E.U. summits. I've been to two or three of them when I was in the government.

When I was in the government, he traveled more to Europe than any other part of the world, despite the Asia pivot, including I think a very successful NATO summit in Portugal, in Lisbon. And, you know, with respect to our commitments to NATO and working with the U.S., including trying to do, you know, some historic work with respect to trade, we'll see how far it goes. I'm not an expert on that, but that's a new initiative of the Obama administration, which obviously I think signals how important economically Europe is to us.

And with respect to our NATO commitments, you know, including providing the guarantees and the training to new NATO partners, President Obama is making very clear that he doesn't distinguish between old partners and new partners. And secondly, committing to a missile defense system that protects all of our allies, not just some of them or partially, from threats from other parts of the world, Iran in particular. I think the record's been actually quite strong. I don't see it that way.

Moreover, I would just compare where we're at today in dealing with this crisis compared to where the Bush administration and his European partners were in August of 2008. I think you see much more unity, coordination, and agreement on steps forward.

And I'll just mention one of many, but there was no economic sanctions -- zero, nothing, not one person was sanctioned -- after Russia invaded Georgia. That has -- that's changed in a remarkable way, in terms of what the United States and Europe has done together. And I think that is testimony to the transatlantic partnership is there's just more coordination and there's more of a shared vision.

I mean, we could go back and talk about the differences, you know, the war in Iraq and differences about Saakashvili and NATO expansion that divided Europe and the United States before. A lot of those divisive issues are, you know, not a part of the current transatlantic dynamics.

VOGT: All right. Let's take the next question, please.

OPERATOR: Sir, our next question comes from Contessa Bourbon with New York Times.

QUESTION: Hey, thank you for holding this, Professor. I'd like to ask -- in terms of U.S. sanctions against Russia and (inaudible) relationship, how will this impact (inaudible) politically the war in Syria? As you know, Russia is a major player there in -- and the negotiations to settle the nuclear issue with Iran.

MCFAUL: With Iran, you said, the last part of your question?

QUESTION: Is that -- how will these sanctions of U.S. impact the negotiation to settle politically the war in Syria? As Russia is a major player in the talks -- in the Iran nuclear deals, too.

MCFAUL: Yeah, OK, I got it. So with respect to Syria first, I think the impact on the joint work we're doing with Russia to remove and destroy chemical weapons will be very small, if not zero. It's striking to me what Foreign Minister Lavrov said about that and -- and the reason that that's going to move forward is that's in our common interest. This is not about anybody doing any favors for anybody, but Russia sees this in its national interest, we do, and therefore, I don't think that will be affected.

With respect to negotiations for a political settlement in Syria, I think you already are feeling some of the impact of that, and I do think that will slow down what was already a rather slow and inconclusive process, you know, the so-called Geneva process already.

I think -- and that -- for the simple reason that President Assad is, I'm sure, calculating that he is no longer -- needs to have these negotiations. And by the way, there are many other factors -- I think one would probably have predicted this even without this -- the Crimea crisis, but most certainly U.S.-Russian cooperation with respect to the political transition there I think is -- you know, has never been great. I deeply admire what Secretary Kerry has been trying to do to try to rescue this process, but as an analyst now watching it, I'm not optimistic it will achieve results.

And with respect to Iran, you know, I think it's more complicated there. The most important thing I would say, though, is for the Iranians, this negotiation is really about some kind of normalization and lifting of sanctions with the United States. That is American sanctions and European sanctions. So -- so, you know, that is the big negotiation for them. And, you know, if it fails, they'll fall back and begin, you know, normalizing trade relations with Russia, but that's not what they're seeking here.

So I think the dynamic in that negotiation is really more a bilateral dynamic and -- or a West and Iran dynamic and not a Russia dynamic for the time being.

I don't know how it's going to end; I want to make that clear. You know, this is a very difficult negotiation. But the cards that we hold is the lifting of the sanctions. And that we can do with or without Russian support there.

I also happen to think it's in Russia's interests to have a deal. Obviously, in the government, I spent a great deal of attention to this issue for the last five years, and I've seen and understood the evolution of the Russian position. I don't think they have an interest in having the P5-plus-one fall apart, either.

VOGT: Mr. Ambassador, if you have time to take one more question, we do have one more in the queue.

MCFAUL: One more question.

VOGT: Great, OK. Let's take this next and this will be our final question.

OPERATOR: Yes, sir. Our last question comes from (inaudible) with the Boston Globe.

QUESTION: Hi, Ambassador. My question is -- and you started to address it in the last question -- a new strategy towards a sort of more muscular or less predictable Russia, what -- what does it actually look like from our end beyond the tactic of isolating problematic players like the businesspeople you talked about? And do you really think it's likely that they're not -- that the Russians aren't going to try and cause us problems in places like Russia and Iran or even further afield with nuclear proliferation in Pakistan as a way of tying us up in knots without causing direct damage to themselves.

MCFAUL: Well, with respect to what it means in reality, I would just refer you to this piece I just wrote today, where I had, you know, probably a dozen different policy recommendations. The key one I think that we haven't discussed as much on this call is shoring up Ukraine.

I mean, to me, that's the drama. If Ukraine falls apart, if they don't institute governance, if they don't in some way isolate and marginalize the non-democratic political forces that are still a part of what's happening inside Ukraine, then that will be a major disaster for Europe and the United States.

So to me, that is the key piece. And I hope people understand the gravity of that. It's not just a one-year aid package. It's a 20-year project, not unlike similar, you know, state-building projects after World War II, where we had to invest enormous resources and attention to making sure that states like Western Germany and Italy and France did not fail. And to me, it's that kind of scale of a project.

Or if you don't like that analogy, you know, it's a rerun of what happened after the collapse of the Soviet Union. We have to succeed this time around.

With respect to the linkage to those other issues, I think you're quite right to bring them -- to suggest them. I don't -- I don't pretend to know what Putin's next moves are going to be. And I would encourage you all to be careful of anybody that pretends they do know.

I would just say -- I would just remind you that even during the Cold War, we learned how to cooperate with the Soviet regime. In fact, I would remind you, go back and look at George Shultz's memoirs, one of the -- one of the best books on diplomacy I've ever read. I used it every day in my previous job, and one of the chapters in that book is called re-engaging the Soviets. I think that's the exact title and that was a guide to us in terms of what we were doing with respect to the reset.

And what's interesting about that chapter is he's not writing about Mikhail Gorbachev. He's writing about the period in 1982, right as he comes into the government, just -- just a year after martial law in Poland and a couple years after the Soviets invaded Afghanistan. And Secretary Shultz's point was on issues of national interest, when it is -- the United States needs to engage with Moscow, without any illusions of who they are or what they want to do, but to engage on a multi-dimensional agenda. He outlines a four-part agenda.

And, you know, I think that will be part of what needs to happen. And a key piece that Shultz wrote about that was a major part of the reset when I was in the government and should be a principle aim moving forward is to avoid linkage between issues that are not related to each other. And so let's talk about Iran here, let's talk about Syria here, and let's talk about these other issues in a different domain.

That's become much more difficult because of what Russia did to Ukraine. I want to make that clear. It will not be easy to just return to the table of those negotiations because of that. But -- you know, I think there are some lessons to be learned from the Reagan administration for how they engaged with the Soviet Union even at a very tense time in our bilateral relationship.

VOGT: All right. Well, and on that very interesting, sort of historical -- or history lesson...

MCFAUL: Everybody go get the book.

VOGT: Yeah.

MCFAUL: Buy it on Amazon. It's a fantastic book. I highly recommend it.

VOGT: I'm going to check it out myself. I want to thank Ambassador McFaul for his time on behalf of everyone here at Foreign Affairs. Thank you for your time. Thank you for the fantastic answers and the analysis. Those of you interested in more interesting commentary on this topic, I recommend that you -- another book that you should check out is "Ukraine in Crisis," which Foreign Affairs has just put out. You can find that on our website.

Mr. Ambassador, thank you again. And we look forward to more media calls in the future. We'll keep seeing how this develops.

MCFAUL: OK. We'll be in touch. Bye-bye.

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