A Conversation with Sergey B. Ivanov

Russian deputy prime minister Sergey B. Ivanov discusses the recent advances in U.S.-Russia relations, including the bilateral presidential commission.

THOMAS GRAHAM: Good afternoon. Good afternoon. My name is Tom Graham, and I want to welcome you to the Council on Foreign Relations meeting with Sergey Ivanov, deputy prime minister of the Russian Federation.

To start, a few housekeeping items. First, please turn off completely -- that is, don't simply put on vibrate your cellphones, your BlackBerrys, any other wireless devices -- so we avoid any avoidance with the communication system. Second, I want to remind you that this meeting is on the record. And third, just to stress one item that's in your short biography of Sergey Ivanov, that is, he is the deputy prime minister with responsibility for the military- industrial complex, but he also has responsibilities in the area of state policy for national security, science and innovation, transportation and communication, and export policy.

The minister has been dealing with the U.S. government for the better part of the past decade, and he's been one of our most prominent interlocutors. I think all of us who have dealt with him, over the past decade, would agree that he is one of Russia's most articulate strategic thinkers and one of its most effective spokesman, in Russian and in English.

The minister has told me that he wants to focus his introductory remarks on economic issues. But in the discussion, we can turn to foreign policy and domestic policy issues as well. So please join me in welcoming Sergey Ivanov to the podium. (Applause.)

FIRST DEPUTY PRIME MINISTER SERGEY IVANOV: Thank you, Tom, or should I say, Mr. Chairman. Ladies and gentlemen, it's my pleasure to address such a distinguished audience and share some of my views on Russian-American relations and their prospects yet another time, because I remember I was here meeting -- lots of faces whom I know quite well -- in, I think, 2005 when I was here at the capacity of defense secretary.

I will speak mainly on economic issues, on technological issues. Apart from Tom said, I also cover the job of two Russian agencies: the space agency and the nuclear agency. And I think -- and I will mention later why I think it's important.

But I will start with security. It's sort of tradition. It's sort of cornerstone of our relations. So we have all appreciated an apt definition to describe our efforts, the resetting. But even unsophisticated iPad user such as myself -- (laughter) -- knows that resetting requires software upgrading -- (laughter) -- which in bilateral political terms has been long overdue.

Today, Russia and the United States more than ever share common interests and universal values, including democracy, equitable world order, human rights and civilian freedoms; and of course, proper environment and stable, sustainable environment.

Such commonality and convergence of views do not mean that we are free from certain disagreements.

That is quite natural in fact, given the variety of national interests of our two states. But we are prepared to seek compromises, to listen, to accept arguments on either side.

Such positive mindset and reciprocal preparedness to pursue a pragmatic dialogue based on mutual respect and equality brings tangible results. Russia and the United States have considerably strengthened mutual trust, reached understanding on many complicated issues, and formed basis for cooperation in a number of spheres.

Well, you all know about the START treaty, which gained momentum since February the 5th. After two and a half years of delay, we have finally seen 123 Agreement enter into force. I was a strong advocate of this agreement. I remember how the then ambassador of the United States, William Burns, signed it in Moscow. For many reasons which I wouldn't even mention, the agreement didn't come to force for quite a long time, but finally it settled down.

Following the recent NATO-Russia Council arrangements, we actively work to achieve the common objectives of the European security, including the joint protection of the continent from possible missile threats, and those threats, of course, exist. I remember six years ago I said more or less the same. We never said that we don't think -- Russia doesn't think missile threats don't exist. It's a matter how we try to counter them.

It is in the light of these new approaches to international security that the U.S.-Russian agreement on air transit to Afghanistan has been signed and ratified. This resulted, by the way, as of now in almost 820 flights transporting 120,000 American servicemen to Afghanistan and back and 21,000 (tons ?) of cargo through the Russian territory. That's quite a result, I think.

The ongoing dialogue on coordinating efforts in the fight against the rapidly growing Afghan drug threat resulted in the first joint operation of the anti-drug forces of Afghanistan, United States and Russia in the Nangarhar province last October.

Through our mutual efforts, 2010 became a real breakthrough in the talks of Russia's accession to WTO. Provided that the momentum is maintained, we can expect to be accepted into organization already this summer or already this fall. It's quite realistic as far as we're concerned or we understand it.

We sincerely hope that this year will also bid farewell to one of the most notorious relics of the Cold War: the Jackson-Vanik amendment. I (hear ?) you're all smiling. I am also smiling because I remember when I was a student back in 1974, this amendment had been introduced. Vice President Biden, who was in Moscow recently, when the Jackson-Vanik was mentioned, he said: I understand I'm old enough now because I remember Brezhnev, I remember Jackson and I remember Vanik. (Laughter.)

But the amendment still stands.

You know, Russia now has a visa-free regime with Israel. Maybe you don't know it -- (laughs) -- but we have it. And we are fighting for visa-free regime with EU and United States already. At least we are advocating a visa-free regime. But the amendment still stands. I hope this last relic of the Cold War will soon die.

By the way, in the year 2002, United States recognized Russia as a country of market economy, but Jackson-Vanik amendment is also linked to this status, but we have got this status nine years ago. Thus the reasoning is gone, but the restrictions still apply. I'll hope -- I hope that the American Congress will manage to remove this last relic.

Now, about the Bilateral Presidential Commission, which has become one of the most visible symbols of resetting and progressive development of Russian-American relations, it compromises now -- it -- excuse me -- my rusty English -- it comprises now 18 working groups covering a broad range of cooperation areas.

The commission has reached an unprecedented level of interaction, resulting in implementation of many joint projects. Russia and the United States are closely working within numerous international forums, such as U.N., G-8, G-20, OSCE, APEC, Asia-Pacific summits and (sic) cetera. One of our major achievements is recognition of the need for increased attention to bilateral economic portfolio and its importance to long-term stability of Russian-American relations.

During the global financial crisis, our business interaction diminished but did not stop. A whole number of big commercial projects involving such leading U.S. companies as Boeing, Cummins, General Electric, PepsiCo, John Deere, Alcoa and others proceeded as planned, and both sides did not change their plans even during the crisis year.

Last year, which already was better than the previous one, we also witnessed three successful large-scale Russian investments in North America. President of Onexim Group Mikhail Prokhorov became the owner, the first foreign owner, of the New Jersey Nets. We have just discussed I am a basketball fan. (Laughter.) So I am looking forward in New Jersey Nets becoming stronger, moving to Brooklyn, as we have agreed -- (laughter) -- and playing better ballgame than before. But that's the task of Michael (sic) Prokhorov first.

Then Atomredmetzoloto, the Russian -- quite a big Russian company, acquired the controlling stake of the Canadian Uranium One, which owns a uranium mine in a state, Wyoming.

Mail.ru brought (sic) from America Online one of the leading services of instant Internet messages, ICQ. The latter -- the latter two projects were considered and approved by the Committee on Foreign Investment in the United States, and we are grateful that this committee took a positive decision on Russian investments to the United States.

By the way, I'm also a member of the board of the Russian foreign investment committee, foreign investment to strategic companies. And recently we have made many decisions approving American investments to Russia.

For example, Mr. Kendall is here. We just discussed that PepsiCo acquired a Russian food giant -- in our terms, food giant -- Wimm- Bill-Dann, and our committee gave approval for that deal. And now I think 37,000 Russians are involved in PepsiCo business in Russia. That's a big employment, isn't it?

This is yet another sign of positive dynamics in the economic area. Still, one should also admit that the existing potential is far from being used to its full extent. Last year, bilateral trade amounted to only $23 1/2 billion. The Russian export was 12.4 billion (dollars). The American export to Russia was 11.1 billion (dollars). This puts U.S. share in Russia's foreign trade at only 3.8 percent. And United States enjoys only the eighth place among our trade partners -- foreign trade partners. In turn, Russia does not even appear in the top 20 of the U.S. trade destinations. Our share in America's foreign trade is less than 1 percent. Isn't it a shame?

The major problem is that the existing trade and investment structure is based on a relatively small and narrow number of areas of capital application, and on a limited number of goods.

Russian exports to the United States are dominated by raw materials -- as usual, it's only oil and gas, which amounts to 72 percent of all Russian exports to the United States. Imported are mainly machinery and food products.

Investment volumes do not look impressive either. Overall, U.S. investments in the Russian economy are estimated at $7.3 billion, or only 2.8 percent of total foreign investment in Russia. I may be wrong, but I think I'm right. I think Finland and Sweden invest more than the United States to Russia.

In turn, our companies have invested $7.7 billion in the United States. These capital flows thus far tend to focus on the Russian energy sector, which is understandable; and the U.S. metal industry, also understandable from the Russian point of view.

The bilateral trade in high tech, especially services, is only marginal. Of course, we cannot be satisfied with that in the context of Russia's new innovation-driven development policy. We hope to expand our bilateral economic horizons in the following priority areas: space, information technology, medical technology, nuclear energy and power efficiency. And active work in many of these areas is already under way in the presidential commission, which I have mentioned before.

For example, the nuclear energy and nuclear safety group discusses next generation of reactors, low- and medium-power generators, decommissioning of nuclear facilities and physical protection of radioactive materials. On March 23rd, on the margins of the working group meeting, a long-term contract for delivery of Russian uranium products for almost 3 billion American dollars was signed here in Washington. I would also like to specifically point out that the tragic events in Japan bring us a renewed urgency in working together in the areas of reactor safety and emergency management at nuclear plants.

Another highly promising area of our cooperation is space exploration and development. Federal Space Agency of Russia and NASA are the key operators and administrators of the International Space Station. But the question, which I have already privately discussed with Tom Graham: What will come next? The international space center, which is a success story -- but it will last only till 2020. What is next? I think it's time we start thinking what is next, and maybe joining not only our technological resources, but also financial resources, because space exploration, particularly if we think about the Moon or Mars, is very, very expensive. And both governments, of course, are interested in effectively managing their budgets -- me including.

That's why I am talking about joining finance.

It may be not only United States and Russia. Of course, we may invite third parties. But I think the (driving ?) force will be definitely United States and Russia, since we are the leaders in space exploration.

As I said, the working group on space is now working on implementing joint moon and Mars research projects, (considered ?) combined control of deep-space missions, and creation of new vehicles for interplanetary flights. To create a new vehicle, in fact, it's a job which might be done. What is more difficult: to create an energy system which will deliver such a vehicle for a very long distance. And as far as I know, at the least the Russian scientists say that the only alternative at the moment is nuclear, whether we like it or not.

The energy group around smart grid and efficiency and energy consumption pilot projects, production of high-tech materials and biofuels: The working group on science and technology at its latest, most recent meeting, approved 50 proposals in nanotechnologies, carbon-cycle monitoring and information technologies.

More and more American companies are taking part in the large- scale innovation project at Skolkovo, which is aimed at recreating conditions that led to the success of the Silicon Valley. Of course, we are not copying Silicon Valley, but we are thinking of using the same synergy in trying to push modernization in Russia via such huge centers like Skolkovo.

And there are already American companies which joined Skolkovo project. They are Microsoft, Cisco, Boeing, Google and Siguler Guff. Many more are actively exploring that possibility. Skolkovo Foundation has signed a framework agreement with MIT. Nobel Prize winners Roger Kornberg and Craig Barrett are among Skolkovo senior managers. And we are happy that they accepted this invitation.

Ladies and gentlemen, I think I have to finish. The Russian government is fully determined to improve the investment climate in order to attract foreign capital flow. We keep making efforts to provide necessary tax incentives; improve technical regulations, judicial and customs procedures. Last year, the institution of investment ombudsman at the level of the first deputy prime minister was enacted. And Igor Shuvalov is now the head of this investment committee.

Many leading international companies, including 13 American, are very active in the Foreign Investment Advisory Council that is shared by our Prime Minister Putin. We will rely in -- we will rely in these efforts both on our internal resources as well as successful cooperation with our international partners, among which the United States hold a specific place.

Thank you so much for your attention. (Applause.) Thank you. I lost my voice.

GRAHAM: Thank you very much for that thorough overview.

Let me just mention that the minister arrived from Moscow at 3:00 a.m. this morning. (Laughter.)

On an Aeroflot or --

IVANOV: No, it was a business jet. (Laughs, laughter.)

GRAHAM: And is going to Washington later this afternoon.

So we really do appreciate your taking the time to be out here with us this afternoon.

IVANOV: Thank you.

GRAHAM: Let me start with the reset, which I think we all agree has changed the atmosphere in U.S.-Russian relations, for the better. You've mentioned START, cooperation in Afghanistan, the 1, 2, 3 Agreement. I think a lot of us are asking here as we look at this relationship, is: What are these two countries going to do going forward? What's the next step in the reset? You've mentioned space. Are there other promising areas of cooperation? One that we're discussing quite actively in Washington today is missile defense. Is this a promising area where we're going to be able to find a way to cooperate in the near future?

IVANOV: Thanks, Tom. As for missile defense, it might be; it might be not. But if you ask me what is the steps, general steps, next step, I'm fully convinced it's not security. It's economy, it's high-tech development, it's investments. Even last year, when I was here in Washington, there was no START yet, and it was not clear whether it will be ratified. Anyway, if you analyze the history of Russian-American relations, it was and mostly is still only security. Security only.

Of course, there are many areas where security plays a very important role, but my point is unless we are interlocked and interdependent, if you wish, in economy, in trade, in investment, like we already partly are involved with European Union, there will be no substance that will cement our relations, really. Everything will depend only on the political atmosphere, on elections, on security, and there's no substance.

So my answer, I think so -- maybe I'm wrong, but I'm convinced that if we want to make a real progress, it should be economic development, social, and of course investment and bilateral trade progress.

GRAHAM: Let's focus a little bit on the -- on the economic dimension of the relationship. As you know talking to a lot of American businesspeople, one of the real concerns about Russia is corruption, rule of law. This is something that your president has talked about very frequently and very eloquently, most recently -- most recently, in Magnitogorsk. And he stressed the damage that corruption does to economic growth. And he's pressed very hard over the past year, year and a half or more, an anticorruption campaign.

Now, those of us who have been dealing in U.S.-Russian relations for the past two decades know that President Yeltsin had an anticorruption campaign; Mr. Putin when he was president had an anticorruption campaign. And so I think the question on everybody's mind is what assurances you can give us that this time it's not, as Prime Minister Chernomyrdin said, "We hoped for the better, but it turned out as it always does"; but that this is going to be a real effort and we're going to see tangible improvement in the -- on the corruption issue over the next several years.

IVANOV: Yes, thank you. You had a very good quotation of Chernomyrdin. (Laughter.)

Well, first of all, point number one, of course we are not ideal.

There is corruption in Russia. There is misuse of rule of law occasionally, though it's not as misused as it has been quite recently. I am convinced about that. There is big share of Russian economy which is called state capitalism. I heard this brand name quite often.

Fighting corruption. First of all, the penalties for corruption has been recently raised; I mean legal penalties. And there are many court decisions how, court hearings, hearing exactly corruption.

One might argue that you sent to court policemen, teachers, some medical doctors who take bribes; you sent to court only low-level, small fish. Partly it's true, partly it's not true, because there are already cases when not little-fish-level officials are being condemned and sent to prison for bribes.

But as you probably know, Russian history, which is thousands of years old, we lived with corruption most of our history. Even in Peter the Great times, the provincial governors were sent to a certain region with a decree. For example, Ivanov -- not me, but Ivanov is the most widely spread name; let's say Ivan Ivanov. (Laughter.) "You going for Kamchatka? You feed yourself there." And it was written, which is the cornerstone of corruption.

So I wouldn't lie and promise you that we would become as transparent as, for example, Finland or Iceland or Norway or New Zealand, which are the leading countries from the transparency point of view. I think United States is not in the top five yet. (Laughter.) But we'll move, and I believe in progress here.

As for the rule of law, that's a matter of discussion, whether our legal system -- of course, it's young. It's only 20 years old. But I wouldn't say that our legal system is totally bankrupt or totally inefficient. That's not true. It is weak, for example, in investigating economic crimes because we don't have experts in both federal law protection services or in court who are very bright in modern economic realities. That's our weak point. But on the other hand, I wouldn't say that our courts make decisions only after or if they're phoned by somebody from Kremlin. That's not true.

State capitalism -- President Medvedev this week in fact, or last week, announced in Magnitogorsk new ways of how to make even state capitalism more efficient than now. We have a certain proportion of industries, branches which are state-owned, and I think that will stay for a while.

I can give you one example: I am the chairman of the board of the Russian (joint ?) aviation company which produces all types of planes -- military planes, passenger planes, transport planes, whatever. Before we made such company, only in 2006, the situation in Russian aviation building was really desperate. We still can produce relatively good military fighters, and half of Russian military foreign trade is with jets. That is a good indication that our jets are still very popular abroad. But we were really weak in producing modern passenger jets.

We started cooperation -- cooperating with Boeing, by the way -- maybe not everybody knows that a big proportion of Dreamliner was constructed and designed by Russians in Moscow, not by people in Seattle. That's already a globalization, and I think it's a good indication that we are cooperating even here. But we put all the Russian aviation plans together, found this giant Russian aviation company, and I was offered a position as chairman of the board. Now the president said that by October, officials or bureaucrats like me should step down from this post so that neutral or business-orientated people should take the chair and run the company. Of course, the company is run by the general director and it will be that way, but we changed the board.

Of course, it's a clear step to indicate, like in many other industries -- in oil, in gas, in energy, in transport -- that we are even more open for normal, regular, predictable, market-orientated ways of running any sort of business, whether it's government-owned or private-owned. The -- how do you call it -- the line will be the same.

GRAHAM: Sergey, will there be room for Americans on these boards after you've stepped down?

IVANOV: There are already -- in this particular I am not sure because right now 93 percent of the company is owned by the Russian state. But there are many companies I know in Russia, in IT, in -- even in transport -- I mean, passenger carriers, aviation carriers -- which enjoy American presence in their boards. Why not?

GRAHAM: Sergey, let's talk a little bit about the WTO. I think we're making progress. You said Russia wants to complete the negotiations by the end of this year. Obviously one of the remaining obstacles still is the Russian-Georgian bilateral agreement. Give us a sense of where that stands and whether you're looking to the United States to facilitate some sort of agreement in the near future.

IVANOV: Well, to start with, we've enjoyed negotiations about WTO for 18 years already. That's a long way.

Secondly, we would like to join, definitely, and we've said it from the very beginning. We perfectly well understand that if we join, there are both positive and negative effects for our economy. Like in any big deal, there are pros and cons. Our strong segments of economy will definitely benefit if and when we join WTO. Our below- competitive sectors -- for example, machine building, auto making, some others -- they will suffer. But we agree with that, and we think that if they suffer, they will be much more motivated than now to renovate and modernize.

Of course, we would like to join WTO on standard rules and practices. We've faced, in this 18-years-old history of talks, many examples when demands were put to Russia which were never put before to any other applicant -- including China, by the way -- including China. This we had to reject because we said outright, we want to join on standard rules, and we applied to the rules, and we of course promised that we will follow those rules.

Or course, there were many problems in the last years with the United States -- intellectual property, agriculture. You well know that. I wouldn't elaborate and go further because I'm sure you all know that. We finalized in fact everything -- in fact everything.

And there is a good question, which Tom mentioned -- Georgia. To start with, Georgia, or our problems or our relations with Georgia -- but we don't have even diplomatic relations with Georgia, but our problems with Georgia have nothing to do with WTO. Have nothing to do. It has nothing to do with trade, with securities, with whatever, you name it. It's a political problem. We wish to solve this problem ourselves. And I know that the first round of non-official talks have been held in Geneva with the Swiss -- I forgot the word --

GRAHAM: (Inaudible.)

IVANOV: -- yes, negotiational host. We are going to continue, but I want you to understand that the problem of Russian- Georgian relations have nothing to do with WTO. It's as simple as that.

As for the rest, folks -- in fact, by the way, there is a precedent in WTO agreements. Once, I remember, Ecuador was accepted to WTO not unanimously but by taking a vote at the general assembly of WTO. I don't wish that Russia is accepted not unanimously. I wish it would be unanimous, but theoretically it's possible that we might be accepted not unanimously.

GRAHAM: Well, we'll see what happens.

Let's turn very, very briefly to the Middle East since that is a focus of a lot of discussion in the United States.

IVANOV: Libya.

GRAHAM: And Libya. And in particular the comments that your president and your prime minister made in the past couple of weeks, which struck many people here as contradictory. I was in Moscow 10 days ago, and this was the talk of Moscow circles at that time, and particularly not only implications for Russian foreign policy but what this tells you about what's happening domestically in Russia. So could you help us sort out what the official Russian position is on Libya and what you see going forward?

IVANOV: OK. And I am not dealing in any way in Russian foreign policy right now or security policy. Well, our foreign policy is always run by the president, and the president set the official position on Russian Federation on the events in Libya. But the prime minister also agreed that the destination point was Gadhafi's behavior, and nobody argues that in Russia. Gadhafi is to blame.

Now, about the resolution -- I even forgot its number -- 1373?

GRAHAM: 1973.

IVANOV: Thank you. Our ambassador to the United Nations is here. (Laughter.)

So we passed this resolution, as you know. I had a feeling -- again, I am not an expert. I didn't work on that resolution, but I had a hunch that this resolution was made very hastily, quickly, for natural reasons. I understand why. Gadhafi was killing his own people. But the resolution -- the text itself -- it's not very clear and not very well-defining the point where the military force may and should be used and where it should not be used.

For example, the land operation -- what is the civilian population? Because the Russian view is -- I know it from our common Russian people whom I meet and they ask me the same question. They say, OK, protecting civilian population is a goal which should be -- which should be sacred. Let's put it that way. But when we see on television the so-called opposition running with bazookas, with Kalashnikovs, sometimes with heavy weapons, is it a civilian population or not?

And finally, the huge question mark is what is Libyan opposition? Nobody knows. Nobody understands. The worst-case scenario is the Somalia scenario. Would you like a Somalia scenario in Libya, I wonder? But it's a possibility.

So the Russian position -- and there's no huge difference or any difference between the president and the prime minister position. The prime minister position commented it, saying that he's answering the question only in the capacity of a Russian citizen and he is not involved in foreign policy matters. And he was very correct here in stressing that point. But later on when the operation started, of course obviously the human losses -- civilian human losses, and the question is how long will it go, to what extent will it go, and if this sacred goal of protecting civilian population wouldn't degenerate into killing even more civilian population. I don't know.

Of course, as far as Russia is concerned, we are not taking part in any military action there. We'll just watch and see.

GRAHAM: Thank you, Sergey.

At this time I'd like to invite members to join in the conversation. So could you please wait for the microphone and stand, speak directly into the microphone, state your name and affiliation, and please limit yourself to one question and make it concise so that we can have as many people participate as possible.

Down here?

QUESTIONER: Carter Page, Global Energy Capital. I would like to follow up on two very interesting points you made. On the one hand you were talking about oil and gas investments, primarily U.S. companies investing into Russia. On the other hand you were talking about technology cooperation between the two states. Over the course of the last several months we've seen a lot of cross-border transactions where Chinese and Korean companies have done similar to what the -- what we saw with the New Jersey Nets, and investments have been made into the United States. I'm just curious to know your perspective as to the prospects for that, both from a transaction standpoint but also from, you know, the overall receptivity of the United States to Russian companies making investments into United States in oil and gas. Thank you.

IVANOV: Thank you. That's a good question. Of course we understand perfectly well that most of developed world is interested in Russian oil and gas. (Laughs.) That's an axioma -- I think it's called axioma. And we don't mind. There are lots of -- well, I think all major companies -- American, European, Asian -- are already on the Russian market in this or that way, in crude oil, in crude natural gas -- like, for example, (oil ?) building pipleines, like Nord Stream project. German capital, Italian capital -- Italian companies are heavily involved, possibly in the South Stream project as well.

The Russian interest is partly the same because of capital. Every energy project, study, exploration of the new oil field, particularly in the north, in the Arctic, like in Shtokman, for example, or other deals like the recent one, which is a bit scandalous -- BP --

GRAHAM: Rosneft.

IVANOV: BP-Rosneft, yes. Then TNK-BP, the Russian subsidiary, argued in court that it was not proper.

Anyway, but the tendency is the same. Russian companies invite foreign investment to take part because they don't have enough capital. It needs trillions of dollars -- not billions but trillions of dollars.

On the other hand the Russian interest is to invite companies which have very good experience in refining, in not only getting and selling abroad for export crude oil but making another product from oil or gas -- petrochemical industries, whatever. It's part of modernization. It's part of -- simply part of modernization.

The Chinese -- OK. We have I think finished the first part of the pipeline from Siberia to China, but we hear all the way that South Korean -- not Japanese now, but Chinese -- they are interested in investing to oil and gas exploration, for example in Sakhalin -- offshore Sakhalin. And incidentally, by the way, when this tragedy in Japan happened we managed to divert several huge ship gas carriers, I think one of them from the States, and I am grateful to your company which accepted the idea that we will deliver that amount of liquid -- how call -- LPG --

GRAHAM: LNG?

IVANOV: LNG, sorry -- LNG gas later and immediately sent the tanker to Japan. That was the way how we could help Japan in this tragic moment. Another idea is to put an electric cable on the seabed from Sakhalin to Hakata to supply Japan with extra electricity.

And apart from oil and gas, I will get back very shortly to nuclear energy. Of course, nuclear is not a popular word now. I understand this. But I also think in two or three months' time everything will be back to business as usual.

GRAHAM: Let's take a question.

Here, please?

QUESTIONER: Thank you. Thank you. My name's Roland Paul. I'm a lawyer. And following on on Mr. Graham's question or maybe recasting part of it, you answered part of it very well about the Russian president and prime minister's views on Libya. But he also rather -- added about what this meant for domestic Russian political situation, and I'm sure he is or certainly I am pointing toward the 2012 election between these two gentlemen. Thank you.

IVANOV: Well, first about 2012 and the domestic impression on Libya -- first of all, I will disappoint you. I have nothing to add except what has been already said by the president and the prime minister about the upcoming presidential elections. Of course, I meet them both quite often. A certain thing -- I will tell you a certain thing: I never ask or discuss that matter with them. (Laughter.) And really I think it's too early -- it's too early. There is a reason that there is some sort of substance, in my view. My hunch is that the parliamentary elections, which will be this fall, will be very important and they will give a lot of clues, but they are only this fall. So it will come naturally later, I think, by fall. But I don't know; I am speculating.

As for the public impression of what is going to Libya, of course the Russian public -- general public -- they don't like really those TV pictures with bombardments, with the war. On the same -- at the same time, they ask a question: OK, let's take Bahrain. Civilian population is killed there by the ruling regime. Why don't they bomb Bahrain? So some people in Russia -- some -- they think it's double standards. On the other hand, what is different from what would have been, let's say, only several years ago in a case like Iraq, now nobody in Russia is demonizing United States or NATO. There are different opinions, but nobody is demonizing. I would like to stress that point, which is new.

GRAHAM: We've got a question way in the back.

QUESTIONER: Thank you. Laurie Garrett from the council. Deputy Prime Minister Ivanov, thank you for being here. (Speaks Russian.)

IVANOV: (Speaks Russian.)

Q

Today TEPCO is saying in Japan that they will be dumping hundreds of thousands of liters of radioactive water into the ocean of Fukushima. I have been searching for examples that we can draw from to advise the Japanese people about what they can expect for environmental damage from polluting the seas with radiation, and the largest examples are in the Baltic from nuclear submarines and old nuclear waste from the Soviet era. Are you prepared to provide details of the isotopes, the release rates, whatever we know about environmental impact in order to assist the Japanese at this time?

IVANOV: Thank you. I'll start with the Baltic Sea and the Soviet stockpiles of chemical weapons. The majority of those weapons put on the bottom were not Soviet, to be frank, but they were German, captured by Anglo-British coalition. That's point number one.

Secondly, we monitor the Baltic, and not only we monitor the Baltic -- the Finns, the Swedes, the Poles, the Estonians -- they are monitoring it, and there is no threat at all.

When we constructed the North Stream gas pipeline on the bed of the Baltic Sea, we first examined the whole seabed, one kilometer wide -- took up a lot of mines from the First World War and Second World War, but there was no chemical weapons and no chemical threat. And by the way, the end of this year the North Stream will start functioning already.

So Baltic Sea and the tragedy in Japan -- they have in my view nothing in common.

Of course, we are concerned and we monitor the situation -- the ecological situation on our far east very closely because, as you have rightly said, if the ocean water is contaminated, the fish we catch only 100 miles from Fukushima spot will be very dangerous. It will affect us, definitely. That's why we're monitoring both the radioactivity level in the air -- and so far it's no problem -- and the sea water substance -- contents.

GRAHAM: Right.

IVANOV: It's no problem.

But finally, as far as I know, our agency and the American experts both were not happy how the Japanese cooperated from the very start. You are right. And we demanded, particularly via the international nuclear energy agency, that more and more information should be given to international experts, how to cope with the problem.

In Russia, every nuclear power unit is now delivering the environmental situation in real time on Internet. It's a law in Russia, and after Chernobyl, of course, we learned our lesson and made safety precautions on our nuclear power stations really strict. But we would like to share this information with anybody who is interested.

GRAHAM: Just to clarify, you're saying that Russia doesn't have any experience with leakage into the sea that you could share with the Japanese in this instance.

IVANOV: I think we have, but there are two different questions. One is to stop the leakage, and second, what do you do with the harm already done in the seawater? There are two different technologies. I am sure we have experience in the first case, but I am not sure we have it with the second. If the leakage is already in the ocean, it will drift.

GRAHAM: I think we have time for one last question. Rhys (sp)?

QUESTIONER: Mr. Deputy Prime Minister, in the spirit of dealing jointly with problems both from the security point of view and an economic point of view, can we talk a little bit about Iran? The area that you see we can cooperate, and also how you see the endgame of that and maybe when you see the endgame of that.

IVANOV: Well, it's my pleasure to discuss Iran since I was doing it for 11 years every time I came to the United States. (Laughter.) No exception.

But there is also a very big change. When I came here during the Clinton administration first, I remember how I was attacked about Bushehr. We were accused of all things in the world, of delivering nuclear military technologies via Bushehr and many, many other accusations. I am happy to say that now the situation is totally different.

I remember and would never forget what President Bush finally said about Bushehr, both publicly and to me in the White House. He said, Russia has done very clever move with Bushehr. They constructed it, they keep their hands on the fuel, they take the fuel relocated back when it is done, it's under the field of the international agency, there are television cameras, and if the Iranians tamper with even one gram of Russian non-military grade fuel, it will be total violation of everything and there will be very harsh sanctions. And it works, so far. Bushehr, by the way, hasn't yet started to function -- (laughs) -- because we now removed the rods again after putting them down because the German compressor which has been put to Bushehr 35 years ago collapsed, and we had to -- (laughs) -- so Bushehr is not yet functioning. (Laughs.)

GRAHAM: But they're still paying you, right?

IVANOV: Hmm?

GRAHAM: They're still paying you.

IVANOV: Yeah. (Laughter.) They're paying in one place.

But on Iran generally, of course, we have agreed on the joint U.N. resolution on Iran. It's much harsher than the previous one. I think you would agree with that.

We never violated any single clause of any international or U.N. resolution which we have voted for. Here I am saying that in confidence, because among other jobs, I am the chairman of the Russian inter-governmental body on export control, and as far as I know, recently no American experts ever said any claim that Russia is breaking any export control obligations.

Besides, of course you know that -- and I said it 10 years ago, a decade ago -- Iran with nuclear weapon is a basic threat to Russia, not to the United States. We understand this, and we are definitely against any move in Iran acquiring a nuclear weapon. But there is -- as far as we know, there is no nuclear weapon held by Iran, but we have to move very cautiously in trying to negotiate in a very unequivocal and testifiable way that Iran has a legitimate right for nuclear power only, and we are working hard with our partners, including the United States.

GRAHAM: Sergey, unfortunately we've run out of time.

IVANOV: Oh. That was quick. (Laughter.)

GRAHAM: I would have stayed. (Laughter.)

Please join me in thanking -- (applause).

IVANOV: Thank you. Thanks. It was a real pleasure -- a real pleasure to see you.

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