U.S. Policy Toward Russia

Tuesday, March 7, 2006

Washington, DC


CLAIRE SHIPMAN: I’d like to welcome everyone to today’s Council on Foreign Relations meeting. I’m told that they’re very strict here about time, so I want to start on time so we have our full hour, and then we can end of time. I want to get through some administrative business first. Please turn off your cell phones.

The independent task force reports are consensus documents on U.S. foreign policy developed through private and nonpartisan deliberations. Task force members who join the consensus endorse the general policy thrust and the judgments reached by the group, though not necessarily every finding or every recommendation. The council takes no institutional position on policy issues and has no affiliation, as you know, with the U.S. government. All statements of fact and expressions of opinion contained in its publications are the sole responsibility of the authors.

And I’d like to remind the audience that this council meeting is on the record. I’d also like to say it’s a critical and an important time to be tackling this subject since I—as I’m sure you’ve been reading, the administration seems to be looking for some guidance on Russia and is extremely eager to reassess its relationship in the buildup to what promises to be a very awkward G-8 meeting hosted by President Putin in St. Petersburg.

I want to introduce the extremely distinguished chairs of the task force who’ve done some heavy lifting, both former vice-presidential candidates, as Tim Russert so aptly noted yesterday: former Senator John Edwards, former Congressman and cabinet secretary Jack Kemp, thank you so much for all of your work on this.

MR.: Thank you.

SHIPMAN: And of course we also have with us the always erudite task force director, Steve Sestanovich. Thank you all for being here.

I’d like to start, Secretary Kemp, with you if I might. Despite this title, “Russia’s Wrong Direction,” which is blunt and controversial, when you read through the report there really is a huge amount to be happy about in terms of what is happening in Russia, especially on the economic side.

JACK KEMP: Well, thank you Claire, for the introduction and the question. Before I answer the question, I’d just like to say to all present what an honor it was and is to participate in this Council on Foreign Relations Task Force. We had a tremendous opportunity to broaden our perspective. I’m speaking for myself and a little bit for my colleague John Edwards, for whom I have high regard, and we actually had the opportunity to go to Moscow to interview men and women in business, in academia, in the NGO world, as well as in the bureaucracy and the government.

And I came away with the sense, Claire, to answer your question more directly, that there is a lot of good happening in the economy. They’ve had almost 6 percent growth, inflation is too high, but it’s stabilized at around 9 or 10 percent. There’s foreign direct investment. There are some things that are certainly going wrong and are headed in the wrong direction; the growing authoritarianism of the government, the takeover of the energy industry to a large degree, shutting off the supply of natural gas to Ukraine, the willingness to be the first government to host Hamas. I was in Israel at the time, and it caused a lot of gnashing of the teeth, both here and in Jerusalem and Tel Aviv. But then when Sergey Lavrov told Hamas to recognize Israel, it points to one of the contradictions in our relationship. The economy is improving, they are getting more investment, there—obviously the price of oil and energy has been a tremendous boon to their economy, but it’s creeping—or actually growing authoritarianism is cause for concern.

But I want to close my answer with this more optimistic mode—optimistic note I should say. I’m not an economic determinist, but I’m pretty close to it. I believe essentially the importance of the U.S./Russian relationship, the coming G-8—I suggested yesterday on Meet the Press that I thought, and I think John agreed, we should have a G-7 ministerial meeting before the G-8 to discuss broadening the agenda from just the idea that Vladimir Putin wants energy security, education, and HIV/AIDS and disease control to be the only three topics. I think there has to be more—a broader discussion, certainly over Iran, North Korea, nuclear proliferation, so I guess I’m cautiously optimistic that we can get perhaps not a strategic partnership or maybe even what Condi talks about, a pragmatic partnership, but selected cooperation on those great issues of the day facing both the United States and the free world.

SHIPMAN: And Senator Edwards, the report is nonetheless alarming, especially about would it cause the de-democratization? I wondered can it really even be called a democracy at this point, and do we care about what’s going on internally?

JOHN EDWARDS: The answer is no, it’s not a democracy, and we do and should care. Before I go further, let me just say thank you to Jack. I appreciate what you just said, and Jack and I have become great colleagues, great coworkers, and great friends in this process. And I think it’s a very healthy thing and—

(Cross talk.)

KEMP: I hope that doesn’t ruin your chances in 2008. (Laughter.)

SHIPMAN: We’re on the record here, I want to remind you. (Laughter.)

EDWARDS: I want to point out Jack said that, not me. (Laughter.) The—I think, particularly in this era of extraordinary partisanship in Washington, it’s a very healthy thing.

KEMP: Thank you.

EDWARDS: And I have great administration and respect for Jack, and Claire also, thank you. It’s a great coup for us to have such a respected journalist doing this. And I also want to say thank you to Steve who’s been such an important cog in everything that we’ve done, and to Lee Feinstein who’s also here somewhere in the room who’s been extraordinary, the staff who’s—who’ve been terrific, and last, but far from least, the members of this task force, who’ve been absolutely invaluable. There’s no way for me to overstate—Jack and I are sitting here having this conversation, but the truth is there was vast knowledge, experience, and expertise represented on this task force that we could never have gotten to this place without their contribution, without their work, and I’m very proud to have been able to serve with folks on the task force.

Back to your question. I think the reason it matters—what’s happening in Russia—is if you think about this over the long term, is the great issues that face the world: proliferation, terrorism, and first and foremost today, Iran, AIDS, I mean almost virtually—energy—virtually every issue that the world is confronted with, we are going to be in a better place if the great powers in the world are able to deal with these issues together, if Russia is working with us instead of against us. So over the long term this is enormously important to America, enormously important to the world.

As to what’s happening in Russia now, Jack made reference to this a moment ago, there’s been—after the chaos of the Yeltsin years, there has been significant improvement in some ways in Russia during the time President Putin has been in power. A lot of the chaos is gone, there’s more stability in some ways, there’s been extraordinary economic change. There had been a contraction of the GDP and in Russia during the Yeltsin years of about 40 percent, and probably by the end of this year we’ll be up to 60, 65 percent growth under Putin.

So it has—by the way, it is not just a focus on oil and natural gas, their energy resource, but it’s not just that. They’ve actually improved in a lot of areas: metals, exports, and manufacturing. So the Russian economy has actually improved dramatically. At the same time that that has happened, the country has moved dramatically away from democracy and there’s overwhelming evidence of that.

When we were in Russia, no one was willing to call Russia a democracy—no one, even the people who you would naturally think would make the argument. I mean, everything from Putin controlling the mass media to taking away the election of governors to the way that he’s dealt with the oligarchs, the way they attempted to suppress the power of NGOs, the way they’ve suppressed any meaningful political opposition.

We sat, for example, with a potential political opponent, and it was—for two politicians, it was remarkable to listen to him talk about what he was trying to do. He has no access to the media, no access to money because the people who can fund elections in Russia aren’t willing to give money who somebody who might oppose President Putin or a successor to President Putin.

So I think there’s no argument that the country is moving—is not moving away from democracy. They are clearly moving away from democracy. And it matters—it should matter to us, and I think it’s important for us to speak the truth, the relationship matters, but they’re moving in the wrong direction, particularly on these (democracy issues ?).

SHIPMAN: Well, I was struck by that part of the conclusion of the task force report that essentially you’re—the goal should be to try to continue the strategic partnership where it’s important to the United States, but not mute the criticism as has been the preference for the last number of years.

And Secretary Kemp, I wonder what do you think can be accomplished by criticizing Russia vocally on issues like democracy, the way it treats its neighbors? I mean, what practical impact is that going to have that will be beneficial to the United States?

KEMP: I don’t think John or I or the task force lectures Russia on democracy. I don’t—this is not a screaming report. This is not preaching to them. We just think there’s efficacy in democratic reforms. A Chinese philosopher said one time, “there’s a great deal of wisdom in the world. Unfortunately,” he said, “it’s all divided up among people.” Well, that’s exactly—it’s not unfortunate. That’s the way the world works. There’s no one man or woman, no elite that can run an economy. Markets work best when they are democratic, when they’re liberalized, when trade is liberal, and the report looks forward to the idea of working with Russia to—their accession into the WTO.

I mentioned earlier my views that ultimately, I’ve said it many times, I think some would disagree, but our history post-World War II is that economic liberalization brings about eventually political liberalization. And it’s to the interest of the West to have Russia liberalizing its economy, ultimately leading to a more liberal democratic institution building and we’d—I think this report strikes a balanced accord without being preachy, without screaming at them, without trying to rub anyone’s nose in the dirt and telling them that ultimately democracy is more efficient in running the political institutions, just as a democratic capitalistic system is the best way to produce the type of wealth and growth that eventually will meet the needs of the Russian people.

I’m not going to pronounce his name correctly, Mike McFaul introduced us to Andrei Illarionav—pardon, Andrei—

MR.: (Off mike.)

KEMP: My Russian is not very—(laughter)—but I mentioned to him that as he was in the Putin government, the tax reform—I wouldn’t be Jack Kemp if I didn’t bring up the 13 percent flat income tax rate in Russia, leading to an—a decrease in instability, a decrease in the underground economy, as it were, the informal economy, and a growth in revenues and a growth in the economy. I’m not suggesting that’s the only reason, but it is certainly the type of tax reform that was very much welcome as Eastern European countries moved towards flatter, fairer, simpler tax rate systems.

So I would just conclude, Claire, by saying I’m very proud of the report in that it doesn’t preach. It is not screaming at the Russians we’re out to make progress and show the centrality of the relationship as opposed to just yelling at them.

SHIPMAN: Senator Edwards, very specifically on that issue, there’s a recommendation in the report—and Secretary Kemp mentioned dealing with the upcoming G-8—a suggestion that it might be affective to hold a G-7 meeting that would, I assume, send a message to Putin among other things. Can you tell me a little bit more about why that would be effective and how you think Putin might react to that?

EDWARDS: Well, I mean, basically what—and Jack mentioned this a moment ago, what President Putin appears to want to do is control the agenda of the G-8. The G-8, by the way, is really the G-7 plus Russia because there are seven democracies and one country, Russia, that’s not a democracy. And what Jack has suggested, and I think it’s a terrific suggestion, is that we start working now at the ministerial level among the G-7 countries to prepare for what’s going to actually happen at the G-8—that we don’t allow Russia and Putin to control the dialogue that takes place there. For example, there needs to be very serious discussion between the leaders of the other G-8 countries, the G-7, about what’s happening within Russia. President Putin needs to hear that. He does appear to respond to international, particularly when it’s unified—an international voice. He did it earlier when they tried to change the law on NGOs. We, on this task force, Jack and I did, spoke up about that, but more importantly, the American government spoke up about it along with the international community and had some influence, unfortunately not on domestic NGOs, but on international NGOs.

And there are other issues. It’s not just the democratization of Russia. I mean, Russia has been bullying its neighbors, those former Soviet states that are on their periphery. Jack made a reference to the Ukraine cutting off of the supply of energy. But the truth is this is something they’ve engaged in consistently and their response when we raise the issue is, well, it’s America and other countries trying to interfere in that region of the world. Of course what we’re doing is we’re trying to promote, particularly in places like Ukraine and Georgia, democracy.

So—and I might add, this idea of democracy and Russia and moving away from democracy is not an abstract thing. And it sounds like it, it sounds, well, this is an ideal for America. We care about democracy. It’s more important than that. It’s important for at least two other reasons: one is that a democracy—a real democracy is more stable over the long term. I mean the reality is that what Putin is doing now may be creating short-term stability, but in all likelihood, over the long term it is not creating stability. And that’s married to what—I don’t want to overstate this, but what we should be concerned about over the long term, which is if the great powers in the world are making efforts to work together today, the possibility that somewhere down the road, if Russia stays on this path, that there develops a divide between the real democracies and authoritarian regimes, which we hope won’t happen, but could be China and Russia. Now, again, I don’t want to overstate that, we’re not faced with that right now.

And then there’s another very practical consequence, which we haven’t talked about yet, which I’m sure we will, which is what I think is the greatest security threat to America today, which is the Iran moving toward nuclear weapons. And it’s—this is a real test, I think for Russia. You know, Russia has been cooperating. They’ve been working with us. We’re essentially in the same place as our friends from Europe now. But the question is when the hard tests come—they’ve been negotiating with Iran to try to control the fuel cycle, but when the hard tests comes—you know, when we get to the security council, which we believe we will, where will Russia be? Will they support sanctions, what kind of sanctions would they support? What are they going to do about Bushehr if these negotiations break down? So I think there are very serious tests out there for Russia, and it’s the reason this relationship matters.

(Cross talk.)

KEMP: Could I just add one thing about the G-8 and—this is the 31st anniversary of Gerald Ford and Giscard D’Estaing going to Rambouillet and having a ministerial meeting with finance ministers and ultimately the leaders of the—Italy, Germany, France, Great Britain and—

MR.: Japan.

KEMP: Japan. Canada was added two years later by President Ford. So the meeting of the G-7 at the ministerial level, in my opinion—I believe John shares this opinion—would remind President Putin in a not-so-subtle way that they’re not a member of the G-8 other than by the willingness of the G-7 to make them a partner in the many goals that the world has alluded to by John and which I talked about earlier. So this is 15 years since the Cold War, the 31st anniversary of the G-6, now the G-8, and I think a ministerial meeting would be a very strong signal that we can expand the agenda without just relying on Vladimir Putin’s three issues by himself.

SHIPMAN: Steve, before I throw it open for Q&A, is there anything you want to add to the—

STEPHEN SESTANOVICH: You know, at these events the project director is normally here as a kind of minder to see whether the co-chairs get anything wrong—(laughter)—and he’s supposed to—

KEMP: Don’t start.

SESTANOVICH:—jump in and—

(Cross talk.)

SESTANOVICH:—and exercise his in loco parentis.

(Cross talk.)

SESTANOVICH: I don’t—you know, I haven’t felt the urge to—(laughter)—

SHIPMAN: It’s okay.

SESTANOVICH:—to do this at all, but if I could add one thing that I think is—reflect something that we heard from the many people that we’ve talked to in the course of preparing this report. A kind of very eminent European politician said about this issue of democracy, and I can see—it’s interesting because it suggests that there are European concerns here, too. This is not just the United States exercising a special grievance. What we heard was the outside world needs to leave issues of the pace of democratic development in Russia to the Russians because they can figure that out better than anybody else, but it has to get alarmed when the direction changes.

And I think that if I could sort of summarize what the co-chairs have said and what other members of the task force have expressed is the sense that what—we’re in a new era now, not because the pace isn’t as good as we would like, but because there’s a change of direction, and that has made Russia look like a very different kind of partner and raised questions about all kinds of other cooperation. With that, I’ll subside in my minder’s role.

EDWARDS: Can I add just one last thing—

SHIPMAN: Yes, please.

EDWARDS:—to tag onto what Steve just said. We focused so far our discussion on St. Petersburg and the G-8 meeting, but there’s another big event out there which is the 2008 presidential election.

SHIPMAN: You mean this one?

(Cross talk.)

EDWARDS: Not in the United States. (Laughter.) In Russia. And one of the—(laughter)—one of the things that we have talked about on the task force, and I think we have consensus around, is the idea that we need to now—America and its allies need to be laying out criteria for what the world will see as a legitimate democratic election. You know, the kind of transparency, the kind of election monitors, et cetera, that we’ll need because we can’t wait until the end, as I’m sure the audience knows. President Putin has said that he’s not going to try to change the constitution and run for another term. But we need to be heard on this issue not later, but now, so that we’ve laid out in a unified way with our allies what it is that will be considered a legitimate transition of power.

SHIPMAN: Well, I have—I could go on all day with questions but I’m going to let you all ask some. I want to—again, a little bit of business here. Wait for the microphone, please. When you stand, state your name and affiliation so we know who you are and try to keep your questions and comments as concise as you can, so that as many of you get a chance to ask questions and time to listen to the answers. Anybody want to start? Yes, Luca.

Q: Hello, I’m Luca Ferrari from the embassy of Italy. My question is where does the U.S. draw the line? We have a necessity to keep Russia on board and that’s why in my country, in particular, we believe that St. Petersburg has to be a success.

KEMP: Right.

QUESTIONER: On the other hand, we need the Russians for Iran and other geostrategic issues, but certainly on the democracy issue we are all very unpleased. So my question is where do we draw the line? Where do you see the U.S. drawing the line?

KEMP: Well, no one here speaks for the United States. As you can tell from our papers, that debate is going on as we speak in this administration, and of course, within the senator’s party. As for me, speaking only for myself, but I think this view is shared by several members of our task force for whom I have such high regard, we think cooperation on Iran is absolutely a huge opportunity and a huge challenge and a huge test of the efficacy of the G-8. If Iran cannot be resolved in a way that is conducive to stopping their ability to produce atomic weaponry and we get the cooperation that we need from Russia, that would be a positive. If they are not cooperative on this issue of Iran’s threat of gaining a nuclear capability, then I would say the G-8 becomes the G-7. I don’t think they need to be told that at the ministerial level. I just think we have to let them know privately and with all that diplomatic skill at Condi Rice’s command, that the G-8 has to be successful. It is a huge test of whether or not the G-8 can work in the future.


EDWARDS: Can I just add one thing to that?

SHIPMAN: John, what I was going to ask you was—I mean, that so many of the other external markers, the ability for the United States to use bases in Central Asia or the invitation of the Hamas leaders to Moscow or even the threatening of energy resources, things are not going that well there either, so I assume though Iran—and to some extent is the line, isn’t it? I mean that is what they need.

EDWARDS: Well, that’s—again I want to be very clear where I’m speaking for me, and to where Jack’s speaking for himself, and where we’re speaking for the task force. Speaking for me, I think I agree completely with Jack. I think this—that Iran is the test. I mean, here we’re confronted with what in my judgment is the greatest nuclear crisis we’ve had since the Cuban Missile Crisis. The difference is in the case of the Cuban Missile Crisis we had to act in a period of hours, and here we have time. And Russia is absolutely critical. At every stage, it’s hard to envision being successful. In a—at least in a diplomatic effort with sanctions without Russian cooperation. They know how—Russia doesn’t want a nuclear Iran. And so their interests are the same as ours, and the question is are they willing to step to the plate and be tough enough? My own view is it is the test that they’re faced with right now.

SHIPMAN: Anyone else? Yes, sir?

QUESTIONER: Bill Maynes, the Eurasia Foundation. Looking through the report that you have on the web, but not the full report, but it seems to me that the administration might argue that basically what you’ve put out there is their position, except to statement U.S.-Russia relations are clearly headed in the wrong direction. I mean, they argue that they get cooperation on terrorism, they’re getting some cooperation on Iran, U.S. trade with Russia is up 30 percent this year. There are a number of positive signs. The democracy issue’s not going well, and they actually took the lead in trying to roll back the NGO bill. Where is the big difference? Is it that the administration isn’t giving enough money for democracy support, which I certainly would like, or is it that it’s not forceful enough in its public statements? I mean, it seems to me you’ve rolled out the thunder that it’s going in a terrible direction, and then when you actually look at the particulars of the administration, you might say, well, that’s pretty much the way we see it.


SHIPMAN: Secretary Edwards?

KEMP: I’ve talked to members of the administration about this report, and you’re not far off the mark. But there is a dilemma, the juxtaposition of authoritarianism—shutting off gas to Ukraine in January was a huge problem for Europe. Twenty-five percent of all their gas supplies comes from Ukraine. In 10 years, we’re told, 75 to 80 percent of their natural gas will come from Ukraine—from Russia through Ukraine. So getting that energy—that European energy accord is a big step in the right direction. Will they sign it? Will they keep it? Will they allow any more, I would say, political leverage used against Georgia and against Ukraine, maybe against Latvia. So we’re, I think, realistic in recognizing—as you said, there are some good things and there are some concerns, one of which is energy security. So we can’t have a G-8 that doesn’t talk about energy security and the European energy accords.

EDWARDS: The energy charter, which does need to be ratified by Russia, is important particularly to our friends in Europe, but there are some things we haven’t talked about. We’ve talked about democracy specifically, but we haven’t talked about the extraordinary corruption in the Russian government which is we had somebody who we had met with in Russia, a business leader, said, “we don’t have to worry about the mafia anymore because the state is the mafia.” And I think that is the wide-held perception about dealing with Russian government at all levels. I think corruption is worse than it has been. And the rule of law—I mean, anyone who wants to engage in these long-term business investment in Russia is terrified about what’s going to happen because of the absence of the rule of law and a way to enforce contractual obligations, for example.

Now let me put on—take off my co-chair hat and answer the question personally that you just asked. My view is that—and I would be very clear I’m speaking for me, not the task force, because there would be a real disagreement in the task force about this. My view is that President Bush, for reasons known to him, has been too soft on President Putin. I think we have not held him to task. I think it’s taken much too long for us in our policy at the State Department to recognize what’s happened to Russia—what’s happened with the dramatic turn that Steve made reference to earlier.

The result is we have not been working with our allies in a unified effort to do something about it, and I think there are consequences. They’ve gotten a long way down the road, and it’s true that now the administration is taking notice and starting to act, but it’s taken an awful long time to get here and a lot of damage—extraordinary damage has been done in the process.

And we should be just—to speak to a question you talked about, we should be doing more funding for the Freedom Support Act. I mean, these are things that we as a nation not only should be doing now, but we should have been doing over the last several years when this deterioration was occurring.

SHIPMAN: And Steve, it sounds as though, from my reading of the report, that the big difference is in the—a vocal criticism of Russia where the United States disagrees, that it needs to be a strategic partnership, but that the U.S. should not be afraid to criticize on the way it’s treating the Ukraine or on its lack of democratic principles.

SESTANOVICH: That’s right, but let me surprise you, if I could, by adding one other element what the report says. It says that we need to work harder at areas we actually are in agreement and create a stronger foundation for them. And to this end, we propose an agreement between Russia and the United States to expand cooperation in the civil nuclear area, something like the step that the president took with India last week. We’re not saying that cooperation is impossible with the Russians; in fact, it—in some cases has too weak a foundation. But on the question of where there are disagreements, how to respond to them, talking more loudly is only part of what the—of what the report says. It says you need to have a consensus among the democracies about how to deal with this problem.

So the first issue is to recognize it as an agenda of policy—part of the policy agenda for the Western democracies, whether it’s with the—in U.S.-EU consultations, within NATO. This is an issue that is how to deal with Russia, has not actually been an explicit part of American and European foreign policy in a long time. The administration didn’t really have a review of Russia policy for its second term. We’re saying you need a bigger review, and you need to do that not just with the—within the U.S. government, but within the Western alliance.

SHIPMAN: Now to be fair, there was also a dissenting statement about this issue within the task force. There were some members who felt that internal Russian affairs really shouldn’t be a worry for the United States and that the U.S. has far too much to focus on to really think about democracy in Russia, as I understand it. So that was certainly one line of thinking—

EDWARDS: I think that—I think the belief is, and Jack made reference to it earlier, I think he doesn’t go quite that far, but he shares some of that belief. We hear it heard over and over when we were in Russia that preaching to us about democracy is ineffective. It doesn’t create any kind of response. I think what we’ve done is picked out—I think what the most—shows them what we believe is the most effective strategy, which is to find the things—the selective things on which we clearly have common interests and common goals—Iran is an example, nonproliferation is an example, HIV/AIDS is an example—work hard to strengthen our relationship in those areas. Another is the one Steve just made mention to which is expanding our civil nuclear agreements. All of those are good things, and we should do those things.

So it’s not just—but we believe it’s simultaneously, particularly in the lead-up to the—to the St. Petersburg that is very important for America and its allies and that’s—the “and” matters because unity matters in this issue—for us to make it very clear what we think about what’s happening within Russia, what’s happening with how Russia’s been using its energy supply as a foreign policy weapon and what’s happening with Russia trying to bully its neighbors, particularly those who’ve moved toward democracy.

SHIPMAN: Because presumably Putin will be more impressed by the Europeans and the United States speaking with one voice than—



(Cross talk.)

SESTANOVICH: Now I have one sentence on this, Claire. Before the—long before the Ukrainian elections of 2004, the United States and European countries treated it as important to convey to the Kuchma regime what we would understand to be a free and fair election in 2004. And what this report says is that well in advance of 2008, the United States and its allies need to do the same both publicly and privately.


EDWARDS: Jack, do you want to say something?

KEMP: I’ll—


KEMP: Andrei wants to ask a question.


QUESTIONER: That’s me. (Laughter.) If I may—

(Cross talk.)

QUESTIONER:—voice a political incorrect question—(laughter)—for both of the distinguished co-chairs.

MR.: Would you identify yourself, please?

QUESTIONER: Andrei Illarionov, Russia. (Laughter.) Here, two parts in your comments; one is descriptive, and the other is recommendations. In descriptive, what I have heard, I haven’t had a chance to look into the report yet, that Russia—today Russia’s leadership is corruption, it is a mafia state, it is bully always neighbors, and so on—just you’ve said. And recommendations: go to G-8 Summit to be chaired by—and admitting to be chaired by the mafia and so on. (Laughter.)

Okay, first, just do you find any contradiction in this part—(laughter)—or no, not at all? And second, what kind of consequences are you expecting after the G-8 Summit? Are you expecting that after this summit, Russia will become a democracy? (Laughter.) We will not be bully with neighbors.

KEMP: We’re not—


KEMP: Andrei, we’re not that naive. I think in answer to the question from the gentleman from the Italian Embassy, we tried to make clear—Senator Edwards and his words and I tried to make clear, that we don’t expect that the G-8 is going to resolve these issues of liberal democracy circa 2006 in St. Petersburg this July. But we do think there are some metrics—there are some measuring points to test the cooperative attitude of Russia vis-a-vis the West, number one. Number two, I think Iran is going to be one of those tests. It is going to be a huge test. I don’t favor as Senator Lieberman, Senator McCain, my friend Tom Lantos with whom I met before I went to Israel two weeks ago—I don’t favor their approach of suspending Russia’s membership in the G-8 at this moment. I think their tests are obvious, we should hold them accountable, but my hope is that they still want international recognition. They still want membership in the WTO. They have negotiated with 149 countries some of the trade disputes that have to be resolved before they could enter the WTO.

I would hope the United States would hold out the hope that somewhere down the road there would be a free trade agreement—and FTA with Russia. I still believe liberalizing our trade, liberalizing our economies, liberalizing our relations will eventually lead to political liberalization—not in every instance, but my hope is that. And I don’t want to sound that I think we can create Utopia, but we certainly can do a lot better than we’re doing right now.

EDWARDS: Okay, go Steve, go ahead.

SESTANOVICH: I just want to add—read two sentences from the report that may help clarify. The report does say, if the decision to hold the G-8 Summit in St. Petersburg were being made today, it would obviously have to be made differently. And it says about Russia’s integration into international forums of this kind, the United States and Europe should convince Russia’s leaders that ground that has been won can also be lost. But you’re right about one thing, Andrei, it’s not going to be lost this summer.

EDWARDS: May I add just one thing? First, Andrei, you—we should point out that, if I understood the—we met just before the meeting—this conference today, and I understood that you were an economic advisor to President Putin. Am I correct about that?

QUESTIONER: (Off mike.)

EDWARDS: Well, first I would say that with all the negative things we’ve been saying, which I believe, there’s some very positive things to say about what’s happened in Russia under President Putin economically, and congratulations to you and to the leadership who were engaged in that.

I think the simple answer is that, and Steve just said it—basically said it, which is this decision was made sometime in the past—Russia preceding over the G-8 in St. Petersburg. I think actually the Germans stopped aside in order to allow that to happen this year.

KEMP: Right.

EDWARDS: So the question becomes a really fundamental judgment that has to be made, and it’s a judgment for the administration, and it’s a judgment we had to make in this case where the judgment is, is it better at this juncture to have Russia on the outside or Russia on the inside? And I’m talking about the G-7 plus Russia. And our judgment was at this moment, it’s better to have them in, but make it very clear to them that their continued membership in this organization, that their ability to be a legitimate player in the world and part of the international regime is dependent on what they do and dependent on a whole range of things not the least of which—which we focused on today—is their continuing cooperation and the nuclear threat with Iran. But not for a second do we believe, I can—I think I can speak for the two of us, that if those things don’t go in the right direction that Russia should remain a member of the G-8.

SHIPMAN: Yes, sir?

QUESTIONER: I’m Jeremy Stone with Catalytic Diplomacy. When Mr. Kemp and Mr. Edwards were in the Parliament, you worked very effectively with your colleagues, in part because you didn’t tell them how to run their business or how to run their staffs or what was undemocratic about how they operated. You worked with them on issues. The word is out in the street all over the world now that America is telling everybody how to run their business. And the word is out all over the street that America makes big mistakes. For example, the advice given Russia in the ’90s is one of the reasons they don’t want our advice now. (Laughter.) And Putin is getting more popular even while we complain—

MR.: Yeah. Yeah.

MR.: It’s true.

QUESTIONER:—that it’s getting less democratic. So there’s a very serious question whether anybody in this room except Mr. Illarionov really understands what Russians want—

(Cross talk.)

QUESTIONER:—and what they should try for. I think it behooves America to be a little more polite, deal with countries as they are. That doesn’t mean complaining about how they treat the Ukraine, that’s an international issue. But it does mean telling them that they’ve got to be democratic, and we’re going to certify their next election and put out in advance markers as to whether this is a legitimate transfer of power. How would we like it if they did that here? I really think America has got to be more modest now, otherwise our foreign policy is going to be undermined and our NGOs are going to be thrown out of countries like Russia and China. We have to take a lower posture.

SHIPMAN: I want to raise something and, Steve, you might be able to speak to this, which is what—you know, when you look at the polls, what do Russians think now? I mean and what—if they are happy with it—what’s an effective benign dictatorship, why would we be jumping in and trying to shape things up?

SESTANOVICH: Well, Russian polls show you lots of different things. They—Putin is definitely popular. There’s no doubt about that. And I think it would be a step toward political instability for him to run for a third term, but he could probably win an election, so that’s not the real issue. And Americans aren’t deciding which candidates should win in any individual countries. And when they’re talking about—they and Europeans talk about free and fair elections, they’re not trying to pick winners. They’re trying to get countries to live up to international obligations freely assumed in the past to organize their own politics in that way. And we don’t hesitate to do that with lots of other countries. We—nobody hesitated to do that with Ukraine, nobody hesitates to do that today with Belarus. The question is whether Russia being bigger deserves a special dispensation. You can argue that because Russia is bigger, it’s more important if Russia becomes unstable.

Now—do—what do Russians feel about particular elements of democracy? Russians believe you need a political opposition. Polls show that two-thirds of Russians think that. Polls show that you need—overwhelmingly show that you need to have free media that expresses criticism of government officials and that good results follow from that.

So I think you have a complex political picture in which a regime has gotten a lot of credit for being able to stabilize the country and grow the economy. Whether one should take that as a formula for stability in the indefinite future, I think is a kind of decision—credulous decision that nobody should have made about the shah of Iran or about other undemocratic countries that we learned turned out not to be so well run, so stably run as we had hoped. And for all of the consensus that the United States cannot tell other countries what to do, we also have a consensus about the difficulties that are created in our policy when we make assumptions about the ability of non-democratic leaders to perpetuate good results indefinitely.

KEMP: I want to take a moment to agree with that part of the questioner’s premise that the U.S. and the West and the IMF gave horrible advice at the time of the transition. Shock therapy was a huge mistake. We’re all for free markets. We’re all for letting prices reach their level of equilibrium, but I believe the advice was very poor, and I think the IMF has made the same mistake in many Third World countries as it made with Russia, and I think the—but to defend our approach though, this is not a preachy document. It is not—it is talking about the efficacy of liberal democracy, and I think that’s perfectly—a perfect point to make to the world that liberal democracy works efficiently, effectively in guiding the decisions of policymakers, and I can be—I think we can be proud of that. But it’s not a preachy document at all.

EDWARDS: And I was just saying I think that from everything we heard at least when we were there, Putin’s popularity is not connected to his move away from democracy. I think his popularity—although it is relatively going down the list of priorities for most Russians, his popularity is related to creating stability out of the chaos of the 1990s and creating an economy that’s actually serving the people very well. So I think that—and that makes sense. It’s the bread and butter that people live with every day in their lives.

I don’t think we suggest—I hope we don’t, I don’t—we don’t mean to, that we can tell Russia and the Russian people what it is they’re supposed to do. What we do instead is say, if you want to be part, for example, of the G-8, an organization that’s supposed to be composed of democracies, we have to tell the truth about what’s happening in Russia.

QUESTIONER: (Off mike.)

EDWARDS: Well, it has historically been—has historically been.

QUESTIONER: (Off mike.)

EDWARDS: But then why—what’s the—we—(laughs)—can have a debate about this. I mean, the question is do we want the G-7/G-8 organization to be composed of democracies that have a common set of ideals and a common set of values? It has historically been that. My own judgment is that it needs to continue to be that. Russia wants to be—what happens is Russia wants to be treated—look West and be treated as a Western country, but then their internal behavior is not consistent with that. And it’s not for us to tell them ultimately how they’re going to govern their country. We know that. But it is for us to tell the truth about what’s happening there, particularly when they’re a member of an organization like the G-8. So how you do it and tone matters, I agree with you about that, but I think it’s critical for us to tell the truth.


KEMP: Secretary Coleman?

WILLIAM COLEMAN, O’Melveny & Meyers: This is not my field, but my problem with the presentation is that what you’re—as I understand it, the G-7 got started because in those countries, there was great unemployment. And that’s what they met about, and I think President Ford’s great contribution was to say that if I can get the inflation rate down, I can take care of unemployment. Now, the presentation you made and what you’re saying is anything that the Russians do having nothing to do with economics or—other than everything has to do with economics—that we can hold a separate meeting and say if they don’t agree with that, then we’re not going to have the G-8 meeting.

Now it seems to me, and I know you’ll disagree with me, but I’d like to have a G-6 meeting, and ask the French folk why they double crossed us at the UN with respect to Iraq. (Laughter.) And I could go—and I think that there may be some at the G-7 that think that France is treating the Muslims improperly. And so why don’t we have a side meeting on that? And I also think that probably other entities have—think that we’re not handling the Mexicans the way we should. So what you’re really saying is you can take an organization that works—you’re going to take an organization that you’ve got a great power who I can say now because it’s 25 years later, I can’t be confirmed for anything else, that I think helped us to win World War II. And but for that, we may not have won it. and it’s important to have them.

Now, the fact that they don’t do anything else we want—I could line up some of the other seven and tell you they don’t do everything else we want. And I think that that’s what I find difficult with the report and then put it a little more personally, suppose that North Carolina, the universities, black and white, decided they were having a problem, and they say we’re going to have a G-8 and all get together. Well, then it turned out two days before the white universities had a separate meeting and planned what they were going to discuss at the other meeting. I think it would just blow up.

KEMP: Yeah. Well, I’ve got a enormous respect for Bill Coleman, one of the most distinguished members of the Ford cabinet and a dear friend of mine personally and all of us politically. I think it’s important that the G-8 take up the issues that have been alluded to here today and not carry so far that it turns it into internecine warfare. I would make a case, as I had before, and not to be redundant, keeping Iran from getting access to nuclear weapons is in the interest of the region of the Middle East and of the West, and I think it is a huge test of the cooperation that has taken place over the past several years.

You were a member of the administration which the G-7 started, and it was in the mid-1970s with the Keynesian dilemma of rising inflation juxtaposed against rising unemployment, something we were told could never happen. You could manage inflation with unemployment, you can manage unemployment with a little bit of inflation, so clearly, there was an economic impetus to Rambouillet and what Gerald Ford and Giscard D’Estaing used as the rationale for bringing the six and then the seven together. Today, the rationale is different. It’s the 21st century, the Cold War is over, we don’t need to make new enemies out of old enemies, and I think it is a good forum for us to resolve some of the areas that have been alluded to here today.

EDWARDS: And I would just add your view—of course, there were others on the task force that share your view about this, and I would point out that your view is at one end, John McCain’s view is at the other, which is just they should be kicked out of the G-8. And we shouldn’t go—the president shouldn’t go to St. Petersburg. I think what we have proposed is somewhere between those two views, and to me it’s—it makes sense.

SHIPMAN: I see some urgent hands there in the back who never got recognized.

MR.: Yes.

SHIPMAN: Yes, sir, right there.

QUESTIONER: (Inaudible)—Center for Defense Information. Thank you and thank you for your report. I think it’s about time. And I think you did good a great job as far as I can see. But, I have a question, and I think there is a contradiction here. The report is dedicated to show that Russia is in the wrong direction domestically. It’s a non-democratic country and that’s the American concern, but will you ask the question where the United States will draw the line, you said Iran, bases in Central Asia, Ukraine, and so on and so on and both problems. So what’s first? Do you need to solve Iran and Central Asia and the Ukraine, or you need democracy in Russia? So that’s my first question.

Second, I don’t see necessary connection between those two things. Like, more democratic Russia, they’ll be more agreeable on American way to solve Iraq? I don’t think so. I would remind you that our biggest crash in Russian/American relations happened in 1990s when United States has no criticism on Russian democracy over—but over the course of a conflict when Boris Yeltsin basically (bowl ?) the situation off and it was very democratic country then. So I would like to see the—first of all, what’s first? Russian democracy or an America needs to solve certain problems?

SHIPMAN: Well, I think, Steve, why don’t you take this one?


SHIPMAN: It seems from my reading of the report and just listening to this discussion, there’s no question that realpolitik plays a role here. I think everybody would have Iran and those issues at the top of the list and—


SHIPMAN:—but you—please.

SESTANOVICH: In our task force discussions, this came to be known as the walk and chew gum problem. (Laughter.) That is, the advocates of walking and chewing gum—is this a phrase that originated in the Ford administration? (Laughter.) It has 31 years—

EDWARDS: If it didn’t, it should have. (Laughter.)

SESTANOVICH: Those who advocate walking and chewing gum at the same time say no trade-off between these issues; that you don’t decide you won’t cooperate—in fact it seemed absurd to say this—that you won’t cooperate with Russia and Iran because you find problems in their internal development. To the contrary, it looks as though—but in fact, it looks as though Russian cooperation between the United States and Iran is actually strengthened in the—in a period in which the administration is given a little more attention to Russian democracy, so it doesn’t look as though those two are in the short term at odds with each other. And the idea that you have to pay a price doesn’t—at least, so far, seem to be—to hold up.

SHIPMAN: But can you give one or two more weight than the other? I mean, in terms of the question, what comes first in terms of importance?

SESTANOVICH: Well, you would. You could decide to give the more weight if you said, well, we want to pull our punches because we feel there will be more—there will be a problem in cooperating in Iran if we’re too critical. The report’s view is there needs to be a balance here, but that that balance has to be established by paying more attention to democracy because in the long run that is the best foundation for real partnership and the only basis on which you’ll actually be able to recreate a partnership that doesn’t exist now.

SHIPMAN: But just to be blunt, if the incident with Ukraine hadn’t happened, if there weren’t issues with the use of bases in Central Asia, and if cooperation with Iran were going along fairly well as it is now, would there be as much focus right now on the authoritarian regime in Russia and redefining our approach? I mean, if the externals are going well for the United States—

SESTANOVICH: If the externals were all good and the internals were all bad, the debate would look a little different. One of the things this report says is that there are some externals as well that are not going in the right direction and that’s why the assessment is not just a contrast between external and internal. But the judgment of the task force, I think, is also that there’s a connection between the internal and the external. There is a special emphasis that Russian policymakers have put on what they call preventing orange revolutions because they see that the assertion of popular power in neighboring countries—they see that as a threat to themselves. So at least even in their own definition, the kind of independent political developments in other countries are related to their own.


SESTANOVICH: And so that makes it hard to make the separation that you do (here?).

EDWARDS: But isn’t the distinction here between a strategic partnership, which now three presidents have been working toward—both Democratic and Republican—and selective cooperation? Because we can cooperate on things and Steve’s right, it would be absurd because democracy is going the wrong way for us to not to work with the Russians on the issue of Iran. But if over time Russia moves back toward democracy, then it sets the kind of foundation—values foundation, trust foundation that allows us to have a broader-based strategic partnership as opposed to just cooperating on specific issues.

SHIPMAN: Michael, did you want us to add anything?

MICHAEL MCFAUL: This is Michael McFaul and I was on the task force. I just—that the point is—Sestanovich is these are not non-related things—(inaudible)—and you know it. Come on. (Laughter.) The orange—the crisis about Ukraine, the orange revolution would not have happened with democrats in the Kremlin. That’s just absurd to think that. Andujan (ph) would not have been supported with a democratic regime in Russia, so the crisis about the bases was very much related. And moreover, I would say—now, I’m on the other part of the task force, perhaps, but this notion that somehow—

SESTANOVICH: Mike is definitely a walk and chew gum. (Laughter.)

MCFAUL: Yeah, I’m a walk and chew gum guy. And I think also that—

EDWARDS: Mike’s getting—(inaudible).

MCFAUL: The hopeful idea that the democratic thing—story can continue to go in this autocratic direction, and the economic story will continue in a positive direction, that’s a hypothesis. That is not a reality. I think you can point to very concrete things that affect our interest. I’m at Stanford University. We invest in companies all over the world. Mr. Hartokovksy’s (ph) arrest affected millions of Americans who lost money in that deal, right? So it’s not just, oh, just let them do what they want to do over there.

Moreover, I think that if the way that the regime is continuing now, then positive benefits on both the economic and foreign policy, I think you have to put a question mark to them. So it’s not just—Ukraine to me is obvious, Uzbekistan is obvious. Iran—they’re doing exactly what they did 10 years ago in Iran. I don’t see any difference there in terms of their policy. All the power to you guys. We’ve changed our position. But I think you do see some very different behavior in terms of foreign policy. Hamas being invited to Moscow? That wouldn’t have happened with a different kind of regime.

EDWARDS: It’s a very important point Mike’s making.

KEMP: I want to add a postscript to this. I think the president in going to Latvia and going to Ukraine was a very careful equilibrium between his approach to Vladimir Putin and his enigmatic behavior, and the demonstration of the orange revolution and what’s happened in Latvia. So I was glad to see our president both in Latvia and Ukraine, as well as going into Moscow. As confusing as it might seem to people, that was a perfect balance, I think, of our concerns and our willingness to have some type of selective cooperation.

SHIPMAN: All right, well, I think, it’s always good to end on a vigorous debate—a little bit of controversy at the end. I appreciate everybody’s participation and—

KEMP: This turnout, I think, Claire is a absolute stunning example of the interest in this topic, and I—John and I just want to thank you all for—

EDWARDS: Thank you all.

KEMP:—for coming. What a manifestation of interest in Russia.

SHIPMAN: Thank you very much. (Applause.)

KEMP: Thank you. Thank you.








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