JOHNSON: What's your read on what motivated the Russian approach to the war in Yugoslavia? What was aggravating them and what were they trying to achieve?

ERMARTH: Well, they're aggravated by a lot of things. It's a long list. From a sense of humiliation at their own fate since the collapse of the Soviet Union to a sense of exclusions from the business of the powers, the great powers. And that's of course what told on their reaction to the Balkan war, most heavily. I think, and maybe I'm wrong about this, that the loyalty to Serbia, that the historic ties, the cultural ties and all that, they played a role, but I think it is more for playing to galleries and internal politics.

But I think there was a genuine and wide spread and elite, as well as popular, resentment from being excluded from a place at the table in the European Security Project and they were determined to have a place. And when they were, by their lights, denied one, the accusation was that Deputy Secretary Talbot was stalling them, they just kicked in the door and took their place.

JOHNSON:By - kicking the door by doing what?

ERMARTH: By sending that 200 man group from Bosnia into Kosovo.

JOHNSON: Has it come out, in the terms of the settlement, has it come out in such a way that Russians in general are going to be happy, or is this going to leave a bad taste?

ERMARTH: I'm not sure how to read the public reaction in Russia to that audacious maneuver. There are clearly many who take pleasure in it and view it with pride. There are some who view it with anxiety. The later in part because it is resinating in Russian internal politics between the reformers, liberalizers, westernizers, and the nationalist, conservative, communist ends of the spectrum in ways that make them anxious, even fearful, and that debate is currently going on. I don't know exactly how that is coming out and exactly how to read it, but there are many in Russia, including people we would call our friends, who are disturbed by this maneuver.

JOHNSON:What disturbs them?

ERMARTH: They see it, and it's success or apparent success, as playing into the hands of the nationalists, communist, derjavaky (Sp?), or statists, and parts of the military they don't trust.

JOHNSON: The Russian military did come into some prominence which they haven't had for a long time here.

ERMARTH: Well, they did a stunt they feel they could be proud of. And it was pretty impressive. Can you imagine our commander sending 200 teenagers on a 500 mile forced march into what, at least by their lights, was hostile territory, with no air cover, three days of provisions, and an extremely uncertain, to say the least, reaction on the part of their advisory partners. That was a bold maneuver. And I think that the people involved in it are fairly proud of it.

JOHNSON:Any prospect of the military becoming more active in Russian domestic politics?

ERMARTH: I think there are a lot of inhibitions about that. They don't want to get drawn into the kind of thing that happened in '93 and could have been much worse, could be much worse if it happens again. They want respect for their institutions and their values and their physical needs above all. And I think that's their political agenda. I frankly don't know enough to go beyond that at this point. It's well worth being wary, it's a good question. I don't think - the Russians don't have a strong tradition of military intervention in politics. On the other hand if things get desperate enough they may feel they need to take some action.

JOHNSON: With the resolution of the war, at least the attempted resolution, and the summit meeting in Germany, it looks like there is some moving back towards some co-operation between Russia and the West. What might be happening in that regard do you think, this post summit good feeling? Are there scenarios with co-operation that can succeed?

ERMARTH: Oh, there certainly are. I think on the western side, I know in Washington, there is a proper recognition that keeping the Russians engaged in the European Security Project, the Global Security Agenda, is one of our objectives. It's a good thing, I think we were inadequately attentive to that after Rimbey (sp?) for various reasons. I think it was less a disdain for Russian than a belief that we could pull this campaign against Serbia quickly and easily and wrap it all up. The President said 50/50 that it would be over in a few days and then, but the other 50% he doesn't seem to have thought very much.

Well, there was an early recognition that one of the casualties of this venture could be, you know what was left of the U.S./ Russian, NATO/Russian co-operation and I think there was a proper recognition they need to rescue that.

On the Russian side, they've got equities with us as well. For all the huffing and puffing and anger and resentment, not to put to fine a point on it, they need the money.

So there's the whole IMF related agenda. And I think resentments of the west and of the United States have not gone so far as to completely eliminate the political value of some rapore. I don't think they have turned their back completely on the arms control agenda. They've got a stake in some of those things and recognize it. Even hardliners recognize the importance of nailing down something - SALT, START II. Since we seem to be determined to march ahead on some kind of national missile defense and theater missile defense, they need a place at the table in discussing on how to proceed on that.

The - an ability to manage Russia on our side ought to be properly part of our agenda, part of the next campaign. While an ability to manage relations with the West is similarly a proper part of their political agenda. So I think those factors were at work. I don't doubt, also, the calculations about the presidential election tactics in Russia played a role in here. And is Yeltsin looking for some license from the west to do something we would rather he not do? I am a little worried about that.

JOHNSON:The Security building agenda that you mentioned - are there any components of that you haven't touched upon? If we were to be re-engaging with that as an objective, what are some of the things that we and the Russians should be working on?

ERMARTH: Well, you use the expression of temporary resolution in the Balkans. Temporary is not the right word, but it evokes the right thought. This is not over. There's going to be a lot of management of this crisis to rebuild, to extract some good things out of it and above all, to avert very bad things that could still happen.

Here we are, chalk a block with Russian forces in Kosovo, and the fact is they have a clientele that's for us on the enemy side and we have a clientele that may or may not be all that manageable. And I can bet my paycheck that Milosevic has a plan to get us shooting at each other. It's going to take some hard, cool management on the part of both NATO and the Russians to keep that from happening. And so that's a very big, that's a very big project. It is obviously at the head of the list of the European Security agenda.

But then as you look downstream, there are more and familiar things there. The future of NATO, the future of NATO expansion, all things in which Russia has been clamoring for a voice, not to mention a veto. And you know, they'll be struggling to get that voice.

JOHNSON: Any prospect of NATO getting involved closer to a Soviet Union - to Russia? I noticed that the President of Armenia had called on NATO to get involved in Karabakh. Is - some Russians have feared that first it's Kosovo and then it's us. Is this a realistic fear of NATO getting involved in some of these civil conflicts close to Russia?

ERMARTH: Well, depending on the time horizon and what happens, on what kind of record we build up in our own eyes, the U.S. and European public's, it may be yes, it may be no. I don't think that it is likely or eminent that NATO gets involved in these conflicts. OSCE, of course, is involved and then there's the whole Partnership for Peace that has NATO folks, U.S. folks in particular, interacting with the militaries of these countries. I suspect that when the dust settles a little bit the Russians will get back in on that enterprise. But I don't see us doing peacekeeping ventures in the former Soviet Union any time soon. But that doesn't mean that the diplomacy of western countries and especially OSCE can't play a constructive role.

JOHNSON: In the larger picture of U.S./Russia relations, how would you describe what the U.S. is trying to achieve with Russia in the Yeltsin era here and how do we evaluate it's success or failures?

ERMARTH: Well, it depends on what you mean by "we," but the objectives have been fairly clear. We have wanted to promote democracy, capitalism, free market economy based on a thickening civil society. Law and order which are required for both of the foregoing and the integration of Russia into the world community, particularly the Atlantic community of economic and diplomatic action. Those have been the objectives.

Now as a result of the turbulence of the last six or seven years, we haven't achieved as much on those objectives as I think we hoped and even expected in the early 90's would come kind of naturally. And part of the problem was that we thought more than we should have, that things would come naturally. Particularly in economic reform and economic development but also democratization, much more trouble, much more turbulent with a lot of disappointment, particularly the Russian population and some of our policies. Well let's put it this way, a lot of Russians blame us for some of this, and to some extent they have a point.

JOHNSON:Their point being?

ERMARTH: Well their point being we forced it on the - on Russia, policies, programs of - lines of economic reform that ended up impoverishing most them. And there's currently a debate going on in the community in the West, the World Bank, the IMF, certainly among expert Russia watchers on just this point and it's self evident that the past 5-6 years have not been a success compared to say Poland.

JOHNSON: Is the American government sort of concise of this? Is there any - In Washington in the government and the affiliates of the government, where does Russia reside these days as a significant factor? That's one issue, also how would we - what would you say about this, should we say, accuracy of the understanding of policy makers about Russia?

ERMARTH: Let me answer the first question: After the elections of '96, Russia tended to fade as a public policy concern in Washington to the point where you and I both have heard colleagues complain of "Russia fatigue." There was a spike in August '98 when there was the economic collapse and then it looked like this basket case was going to drift off the agenda, which contributed, by the way, to a lot of Russia resentments. The move into Kosovo has spiked up recognition of the importance of the Russian - of Russia's fate on our agenda. And properly so. So, you can't say right now that it's not getting attention.

The IMF has re-engaged, the President and Yeltsin met and shook hands and made up in Callone, and they signed some sort of agreement, which I haven't reviewed, about moving ahead on arms control and the ABM agreement. So, things have been revived.

Now the appreciation of Russian realities. I haven't been close enough to the center to know what the players have really and truly and honestly in their hearts of hearts thought or thought they were perceiving, but I have to say that this administration has systematically mis-represented Russia realities to all constituencies, most importantly and most harmfully the Russians themselves, who know better, what was going on over there. Particularly on economic reform, the Yeltsin regime, democratization, and I think that it's done that largely, with a mixture of naivete and just the desire to paint all policies as successful and we're all familiar with that. It's a kind of post modern cynicism that I think is very injurious. And I hope that we get over it in the years ahead because some real honesty and candor is required to manage this relationship.

JOHNSON: There are some things lacking in U.S. policy towards Russia. If we were sort of to embark on a new path, a change of course here, what are some of the main elements vis a vi Russia? What should we be doing?

ERMARTH: We need to recognize the necessity to see things clearly and honestly in Russia - what's going well, what's going poorly - on democracy, on economic reform and so forth. I am convinced the most important audience in Russia and all the people at large respect an honest appreciation in the West of their condition. And they definitely don't respect critification on behalf of players they hold largely responsible for that condition. So we've got to work up some habits of honesty. I think that also involves them looking back over the record of the last - well since '91, '92 - and sorting out things we did right, things we did wrong, places where we missed opportunity and so forth.

Then comes the all important matter of economic doctrine. Where we ought to come out, I don't know, you're talking to the wrong guy. I do know where we ought to go in though, and that is reassessing the so-called "Washington consensus;" The set of propositions pushed by the IMF and the World Bank and the reigning economic establishment in the West. In some respects those doctrines are right, but they are incomplete. In other respects, they're wrong I think.

Any case, this is being rethought by the professionals and there has to be a stock taking on that front. I don't think the Russians are going to be as receptive to our advice as they seemed to be in '92 and '93 but they and the International Financial Institutions are going to demand that we take a position. We can't avoid judging what's going on over there. So what combination of economic policies we think is likely to work. And the politics that surround them, particularly gaining public understanding and support. We got to think that through and come to some better synthesis than we had in the last 6 years.

I think there are some other aspects that need to be attended to. The turbulence of Russian economic, financial, and institutional - and then to go on to corruption, criminalization and the internationalization of those things - entangles western businesses, western institutions in ways that we need to watch out for. And in some respects perhaps clean up.

The - I think the record of our interaction of such things such as the Nunn - Lugar money going for safeguarding nuclear materials, dismantling strategic armaments has on the whole has been constructive. The money has been constructively spent. But nothing's perfect and we need to do an audit of that kind of thing as well.

JOHNSON:Just for clarification: when we talk about the Washington consensus and economic policy, what are the main things that are problematic or incorrect when we refer to that? What's been the problem with our economic approach?

ERMARTH: Well, let me give you my amateur's perspective on that and then challenge the professionals to come set is straight for your viewers and for me. As I understand it or take it, the Washington consensus centers on about four propositions:

* Get the government out of economic regulation especially any kind of price fixing.

* Stabilizing currency

* Bring down inflation

* Privatize

Now, thses propositions are the sort of core elements of a doctrine by an institution which is designed to rescue already existing capitalist societies from the results of, you know a Chile, or an Argentina, or a Britain, or a Norway. Not designed for a Nigeria or a Russia. Because they don't have the starting positions.

Now the economists and the officials that propagate this doctrine say "oh, well you do have to look out for law and order. You do have to have courts. You do have to have a cultural setting. You do have to have a business habits."

Yeah, but you know, where's the beef? I mean we just didn't give those things the kind of emphasis that was called for. As a result we seem to license what the Russians call - have accused like Trubise (?) and it's only Trubise of a sort of neo-bolshevik capitalism. Crash through the wall of the old order, promulagate (?) these two doctrines and everything else will grow up naturally. Well, that just didn't happen in Russia, and it was pretty obviously not gonna happen early on. And perhaps the greatest sin was that we didn't correct ourselves when it was obvious we should have, back in the early 90's.

JOHNSON:Yeltsin, with all his faults, is appearing to have a quality of being a known factor. The end of his era is coming shortly. People might be anxious about what's going to happen. What's your feeling about post-Yeltsin Russia? Is this going to be a great traumatic experience of uncertainty or can we look forward with some optimism to the post Yeltsin...

ERMARTH: Well, how traumatic it's going to be I don't know. It's definitely going to be uncertain. I believe - except for the fact that it's coming. And one hopes that it comes by constitutional rather than by non constitutional steps. That's still uncertain. Assuming that they do get through to an election process that has some credibility. I am mildly optimistic. I mean the economic conditions are atrocious.

I heard Alan Greenspan say the other day, "it can't get worse, so they're going to get better." Well, maybe they can and maybe can't get worse, but there are prospects of them getting better.

But on the political front, I think that the custodians of what passes for power in Russia, when they get through these elections, if they get through these elections, are gonna face a situation where they have to say to themselves, "look we can't go on like this. We've got to nail some things into place. We've got to stabilize this situation." And that's gonna require a fresh attack on the agenda of reform. Political and economic.

They are going to have to look at the constitution and say you know, if we are gonna have a responsible President, he's got to be made accountable. If we are going to have a responsible Duma, it's got to be given some responsibilities. That requires some constitutional adjustments. On the economic reform, whoever is elected, they are going to have to put a team into place and then say, "all right, now what do we do"?

We need to come to terms with the IMF on what it takes to get those infusions of fun. We need to appeal to westerns investors and we have to address this field of dinosaurs out there in the industry and start what's called restructuring. Don't ask me how you do that programmatically or politically but that's clearly what has to happen. And if they find themselves able to start, there'll be a new chance. And we have to be there with at least the right kind of assessments of what we think will work. What we will back and it'll be another chance.

JOHNSON:Judging by the track record of American policy one might be hesitant to predict a constructive engagement with this opportunity. The American missionary propensity. Can America help Russia?

ERMARTH: Yeah, I think it can. I think we can. But it requires more modesty, more humility, more appreciation of the uncertainties of the cultural and historical differences than we have shown in the past. It requires more patience. It requires more of a capacity to listen, I think, and it requires a recognition that we got to keep focused to the extent that this is an important issue for us, and it is. Our attention spans are too short.

My fear is that other fashions or shticks will take over. You know, if Gore gets re - gets elected, well he'll be in a position where he feels that he has to defend what went before. And doing that will be the most important thing. If a republican administration comes it may feel a need to assert skepticism in - for it's own sake which I don't think would be helpful. That's why I believe we ought to sort through this before we have our elections.

JOHNSON:Skepticism about Russia?

ERMARTH: Well, skepticism about Russian trade with Iran, Russia pulling our chain in the UN and on things like the Balkans for example. Russian - you know, the perversions of reform, the criminalization of business and so forth, used as an excuse to distance ourselves from that account, from the Russian, you know our objectives in the past decade. I think that would be a mistake.