Following is the text of U.S. Sen. Dick Lugar's speech at the Brookings Institution, Washington, D.C. Lugar is ranking member of the U.S. Senate Foreign Relations Committee and co-author of the Nunn-Lugar program (www.lugar.senate.gov/nunnlugar).

The relationship between Russia and the United States is more important for American interests and more complicated to manage than at any time since the end of the Cold War. The truth is that this is a period of considerable frustration and disappointment about our relationship in both Washington and Moscow.

The State of the Relationship

For many Americans, there is concern about an over-concentration of power at the top in Russia and about how that power is being projected in dealing with the "near abroad." For Russians, there is a growing conviction that Americans really don't even try to understand how chaotic the last 15 years have been for Russia.

In reality, we both need to get used to the fact that we need each other; that we need to be as energetic in expanding common ground as we have been lately in voicing our frustration.

In fact, in our current fashion of mutual dissatisfaction, we are losing sight of what we have to gain by working together. And that risk will not likely recede over the next 14 months when the intersection of our two domestic political processes may produce more rhetoric than light from either of us.

A Three-Part Framework

How do we put Russian-American relations on a more sustainable, long-term footing? In the next fourteen months, both the United States and Russia will hold presidential elections and elect new leaders. While both presidents would be considered by many political pundits as "lameducks", this last phase of the Putin and Bush presidencies offers a historic opportunity to renew and revitalize US-Russian relations. Our presidents have an opportunity to give new direction to their bureaucracies and to lead our countries toward a stronger partnership.

To many it will seem counterintuitive to make major policy pushes in the final months of a presidency, but the strategic choices legitimized by Presidents Bush and Putin will shape the behavior and policies of successors for years to come. The U.S. and Russia have a narrow window of opportunity to make significant progress on a number of important issues. Progress on global security initiatives will anchor bilateral relations amidst tensions and disagreements on energy dependence, Kosovo, Georgia, etc.

Secretaries Rice and Gates will travel to Moscow at the end of this week to meet with their Russian colleagues­the so-called Two-plus-Two Discussions. This visit provides the last best opportunity to lay the foundation for bold initiatives and to seize the high ground by establishing a legacy for Presidents Bush and Putin. I strongly recommend that the Secretaries and their Russian counterparts introduce a new package of initiatives. These initiatives relate to three bold security challenges: (1) nonproliferation and nuclear energy partnership; (2) progress in arms control; and (3) missile defense cooperation.

NONPROLIFERATION AND NUCLEAR ENERGY

Nunn-Lugar Expansion

In the area of nonproliferation, we have made great progress. Even during moments of tension between our countries during the last 15 years, the Nunn-Lugar program, our primary cooperative means to address proliferation of weapons of mass destruction, remained a constant. Both sides recognize the importance of this endeavor to our mutual security. The Program has succeeded in convincing Ukraine, Belarus, and Kazakhstan to remove all of the nuclear weapons from their territories. In addition, it became the primary tool through which the United States works with Russia to safely destroy its massive nuclear, chemical and biological warfare capacity.

Fissile Material Storage Facility

The Fissile Material Storage Facility at Mayak is one of the largest projects undertaken by the Nunn-Lugar Program. The massive storage bunker provides safe and secure storage for up to 100 metric tons of plutonium taken from dismantled Russian nuclear warheads. Negotiations are underway to conclude a Transparency Agreement that will establish a process whereby select U.S. personnel, acceptable to Russia, can periodically inspect the facility and ensure that it is being used for its intended purpose -- storage of weapons-grade nuclear material. U.S. personnel would be able to make observations and take certain, previously agreed measurements to create confidence in the material stored in the facility.

In February 2007, the US provided a new draft proposal to bridge the gap between the US and Russia on this important issue. I was pleased to learn from officials at ROSATOM that Russia believes these negotiations can be concluded by the end of this year. Such a success would demonstrate ongoing US-Russian cooperation on nuclear security matters in particular and the Nunn-Lugar program in general.

Warhead Security

Four years ago Presidents Bush and Putin agreed at their summit in Bratislava, Slovakia, to upgrade the safety and security at Russian nuclear warhead and material storage sites by the end of 2008. This was an important step forward. Together we have made tremendous progress but we still have much work to do. It is important that Washington and Moscow reaffirm their commitment to complete the site security work and reach agreement on how the improvements will be sustained in future years.

Plutonium Disposition

Equally important is the fate of the US-Russian agreement to dispose of 34 metric tons of weapons-grade plutonium, on each side. This proposal has been held up for a number of years over disagreements in implementation. Now is the time to finalize a path forward, amend the existing agreement, and begin implementation. Progress on elimination of this former weapons material will send an important message to the international community: both countries are meeting their nuclear disarmament commitment under Article VI of the Nuclear Nonproliferation Treaty.

Nunn-Lugar in North Korea

Together, the United States and Russia should be sending the clear message that we are willing to go anywhere in pursuit of preventing the proliferation of weapons of mass destruction. We should not assume that we cannot forge cooperative non-proliferation programs with critical nations. The U.S. and Russia should be exploring how the Nunn-Lugar experience can be applied in North Korea. While difficult diplomatic work remains, we must be prepared to move forward quickly if the respective governments affirm the "disablement" steps agreed in the Six-Power Talks succeed. To the extent that North Korea permits the elimination of its weapons of mass destruction and their means of delivery, the Nunn-Lugar program represents a ready-made framework for beginning the weapons elimination process. Moscow and Washington have proven that former enemies can work together to achieve shared security benefits. Such a track record will be critical to a successful diplomatic process on the Korean peninsula.

In sum, the Nunn-Lugar Program still has important work to do with Russia. I strongly urge Secretaries Rice and Gates to make certain that the Mayak Transparency Agreement, warhead security, plutonium disposition, and joint efforts in North Korea are at the top of the list of subjects to be discussed a the Two-plus-Two talks in Moscow.

Nuclear Energy

Closely related to nonproliferation cooperation is the need for joint efforts in the nuclear energy field. Many nuclear experts predict a coming surge in global demand for nuclear power, which may provide a pretext for more nations to seek their own nuclear enrichment facilities. The spread of this technology to additional states poses long-term risks. While the technology may be intended to produce reactor fuel, it can also produce materials for nuclear weapons.

The US and Russia should formally continue joint efforts with the International Atomic Energy Agency and consultations with potential partners to develop an international nuclear fuel bank and a multilateral fuel assurances system. Such a system would ensure that countries who give up their enrichment and reprocessing programs have an assurance -- either bilateral, multilateral or both -- of nuclear reactor fuel at reasonable prices. Under such a regime, nations would be prohibited from using the guise of peaceful energy production to develop nuclear weapons.

The US and Russia can provide critical leadership in stopping the abuses to the core and intent of the NPT. For too long, nations have used the template of nuclear energy to develop nuclear weapons; the nuclear fuel bank and assurance system concept could give us an effective means to reverse this trend. To realize the full potential of these proposals, the peaceful nuclear agreement, or "123 agreement", negotiated by the US and Russia, must be finalized and signed by the President and sent to Congress. When the agreement arrives in the Senate, it will have my support.

ARMS CONTROL

START I Treaty Extension

There is a second area where progress is not only possible in the short-term but is in our mutual interest­and that is arms control. The United States and Russia are engaged in negotiations on the fate of the START Treaty's verification regime, which will expire in 2009. The Russian Government has announced that the agreement should be legally binding. The US, on the other hand, has argued for a politically-binding agreement that is not reinforced by law. The US position is similar to that adopted by the Bush Administration in early rounds of discussions on the Moscow Treaty in 2003. I am hopeful the Administration will ultimately abandon anxieties about legally binding commitments as they did four years ago.

Some argue that concluding a legally binding agreement suggests that the current bilateral relationship is the same as the U.S.-Soviet relationship. Unfortunately, this point does not provide a logical rationale for abandoning a legally-binding START Treaty. If both sides agree that it is necessary to have some type of verification arrangement in place, why not provide them with the force of law? The predictability and confidence provided by a treaty and an effective verification regime will reduce the chances of misinterpretation, miscalculation, and error.

I appreciate the view that the Moscow Treaty was a first step in formalizing a new strategic relationship between the two countries based on transparency and confidence building measures. But we must not forget that this new concept was buttressed by the START Treaty's verification regime. In other words, the conceptual underpinning of the Moscow Treaty depends upon something which is about to expire! The selective discarding of START Treaty elements in order to arrive at less stringent post-START transparency alternatives carries with it the seeds of greater distrust between the two sides. I am not opposed to new transparency measures but the current Russian-American relationship is complicated enough without introducing greater elements of uncertainty into the nuclear relationship.

The US and Russia need to get on with the business of extending the START Treaty. Time is running out. The failure to extend START would be a significant setback to the NPT and the international community's view of the American and Russian commitment to meeting our obligations under Article VI of the NPT. This could lead to a further weakening of the nuclear nonproliferation regime, which has already suffered significant damage in recent years. A shift in policies in both capitals will be necessary if we are to stop this sharp decline and begin to rebuild the regime.

Transparency for the Moscow Treaty

After signing the Moscow Treaty, the United States and Russia committed to work closely together to negotiate additional transparency measures to accompany the treaty. Unfortunately, no progress has been made to date. This is a missed opportunity that must be rectified.

The Moscow Treaty created the Bilateral Implementation Commission as the primary forum for discussions on transparency and verification. A number of important proposals should be added to the Committee's agenda to enhance confidence and help verify reductions of strategic systems, including: more detailed exchanges of information, visits to additional sites, and additional kinds of inspections. The two sides should also discuss the merits of an inspection regime that would seek to verify the actual number of warheads on each delivery system or permit inspections at storage sites to count weapons held in those locations.

It was also hoped that the Commission would be used to address non-strategic (tactical) nuclear warheads. Many public reports suggest that Russia may have more than 12,000 of these systems. The Administration testified in great detail on how this would be a topic of discussion and negotiation. Again, unfortunately, there has been no progress.

The START and Moscow Treaties made important contributions to US national security and I believe they can continue to make us safer. To accomplish this, the Administration must reject the arguments from some that suggest the US-Russian relationship has moved beyond the need for legally binding treaties. While I wish this was the case, nuclear weapons are too dangerous to leave to political machinations of Washington and Moscow. Extension of START and the establishment of transparency measures under the Moscow Treaty are the next steps in providing the international leadership necessary to address the threats posed by weapons of mass destruction.

MISSILE DEFENSE

Missile defense is a third area where progress in the short term is possible, even though this issue is seen by many as a major source of the current malaise in the relationship.

Concerns over the impact of a limited, regional missile defense system in central Europe directed at rogue states can evolve into productive discussions over a more global approach to defenses against nuclear attacks. Henry Kissinger has suggested that President Putin's initiative to link NATO and Russian warning systems was one of those initiatives easy to disparage on technical grounds but also one that allows us to "imagine a genuinely global approach to the specter of nuclear proliferation, which has until now been treated largely through national policies . If the countries involved link their strategies on the nonproliferation issue - a new framework for a host of other issues will come about". I agree with former Secretary Kissinger. The Russian missile defense proposal provides an important strategic opening for further discussion and exploration.

President Putin's proposal is not a new concept. In fact, it is surprisingly similar to the strategic vision that President Ronald Reagan laid out more than two decades ago. I am pleased that the Administration is seriously studying Putin's offer on missile defense. While the utilization of former Soviet radar stations may or may not assist in tracking missiles fired from rogue states, sharing information gathered by US and NATO systems to Russia, and possibly linking radar and early warning systems, would be useful in ensuring transparency and reaffirming our cooperative approach. As General Obering, head of the US Missile Defense Agency has said: ". the Russian proposals are things we should certainly pursue . The ideal future . would be that we have US capabilities, we have NATO capabilities that marry up to (US capabilities), and we have Russian capabilities that can marry up to (US and NATO capabilities) as well."

The US and Russia should also consider the establishment of jointly manned radar facilities and exchanges of early-warning data. They might also consider joint threat assessments as well as undertake bilateral discussions on options for missile defense cooperation. Lastly we might consider placing Russian liaison officers at US missile defense tracking sites in exchange for US officers in Russian strategic command centers. The transparency gained from such steps would be useful in offering reassurances that these radars are not meant for spying on Russia.

During my recent trip to Moscow, US and Russian experts discussed the utility of installing missile defense in Eastern Europe in phases. They argue that this could well change the substance as well as the tenor of U.S.-Russian discussions on missile defense. Further, I applaud General Obering's invitations to his Russian counterparts to observe missile defense tests here in the US.

Missile defense cooperation could be conducted on a bilateral or multilateral level through the NATO-Russia Council. Some have expressed skepticism in using NATO because of the need for unanimity under NATO rules. But such a view is short-sighted. It is difficult to believe that the US will succeed in developing an effective missile defense system in Europe without the full support of NATO members. In many cases, this will require a good-faith effort to engage Russia. While securing broad support is time-consuming and difficult, it is unlikely that a policy based upon avoiding those European capitals that oppose our plans and Russia will succeed at all.

The 2008 NATO Summit in Bucharest provides an opportunity to build European support for the missile defense concept. Further, the NATO-Russia Council could serve as a forum for discussions and consultations on not only proliferation but broader nonproliferation cooperation. It might organize threat assessments, research and development concepts, interoperable systems, and studies on joint capabilities and operations.

To date, missile defense has been a divisive issue in the US-Russian relations and it has the potential to cause similar damage to the US-European relationship. This does not have to continue. Experienced observers understand that the US will need to build support in Europe for missile defense and that this will require patient diplomacy and a willingness to consider other options, opinions, and alternatives time lines. Let me be clear: the United States must do whatever it must, including missile defense, to protect American lives. But, in this case, we must have cooperation from our allies. US policies must reflect this reality!

BUSINESS COOPERATION

While the US-Russian government-to-government relationship needs creative, strategic thinking and a kick-start, the commercial side of the bilateral relationship is moving in high-gear and expanding significantly. Last year, U.S. exports to Russia increased by 20 percent to $4.7 billion in a broad range of merchandise and service markets. Unfortunately, the merits and benefits of this expanding relationship remains unknown to many here in Washington.

The business community can be a valuable partner in improving US-Russian relations. We should carefully consider the recommendations they are making. First, they argue accurately that the Jackson-Vanik economic legislation has long outlived its usefulness. This relic of the Cold War is no longer applicable to the modern Russian government and administration. For more than 8 years, Russia has satisfied the requirements of Jackson-Vanik by facilitating free emigration.

Perhaps most importantly, the Jackson-Vanik amendment must be revoked if Russian membership in the World Trade Organization (WTO) is to move forward. Granting permanent normal trade relations will improve confidence in the Russian investment climate and enhance economic relations between the U.S. and Russia. The two countries have concluded a bilateral agreement and work is currently underway on the multilateral draft Protocol of Accession for WTO. I support Russian accession to the WTO and urge both sides to ensure that these agreements contain provisions improving cooperation in the areas of piracy, counterfeiting, border control, protection of pharmaceutical test data, and intellectual property rights.

I urge Secretaries Rice and Gates to inform their Russian counterparts that when the WTO multilateral negotiating process is complete and these important provisions are secured, that President Bush will send it to Congress for approval with the full strength of the White House behind it. They must work to convince both the House and the Senate that Russian membership in the WTO will further integrate Russia into the international, rules-based trading system and help lock in reforms. Both represent important US national security objectives.

There are no more effective ambassadors for democracy, rule of law, and American ideals than US corporate leaders. While governments will continue to play the critical role in relations, we must encourage and endorse the benefits that will be gained from strong commercial ties and the important contributions they can make to the US-Russian relationship.

CONCLUSION

To conclude, the existence of neuralgic issues on both sides should not distract us from pursuing means by which to manage them more adroitly so that priorities that make sense can be illuminated and mechanisms through which to accomplish mutually positive ends can be identified.

Presidents Bush and Putin have the opportunity to give new direction to their bureaucracies and to lead our countries toward a stronger partnership. If they are to succeed, Secretaries Rice and Gates must arrive in Moscow later this week with a forward-looking agenda aimed at constructing a package of agreements designed to make progress on the nonproliferation, nuclear energy, arms control and missile defense fronts.

To arrive at such a package of agreements, the United States and Russia must entertain compromise. Refusal to seek common ground dooms the entire exercise to failure. I remain optimistic we will summon the courage and perseverance required to move our nations toward many mutual successes.