CELESTE WALLANDER: I'm going to just highlight some of the points from my written testimony, which I'd like to submit for the record, and focus on my assessment -- as it turns out, some of the questions that have already arisen, namely, what is the Russian political system and what does it mean for the potential of the new president, Dmitry Medvedev, and the role of new Russian Prime Minister Vladimir Putin?

Survey a couple of main points about Russian foreign policy and their implications for the United States and whether we can expect continuity or change in those polices, and then think about some pragmatic -- what I think are some pragmatic initiatives in the next year or two that the United States could advance to try and take advantage of the new administration on the Russian side and, looking forward, of course, a new presidential administration on the American side.

As we all know, Dmitry Medvedev took office as Russia's third president yesterday, the 7th of May, and Vladimir Putin was confirmed as prime minister today, on the 8th of May. And with this leadership transition, Russia's put behind it the crisis of uncertainty over the succession plans that had dominated politics in Russia for some three years now.

But far from ending uncertainty and speculation about Russia's political system and stability, the new lineup has shifted the issue to speculation about where real power will lie, in the presidency, in the prime minister's office, or divided somehow between them.

In my view -- and in my written remarks, I go through different scenarios and lay out my analysis, but I'm going to just focus on what I think is going to happen. In my view, the most likely outcome is a shift in power to the prime minister's office and to the person of Vladimir Putin.

Medvedev will be president, but Putin will hold power. And to the extent that Medvedev is an effective president, it will be because he does not contradict or cross Putin.

The political systems that Putin created over the eight years of his presidency enables the political leadership to exercise considerable power without accountability to Russian citizens.

The party Putin now leads that his Kremlin created, but which notably he's not a member, United Russia, holds 64.3 percent of the seats in the Duma, 315 out of 450. Just Russia, the next-largest party, a party also created by the Kremlin in order to establish a non-opposition opposition party, holds an additional 38 seats.

The Liberal Democratic Party, under Vladimir Zhirinovsky, which supports the Kremlin, holds 40 seats. And the only opposition party remaining in the Duma is the Communist Party, which holds 57 seats, or just over 11 percent.

Yabloko and the Union of Right Forces, Russia's only genuine opposition parties, in the December 2000 Duma elections, failed to gain any seats at all.

So the Putin leadership has thus successfully eliminated competitive, pluralist politics in Russia for some time to come. Media is either state-owned, in the hands of a Kremlin-friendly businessman, or without access to national broadcast outlets.

Civil society organizations can operate only if their activities and objectives are non-political. The Kremlin has created onerous requirements for NGOs seeking foreign funding. And most Russian NGOs subsist on donations from Kremlin-approved businesses or from the government's NGO monitor, the Civic Forum.

This political system is essentially authoritarian, although of a modern cast. Putin's consolidation of power rests on two sets of parallel processes: eliminating political opposition and building patron-client bases of power, dependent on his leadership.

These are primarily rooted in the Soviet security services, notably the KGB successor the FSB, and the key to holding political power in Russia is access to wealth and resources. And the key to access to wealth and resources in Russia is holding political power.

Among the major figures in Putin's supporting networks of clients dependent on and supporting his role as president were Medvedev, who was deputy prime minister while also serving as chairman of the board of Gazprom; Sergei Ivanov, who was deputy prime minister overseeing the defense industries; Igor Sechin, first deputy head of the presidential administration, while at the same time serving as the chairman of the board of Rosneft; and Viktor Ivanov, deputy head of the presidential administration and chairman of the board of the defense firm Almaz-Antey and of Aeroflot.

As Russia's state-owned or controlled firms in the energy and defense sectors have extended their control of enterprises and commerce, these close clients of Putin have come to control the most important sectors of the Russian economy and to become very wealthy themselves. Recent reports suggest that Putin himself may be worth as much as $41 billion.

Now, giving Medvedev the presidency would thus appear...

HASTINGS: Was that million or...

WALLANDER: ... $41 billion.

HASTINGS: With a "b"?

WALLANDER: With a "b." Giving Medvedev the presidency would thus appear to be an extraordinary transfer of power, far beyond that of the process of presidential succession in democracies where political institutions create checks and balances, competing political parties and media allow citizens to hold their presidents accountable, and political power is not so inextricably linked to business and the economy.

If Putin were really truly ceding the system he built to Medvedev, it would be extremely important to understand Medvedev's preferences and intentions. And we've heard speculation that Medvedev has expressed more liberal views, has talked about the rule of law, and has talked about fighting corruption.

I think, however, a path by which Medvedev as president is powerful is unlikely in Russia for two reasons, by 2008. First, although it's possible that Putin has decided to reverse course and has turned political power over to Medvedev to put a velvet glove over the iron first of the system he spent eight years building, liberalization is ultimately contrary to how that system works and what Putin himself has consistently and decisively declared necessary for Russia.

Putin's political leadership is viewed by Russian society as extraordinarily successful, with Putin's approval ratings above 80 percent. In recent weeks, Putin has prepared to leave the presidency with statements affirming what he has achieved in strengthening the Russian state, establishing Russian power on the international scene, and completing the work of limiting private foreign investment in the strategic sectors of the Russian economy.

There do not appear to be any regrets that Russia has been turning firmly away from political and economic liberalization.

Second, and more importantly, why I don't believe that President Medvedev will be a powerful president in Russia, the idea of a powerful President Medvedev is based upon a faulty premise, that political power and how the Russian system works are based solely upon the constitution, rule of law, and institutions.

The functioning of political power is as much, and I would argue even more, dependent on these networks of patron-client relationships and the clans of long-held regional and professional associations of the Russian elite.

Most important of these are the men who served in the KGB in the late Soviet period, the siloviki, who constitute Putin's inner circle and network of associates.

Medvedev does not share that background. And while the members of the regional clan who came from St. Petersburg to Moscow to work for Putin have become wealthy and powerful because of their deep regional connection to Putin, they are dependent upon him and lack a vital power resource exercised by the siloviki, which is access to information and the ability to investigate and imprison opponents.

Furthermore, it is not only that Medvedev does not have the resources for this change of course. It is likely that those with resources under the current system would very actively fight to prevent any change that would threaten their hold on power.

A loosening of state control of the economy, a reduction of corruption, and an effective rule of law would break apart the patronage-based authoritarianism that has installed Russia's current leadership in power and enriched them and their clans.

Now, Medvedev and Putin are clearly close associates with a long history and relationship, so they may hold a level of trust and unity of political purpose sufficient to make a two-headed leadership work. But it would work only if they were of the same mind on policies, personnel, and ultimately the goals they seek.

In any difference that might emerge in any of those areas, someone would have to lose, and I don't think it's going to be Vladimir Putin.

That, in turn, means that real power will lie in the office and person of Vladimir Putin. The informal, but real patronage-based authoritarian system created in the past few years already favors Putin's power, even as he shifts to the position of prime minister.

Furthermore, in the past few weeks, Putin and the Duma have been busy enhancing the power of the prime minister. Large blocks of responsibilities are being pushed down to the ministerial level -- from the prime ministerial level down to the ministries, freeing the prime minister from the kind of administrative, day-to-day oversight that kept Putin's prime ministers busy and subject to criticism and rebuke.

When president, Putin slimmed the administrative offices of the prime minister. Word now is that the number of deputy prime ministers will grow to as many as 11 serving under Putin.

In his move to the prime minister's offices in the Russian White House, Putin has created a press office, a speechwriting office, and a protocol office, suggesting that the new prime minister will not be absent from foreign policy.

The rules which limited press access in the president's Kremlin offices have been extended to the White House, indicating that Putin's style of non-transparent and personalistic politics will move to the prime ministership.

And just this week, there have been reports from Moscow that the likely candidate -- the likely person to move to the Russian security council, which is an office of the Kremlin overseeing foreign and defense policy, is Sergei Ivanov, at one time considered to be a contender for the position of president, one of Putin's associates from the KGB, a member of the siloviki, and likely, if he does end up in that position in the Kremlin, likely to be Putin's man in the presidential administration.

So all the indications are that Putin is not merely remaining in politics, but that he is remaining in power. This is not surprising. Experts on Russia's political system are in substantial agreement that it is not one rooted in institutions and law.

The Russian state is Putin's state, whether he sits in the Kremlin or the White House. Insofar as Dmitry Medvedev is Putin's trusted ally, he will be a strong president. But if Medvedev remains Russia's president, it will be because Russia's president is not the figure who wields power and determines policy.

And I've taken a lot of time, so I won't go through a lot of detail on Russian foreign policy. But the obvious implication of my assessment is that we are going to see primarily continuity in Russian policy, in foreign policy, in the three areas I talk about in my written testimony as being Russian priorities, namely in re- establishing Russia as a Eurasian great power; preventing the United States from eroding Russia's power from within, namely Russian concern about democracy promotion, what the Russians call "color revolutions"; and Russia's efforts to build good political and economic relations with Eurasian major and great powers, especially emerging powers of the 21st century, China, India and, in particular, Iran.

So I'm going to skip over the analysis, because I don't want to impinge on the time of my colleagues or the opportunity to answer questions, and point nonetheless to some degree of optimism. And that optimism arises from precisely the fact that the Russian political leadership is feeling more secure and more certain about its own future.

The insecurity about the succession, about American democracy promotion, about the real fear that the Russian elites had that the United States was somehow planning some kind of internal Russian democratic revolution to follow upon the Rose Revolution in Georgia and the Orange Revolution in Ukraine, is behind them.

They've managed the transition. They've managed it to their liking. It appears that President Putin as now Prime Minister Putin will remain in control.

And so the opportunity for constructive cooperation, although there might be a small window for that opportunity before the next round of elections in four years begins to loom, is real.

And I will just refer to exactly something that came up with Undersecretary Fried's testimony, which is namely the missile defense proposal, just to highlight the point, rather than going through many examples.

Back at the end of 2000, the very same sorts of proposals for transparency and confidence building that the U.S. government brought to Moscow on missile defense, on U.S. plans for missile defense, were criticized as being irresponsible, inadequate, disrespectful, not caring about Russian security interests.

When Secretary Rice and Secretary Gates were in Moscow a couple of months ago, it was essentially the very same proposals. The response was much more welcoming, much more approving. And we heard Foreign Minister Lavrov, actually, comment that these were proposals that Russia could work with, because they took into account Russian interests and Russian concerns.

To me, that's an indication that the Russian government is feeling more secure and is willing to lower the rhetoric, lower the tone of hostility and fear and threat, that was so characteristic of President Putin's foreign policy in the last two years and, also, of the other officials of the Russian government.

And it creates the opportunity for initiatives in the area of security cooperation, restarting talks about the Conventional Forces in Europe Treaty, taking seriously the need to negotiate a follow-on to the START Treaty, which expires in 2009, and by which we will lose the verification procedures, and monitoring infrastructure that was so valuable for confidence building and for interaction between our defense and security establishments.

So the United States, although having a very clear eye about the nature of the Russian political system, ought to be ready to take the initiative in offering some pragmatic areas of cooperation, such as graduating Russia from the Jackson-Vanik amendment, supporting Russian integration in the World Trade Organization, advancing the cause of conventional arms control, and also re-establishing a basis for strategic arms control, and welcoming the newly signed civilian nuclear agreement between the United States and Russia, which will allow the United States and Russia to cooperate in the area of nuclear technology in a way that serves both countries.

So thank you very much for the opportunity to present my views. And I look forward to your questions.

STEPHEN BLANK: Senator Cardin, members of the commission, it is a distinct honor and privilege to appear again before this committee that works to uphold the fundamental principles of Western civilization, not just the United States.

With that said, my remarks do not reflect the opinion or policy of any U.S. governmental institution, including the Department of Defense and the Army.

We meet today to grapple with problems of advancing the national interests relative to a state and society that resists these principles, yet whose cooperation and even partnership is sometimes necessary to secure for ourselves, our allies, and Russia's peoples the blessings of a lasting peace.

Relations with Russia represent a perennial problem for the United States. Even as the U.S. seeks to engage Russia to advance its security interests, it does so knowing that it is interacting with a government that steadfastly opposes American interests and values.

Any U.S. administration seeking to advance those interests also simultaneously faces the problem of reconciling that activity with the difficulty of adhering to its own fundamental principles and of engaging Moscow in a candid discussion of them.

For in the present political climate -- and with good reason -- America cannot conceive of a true partnership with Russia absent a rapprochement on values and principles. Otherwise, the relationship will inevitably end in mutual recriminations and disappointment, not to say frustration.

This conundrum has affected the Bush administration's relationship with Vladimir Putin's Russia and will affect the next administration's relationship with Dmitry Medvedev's Russia.

There is no easy solution for the problem. But it is essential that we understand that, as many American and European scholars, diplomats, and even intelligence analysts understand we are dealing with a mafia-like regime whose tactics are predatory and rely on corruption and intimidation to secure its objectives.

Those goals are a free hand for Russia to do as it pleases throughout Eurasia and the concurrent corruption or even subversion of Western public institutions to deter the West from interfering with this grand design.

The present crisis in Russo-Georgian relations, for example, reveals once again that Russia has no respect for the sovereignty, independence and integrity of its neighbors. And Mr. Putin made this clear in his remarks at Bucharest.

Furthermore, Russia believes that it is or should be free to disregard its own international agreements if it wants to do so, just as it has established a domestic autocracy that answers to nobody and does as it pleases within Russia.

This challenge requires of us the most intimate and systematic coordination of U.S. government agencies and coordinated action with our European allies against this fundamentally long-term and even insidious threat.

But even as we pursue engagement and even accord with Russia on key interests of national security, the nature of its regime and the challenge it poses cannot ever be forgotten.

Nor can we let the necessary pursuit of such agreement deflect us from confronting Russia's unprecedented challenge to our interests, allies and our shared values and institutions.

Often pursuing our overriding national interests will take precedence over the pursuit of a dialogue on values, leaving administrations open to the charge of hypocrisy. But those interests also include encouraging the greater democratization, transparency, legal accountability, et cetera, of European and Russian political and economic institutions, as stipulated in international treaties, like the Helsinki treaty, and they must be pursued with equal vigor in Russia and among its neighbors.

So to the extent that we succeed in such initiatives in places like Ukraine, Georgia and Russia, we advance both interests and values at the same time.

Bearing in mind that the only answer to the conundrums outlined here is a long-term strategy that combines patience with vigilance, candor with engagement, and realism about what can be expected at any given time, in my written statement I have striven to outline a long- term strategy for relating to the Medvedev government that pursues both American and allegedly common Russian-American interests, while simultaneously upholding our democratic principles and values abroad.

The objective of this strategy is to overcome what I call the agenda of discord, an agenda that comprises not only human rights and arms control issues, but that also seeks to engage Moscow on a wide variety of issues where it has interests and a voice: energy and regional security in Europe and Asia.

A strategy that negates the importance of the energy and regional security issues, the latter of which also includes proliferation, implies that Moscow has no legitimate interests and remains stuck in the agenda of the past generation.

Unfortunately, there is a tendency to overlook the fact that global energy problems cannot be successfully addressed without taking Russia into account. Neither can we ignore the impact of Russia investing abroad into foreign businesses, all too often in order to subvert and corrupt them on Moscow's behalf.

It can do so because energy is the main lever by which the Putin regime and the forthcoming Medvedev regime have pursued and will pursue their goals of undermining the post-Cold War settlement in Eurasia.

Yet we can safely say that we have no energy or investment policy for Russia, or at least none that has ever been publicly articulated and implemented by the current administration. Neither have we taken Russia's ability to influence European governments by these means sufficiently into account in timely fashion.

It took an enormous exertion of last-minute presidential power to secure the gains in regional security consummated at the last NATO summit in Bucharest in April 2008. But our day-to-day foreign policy should be more active and engaged with our allies, local governments, and Russia on these issues without waiting for the last minute and committing the president so publicly.

Our Russian and European policies must be both multi-dimensional and closely integrated. They cannot run on separate tracks. They must be multi-dimensional to confront the new dimensions of Russia's challenges, which in their method and scope require a coordinated effort of all the institutions responsible for international security, and not just diplomats, armed forces, and intelligence agencies to overcome them.

Ultimately, President Bush succeeded handsomely at Bucharest, but it must be recognized that Moscow remains unreconciled to the post- Cold War status quo and will seek every opportunity to revise it.

Understanding that requires that we have a comprehensive strategy that goes beyond haranguing Moscow on human rights and pursuing arms control and nonproliferation agreements that we want toward a broader understanding of where and how Moscow stands and plays in contemporary world affairs.

For such a strategy to succeed, it must express the policy of a unified administration and a unified transatlantic alliance, while also being comprehensive in scope and oriented to enduring long-term gains. That strategy also must fully engage our ability to speak for our values abroad or, in other words, a rejuvenated public diplomacy that has sadly atrophied since President Reagan's time.

As Pope John Paul II said, quote, "In a world without truth, freedom loses its foundation," end of quote. If our policy towards Moscow does not meet these criteria, it will inevitably fall short, whether we are discussing human rights, arms control, energy, regional security in Europe or in Asia.

Thus, our strategy must transcend the facile notion that a good relationship with the Russian president is the objective or sufficient. While such a relationship is decidedly beneficial, we relate to the Russian government and must engage that entire government in the pursuit of common interests where feasible.

And where it is not feasible, both governments should be engaged in an ongoing and unceasing dialogue. It is on this basis that I have offered such a strategy to you in my written testimony, and I welcome your questions.

Thank you.

DAVID FOGLESONG: Senator Cardin, thank you for the opportunity to speak at this hearing. This is a first for me, coming down to Washington to testify.

As a historian, not an expert on current relations, like the two previous witnesses, I think the most useful contributions that I can make to this hearing are, first, to highlight some of the major causes of American misperceptions of Russia in the past; second, to show how those assumptions and expectations continue to distort perceptions of Russia today; and, third, to suggest some ways to move beyond these misunderstandings as we engage with Russia in the future.

As I show in a recent book, the one I handed you earlier, American views of tsarist, Soviet, and now post-Soviet Russia have been distorted by a number of unrealistic beliefs and unwarranted attitudes, particularly: first, a messianic faith that America could inspire a sweeping, overnight transformation of Russia from autocracy to democracy in 1905 and 1917 or from totalitarianism to liberty, as in 1991; second, an extreme antipathy to leaders who are blamed for thwarting the natural triumph of an American mission; and, third, scorn for the ordinary people of Russia when they seem to submit meekly to authoritarian governments.

These ideas and emotions continue to skew American views of Russia today.

Many Americans who were thrilled by the supposed transformation of Russia from communism to free-market democracy in the early 1990s have now veered to bitter hostility to Russian leaders whom they blame for obstructing the dream of a democratic Russia.

Confounded by opinion polls that show that the majority of Russians vastly prefer today's Russia to the Russia of the 1990s, influential Western commentators assert that Russians have been hypnotized by a Kremlin-propagated myth or claim that they have been duped by Kremlin propaganda.

In reality, Russians have quite rational and pragmatic reasons for saying that they would prefer to live in contemporary Russia than in the Yeltsin era.

Senior citizens like to receive their pensions on time. Teachers prefer to get paid. People like to have some confidence that their life savings will not be wiped out tomorrow by some government currency reform or financial crisis.

The greatest challenge today to the Helsinki ideal of promoting fundamental freedoms in Russia is not that gullible Russians have been mystified by Kremlin spin doctors. It also is not that DNA or history have doomed Russians to submit to centralized authority.

In the last three years, when pensioners, automobile drivers, and other Russians have felt that their material interests and personal rights were threatened, they have demonstrated, often effectively.

Polls have shown that the overwhelming majority of Russians continue to value freedom of expression, freedom of the press, and freedom of political choice, though they tend to rank those rights as lower priorities than protection from violence, access to medical care, and receipt of pensions.

Instead of being frustrated by Russians' current priorities, we can be, I think, cautiously optimistic that as more Russians achieve a level of economic security more of them will assert their interests and demand respect for their rights.

There are severe limits to what Washington can do to promote freedoms in Russia at a time when the Kremlin has tightened control over the mass media and sharply restricted opportunities for political activity by critics of the government. Lecturing Russia about democracy provokes resentment, as you noted earlier in your remarks.

Publicly excoriating human rights violations in Russia will have little positive impact. Not only top Russian officials, but also the majority of Russians dismiss State Department criticism of Russian rights violations as a product of prejudice, stereotypes, and a desire to discredit Russia.

That does not mean that we must abandon all hopes to influence the development of Russia in a positive way. It does mean that we must reconsider some deeply entrenched assumptions and shift to a more gradual and subtle approach.

I can offer five specific suggestions.

First, be patient. There are different ways to be a missionary. One way is to go to a foreign country with little knowledge of the language or culture, but much fervor and high hopes to reap rich rewards in a short period of time.

Many Americans -- secular reformers and financial investors, as well as Christian missionaries -- took that approach to Russia in the 1990s and wound up frustrated, disillusioned and embittered.

Another and wiser way to be a missionary is to make a long-term commitment, learn the language, understand the culture, cultivate connections in the foreign society, and hope to see benefits not in weeks or months, but in years or decades.

Second, one of the most promising ways to pursue that patient approach is, of course, to increase funding for educational cooperation and cultural exchanges.

During the Cold War, scholarly exchanges were effective means of building relationships and influencing the ideas of Russian intellectuals, some of whom eventually had significant impact on changes in Soviet government policies. It's particularly important to maintain and, if possible, expand such contacts at a time of tensions between the American and Russian governments.

Third, don't ostracize Russia. When Russian leaders have done things that seemed morally repugnant or politically frustrating, many Americans have been inclined to excommunicate Russia. In recent months, for example, we've heard many calls to throw Russia out of the G-8.

We've tried that sort of approach before, and it hasn't worked. I think the best example -- there are many that I could cite -- but I think the best example of the ineffectiveness of excommunication is the U.S. policy of not recognizing Soviet Russia between 1917 and 1933.

That policy did not hasten the collapse of Bolshevism or lead to the compensation of American companies whose assets had been nationalized. The main short-term effect was to direct more Soviet trade to European countries.

Fourth, engage Russia. In contrast to the ineffectiveness of isolation, there is a positive model of genuine engagement: the policy of Ronald Reagan and George Shultz.

Twenty years ago this month, Ronald Reagan flew to Moscow. Walking with Gorbachev on Red Square, Reagan said that the Soviet Union had changed so much in the preceding years that it was no longer an evil empire.

If Reagan had heeded the pessimists in his administration who insisted that Gorbachev's words were merely deception and that Russia was an irredeemable enemy, he would not have gone to Geneva in 1985 or Reykjavik in 1986, much less to Moscow in 1988. Fortunately, Reagan believed that even communists could change, and he learned that genuine dialogue could encourage reform.

One of the things Reagan talked with Gorbachev about was the importance of religious freedom. The U.S. president can follow that example today by encouraging President Medvedev to speak publicly in Russia about the importance of religious freedom and the value of all Russian citizens, regardless of their religious affiliations.

Although Medvedev can be expected, at least in the near term, to follow President Putin's policies in most areas, his youth, legal training, and recent statements provide some reason to hope that he will be inclined to make more expansive affirmations of religious liberty and other human rights.

Fifth, keep an open mind about Russia. Almost 60 years ago, one of America's wisest diplomats offered advice about how to think about Russia's future that is worth recalling today.

When the Soviet regime fell or mellowed, George F. Kennan cautioned in 1951, Americans should not "hover nervously" over the new Russian leaders, examining "their political complexions to find out whether they answer to our concept of democratic." Instead, Americans should, quote, "let them be Russians."

Kennan did not mean that Americans should shrug their shoulders and give up all hope of influencing developments in Russia. Rather, he counseled that Americans should conduct themselves in ways that would facilitate, rather than impede, the emergence of the kind of Russia they wanted to see.

In addition, Kennan recognized that, quote, "the most important influence that the United States can bring to bear upon internal developments in Russia will continue to be the influence of example."

In recent years, some of the policies of the United States have greatly reduced the attractiveness of the American example. Yet the United States continues to be a touchstone for what is "normal" to many Russians, including, it seems, Medvedev.

If the United States alters the policies that have tarnished its global appeal and damaged its credibility as a champion of human rights, it may enhance its influence in the future.

I think today many Americans yearn for a reaffirmation of a positive sense of America's mission in the world. An easy and familiar way to do that is to exaggerate real problems in Russia and draw a stark dividing line between Russian autocracy and American democracy.

That is likely to exacerbate tensions and impede the emergence of the kind of Russia we would like to see.

A more difficult, but in the long term more effective way to pursue America's mission is to reach across the gap between the two countries, broaden the dialogue, and creatively expand exchanges, in order to facilitate the positive evolution of Russia.

Thank you.