#2
Grigory Yavlinsky
"Russia and the United States: New Challenges, New Strategies"
March 18, 2002
Strengthening Democratic Insitutions Project, Harvard University
http://ksgnotes1.harvard.edu/BCSIA/sdi.nsf/www/home

Moderated by:
Graham Allison, Director, Belfer Center for Science and International Affairs Sponsored by the Institute of Politics and the Strengthening Democratic Institutions Project

GRAHAM ALLISON: Good evening. I am Graham Allison, Director of the Belfer Center for Science and International Affairs. It is my great honor and pleasure to welcome back to Harvard Grigory Yavlinsky, leader of the Russian Democratic Party, Yabloko, a Russian presidential candidate, and one of the great political leaders in the Russian democratization process over the past decade. Indeed, if you look at the political scene of democratic leaders who have been active in Russian politics since the late 1980s, beginning with the disappearance of the Soviet Union and the emergence of Russia just ten years ago, Grigory is the last one left standing. Gorby has got his just desserts. Yeltsin has gone back to his bottle or whatever. But Yavlinsky is still in the front line, and the best of Yavlinsky is yet to come.

Ten years ago, literally last spring, Grigory Yavlinsky, who was a young Russian political leader, came to Harvard, bringing with him seven or eight members of his EPICenter, which was a research group in Moscow, to work with a group that I organized and he and I co-chaired. It included Stan Fischer, Jeff Sachs, Bob Blackwill and others - to develop a program that was called "The Grand Bargain." It called for Western Marshall Plan-like assistance to Russia to ensure an orderly transition to democracy and a market economy. Grigory and I went and presented this to Mr. Gorbachev in Moscow on several occasions, and ultimately to President Bush here in the US.

I can say that we were equally successful with both audiences. Each said "nyet." However, the framework that it provided has actually provided the grounds for a great deal of subsequent events. Grigory will have something to say about that tonight.

Our speaker tonight is a man of many terrific facets and distinctions. If he were just a professor here at the Kennedy School, we would be fortunate, because he is a professional economist, who thinks of things as a political economist in the way that the Kennedy School tries to train people. Just two years ago he published at Princeton University Press a very good economics book called Incentives and Institutions, which represents the first analysis of the transformations of a former Soviet or command-style economy, and an understanding of the actual process. This book is used as a textbook. So, academically, you could think of him.

As an institution-builder, he created the first independent research institute on economic affairs in Russia: EPICenter. The group of young people whom he recruited and who came with him ten years ago to the school to spend seven or eight weeks wrestling over what this plan should be, are actually all now very distinguished Russian political leaders themselves. Mikhail Zadornov went on to become finance minister, while the two Mikhails are both heads of committees. All of them are at the very least members of the Duma. Some of the people of our group also went on to gain distinction. So it was an interesting mixture. However, Grigory opened the first independent research institute.

Then he founded a political party: first Yabloko, which is now called the Russian Democratic Party Yabloko. He was the only person to be actively involved in the Duma elections and the presidential elections in each of the elections that have brought Russia to this point.

We are very fortunate to have Grigory here tonight. He is going to talk to us about Russia and about the challenges in Russian-American relations. Let us welcome Grigory Yavlinsky.

GRIGORY YAVLINSKY: Ladies and Gentlemen, I am really very privileged to be a guest here at the Forum. It is very important for me to listen to your questions, know your reactions and discuss with you the most important problems of the current developments. Russia is such a country that irrespective as to whether Russia is weak or strong, it is always related to everything that is going on in the world - or almost everything. I had a chance to be here and to present several very important issues about my country. Firstly in 1991 when we were developing a special plan to avoid profound suffering and unsuccessful developments in our economic reforms. But unfortunately, Mr. Gorbachev went to the G7 meeting in London with a different plan. And, in August 1991, the coup occurred.

The second time I was here at this podium was after the 1996 [election], and I was speaking about Russian economic reform. I tried to explain that if the reforms continued in the same way after the presidential elections in 1996, only a blind person couldn't see that we would soon be facing a debt crisis. This happened in August 1998.

Now I am here, I think, to share an important issue with you. Many things changed in Russia after the eleventh of September. A lot of things changed in the world. A lot of things changed in Russian politics. I am going to speak to you about the new stage and new possibilities in Russian-American relations, and about developments in Russia itself both this year and in the next one or two years -- maybe even less, as time is going by so quickly.

I will start by providing some explanations about the Russian economy and then about Russian democracy. Then, I will go to Russia-U.S. relations. I want to share with you first of all, my vision of developments in Russia -- of what Russia represents today. Then we will go to relations with the United States. I am not going to analyze developments with the United States itself, as you are just here. And you know that even better than me.

In every newspaper, you can now see very positive analyses about the Russian economy since 1998. This is true. The figures are much better than in any year after 1991. But I want to say that in my opinion economic growth this year will be visibly slowed owing to three major reasons. First of all, as you know, the main reasons for economic growth in Russia are the devaluation of the Russian currency and the very high price of oil. I would like to point out that these major factors of economic growth in Russia are almost exhausted. Now sales can only be expanded by providing better quality, new technologies, and lower costs.

Further growth would require more investments and radical change in the quality of management in the Russian economy and also in the political environment. I don't think that the Russian government -- if you take into consideration the statements of the Russian government in the economic forum -- understands that clearly. But I think that this is the key issue that the government should understand as soon as possible.

Secondly lower prices and the uncertain prospects of the international oil markets have led at least some of the larger Russian companies to revise and downscale their investment programmes.

And the third reason concerns political and personal concerns about the Russian business elite: fears of new attacks on the business people who acquired large assets through connections with the Yeltsin family. This problem is unavoidable; it is almost an institutional problem in Russia. Our reform and privatization process are responsible for this very high level of instability. The agreement which appeared up to the 2000 elections about peaceful coexistence between all the new elite, is now very much under threat.

For all these reasons, I do not expect economic growth in the first quarter and maybe even in the second quarter. I also want to underline that we already have inflation of 1.2% a week. So that means that we can expect at the end of the year -- even if that will be on this level again -- about 30-35%.

In my second point, section or paragraph about the Russian economy, I want to congratulate the Russian government. The Russian government has just created maybe the most interesting and most promising, at least partially, tax system among all the countries I know. The Russian government did what I have been advocating for ten years, including at this place. I was fighting the IMF, with the honourable Stan Fischer, and the other man who has now retired from the IMF, Mr. Camdessus, who said that low taxes are always better than high. They did not want to listen. They were saying that they needed a balance and for that balance, as bureaucrats they were saying, "we need these figures."

I was advocating a 10% tax, above all a flat rate of tax. Immediately after the elections, [at] my first meeting with President Putin--I came third, he came first [in the election]-- he asked me: "What would you do first if you were in my office?" I said: "If I were in your office, first of all I would create a flat rate of income tax of 10%." He said: "I promise that I am going to think about that." In the same year it was adopted by the parliament because he pushed it through the 13% tax and a flat rate. What we have today.

You remember the stories that Russians are not able to collect taxes, etc.. The IMF delegation comes to Russia and says that Russia is not able to collect taxes. I tried to explain to the IMF that no normal government would be able to collect a 45% income tax, and in Russia, never. Russians would not pay this tax. Never. Not now. Not afterwards. They simply don't want to. They kept asking me, "How do you know?" I said, "Because I am Russian. I know this." This is my explanation. Obviously they wouldn't pay that.

They said, "What will they pay?" I answered, "About 10%, not more. We are a poor country. The people have been very poor for a very long time, and they are not going to pay 45%. And we need only a flat rate. This is the only thing possible in Russia."

Now we do not witness 50% collection of revenues; we witness a collection rate of over 90%. We have better levels of revenue than we had before 1998, before all the crises. Coupled together with reduction in budget expenditures which I also want to praise the government, in proportion to GDP, corresponding expenditures stands at about 2.5% in 2000-2001. This is a very good number, and much better than 1998. Before the crisis it was 5.4%.

Like the president, the government has one main advantage -- unlike the previous president - the new president has enough authority to collect the necessary taxes from the large companies. The question is if he chooses to do so. This is a different question. But he has the authority. And that certainly supports the budget very much. If the price of oil price would be above $20 per barrel, we would be on the safe side.

By way of conclusion, I would like to add that Russia has no problem with debt burden at all. We can easily manage our debt, both foreign and domestic and we can be in a good position.

Consequently there are two key positions on external borrowing policy in future. One policy concerns the position of the government. They are happy, and they want to take money from abroad. The other position, which I share, is the position that Russia must stop all kinds of borrowing, including IMF borrowing. This is not acceptable any more.

The capital flight from the country is still very big, USD 20 billion a year. Twenty billion dollars a year from a country with a budget of USD 60 billion is pretty large capital flight. But I want to say that the criminal portion is much smaller than some people want to think. Mainly this is money that is stored abroad for business considerations, mainly for safety reasons. There is a clear case of political [in]stability in the country. Very often Russia is accused of corruption, and the money is explained by way of corruption. Even the chairman of the Central Bank from time to time makes a very special announcement that it is not simply USD 20 billion a year, it is a more than $4 billion a month. Things like that. But in my judgment this is not real. And I would not believe in that.

What about corruption? I want to say that I conducted a special investigation on this issue. I want to report some results. The result of this investigation is that the Russian bureaucracy and corrupt Russian individuals-whether they be businessmen or bureaucracy or politicians--are not storing their money in North Korea. This may sound strange to you. Similarly they are not storing their money in Saddam Hussein's banks. I can tell you which banks they are using to store their money. Some are not far from here; some are in Switzerland, and some are in Britain or in other famous countries. So when you are criticizing Russia for corruption, it is fair to say that at least it is a joint venture. (Laughter.) We would never achieve such a level of corruption if you were not prepared to offer such great assistance.

So, I want to ask everybody discussing Russian corruption and Russian laundering that they understand that this is always a joint venture. Russians cannot do it all on their own.

Now the banking sector is a very painful sector for us. Clearly it is not in very good shape. We still have no banking system. But those small banks we already had up until 1998 are trying to work without taking money from the government.

In terms of economic policy, I want to say that there is one major correction. We should proceed as far as possible and as rapidly as possible with institutional changes in the country. It is a tax system, a labour code, land legislation and foreign currency control. These must differ totally from what we have at present.

Generally speaking, Russia is moving slowly -- but it is moving forward with its economic reform. This is far less than I want to see, but far more than I often read in Western newspapers.

In my opinion another issue to key to any understanding of developments in Russia: domestic politics and the state of democracy. Here I want to say that I have a very negative view about developments in, first of all, the press, secondly, elections, and thirdly, the judiciary.

Regarding the press: I want to say that censorship, control of access to the press, manipulation by the press and establishment of the press as a means of propaganda, and full control over the major state channel of television are very serious issues. It is incomparable to 1992, 1993, 1994 and 1995. It is a completely different situation. Television in Russia [can be described as]: 80% entertainment -- very low quality; 10% of the ideas coming from the two or three policy makers from the Kremlin; and then sports and weather. That is it. No television at all. Finished.

We have almost the same situation with the newspapers. Certainly you can have a newspaper when you come as a tourist. When you come as a tourist to Moscow, you would be told that, "We have a lot of different nice things in Moscow. We have the Kremlin, museums, Tsar Cannon, nice shops, a zoo. We have democrats in the parliament. We can show them to you. Also, we have some newspapers which can openly criticize everybody. Our democrats are writing their articles, and so on." So this is for such purposes.

It is not possible to express views on a constant basis. It is not possible to draw a political line to your voters. I have millions of voters; I have a right to express my political views there. But there is no access. There is a stop list with names, and there is a stop list with topics, which are completely prohibited. It is a very tough situation there.

Elections. All the regional elections, almost all of them -- are manipulated. Look at the elections in the Far East. Look at the elections in the middle. Russia and Rostov, everywhere. Manipulated. Almost openly. Almost openly.

And the judicial system. This is the situation. It is used like a political tool, like a political weapon. Simply, if you want to do something, you are immediately using this tool as a knife or as a gun if you want to kill your political opponent.

In summary, I want to repeat what I was saying two years ago. This is the attempt to create a managed democracy or controlled democracy. It is a very special system. It is a system of quasi-democracy. The idea is that you have all the democratic procedures, you have a democratic facade. But you have no substance. This is the very well-known Russian policy of creating Potemkin villages. Now we need this Potemkin village to be accepted at different lunches and dinners everywhere abroad. So we have everything. But I want to remind you that Stalin's constitution was the most democratic constitution in the world in the 1930s. So we are experienced in organizing such things.

But I want to explain some small differences that you can find between the totalitarian system and the current system. The totalitarian system was simply destroying democratic institutions. Simply destroying them. This system, the system of a managed democracy or controlled democracy, is not destroying democratic institutions. It is adjusting democratic institutions to its own needs and goals. It is different in nature.

If they are unable to adjust them, they replace them with something different. "You don't like the Journalists Union? No problem. We will create a Media Union, and we will simply push you away from the scene." The same thing holds true for political parties and the television stations. They are not destroying private television. "No problem, you can have private television." But if they don't like this television, they will change the owner. They will simply change the owner, and put in an owner who will do what they want him to do. This is all really serious, as it is a small group of people who manipulates the whole situation in this way. They came to this, step-by-step, based on experience from 1996-1999.

The last observation -- I am certainly doing this quickly to be clearer in the main part of my presentation about Russia-U.S. relations -- concerns Chechnya. The war in Chechnya is a terrible, complicated and difficult issue. First of all, it certainly represents a massive oppression of human rights. Massive. Every day. In all directions and in terrible forms.

But now the situation in Chechnya certainly differs significantly from events in 1994-1995-1996. It is a completely different scene, and completely different situation. It is a result of federal policy as well, not something that simply happened. As the policies were adopted by the federal authorities, they are completely wrong. We have now reached a situation where we have a very big bird in Chechnya which I can call terrorism in the plain substance of this word. There are some people who I call separatists, and a large number of people who are normal. The question is, who can know who is who, and what is what? This is completely impossible. A hundred thousand people/military troops are staying there. And so this is all a complete mess. Sooner or later -- I would prefer sooner -- a political solution is needed. There is only one political solution: there must be a round table in Moscow under President Putin among all the forces interested in a political solution, without excluding anybody from Chechnya itself. This represents the only way forward.

I said this to the president several times, and insist on this. Sooner or later that will happen, only in this way. All the other solutions are simply impossible, as the situation there is too complicated now.

Now I am reaching the most important part of my speech; I will try to explain developments in Russia. After September 11, things happened which we never expected. President Putin made such a dramatic U-turn after his meeting with the leaders of North Korea who were traveling for months and months through Russia in a bulletproof train, which was very strange. It was like a dream. Something like a nightmare. Then, he was inviting somebody from Libya-Qaddhafi--to come first to Belarus, then to Russia. Then he was visiting Fidel Castro and saying that "this is the best place in the world." Then we had frequent visits from Iran, Iraq. So things were developing in a very strange direction. Almost the adequate direction to what we have in our democratization process.

After the eleventh of September, suddenly everything changed. Immediately. In one day. As soon as President Putin was able to find President Bush, he called him. And thirteen days later, on the twenty-fourth of September, he invited leading Russian politicians from the Duma, and the State Council -- that means the Russian senators -- to a meeting. There were about 21 people in this meeting. He said, "What do you think about our future? What should we do in this situation?"

The discussion was very long. And the political forces present at this meeting made the following statements: one person there said it was necessary to support the Taliban; eighteen people said that Russia must be neutral-eighteen; only two people said that it was necessary to offer unconditional and immediate support to the United States and the anti-terrorist coalition.

Then President Putin said: "Now I want to make my own statement." His statement was about, as you know, unconditional and immediate support. So that was his personal decision. And that was very interesting because this decision ran contrary to all members of the team that President Putin had been collecting around himself for two years. So it really was a personal decision. Certainly he had very strong tactical reasons for that decision. It was great that he understood them.

Two years earlier, even one year ago in summer 2000, you may have noticed, the Russian Security Council made a statement that "we are going to bomb the camps in Afghanistan, which are preparing fighters for Chechnya." For tactical reasons, it was absolutely clear that maybe for the first time in Russia's history, we could solve our problems by using someone's help and someone's force. And it was really a very difficult problem for us. And then suddenly, unexpectedly this help came.

It was not a gift for us; and we were not offering a gift. It was not a gift for us. We were just cooperating. From the very outset our interests really coincided. And I praise the president for understanding this issue. Maybe now everybody can see it is not so difficult to understand, but at that time it was rather surprising.

But there is also a strategic side to the issue. Not only tactical. We have had alliances with the United States before. We had an alliance in the First World War; we had an alliance in the Second World War. Now we have an alliance at the beginning of the 21st Century. But those were tactical alliances: now we can speak about strategic alliances.

Both presidents talk about a "strategic partnership." The question is, what does "strategic partnership" mean? I want to say that I think that strategic partnership means an absolutely new quality of partnership -- a new quality of relations between Russia and the United States. In most general terms, "strategic partnership" for Russia means to understand and introduce into everyday life the key values which serve as the basis for Western society and the United States. That is what "strategic partnership" means to us.

For our economy it means that we finally have to separate business from power. All the main business in Russia is conducted through the authorities and through engagement with the authorities and with power.

Democracy must be expressed very clearly through the free press and an independent judicial system--I want to stress that an independent judicial system is one more precondition for a strategic partnership. And certainly human rights is the main value and the main goal for the country's political development. For Russia, that is what strategic partnership means in general terms.

For the United States, it is not an easy task either, by the way. First of all, it is necessary for the United States for the first time not to place stakes on a group of people or on an individual -- not to repeat the experience with Mr. Gorbachev and then with Mr. Yeltsin. When the group or individual disappeared, the foreign policy of the United States and the West towards Russia also collapsed.

No republican administration or democratic administration, has ever believed in the country or in an individual in the Kremlin. It is necessary to see the country, not simply the leader. It is very good that Russian and American leaders have good relations; it is a good precondition. But it is only a precondition. In this strategic partnership, the US must see as its partner Russia as a country, not simply the leader of that country, who would sit in the Kremlin with a strong hand. And that strong hand would control all Russians because "they don't understand concepts like democracy or economy." That would not work in this way.

Secondly, it is very important for the United States to understand the situation with Russian borders. Russia has the longest borders with the most unstable regions in the world. The ultimate goal for Russia is to keep those borders in order. Meaning that we want to survive in the current borders. We want to become a European country within the current borders. And, we have a very dangerous situation in the south and the south0east: the borders with China, Iran, Iraq, Afghanistan, and the Caucasus. This is a real challenge for Russia. It is a real threat to us. So it is very important that the United States understands this issue.

Thirdly, for the United States, if we speak in general terms, it is extremely important to answer the question of how the United States wants to see Russia strategically. If the United States sees Russia strategically as a European country within the current borders as a strong democracy, and understand the role it is playing in Eurasia, that means that Russia and the United States can be strategic partners.

But that also has substance in practical terms. What does the strategic partnership mean for the United States in practical terms? First, de-monopolization of OPEC in the world market of oil. Secondly, stabilization, I think, forever, of the situation with China -- let me put it in such a diplomatic way. Thirdly, non-proliferation. Fourthly, stabilization of the borders with Belarus, Ukraine, and in Europe in general. And fifthly, one of the most important issues at present I want to give you the formula: a weaker Russia, more terrorism in the world; a stronger Russia, less terrorism in the world. This is plain.

But there are also a number of issues in the world, which require in my opinion strong and deep serious strategic cooperation between Russia and the United States. The Balkans, the Middle East, Pakistan/India, the situation with Taiwan, the environment, international crime and drugs, European security, and finally North Korea, Iran and Iraq. All these problems can be much better understood and pushed forward more easily with strategic cooperation between these two countries. I am not saying that these problems cannot be resolved without Russia. Maybe it is possible to resolve all these problems without Russia. But I think it would be much more effective and much more stable to find the answers to these questions with Russia.

So the first step for this kind of cooperation was made by the Russian side on the eleventh of September. Now for the second step. The second step involves a proposal about the new quality of the strategic partnership. I want to stress that it is not NATO. It is not Russian membership in NATO. In my opinion, if Russia was in NATO, NATO would collapse the next day. By the way, we have nothing against NATO at all, because the more people in NATO, the more [NATO is a ] mess, and we view ourselves as safer.

Secondly, it is not just about the negotiations about warheads as was the case during Soviet times. No. We are concerned about the creation of a new institutional framework for the 21st Century: political and military. Is Russia ready for that? Look at the signals Russia is giving. Putin shut down the bases in Cuba and Vietnam on his own, simply to give a signal. Then he was very shy, I would say he was very restrained and very modest on Bush's ABM decision, and then that next week, Bush said "we are going with NATO to Latvia." Once again, there was no hysteria from Russia. No noise. "That is okay." It is not okay, but "do what you want."

Thirdly, even when the United States said such a strange thing, strange thing, that first of all "no treaties" - very civilized point. Secondly, "we are not going to destroy the nuclear warheads, but to store them." But "to store" the warheads, about 4,000 warheads, means in plain Russianthat "Russia is an enemy," because you don't need to use that many warheads against any other country in the world. Only against us. Because you have only 2,000 objects to attack in Russia by nuclear means. We are saying 1,500 warheads; you are saying 1,700, but not only that. "We are going to store the others." Even after this statement the president of Russia was very restrained and was very reserved about this issue and stopped negotiating and explaining that this was not a very smart intellectual decision.

In March last year, Russia made one more step. A year has already lapsed. President Putin proposed to Robertson, the secretary general of NATO, the creation of a Russia-European or Russia-NATO anti-ballistic tactical defense system. He offered Russian territory, the Russian industrial-military complex, and Russian military potential. There has been no response for a year. So I think that it is the right time to put it all together, these things, and to say, "Look at this. This is a real signal." Why does the West always say, whenever Russia is extending a hand to shake, that it means that Russia is weak? Yes. Russia is weak. But we are not just talking about that. We are speaking about the possibility of cooperation in the most important areas.

So we are talking, I am talking just now, about the possibility of creating a political/military alliance. Russia is not looking at present for any gifts or free lunches. We don't need free lunches. We do not need anything -- the loans, the credits, the debt. It is not a bargain. We were making the Big Deal here at the beginning of the 1990s. That was the time for bargains. Now it is time for a joint venture. It is a completely different thing. It is a time for a joint venture to resolve the world's major problems which I named. And a joint venture for the 21st Century.

My lecture was titled, "Challenges and Strategies." I am coming to the end. So, what are the challenges? I would start with a challenge to the United States. The United States is now the strongest country in the world. It ranks first, second, third, fourth, fifth, sixth, seventh, eighth, ninth and, tenth -- in everything and everywhere. So all the other countries start after ten. Okay?

The challenge. What policy will the United States undertake in these conditions? This is a very difficult issue. What is clear is that previous policies are not working. The competition is over. You win. So what are you going to do? How are you going to communicate with the other parts of the world, and with the world in general? What positive approaches to the war on terrorism are you going to use? How are you going to fight the terrorists in a positive way? Not only with weapons. That is clear. Now what will the positive response be? What will you do about education in the world? What about starvation in world? What will be done about that?

It is necessary to understand that the traditional understanding of military force used in the 20th Century is almost finished. It is not finished yet, but it is coming to an end. As I said just an hour ago, the United States is prepared to fight elephants, bears, lions, and other giants. But now the enemy is mosquitoes. These weapons are not adjusted to mosquitoes. You know? It is very hard to fight with mosquitoes using a very big gun or an aircraft carrier. And the eleventh of September showed that this is a new quality of threat. It is coming from a different direction: that means that it is not appropriate for such things. It is a new reality. It is the question and the challenge: how is the United States going to behave? It is hard to say for the Russian politician as a senior partner.

It is a fact already. So what is the US going to do? Russia is not the only country to have domestic problems. The United States has them as well. It has serious domestic problems, like the influence of the military-industrial complex, which would rise more and more after the decisions. Arrogance of power. A balance in society. Economic problems, which you know very well. So there will be a lot of different changes in the world. But from history you know that the United States has responded to serious challenges in very wise ways. The challenges were serious. It was slavery. It was poverty during the crisis of 1928-1933 and the Depression. It was segregation. And every time, there was a wise answer to those challenges. So now what will the response be?

For Russia the challenge is a real democracy and market. And, a special challenge to the Russian political elite -- to teach ourselves to be a junior partner. It is very difficult. It is necessary to forget all imperial dreams forever and learn to be a junior partner.

These are the challenges. And now, in short, what are the strategies? Strategic partnership in the new framework of political and military alliance is a strategy for security for overcoming terrorism and for beginning to establish something new for the world for the 21st Century. This will change greatly in the domestic politics of the United States and the domestic politics of Russia.

Let me tell you that I can see a lot of very difficult and painful, almost unexplainable problems in our domestic policies, but if we find a common language for our strategic partnership, that would necessitate a new people in Russia for that policy, new criteria, and new people who would be able to realize new goals.

This is the crossroads for the United States and for Russia. This is the crossroads for many countries, but first of all for the United States. And it is an intellectual challenge. In politics, which can be the answer to this challenge, [it] can predominate the 21st Century. I hope that the United States and Russia will make a wise choice.

Graham Allison: We have just a little more than 15 minutes for questions and answers. We are going to hold a short questions and answers session. Grigory has already covered many questions that people might otherwise have asked, and he has raised so many issues that if we ask all the questions, we would be here all night. Let me start with Ken Heebner. What you should do is say your name, pose your question, and then Grigory will give a short answer.

Ken Heebner: My question is: what role will Russia play with OPEC in the world oil scene? Will they cooperate with OPEC, or will they pursue an independent course? And what is the outlook for Russian oil production?

Yavlinsky: Let me provide a short answer. First of all I think Russia must be included in the International Energy Agency. Then at the very outset the prices of oil must be balanced inside the members of the International Energy Agency and balanced and subsidized, especially for Russia, in order to give incentives to be there.

Secondly, I think that it is absolutely necessary to greatly increase investments in North-East Asia: here I am referring to Siberia. And Russia, I think, must be ready to hand over control of some pipelines to Western partners in exchange for stable and constant market access in the West. That would rapidly resolve a number of Russian economic problems and also demonopolize OPEC completely.

Russian Student: Good evening, Grigory Alekseevich. First of all, as one of the Russian students here, I would like to welcome you. It is very nice to see one more Russian face here. And I wanted to congratulate you, as your rating has just increased by 1%; I just read this on the Internet. Now the question. You are well known in Russia as probably the second largest critic of the present Russian policy. The first is Zyuganov, the leader of the Communists. My question is: as you probably have the best connections with American politicians and business leaders, what do you do both in Russia, on the issue of those joint ventures, and in the United States, to create and promote these investment projects and these projects to obtain new technologies? What do you do in America with your friends and partners to gain some new investments to Russia? And what do you do in Russia in the legislative sphere to create a good climate for joint ventures in Russia?

Yavlinsky: Regarding the United States, I have no partners here. It is a sad story, but I have no business here. So I am absolutely hopeless in the United States. As far as I understand, the only person who has serious business here is our president, who has business with the president of the United States, who had a chance to "look in his eyes and see his soul." So they both said that they are going to do business with each other. So this is maybe, as I said, the main precondition.

What are we doing in Russia? In Russia we are trying to put Russia back on track with the free press. We want to establish an independent judicial system and courts. We also want to have, as you may know, fair elections, in which we are taking part in all the time. And we attract about 7.5% in the polls in Russia, the Communists have 32%, Putin's party of power has 30%. But that is a very good result if you don't have any television for two years already. So everybody has to guess [about] you. But now people will have that in mind. That is what we are doing there.

Student: You mentioned the need for Russia to accept its role as a junior partner internationally. I was wondering if you think most members of the Russian political and military elite share that view, or if you think they are likely to any time soon?

Yavlinsky: They don't.

Student: Do you think there is anything the United States can do to make that a more appealing role for Russia and to engage Russian cooperation in that role?

Yavlinsky: I have a view, maybe I am not right, but I have a view that the level of education of the American political elite, especially military, is a little higher than that of their Russian counterparts. So they should understand the realities which they created themselves. So I don't see any alternative to what I said. Sooner or later they will come round to this point of view. Maybe with this government, maybe with the next government. But I don't think we have a lot of time. I am not just inventing something which is completely unreal.

Look. If you would perform your own analysis on all your own press, you would see that more or less every other newspaper is coming round to that idea. Simply I am very happy. I came to the United States to Washington, meeting the officials in the government talking to them about different things. That was a week ago. The climate was different. Now the climate has changed after the State of the Union speech and things like that. These are the developments. I am very happy today that Colin Powell said in Congress that a decision was taken for the signing of treaties on nuclear issues. That is okay. So I was not talking about the rejection of treaties at all, which was very strange for me. And I have only heard such ideas when I was a student. The boys and girls were discussing whether they needed treaties between each other or not. Since that time I have not had a chance to hear in politics something about people saying, "We don't need any treaties any more at all. We are simply friends." So what does the term "friends" mean? And by the way it was a strange argument, that, "We are friends with Britain. We have no treaties." Sorry, and NATO? NATO is a big treaty. Different thing - it is not working. But you have a treaty.

Mike Weissman: I wondered if you can tell us what you think the US and Russia must do in the joint venture, as you put it, to prevent the theft of Russian nuclear material by potential terrorists?

Allison: What would be the nature and the content of a joint venture as it relates to prevention of the theft of nuclear materials, especially from Russia?

Yavlinsky: As I said to you, we are in a very strange situation. Theoretically, first we undergo domestic changes, and then external. Theoretically, we should finish our reforms and then give you a call saying, "Hello Washington? It is Moscow. We have finished our reforms. We are ready for a partnership." I was expecting such a situation for ten years. It is not working. So now I am looking at the opposite situation.

The strategic partnership may be so important for domestic life in Russia by changing the people in the Russian government, in the Russian official, reaching the goal of a strategic partnership, which would be one of the most important components that would make it possible to curb proliferation of some nuclear things, or whatever. As the official position of non-proliferation has been 100% accepted by Russia. So the way is changing people, creating new goals and implementing new principles in accordance with a strategic partnership. And that can have a positive impact.

Konstantin Rosanov: Good evening. You mentioned the economic/business elite problem created by the privatization reform and Yeltsin's ties, which causes economic inefficiency and general instability. What solutions do you perceive for that problem?

Yavlinsky: I see only one solution. It must be an agreement between the president and the major business groups which has a special substance. I am not interested in previous developments. But from tomorrow, we need new rules of the game. That would provide stability for all those people. And that would give the president the right to operate in a new manner. That is what I am going to do when and if I become president.

Student: I want to ask you a question about the junior partnership, and its implications for Central Asia. I know that America is expanding its military bases in Central Asia. What is the reaction of Russia?

Yavlinsky: First of all, here is one more example. I heard two points from the United States. One was that "we will stay there almost forever." The other is that, "No, no. We are not crazy. We are going to stay there for some time, and then we will leave."

I think it will be a very difficult undertaking for the United States to stay there for a long time. But if the United States protects those states and that means Russia, from Islamic fundamentalism, if the United States can through its presence curb the drug traffic, and if the United States is ready to stop the different criminal routes and black money which is coming from that region, it will be a very positive outcome for Russia. It is vital for us to stop the drug traffic. It is vital. If the United States could do that--it won't prove that easy.

I think that it should be pointed out that the developments in Afghanistan do not represent an end in itself. This is only the end of the beginning. I think one can say this for sure. It is only the end of the beginning. And the euphoria based on a premise that everything is over - I would say that it is too early to say that everything has been done. This is only the beginning of the story. The stronger Russia is, the less opportunity there is for terrorism in the world. The weaker Russia is, the more opportunities there would be for terrorists.

Rachel Cherry: I wanted to ask you a question about economic development within Russia. I know that some land reforms were passed in spring: and I wondered if there were any more land reforms up for reading in the Duma. And, if you feel that the adopted reforms have already yielded positive results in the economy and given people more confidence, and if you think further land reforms are necessary to boost the economy further and give people more confidence.

Yavlinsky: To have more confidence in economic reforms, it is necessary to have a very stable political infrastructure and have a very clear feeling about the future. If you ask me, for example, what the main problem in Russia is, in general, one word, I would say, "unpredictability." That is the point. This is the problem everywhere at all levels. Political, economic, whatever.

I would honestly say that we already have no special economic problems. We have problems, but we know how to resolve them. Everybody knows. The problem now is in other dimensions. The dimension is: no independent judicial system, no free press, and no political protection in this sense. Political instability creates a hostile environment for investments. So it is not a case of the laws; it is not the case of the machinery which you can implement in the Duma or somewhere else. It is the case of the political environment in general. And that is what makes people more confident.

Question: I am a historian and a journalist and a previous scholar at Harvard. I was lucky enough to be in this same audience ten years ago listening to Mr. Yavlinsky. I remember that it was a very interesting talk, and Mr. Yavlinsky criticized Mr. Gorbachev, and I remember that at the end of the talk Mr. Yavlinsky was asked if he knew anyone who could replace Mr. Gorbachev. "Yes," said Mr. Yavlinsky. "But I cannot say who this person is. Not yet." And now I have heard a lot of critics of Mr. Putin. Now can you now name the person who can replace Mr. Putin?

Yavlinsky: I will repeat my answer. (Laughter)

Allison: We look forward to asking and answering that question again when the answer becomes clear.

Question: What do you think about Gorbachev's newly created Social Democratic Party that is growing in popularity? Do you think it has a chance of growing into a major party in Russia? (Laughter.) I will take that as a "no."

Yavlinsky: No.

Questioner: (continues) But do you think it may have a connection with the European Social Democracy which is the ruling party there?

Yavlinsky: No. It has no connection to anything.

Questioner (continues) Then why is its popularity growing?

Yavlinsky: That is what I don't know. But I didn't know that it was growing in popularity.

Questioner: (continues) It is. The numbers say so.

Yavlinsky: You know?

Questioner: Yes. I do.

Yavlinsky: I have never heard about that. I think that only two persons in the world have these numbers: you and Mr. Gorbachev. (Laughter).

Questioner: I think you are wrong.

Yavlinsky: No, that is true. By the way, I don't want to comment, because I respect Mr. Gorbachev very much. I don't want to disrespect him. But I have been party building for ten years. So I know what is what. And this is the issue. You cannot create a party in this way. Gorbachev is an outstanding figure, and I have considerable respect for him. But party building, especially socialist party building, social-democratic party building in Russia, would have a very difficult fate.

Questioner: (adds) But don't you think it would be a good substitute to the communist party?

Yavlinsky: They don't think so. The communists don't think so. That is why there is no chance.

Questioner: The question is what the people of Russia think.

Yavlinsky: They are not…once again, the problem of this party is that the people are not thinking about this party at all. At all.

Allison: Other than that it is doing great. Next question, the gentleman on the left.

Question: Mr. Yavlinsky, I have a question about the free press and the democratization process in Russia. When in the Czech Republic, in Prague, the state tried to impose their own director of news programmes, 50,000 Czechs took to the streets. I have never heard of such protests in Russia. If Russians want to democratize and have a free press, why don't they protest?

Yavlinsky: First of all, I don't want to be impolite, but I want to say that you need to check your ears a little bit. When NTV was closed, there were demonstrations in Moscow twice, each with more than 20,000 people. There were demonstrations in 60 cities in Russia. So it was a kind of a protest. Not in the same way as Prague.

It didn't happen with TV6. It didn't happen for many reasons, but there is one major reason. The people are deeply dissatisfied in general with what one can call the Russian press. We have prominent and very respected journalists. I can name them. Some of them are even in this audience. But, as for the press in general, the people don't feel that the press have over the past ten years been really interested in their problems. The people don't feel that the press has protected them from previous developments - such as the 1998 crisis for example.

The people had no chance to have any evidence that the press investigated crimes or criminal issues. So the people are much more interested in entertainment. It was a problem of the quality of the press.

What happens with the press? When political power first ruled the professional press, it disqualified the professional press; it made it yellow by creating different scandals, etc.. Afterwards, nobody came to support or protect it. NTV was supported because NTV was a highly professional channel. Extremely professional. It offered some of the best television, maybe in Europe. It was European-class television. It was the only thing created in Russia at a European level -- technically and thoughtfully, etc..

Secondly, NTV broached very sensitive issues in a serious way, such as the Chechen War and nuclear waste. For example now a decision was passed import all the nuclear waste from all over the world into Russia. NTV was the only channel to fight this decision. And although it was manipulated as a private channel, it offered professional political television where every more or less meaningful Russian politician could have the floor. Everyone. Whether it be Zyuganov or Zhirinovsky or whoever; everybody had a chance to speak there on a regular basis. And you can compare this opportunity with the other channels. That was the substance of political television. It was the only channel of its type.

TV6 was not such a channel. They were not working in the same style. So for all of those reasons, this is a drama, and people lost t interest. And that is why they are not publicly protected.

Yabloko, my party, held meetings. I can tell you honestly, that in that meeting in the middle of Moscow, there were more journalists and correspondents than media people.

Allison: Unfortunately, it is my responsibility to tell us that the witching hour has come. There are a number of other people who have good questions. I apologize to you. If you come down quickly, it is possible you might be able to ask Grigory your question at the end. But for now, and in the hopes that we get him to come back, the local workmen say that we need to stop. So please join me in thanking Grigory Yavlinsky for coming, and hope that he will come back.