Johnson's Russia List
#6235
11 May 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org

********

Brookings Press Briefing
Preview of President Bush's Trip to Russia: Assessing Current Relations
Between Moscow and Washington
May 9, 2002 
Washington, D.C. 
THIS IS AN UNCORRECTED TRANSCRIPT

MR. JAMES B. STEINBERG: Good morning ladies and gentlemen, welcome to
Brookings. The President is meeting with Putin again and once again we're
here to talk about what this means for U.S.-Russian relations in the
broader context, both on the war on terrorism and some of the big issues in
European security.

We have with us this morning three very distinguished Brookings scholars
each of whom have focused on a different aspect of the issues that are
going to be at stake in the summit.

We're going to begin with Cliff Gaddy who is going to talk about the
context of what Putin will be thinking about, what environment President
Bush will find President Putin coming from as he comes into the summit.
Then Fiona Hill will turn more broadly to the overall themes for the
summit. Finally, Jim Lindsay will talk about some of the security issues,
particularly the nuclear weapons issues that have been such an important
part of discussions over the last several months.

So let me begin with Cliff.

MR. CLIFFORD G. GADDY: Thank you very much, Jim. I'd also welcome all of
you here.

Let me say from the beginning, I'm just going to make a few brief remarks
but I really want to make a quite simple point. I want to ask what is going
to be on the mind of this man, Mr. Putin, that President Bush is going to
be meeting with in a couple of weeks?

Judging by Putin's major speech three weeks ago today, the state of the
union speech, it's not going to be relations with the United States.
Judging by that speech it's not going to be foreign policy at all. I think
it's a mistake, however, to judge the state of his mind by what he happened
to say in that speech and Fiona Hill is going to I think make the point
that foreign policy is indeed one of Mr. Putin's preoccupations but that in
fact he can't really talk open so much about foreign policy to certain
audiences in Russia. Partly, I guess, because he's convinced that's one
area that he can handle on his own, handle as well as anyone else in Russia.

There is, however, another major preoccupation that Mr. Putin has, the
economy. I'm quite sure that he feels he cannot handle this problem as well
as other people can and is not sure if anyone can. That's what's worrying him.

So I'd like to say just a few words, give you a sense of what I perceive
some of his thinking to be about the economy and then try to lead into how
that might possibly impact the way he will be talking to President Bush.

If we look back over just no longer than the last couple of months, and
some of Mr. Putin's appearances, some of his activities, I think you can
get a sense of what I'm talking about when I say he is preoccupied with the
economy.

March the 4th he held his weekly Cabinet meeting. After having made a few
introductory remarks about some of the other issues that he was involved in
he told his Cabinet, "We need a rigorous analysis of what's happening in
our economy, what's happening in individual branches of industry. Look, we
all know the statistics," he said, "but I want the government to find out
what's happening in specific industries and tell us what we need to do to
fix what's going on."

Now what was he talking about there? And I ask that question because my
sense is that the general perception is the Russian economy is doing quite
well. In fact, however, there are some critical signs in the Russian economy. 

In the year 2001, the past year, profits declined fairly dramatically
throughout the Russian economy. More serious, I think, from the standpoint
of Mr. Putin and what he's indicating in these remarks, were actual
declines in output. Less output being produced this year than last year and
before, in specific sectors and also in specific regions. Mr. Putin pointed
out that aggregate statistics do not mean very much in Russia today, and I
think they're meaning increasingly less as the country polarizes and
fragments with different levels of performance.

But just to give you a sense of what he already knew at that point was that
the figures for the first quarter of 2002 showed that in 30 of Russia's 80
regions industrial output was declining, not growing, as compared to the
first quarter of 2002, and that these included arguably a list of the very
most important major industrial regions in the country centered in the
Urals and the Volga region.

A couple of weeks later Mr. Putin made a very unexpected trip domestically
to the region of Krasnoyarsk in Siberia and to the town or city of Norilsk
[ph], the site of a gigantic metallurgical combine there. Krasnoyarsk is
one of Russia's most prosperous regions because of the metallurgical
industry and their export revenues. It previously had been regarded as one
of the success stories, one of the ten so-called donor regions to the
federal budget, that is a region that provides more than to the center than
it receives back.

Mr. Putin comes up there, as I said, unexpectedly, holds a meeting and
announces that I'm glad to be here, Governor Lebid [ph], the late Governor
Lebid who after that died in a helicopter crash, had a longstanding
invitation from Governor Lebid to come up there, but frankly, I did not
ever seen any reason to come. You're doing fine. 

He said this morning I was shown around the region, I was shown around the
city. They showed me all your hospitals and clinics and schools. It looks
great. He makes a few perfunctory positive comments about this, and then he
says literally. Okay, that's the end of the diplomatic part. Now let's get
down to business, and he says you're not doing well at all, you're screwing
up. Loss makers are growing in the number of companies that are losing
money rather than making profits, your socioeconomic indicators are worse
than average, you have a budget deficit, your wage arrears are growing. You
cannot even pay your government employees and the federal government had to
send money up here to pay them. And he said very specifically, if we cannot
make it work here in one of our most prosperous regions, how is it going to
work anywhere else in the country?

So a second major sign, a public signal that things were not going well,
that he perceived that they were not going well.

Then began the rather ugly episode with his Cabinet and the state of the
union message. Beginning in April at again another Cabinet meeting, Mr.
Putin began haranguing his government for failing to come up with high
projected growth rates. I need to give a state of the union speech, he
says. I need to be able to promise some high growth rates. I've asked you
to come up with projections for high growth rates, you don't do it. I'm not
going to give the speech until you do. He has in effect said, and in effect
that's exactly what he did. He delayed way beyond the originally scheduled
time of delivering the state of the union message. 

In the end they never gave him higher growth rates. One of the ironies of
Putin is that he has around him some very very competent economic advisors,
a whole new generation of economic advisors. They're very good at running
the economy but they're much too honest to come up with figures they know
cannot be justified.

The background for this is that Mr. Putin, if you recall in his so-called
millennium message, the internet message he sent to the Russian people
right before he officially became President New Year's 2000 made a rather
curious projection and promise that Russia would see 15 years of 8-10
percent GDP growth per year and that would bring Russia up to the level of
the least developed of the Western European countries. I kind of thought
that must be a slip of the tongue, he might be wanting to forget that he
ever said that after awhile. Nobody can achieve that sort of growth for
that long of a period. But apparently he has not forgotten it and he's
getting worried. He's seen a couple of years go by. One year did have high
growth as a result of inheriting a situation in which there had been big
declines after the August 1998 financial crisis, but since then growth has
slowed noticeably. I know all of you won't be able to see this, but in fact
Mr. Putin inherited a booming economy. Ever since he has come into power it
has slowed down. For those of you who can see it the idea is that when he
comes in industrial growth per month is at a rate of 25-30 percent per
month. It has subsequently declined to its current rate of about 2 or 3
percent and fairly steadily, with little bumps along the way.

He comes in maybe assuming that this is going to continue, maybe assuming
that this is the norm. He has gradually come to the realization that this
is not the case, and my sense is that he doesn't quite know what to do
about it.

Finally, his state of the union speech. You read it and you can only think
of this guy is like a coach giving a half time pep talk, a team that is way
behind, and he is pretty desperate.

He introduces the speech by saying, "Understand the world outside us today.
It's a struggle," and he loves to use this word struggle, badaba [ph],
which happens to be the same word in Russian for a wrestling match. Mr.
Putin of course is a judo expert. He is a sportsman. He is a competitor.
And he talks in this language. He says, "In the struggle, that struggle out
there, Russia has to be strong, we have to be competitive. Countries these
days are competing in all areas. When we were weak we had to relinquish a
number of niches, a number of areas to other countries. They're not just
going to give them back to us, they're not going to hand them back to us.
The conclusion is straight forward. In today's world nobody is trying to be
our enemy, but nobody is out there waiting for us with open arms. Nobody is
going to give us any special breaks. We're going to have to fight for our
place under the economic sun on our own."

And that's when he said that we need more ambitious goals. If we're going
to compete we need faster growth rates. He said, "Is Russia ready for this
competitive struggle? Is Russia capable of reaching the growth rates that
I've just described that we need? Our government doesn't seem to think so.
They underestimate our potential. They aren't even trying."

He says this in the state of the union speech about his own Cabinet. Just
short of branding them as traitors, it seems to me.

He himself went on to propose a number of reforms. Very pedestrian, very
ordinary administrative reforms, legal reforms, local government reforms,
small business reforms, housing reforms, ignoring relatively some of the
really major challenges that Russia has -- demography, health, military
reform, and so forth.

And finally at this past Monday's Cabinet meeting he addressed them again
and he said, "Well, one month has gone by and I still don't see any new
figures." So this is Mr. Putin right now.

And in a sense, this is his dilemma, as I said. He has around him some very
competent people helping him deal with the economy. They are very
intelligent people. They are so intelligent that they simply cannot allow
themselves, at least as yet, to play this game of coming up with
unrealistic figures and unrealistic programs.

Does this mean the crisis for Mr. Putin, despite the overwhelming
preoccupation that it represents in terms of his own energy and time, is it
a crisis? Is it something that would threaten his position? I don't think
so. Is it dangerous? Yes, I think it could be, but not because of the
objective situation of the economy but rather because of his reaction.

As I said, I don't think Putin really knows how to deal with this
slow-down. I think he believed that it wasn't going to happen. He has also
invested a lot of personal prestige, a lot of personal interest in economic
performance, in the competition sense, in the idea that this is a way we
measure success and we measures success of countries and economies.

His immediate reaction, because this is the kind of person he is, is to fix
it. He wants big action, he wants quick action. But as I said, he has a
government that is unfortunately, from his standpoint, too competent and
knowledgeable to do that. He wants magic bullets, they know they have known.

And psychologically I think right now he's in a position of on the one hand
spending a great deal of effort in trying to cope and trying to manage this
enormous country with all its problems -- social, economic and political --
on the one hand, and on the other hand hoping for, looking for magic
bullets. Magic bullets that would provide a solution for him which is
stability and growth together. It's very important because he knows that he
cannot afford to undertake disruptive, major economic reforms, what he
himself has referred to as radical experiments. That has not been his
mandate, it was not his mandate from the beginning. His primary mandate is
to maintain cohesion in the country, stability in the country, and of
course that is the reason that he looked upon foreign policy in the way
that he does.

In short I think Putin is a man with many many concerns. He has many
preoccupations. They begin with his own domestic situation, the looming
problems in the economy, some further challenges out there on the horizon,
and at the same time of course, he has the challenges that face him in
terms of the foreign policy environment within which he has to operate and
deal with these domestic problems.

MR. STEINBERG: Cliff, it sounds to me like Putin has learned a
quintessential American political lesson which is always run as an outsider
even if you're a total and complete insider. [Laughter]

Fiona?

MS. FIONA HILL: Thanks, Jim.

I'm going to make four quick points. First of all I just want to make some
general comments about the summit, then as Cliff suggested I'm going to
talk very briefly about foreign policy from Mr. Putin's perspective. I'll
then make two short comments, one on the war on terrorism and then also on
Central Asia and some of the things that are coming up for Russia and the
United States in that area, of course that being linked to the campaign in
Afghanistan.

So first of all on the summit, the most important point to make here is
that the summit has provided a framework and a clear timetable for making
decisions about some of the key issues in the U.S.-Russian bilateral
relationship. And so as a result of the last several months we've seen a
great deal of bilateral consultation and high level meetings which I think
have actually put U.S.-Russian relations on a fairly positive trajectory.
And in the remaining two weeks before the summit we have an agreement
underway between the U.S. and Russia on reductions in strategic nuclear
arms which Jim is going to talk about. That's of course eventually going to
have to be ratified by Congress and the Duma. And we've got also a
political agreement on a new strategic framework for bilateral economic and
political relations that's also going to cover joint activity in the war on
terrorism, cooperation perhaps on missile defense developments, and some
joint activity on non-proliferation.

The important point to make here is that on both sides neither of these
agreements are really seen as huge breakthroughs. They're seen more as
mechanisms to consolidate the progress that has been made so far and that's
very much the tenor of commentary in Moscow on these two agreements.

And even if these agreements are signed in Moscow, we're going to have to
have still quite a lot of activity to push things forward after the summit.
There's a great deal of reluctance in the Russian military to make major
cuts on the nuclear arsenal, even if an agreement is signed on this, and
there's still quite a lot of trust in Moscow in the U.S. and its ability to
follow through on commitments, or at least its willingness to follow
through on commitments.

On the economic side, as we know Russia still wants to see the lifting of
the 1974 Jackson-Vanick restrictions on its trade. It wants to see the
recognition of Russia as a market economy which will pave the way for
eventual acceptance to the WTO. And in spite of the considerable amount of
pressure from the Bush Administration and the U.S. business community right
now, we still have to push these agreements or these waivers through
Congress. 

We've also got NATO expansion. In the next week we've got the summit in
Rechyavek [ph] with the U.S.-Russian-NATO council meeting. And all of these
are old issues that we've had looming over us in the U.S.-Russian
relationship for the past decade now. So we still have quite a long way to
go in simply clearing up the debate with hardened U.S.-Russian bilateral
relations for the past ten years.

The most important current question is how much the U.S. and Russia can
continue to cooperate in the war on terrorism and in the campaign in
Afghanistan, and I imagine that that's going to be a major discussion also
in Moscow at the summit.

Now on the foreign policy aspect of things, Cliff and I have a new policy
brief which I'm just going to plug very briefly which is out there, and if
you haven't picked it up please do on the way out. What we're arguing in
this policy brief is that the main thrust of Russian foreign policy right
now under President Putin is to ensure international stability. And a
critical component of this is a predictable, stable relationship with the
United States in which Russia is consulted on all of the issues that
directly affect its national interests.

International stability is a critical element for Putin and the Russian
government to enable him to tackle this overwhelming array of domestic
challenge, especially economic challenges that Cliff has just outlined and
that we also talk about in the policy brief. And obviously Putin is going
to have to tackle these if he's going to make Russia an economically
competitive and viable state.

Now in [likened] domestic affairs there's a general consensus in Russia on
what has to be done about clearly, as Cliff was pointing out, President
Putin isn't entirely sure what he has to do to tackle this problem of
growth rate. President Putin is largely [only going] in foreign policy. In
part this is because he sees the foreign policy agenda for himself and he's
made it very clear that it's off limits for external participation at this
point. That's one of the reasons why there was no mention of it at all in
his April state of Russia address. And his priorities have to be discerned
rather than those stated. 

Although relations with the U.S. are clearly a priority there's a great
deal more speculation about what the other priorities are that in fact in
Moscow and even in Moscow itself there's a great deal of debate about where
it is that President Putin gets his foreign policy counsel from. And
certainly foreign policy discussions are confined to a very small circle
within the presidential administration and perhaps few people from outside.

Now obviously outside in Moscow there are an awful lot of people who have
opinions on what Mr. Putin's priorities should be and they're making a lot
of public noise about this. But that's actually really a distraction
because President Putin is keeping his cards very close to his chest.

And while foreign policy seems to have very little effect on President
Putin's popularity with the Russian public and a foreign policy disaster
just like a disaster on the economy might not really affect his high poll
ratings that much, it will certainly turn up all the big background noise
from the public opinion and the elite.

But what might happen if there is a foreign policy disaster is it might
negatively impact his own standing within his inner circle and that
actually could have some negative consequences.

If we look back to the Yeltsin period we know that Yeltsin had very low
ratings in polls and sometimes they went down to single digits. But he also
had a considerable lack of personal procedures in his inner circle. It was
well known of course of his drinking problems and the fact that he was
disruptive on a number of issues, and as a result we had a lot of free
lunching in foreign policy by a whole range of institutions in Russia from
border guards to the Russian military to the foreign ministry and many
other institutions in between. And this led to a great deal of confusion
and chaos in Western foreign policy in the 1990s.

The fear is in many circles in Moscow that if Putin makes some missteps
abroad in relations with the U.S. or on a number of other issues, where he
is stepping out essentially alone, then he could lose control of the agenda
to be kept for himself here because he may lose his standing within this
very small, tight group around him who are helping him in directing this
policy. Then we might see a return to the foreign policy disarray of the
1990s with again a whole lot of freelancing on various issues that could
eventually also impact the domestic front on the domestic agenda if this
spills over into economic affairs or anything else.

So beyond this emphasis that we're pointing out in this policy brief on
strategic stability, the rest of the foreign policy agenda is not entirely
clear. It actually paradoxically makes it easier to define failure than it
does to define success for Mr. Putin.

This is where I have a few concerns, because even more so than what Mr.
Putin gets or he doesn't get in this list of the things that we've had on
the bilateral agenda for the last ten years in U.S.-Russian relationships,
irrespective of what he gets or doesn't get from us at the summit with Mr.
Bush, it's really the continued cooperation on the war on terrorism where
he runs some considerable risk.

We've seen today, in fact a tragic explosion in [Gygistan] in southern
Russia where as many as 30 people may have been killed, that Russia still
has a very serious problem with domestic terrorism. This has just been one
in a series of similar explosions in Russia over the last several years.

But as the months have passed since September 11th and we've moved beyond
the campaign in Afghanistan onto other issues, we've lost some of the sense
of common cause that President Bush and President Putin had immediately
after September 11th. We've seen the U.S. move on to tackle the tentacles
of al Qaeda in the Philippines, Yemen, and most recently on Russia's
borders in Georgia, and Washington has now designated Iraq, Iran and North
Korea as state sponsors of terrorism, and of course the U.S. seems
committed to a preemptive strike in Iraq if the crisis in the Middle East
currently can be resolved.

Given his background in the security and intelligence services, President
Putin prides himself on knowing it's an issue about what the problems are
out there, especially from Russia's perspective, and he does not feel that
Iraq, Iran and North Korea are problems for Russia.

While Russian intelligence officials will concede that the U.S. concerns
about Saddam Hussein's acquisition of weapons of mass destruction have some
merit, they feel that this problem can be managed. From the point of view
of Iran, Russia actually sees Iran as a stabilizing force in the Middle
East, in the Caucasus, in Central Asia, and doesn't at all share the
perspective of the United States on Iran. And for Russia, North Korea is of
course an immediate neighbor, shares a border with terrorist. It's seen as
unstable but it's not seen as a military threat. So on the axis of evil
from Mr. Bush's perspective, this is not Mr. Putin's at all.

So for Putin now, his association in the war on terrorism with the United
States has become something quite unpredictable and it could have
potentially negative implications from Putin's perspective for the entire
region on Russia's borders.

I think when Putin first engaged with the United States most actively after
September 11th he felt that this would enhance Russia's sense of security
and its sense of international stability by really making a common cause of
the United States and moving forward, but I think from his perspective now
it may be the opposite. And if Russia and the U.S. are to continue to work
together in the war on terrorism, these divergent views would have to be
reconciled, so I imagine that is going to be a major point of discussion in
Moscow, and Putin most importantly is going to have to feel that he is
being consulted on where the U.S. moves next and he's going to have to
demonstrate that his being consulted to the members of his inner circle.

Quickly on Central Asia, from the U.S. perspective this time there may be
some pitfalls ahead again in the U.S.-Russian relationship here. There's a
great deal, obviously, of potential for cooperation between Russia and the
United States and Central Asia. Russia was also concerned about security
dilemmas in the region, especially about the Taliban and the al Qaeda
activities and militant Islam emanating from Afghanistan into Central Asia.
The Russians, like the U.S., would like to stamp out drug trafficking and
the other smuggling of weapons in the region, and it would also like to see
the long term promotion of stability and trade and development in Central
Asia.

There was already a conclusion in Moscow that U.S. military presence in
Central Asia is going to be there for the long term, but there again is
ambivalence as to whether this is necessarily a positive thing for Russia.

And if the overall U.S.-Russia relationship sours and Russia comes to feel
increasingly insecure and feeling that it's not consulted on other fronts,
it's quite possible that these basic interests may diverge here too, then
we may see again renewed Russian attempts to obstruct the U.S. in Central
Asia as well as in other sensitive regions on Russia's borders such as
Georgia. Especially if we go back to this foreign policy freelancing that
we saw in the 1990s with the Russian military, which is most opposed to a
long term U.S. presence in Central Asia feels that it can seize its own
initiatives in the region to block United States initiatives.

So we could see, instead of an arena for cooperation, Central Asia becoming
again an arena for U.S.-Russian competition.

I just wanted to point to a few worrying signs. Russia in the last few
months has also begun to formulate its own response to regional security
beyond its cooperation with the U.S. in Afghanistan, and to start to
examine the nation's security provisions in the Shanghai Cooperation
Organization. This is the group that Russia, China, and four of the Central
Asian states are part of. And in early April we saw a major exercise
including Russian troops and contingents from eight CIS countries which
this is a huge counter-terrorism exercise including live fire. It was
significantly the largest since the collapse of the Soviet Union in the
region.

And coming up on June 7th, two weeks after the summit meeting between
Presidents Bush and Putin, in St. Petersburg we're going to have a meeting
of the Shanghai Cooperation Organization and on the agenda there is a
discussion, at least a tentative discussion, of a new security alliance to
build upon these kinds of exercises on counter-terrorism in Central Asia.
And most regional analysts see this very much as a response to the presence
or the long term presence of the U.S. in the region even though of course
terrorist threats to Central Asia have subsided dramatically since the
campaign in Afghanistan.

So as we move ahead beyond the May summit and in thinking about how the
U.S. and Russia are going to work together in Central Asia and other
arenas, we're going to have to work very hard to keep the Russians on
board, to keep them consulted on important issues, and really to keep and
maintain the momentum of the very positive trajectory that we've had so far
in the discussions leading up to the summit and to try to continue this
cooperation in places like Central Asia rather than turning back to the
competition that clearly Mr. Putin sees in the economy but that doesn't
necessarily have to be the case on other aspects of foreign policy.

MR. STEINBERG: Jim?

MR. JAMES M. LINDSAY: I guess my job here is to take us through the arms
control agreement that may or may not be signed at the summit meeting and I
should begin by saying it's somewhat ironic that the President of the
United States George Bush is going to go to Moscow and that one of the
major issues on the agenda is going to be an arms control agreement. I'm
sure you're all well aware that when the Administration came in it was very
critical of formal arms control agreements arguing they were part of the
problem, not part of the solution.

Last November when Mr. Putin was in Washington and told the President that
he wanted some agreements put down on paper the President in the press
conference seemed to be miffed that this would really be an issue. In
February the President came around and said that he would get some kind of
binding agreement, and now the Administration finds itself in a position
that to some extent the success of this summit is going to be judged on
whether or not they can actually produce the kind of agreement that they
had previously been rather skeptical about.

So the question sort of bubbling on in Washington these days is are we
going to get an agreement? Certainly all of the signs coming out of the two
capitals in the last week or so have been very positive. I think a key U.S.
diplomat in Moscow gave a background briefing yesterday saying he thought
this was going to happen. Mr. Ivanov was here over the weekend and said
that he thought there was a very high probability that we would get an
agreement. Mr. Bush and Mr. Putin both seem to want to have an agreement so
it makes it likely that we'll get a deal. The obvious caveat is to keep in
mind that they're actually trying to do a tremendous amount of work in a
very short period of time on an issue that has a potential momentous
consequence. So it's possible on the eve of the summit they could hit a
snag and not have it go forward. I think as Jim knows, those last minute
difficulties are not unknown in summitry. 

Another possibility I see quite likely is some of the details will simply
get put off to subsequent agreements. That is if we do get a binding
agreement it will not necessarily settle all outstanding issues.

I would also add, to sort of draw on what Fiona has just said, that nuclear
weapons while still important in the context of U.S.-Russian relations are
not all defining. So I think it's important to recognize that there are
other issues that are going to be on the summit, and while an arms control
agreement may get a lot of attention I think [new agreements] generally are
less important though not unimportant in U.S.-Russian relations.

The real question though is a binding agreement to do what? What will be in
this binding agreement? I think we know that the two capitals have some
fundamental differences on nuclear weapons. They can basically be summed up
the following way: The Bush Administration believes it's important to have
maximum flexibility to make decisions about nuclear weapons, and the
Russian position is we want to have maximum constraints on the ability of
the two sides with respect to nuclear weapons. Now obviously that's a
fundamental difference.

The Bush position flows from the logic in the nuclear posture review. My
colleague Ivo Daalder and I did a policy brief discussing the NTR. It's I
think available out on the table outside. So Fiona's not the only one who
hawks her wares. [Laughter] I won't take you through all the intricacies of
the NTR but basically what it says is the United States A, can go much
lower than 1700-2200 warheads; but B, it's a dangerous world out there so
we should not destroy the decommissioned warheads but keep at least some of
them in a responsive force. Because there may be some unforeseen military
contingency down the road that would lead us to want to increase the size
of our nuclear forces in a matter of weeks, months or years.

The Russians look at this perspective rather wearily. The Russians I think
wanted to go deeper in large part because of some of the budgetary problems
that Cliff has alluded to. It costs a lot of money to maintain a very large
nuclear arsenal. The Russians would like to go down lower. Putin's range
was 1500-2200 warheads, they might even go down lower than that. The
Russians really prefer to have cuts that were irreversible. They're
uncomfortable with the idea of a responsive force in part because they
probably would not be able to maintain the necessary infrastructure to
upload very quickly, unlike the United States. And I think the Russians
also have some concerns and aired some concerns over the link between
offensive weapons and defensive weapons and want to see some understanding
about the relationship between the offenses/defenses strategic balance.

I'm not going to take you through all the details of all the sorts of
complicated [excuses] that flow from those broad observations. Let me
simply suggest some of the things that will probably be in the agreement,
some of the things to watch for that might be in the agreement, and some
things that probably aren't going to be in the agreement.

In terms of what would be in the binding agreement, we're likely to see the
following things. Number one, an agreement for ten years; we will see it,
the Bush Administration's proposed to go down to 1700 to 2200 warheads.
There's a reasonable chance there will be additional transparency
provisions so that each side will have confidence that the other is living
up to its promises, particularly data exchanges and things like that. And
it will probably have a standard six month withdrawal clause that is
allowing either side to revoke, to plead national urgency and to leave the
agreement. That's pretty standard.

One to keep your eye out for is whether or not the United States gets what
it has proposed, this is in addition to a six month withdrawal clause, to
also have a 45 day notification clause. Let me go ahead and try to explain
the difference.

Under a 45 day notification clause if you notify the other side that for
national security reasons you're going to have to breach the agreed limit
and you will do so in 45 days, but unlike a complete withdrawal which would
terminate all obligations, the 45 day provision would leave all other
understanding in the agreement intact, particularly the verification and
transparency provisions.

Now the Russians were I think relatively cool to this idea. The Department
of Defense is pretty keen on it. We'll see how that shakes out.

Another real question to look for is what does the agreement say, or what
do they say in any non-binding political statement surrounding the summit
as to what happens at the end of this ten year period. What are the two
expectations the two sides have of each other, any obligations they might
take on.

What isn't likely to be in the agreement? Number one, you're not likely to
see a specific number. The Russians have been arguing for not a range, 1700
to 2200, but a specific number as close to 1500 as possible. It's not
likely to happen. But we are not likely to see any limit on the size or
character of what the NTR calls the responsive force. That is the
decommissioned warheads.

We're not likely to see anything in the agreement that requires the
destruction of decommissioned warheads as you go from 6000 or 7200,
depending on how you count, down to the 1700 to 2200 range. 

And we're not going to see anything in this agreement that limits
launchers. Launchers are critical because they affect how quickly you can
upload.

Now I should point out that all of the things that aren't likely to show up
in the agreement are all things the Russians have said in the past they
very much would like to see if they could get their ideal agreement. As far
as I can tell, both from what American officials have said both publicly
and on deep background, and likewise from the Russians, the Russians have
backed off a lot of these demands, requests, negotiating positions and it
may not be too far to say they essentially are conceding their way to an
agreement by deciding that what they will in essence do is to accept
whatever it is the United States is willing to agree on.

The real question is why are the Russians, to pick up on Fiona's point, why
is Mr. Putin being so agreeable? I would imagine as the months and years go
on historians and pundits will argue this out but I think there's really
two likely explanations. 

One is that for Putin it is important for reasons both at home domestically
and abroad to have some symbol of Russia's continued great power status.
Russia is the only country in a bilateral nuclear relationship with the
United States and that has some symbolic value.

I think a second rationale is that for Putin any agreement is better than
no agreement because if you get an agreement it keeps Russia in the game.
It keeps some semblance of scaffolding, of international arms control
architecture out there. The expectation may be that Mr. Bush will
eventually leave office and it would be easier to build on these remnants
of an arms control architecture than to start from ground zero.

I should also point out that the Russians will probably understand they
will not be able to get what they want in the binding agreement. We are
likely to see political declarations or statements at the summit and we may
see some broad agreement, though non-binding on some of these issues,
perhaps on missile defense, but clearly the Russians reserve the right that
if they can't get something satisfying even in the political declaration
about presumed expectations, that they can issue their own unilateral
declarations of their understanding of what's happened and particularly
with regard to missile defense.

Final issue. Is this going to be a treaty or an executive agreement? This
is a question talked about a lot here in the United States. So far publicly
the Administration says no decision has been made. The executive agreement
versus treaty distinction is something rooted in American constitutional
practice. From the vantage point of international law they're treated as
identical. They're both binding. The difference in the American context is
that if it's a treaty the Senate must provide its advice and consent by
two-thirds; if it's an executive agreement given statutes on the books it
would have to be, the agreement would be submitted to both houses of
Congress for simple majority approval. That creates some really interesting
dynamics in American politics because the Senate wants to reserve its
prerogative with the treaty-making power. Senators Biden and Helms,
Democrat and Republican, fired off a letter saying we want a treaty. You
can bet your bottom dollar a lot of people in the House of Representatives
very much would like to see it as an executive agreement because that gives
them a way into this whole debate. This is an issue that has alienated
House members all the way back to 1794 and James Madison on some issues, so
it has some very long history. It will be interesting to see how the
Administration decides who it wants to offend.

The Russians are going to submit their agreement to the Duma. I think one
of the questions to follow up down the road is who's going to go first in
submitting it? The signals coming from Moscow is they would like to see the
Americans run it through Capital Hill before Putin has to go to the Duma.

MR. STEINBERG: I think they have some history for thinking that maybe they
would like to see the U.S. go first.

Let me just conclude with a broad observation about the trajectory of
U.S.-Russian relations and then we'll open it up to questions.

I think it's interesting to look back at the beginning of this
Administration from the campaign into the early months of the
Administration to what one might have guessed U.S.-Russian relations would
have been about and how they've evolved over the last year and a half. If
you go back to the early campaign in the early months of the Administration
where it appeared that U.S.-Russian relations would be playing a much less
significant role. Bush as a candidate in the early days of his presidency
seemed to suggest there had been an excessive preoccupation with Russia
during the Clinton Administration and particularly an excessive
preoccupation with the personalities of the leaders and the personal
relationship between President Clinton and President Yeltsin.

Similarly there was a strong sense that the Bush Administration's diagnosis
was that the United States could do very little to affect the internal
course of events in Russia, both political and economic and therefore the
United States should largely concentrate on the relatively limited number
of issues of Russian behavior that were of concern to the United States
such as concerns about proliferation related activities, Russia's relations
with Iran for example.

Obviously it has turned out very differently than that. This is something
that clearly pre-dated September 11th, the tabled first meeting between
President Bush and President Putin in Lubliyana [ph] which was a few months
before September 11th. But these trends now place a much greater emphasis
on U.S.-Russian relations is very pronounce. For the clear sense that
contrary to what I think the Administration first thought, Russia can be
very useful to the United States now on issues which are now very high on
the United States agenda. Fiona talked about the war on terrorism. She
didn't mention, although she's done a lot of work on it, the issue of
energy and the current fascination with the potential that Russia could be
perhaps a substitute for Saudi Arabia and other less desirable states for
our energy supplies. A sense that in a geostrategic way that Russia has
become more important.

So we've seen this real shift in U.S.-Russian relations. But the question
we now will have to watch, I think, over the next several months and at the
summit is what does it mean for the Administration to put more emphasis on
the relationship? Clearly there are things that the United States wants
from Russia. The question is how do we see what a full relationship is
like? Fiona has suggested that what is going to be important for Putin and
the Russians is some sense that this is a real partnership, a two-way
street in which Russian concerns are as much on the U.S. agenda as U.S.
concerns on the Russian agenda.

I think one of the places it will be interesting to watch in particular is
the evolution of policy towards Iraq. Russia has an extreme level of
interest there. It may well be that Putin doesn't have the kind of
geopolitical nostalgia that Primakov had for the Russian-Iraqi relations
but there are substantial economic and political interests that remain. And
to the extent that this is a more mature relationship between the United
States and Russia, how much weight will the United States give to Russia's
view on this, on the Central Asian question, on the Caucasus, Russia's
concern about Georgia and the like. I think the real test of whether this
is a sustainable new strategic partnership will come as we see whether this
can be broadened out to handle issues of concern to both sides in the
months ahead.

Let me open it to questions.

QUESTION: Scott [inaudible].

I've got a question regarding another question that was prevalent at the
beginning of the Administration and that was the Russia-China relationship.
There was a great deal of speculation about Russia and China moving closer
together that went beyond the sale of military equipment by Russia to China.

Suddenly after 9-11 that all seems to have gone away. I'm just wondering
where that relationship is and perhaps could that be one of the drivers
behind the Bush Administration's change in attitude towards the
relationship with Russia?

MS. HILL: I don't think that relationship has entirely gone away, but
clearly it has faded into the background. Certainly a year or so ago, well
before September 11th, we were very concerned about Russian-Chinese
relationships especially after the signing of the Friendship Treaty, which
I'm sure that's what you're alluding to. But in many respects that
relationship back then was seen even by President Putin as a means of
counterbalancing the U.S..

Certainly when Putin first came into power there was still a kind of a
hangover from the Yeltsin era of trying to find ways of counterbalancing
the U.S.. There was lots of talk of a multi-polar world, of potentially
Russia becoming an alternative pole and surrounding itself or joining in
with other states that were seeking the same kind of counterbalancing
effect on the United States and China was certainly one of those. The idea
was to try to influence the U.S. decisionmaking on the withdrawal from the
ABM and missile defense.

Clearly both Russia and China and realize that was a bit of a losing
battle. As many people said back then, the train had already left the
[station] and they were kind of just circling behind running along the
platform trying to catch up with it. So I think both Russia and China
realized this was not necessarily the way to go.

China was also taken I think completely by surprise by what happened on
September 11th. If you remember, I think it was literally the day before
that the Chinese delegation was in Kabul meeting with the Taliban to try to
reach their own agreement to keep the Taliban from sending militants over
to China and to find some kind of ways of keeping trade routes open. So
they had egg on their faces in terms of that relationship which I think was
one of the reasons they were so cautious in the response. Unlike Putin who
had been actually very much opposed to any kind of relationship with the
Taliban.

But Russia and China need each other. It's a fact of life. They have the
largest border between their two countries, and the Russians are very
concerned over the longer term about their own relationship with China. In
many respects this thing called the Shanghai Cooperation Organization that
I mentioned in my remarks, is as much an acknowledgement of China's
presence in Central Asia as it is anything else in terms of an agreement
between Russia and China to push any other power out of the region.

The Russians know that China has this huge economy, this huge demographic
boom right across the borders and there are real concerns that over the
longer term China could become a security threat to Russia too. So the
important [thing] for Russia now is to bind China to it. The Friendship
Treaty was as much an acknowledgement that China and Russia would cooperate
over the longer term and also for Russia to find ways of evening out that
imbalance in demography and economic issues with China. The Russians want
to sell oil and gas to China, they'd like to build pipelines. It's not just
a question of technology transfers, of weapons, they're also trying to
build industrial links between them. Many Russian products are now mass
produced in Chinese factories. There's Chinese migrant labor in the Russian
Far East. So the Russians are also trying to find a way of creating a
positive relationship with China. 

So not everything about the Russia-Chinese relationship is negative from
the U.S. perspective. It's just going to be a challenge because obviously
Russia, China and the U.S. often have very different viewpoints, especially
in regions as sensitive as Central Asia.

MR. STEINBERG: I think the last thing, over the last ten years has been
that although there's kind of a theoretical attraction of this
Russian-Chinese partnership, in fact the concerns between them bilaterally
way over-dominate the potential for cooperation. There are some very
practical things. The Russians need to sell military equipment, they don't
have a lot of outlets, the Chinese have needed Russian technology and so
that's going pretty well.

But from a strategic point of view, largely these agreements are attempt to
try to minimize the friction rather than to build a real strategic
relationship. And particularly in the contemporary world where the United
States is the 800 pound gorilla. Both of them are far more focused on their
bilateral relations with the United States than they are with each other.

QUESTION: George Condon, with Copley News Service. 

Two questions. First, how does the ABM withdrawal affect this summit and
the talks? Secondly, following up on what Jim said, ever since Slovenia
we've heard a lot about the personal relationship. The United States has
gotten out of that the mild reaction on the ABM withdrawal and help after
9-11. What has Russia gotten, and is Putin under any pressure from the
elites or from the public to get something out of that relationship?

MR. LINDSAY: I think in terms of the ABM Treaty withdrawal, that's sort of
water under the bridge. The Administration made its announcement last
December. Mr. Putin accepted it graciously. I think he limited himself to
calling it a mistake and not much more than that. 

I think the broader issue for the Russians is what are America's missile
defense plans likely to be and how are they likely to affect Russia's
strategic interests. I think one of the reasons why Putin could be so
understanding last December is the realization in Moscow, in the military
plan is that in the near term there is nothing this Administration is going
to build or deploy that would have any practical impact on the Russia
nuclear deterrent. I'm not talking a decade, I'm talking probably longer
than a decade. That's important to keep in mind. So the Russians' concern
about missile defense is not an immediate dire concern. It is how is it
likely to evolve in the future, particularly as we go lower, and what kind
of consequences it will have, which is why I think from the vantage point
of the Russians, the Russians aren't going to be focused on can't we go
back into the ABM Treaty, but trying to develop some understandings about
what it is the United States is doing in missile defense so they can have
greater reassurance and more predictability, which is understandable.
Countries generally prefer to have predictability rather than
unpredictability.

The question of whether or not Mr. Putin is getting enough in return I
think is going to be one that different Russians will have different
opinions on. We were in delegation in Moscow in February and clearly some
people we talked to, many of them felt he hadn't gotten enough in return. I
think many people in the Administration, they would argue that they already
got something big in return and that is their presence, their reward for
our leaving the ABM, being so nice in leaving the ABM Treaty is they're
going to get a binding agreement on offensive nuclear missiles which we
personally would rather not have.

So I think in that sense, from the Administration's point of view, they've
already given something. The question I suppose about whether it's a
one-way street or a two-way street depends upon what it is you're actually
expecting to get out of this. I think to the extent any Russians expect to
get something tangible, bankable it's not clear they're going to get that.

MR. GADDY: Two aspects to be addressed. One is what would Putin like as
opposed to maybe what other Russians would like. As Jim said, everybody has
an opinion on that and we heard most of them. [Laughter]

The other, and maybe a more interesting question is this issue of pressure
on Putin. Is he under pressure?

What people talk about in Moscow, what Russians talk about is often very
directly related to quid pro quos on specific issues -- ABM, Strategic
Nuclear Arms Agreement. If the U.S. invades Iraq, well, how about the Iraqi
debt that the current government owes to Russia, could that be settled? Is
there a monetary, a price tag you could put on these sorts of things.
People come up with these different scenarios.

My sense is that these may be more interesting for the people, specific
individuals, specific groups that are throwing those out. Not that they
aren't interesting for a broader segment of the Russian population, but the
population in general in Russia, as Fiona said, is really not that
concerned about foreign policy and foreign policy issues.

What they I think are concerned about and I think Mr. Putin is quite
concerned about, on his own behalf and on their behalf, is just the sense
of fairness, of respect. It's such a cheap thing for us to give, frankly.
Just to spend a little bit of extra time thinking about how will this
impact on Russian public opinion, on Russian leadership opinion, the way
they're being treated by the United States. And it's very much by the
United States, by the way, as opposed to "the West".

Just the basic idea that we're not being disrespected. The pressure issue I
think is -- Frankly I don't think that Mr. Putin has to worry about being
accused of having a sell-out to the United States or giving in as long as
he can deal with other issues. Again, Fiona said this very clearly I think,
there's an inner circle. I don't think anybody knows what it is or who it
is if it is a definable inner circle, but there are clearly forces based in
the security services, possibly the military, the military industrial, Red
Director type, who have been empowered, they feel empowered by Putin's
advent of power. They felt it already when Mr. Primakov came in. They act
differently, they think differently, and they have different expectations.
They will react differently also to the same kinds of events that might
have happened in 1994 and 1995 where if they happened today they would
perhaps react differently, and that includes certain domestic policy issues
and foreign policy issues. I think they're making their sense of what they
expect and what they want known to Mr. Putin and he has to take that into
consideration.

But above all, if his original mandate, his original reason he was brought
in, he says it himself time and time again, was to prevent the dissolution,
the destruction, the collapse of Russia just the same way the Soviet Union
happened. That will not happen under his watch. His mandate is to maintain
this unity cohesion, strengthen it, strengthen the state. All these things
are very closely related. That's the main thing.

If it means making tactical compromises with the United States of America
on this issue or that issue, if he can persuade them this is all being done
for the grater good, for a longer term goal and they believe that okay,
he's doing things that look a little bit funny right now maybe but okay,
he's got it under control, he knows what he's doing, then he's all right,
and I think he is. He's that kind of a person. He has that sort of trust
among these circles as well as the broader population. But longer run, more
deep effect of this simple idea of being treated fairly I think is
extremely important.

QUESTION: [inaudible] of United Citizen. Eleven years before I was in
Soviet Union.

I have question for you and for you. First question for you. About
strategic treaty and all this stuff. My question is this. The reason to
insist to keep warheads in some storage from United States point of view.
Can you give me some reasonable explanation for this?

The second, not so question for you but maybe answer on your question. You
said why is Putin so agreeable? If I can, I will give you answer because --

MR. STEINBERG: Very quickly, please.

QUESTION: -- may be smarter, and is very simple answer on this question. So
I'd like to know an answer on the first question.

MR. LINDSAY: I'll explain the Administration's thinking which I don't
accept and we have a policy brief out there that lays out why it works. The
Administration's argument in essence proceeds from two assumptions. Number
one, nuclear weapons are useful. Number two, it's a dangerous world out
there. And so the calculation is we can afford to go down because things
are relatively peaceful now, but we need a hedge in case things go bad.

I think what you're alluding to is that looking at this notion of response
of forces presumably we'd have, the numbers we're getting is at least 2400
warheads in it, is that the question is well who would you possibly need
all these warheads for other than the Russians because once you put the
Russians aside, no one else has a very large -- Well, we tend, we're not
worried about the British nuclear force, we tend not to worry about the
French nuclear force and the Chinese have a very small, less than two dozen
missiles.

The Administration as I know either in the Nuclear Posture Review has not
produced what I would find a particularly persuasive reason why you need to
have a hedge so large. If the question is do I think it can go much lower,
I think yes. And [inaudible] argues just that, and I'll leave it there.

QUESTION: Jay Rosen, McClatchey Newspapers here in Washington.

Just a very broad, somewhat speculative question. This is a question I've
heard from several editors of our papers. If we can look five or ten years
down the road, if one is the relation that we have with our enemies and ten
is the relationship that we have with our closest allies, the United
States, where do we stand now with Russia and where might we stand in five
or ten years? And is our current sort of warming, is this just a convenient
temporary alliance or it is a more permanent relationship?

MR. STEINBERG: I think that that is the big question. The question is why
do countries have alliances and what are the roles of alliances.

There was certainly some hint in the Administration's comment particularly
in the post September 11th environment that they were foreshadowing a new
concept of alliances based on the common interests in dealing with
terrorism. If terrorism is the dominant threat, if counter-terrorism is the
sort of organizing principle for foreign policy then one might imagine a
kind of a new alignment based on who is for us and who is against us in the
war against terrorism. And certainly President Putin argued even before
September 11th that he had seen this change coming, that he had warned the
United States, that we had been insufficiently attentive to it.

And so if alliances are based on sort of long term convergence of strategic
interests then one would ask the question is terrorism, for example, a
sufficient basis for an alliance.

Similarly on the energy front. After all, we have had perhaps not alliances
with key Gulf states over the last 40 years but we've certainly had very
strong continued relations that have colored and shaped our approach to a
broad range of other issues because of our interest in secure access to
Persian Gulf oil. So that might be a second basis.

The third basis which has been an important one for the past 50 years is
shared values. Can you build alliances over time on shared values? It's a
great debate in the strategic community. People say well, if you look at
what's happening between the United States and Europe once the Cold War
threat is gone, we're seeing all these great divergences. Maybe values
aren't an adequate basis but if they are, do we see enough of an embrace of
"Western values" in Russia to see that Russia might become part of that.

It's clear that, and I think this goes with my earlier comments, that after
really minimizing the potential for a long term relationship with Russia
the Administration has gone a long way towards suggesting that there is a
big one. One has to ask whether that is a matter of convenience. It was
good to say in the context of being able to drop the ABM Treaty that we can
do this because we're not adversaries any more, so don't worry about this
any more. They may believe it, but it helps in terms of very specific
objectives.

Similarly in terms of some of the near term objectives on terrorism, it
obviously helps to buy Russian acquiescence into U.S. military deployments
in Central Asia, to get acquiescence into what now looks like it's going to
be a very large enlargement of NATO and the like. But I think it's unfair
to just say it's only tactical. I think it remains to be seen as to whether
this can be bound into a more strategic partnership. 

Certainly there have been aspirations by many for some time to do that and
I think that there is sort of, in my judgment there is no inherent reason
why the relationship can't grow more broadly. You can go back to
[inaudible], 100, almost 200 years ago that Russia and the United States
were natural allies. So I think the verdict is out on that, but I think you
can see both reasons to think that there is a possibility for a deeper,
longer term relationship and some question marks about whether that could
be sustained.

QUESTION: Richard Salmon with Kiplinger.

What would a successful summit say for a U.S. business investment climate
in Russia over the next couple of years? Does a successful summit clear the
path for larger business investment in Russia and in what areas of industry?

MR. GADDY: It's a bit of a circular question because for a businessman I
would presume that a successful summit would be one that did least to
increased confidence in the business climate.

I think more broadly yes, absolutely, in fact we've already seen it. The
warming of the relationship between the United States and Russia from the
previous summits and in between has clearly had a positive influence on the
attitudes of American business, Western business but especially American
business, to take a look back at Russia after the August 1998 crash. 

Objectively the reasons might have been there to take a look at it and look
at it soberly, but psychologically the warming has been very very
important. The acceptance of Mr. Putin as a legitimate leader, his stature
and so forth, and the personal relationship with Mr. Bush has been very
important.

So I think it's the general climate will be the most important thing. Any
specific agreement? I don't see major, I don't even see the potential for
any major decisions made within the context of the summit that would
substantively impact decisions by business people. I always hesitate to
make generalizations for business people. But certainly the United States
can make some general statements about helping Russia join the WTO as it
already has done. Certainly the President could make some positive
statements about getting rid of Jackson-Vanick and so forth, these things
that are relating to trade. Certainly this would be a concrete thing. The
United States could officially declare that Russia is a market economy
which we have claimed that we're going to do. But in a sense the really
important things have already been done which is this warming of the
relationship.

MS. HILL: If I could make a quick comment on energy. That's been one of the
issues that there's been most speculation about both before the summit and
for the summit itself. We recently had the meeting in Detroit of the
[inaudible] Energy Ministers and I know that the world's meetings with the
Vice Presidents, with Dick Cheney and Russian officials specifically on
energy issues. There's talk now about the U.S. buying Russian oil for its
strategic reserves. There's also speculation that perhaps there may be some
kind of new agreement on closer U.S.-Russian cooperation on energy that
might in fact bring in more U.S. investment.

But the investment climate within Russia for energy remains very
complicated and in part it's related to the importance of energy for the
Russian economy itself. Cliff has done an awful lot of work on this and
could probably give you some more details after we finish, but energy is
Russia's most important strategic economic asset. It's completely
intrinsically tied to the government revenues and there's an increasing
trend in the Russian energy sector now to almost a renationalization of the
sector. So more government control is in evidence in spite of the
privatization of the oil sector in the 1889s. We're seeing increasingly
Russian oil companies acting more in line with broad state priorities and
simply as independent investors or as independent companies in their own
right.

In spite of all of the rhetoric about this there is still a very limited
opportunity for U.S. energy companies of getting equity stakes in Russian
reserves. There's hope that the summit might pave the way for this, but
that's all very much dependent on decisions taken within Russia itself on
production sharing agreements and all of the legislation, but the trend is
not particularly positive towards that, and although there's a lot of
[scope] for U.S. service companies getting involved with the Russians, the
Russians need technology, it is a case that Russian energy companies want
to keep hold of their own reserves and they themselves want to expand. So
in fact there may be more benefit for Russian oil companies themselves to
expand even in the United States than there may be for U.S. oil companies
to expand within Russia.

QUESTION: Hi, my name is Michelle Strengbaugh, I work for APAC.

My question is regarding the upcoming summit and the likelihood of the
issue of Russian proliferation of technological information regarding
nuclear weapons to Iran. First of all, what's the likelihood of that being
on the agenda? And second, what leverage can the United States use, perhaps
economically or otherwise, to convince Russia that this may not be in the
best interest of Russia's strategic interest? And I'm thinking particularly
economically. Whether there could be other uses and development for Russian
scientists in cooperation with the United States as a way to go and show
alternatives to an alliance with Iran.

MR. STEINBERG: As you know, most of those efforts have been tried and they
have had some success. The [ISAC] program, there's a number of programs
that have been developed over the years to provide Russian weapon
scientists with alternative projects to work on, collaboration with U.S.
and other scientists. The issue of Russia's proliferation activity has been
a major source of contention for at least a half a decade.

I think the problem remains that Russia is in denial about this problem so
I do expect the Administration to raise it. I don't expect them to raise it
as a major issue in the summit. There's certainly been discussions that
have involved Sergei Ivanov who had a particular role on this issue. But I
think as with a number of issues the Administration will certainly make the
point but whether this will lead to a new set of policies or actions I
think is uncertain under these circumstances, particularly given the range
of issues that the Administration will have on the agenda and as I
indicated earlier, I think in particular at least, if it's not an issue at
the summit, the near term issue to have to deal with Iraq I think makes it
difficult to try to proceed on all of these fronts at all times. So given
the both domestic and international interest in the issue it would be
surprising to me if the spokesmen weren't able to say at the end of the
meeting, yes, they discussed this issue. But I would be surprised if there
were any significant new initiatives.

I think part of it is, there are two tracks here too. One is the question
of unauthorized cooperation with Iran and the other is Russia's continuing
cooperation with Iran. I think on the formal side there may be some more
progress in the sense that I think there is, Russians have shown a greater
willingness, for example, to recognize the need for an end-to-end agreement
on [Bushaire] so that if the Russians are going to continue to build this
nuclear power plant that at least we have real safeguards to make sure that
the waste products and any potential recyclable plutonium is taken out of
rods. So there is certainly some progress on that front.

QUESTION: Bob Deans with Cox Newspapers.

Two quick ones on NATO. One, do you think that Putin is comfortable that
the 19+1 arrangement satisfies his yearning for greater Russian input into
NATO? Two, do you think that President Bush has a sales job to do with
respect to the big bang expansion that appears to be contemplated later in
the fall? And do you see these as being linked? In other words if Putin
accepted one in exchange for the other.

MR. STEINBERG: I'm sure he would not call it 19+1. I think the selling
point -- it may be exactly what we had before, but not it's 20 and not 19+1.

I think that the issue of better Russian cooperation is to some degree a
matter of formality, but to some degree it really is a matter of spirit and
willingness. That is the old Partnership Joint Council was plagued by the
fact that the Russians just were not interested in taking it seriously. So
while it's true that there were institutional constraints on what it could
do, the Russians I think rather than trying to nudge it in a direction to
give them a greater role decided to take a principal position of being
difficult to deal with in that context. I think Putin has made a decision
to do it differently. So while, in terms of the formalities and all the
constraints that have been built around this process, NATO has to decide
beforehand that 19, whether an issue can go into the 20. Once it's in the
20, NATO at 19 can decide to withdraw it from the 20. So there's, in terms
of what you get on paper if the Russians had wanted to take a sour view of
this they could have taken a sour view, but I think that Putin has decided
that this is what you make of it. He's decided to try to make something of
it and as a result I think he will get more forthcoming reactions from a
number of the NATO partners who are willing to be more forthcoming even on
the institutional design before it came up.

Let me defer to others on NATO expansion. My sense is that once Putin made
a decision that he was not going to make an issue of it in general, the
specifics are not going to matter to him.

MS. HILL: The one aspect of the sales job that I guess is still the
lingering concern is the Baltic states. That is itself actually even more
confused than one might expect in the Russian context. 

Jim alluded to our trip with a little delegation up to Moscow to talk to
everyone and we certainly heard plenty about the Baltic states. But the
interesting factor was that there were more concerns about EU enlargement
running to the Baltic states than there was NATO enlargement. And everyone
we spoke to confused both issues as if NATO enlargement and EU enlargement
were now one and the same issue. 

Now clearly the United States can't do much of a sales job for EU
enlargement for Russia even though perhaps we may think we can sometimes,
but that's actually more of the problem. The real concern for the Russians
is they're going to get closed out, that there's going to be a new iron
curtain for European expansion in all of its institutional forms, that
Russia is going to be closed out. They're more concerned about access to
European markets for trade and transit issues than they are really now
about the stock phrases about the Baltics which is about this being a real
threat to Russian security. It's very clear to them that this is not a
security threat. The relationship with NATO that Jim is describing will go
somewhere to resolving those kinds of issues about consultation which
they're concerned about. But the real hard questions again come back to
what happens if NATO enlargement, the Baltics is just simply a first step
toward European enlargement, and then we get into the whole realm of them,
how do the Russians come to be able to access ports, markets and just tons
of issues. So there's actually a whole new agenda of questions that really
can't be resolved at this summit and certainly won't be resolved at the
Prague summit for NATO.

QUESTION: Gary Mitchell from the Mitchell Report.

I want to ask a question about context and to do that I was thinking about
a comment that the historian Richard Norton Smith made on the night of the
first debate in the 2000 campaign and he made what was certainly the most
succinct and maybe the most insightful comment in which he said that the
debate proved that Gore knew a lot and that Bush knew enough.

Using that sort of framework, I'm interested in getting your perspective on
the sort of relative intellectual and political throw weights of the two
people who we're getting together at this summit. How do you rate these two
people, particularly when you put it in the perspective of the
personalities that have been doing this for the last four or five decades?

MR. LINDSAY: I only know about warheads. [Laughter] And Richard Norton
Smith is an eminent historian who I think you're quite right, quite
literally summarized what's up.

I think you raise the question that I think is going to be debated for a
very long time, particularly when you go back to the gentleman's question
before. I think that U.S.-Russian relations are going to continue to
improve, in part because I think Mr. Putin has made some fundamental
decisions about the trajectory of Russia. I think to a great extent if
you're going to rate people by smarts, shrewdness or what have you, I think
Mr. Putin would come out relatively high. By all accounts he's really
handled everything, particularly since September 11th, remarkably well.
He's played his cards remarkably well. And I think it's remarkable that
even things that clearly before he had laid down his red lines like ABM
withdrawal and the threat to, it was the cornerstone of the international
arms control infrastructure. When the Bush Administration did it, he
swallowed hard, said the sort of right things and let it be done. I think
that he's done it for a number of very intelligent reasons so he's a very
intelligent man and I'm going to Moscow next week and do not want to be
detained when I get to the airport. [Laughter]

I think with respect to President Bush, I think even President Bush would
say he makes no claim to being the brightest bulb in the room. He doesn't
claim that he's a great intellectual. He I think in some sense sort of
[inaudible] being different from his predecessor others who were considered
to be very very bright and have great records. I think that President Bush
has clearly grown in the job. I think that looking at him [inaudible] that
as ideological as I think he is, he also has a very strong streak of
pragmatism. I think clearly in terms of looking at the issue of Russia, it
may have begun the talk about we're no longer adversaries as a way to sort
of grease the skids so he can leave the ABM Treaty. I think the President
right now actually believes in [this bonus] and is trying to make it
happen. You've got to give him credit for that. He's surrounded by a top
notch group of advisors.

If you're going to sort of rate people, one way to rate them is are they
smart enough to know to pick people who can give staff to their weaknesses.
I think the President clearly did that.

MS. HILL: Can I make a point on this? We always say now that we shouldn't
let personalities count, but personality does count. I think that actually
both Bush and Putin are sort of evenly balanced on this front. Putin has
made his whole career on being able to communicate with people. If you
remember part of his thing is he was a recruiter for the KGB. He speaks
with great pride of his ability to communicate. And certainly President
Bush is a great communicator. That's why they managed to hit it off so well
at their initial meetings. And I think that's actually counted for a lot. I
think that's been able to give both men the flexibility and the ability to
move forward even on tough issues and to find a pragmatic basis for moving
forward. So I think personality is just as much of an important factor here.

QUESTION: Been Ross, Houston Chronicle.

Considering the Middle East will probably still be on the front burner
during this summit, where does Putin stand on this issue? Is he more
sympathetic with the Palestinians or the Israelis? And how might Bush try
to use Putin to maybe influence some in the Arab world concerning their
past ties?

MS. HILL: I'll make a quick initial comment and then I think Jim can talk
more directly about the Middle East situation as a whole.

Russia's position on the Middle East has changed quite dramatically in fact
since the collapse of the Soviet Union. Although we still have the
Jackson-Vanick trade restrictions on the table dating back to the Soviet
Union's restrictions on Jewish immigration to Israel in the 1970s, we've
had such a huge change over this time that actually Russians, Russian
speakers have become a major factor in Israeli politics. And this is
something that started to change their minds in Russia itself. I think it's
in that 20 percent of the voting population in Israel now are Russian
speakers who are now beginning to identify themselves as Russians within
the political context, obviously Sharonski being a very important figure in
Israeli politics.

Where the Soviet Union would have been much more sympathetic toward the
Palestinians and obviously have a very strong stance within the Arab world,
there was a great deal of obviously economic support for Middle East Arab
countries from the Soviet Union. Russia has really been changing its
position to a much more nuanced, much more balanced approach over the last
ten years and Putin has in fact come forward quite strongly now in offering
his services to the United States in trying to find a resolution in the
Middle East. In fact the Russians have already agreed to take part in the
conference that has been proposed by the Bush Administration.

So it's possible that Russia could play a positive role here given its past
relations with the Arab states and now it's newfound linkages with Israel
which also extends it beyond the basic part of the population to a great
deal of business interaction over the last 10 years, especially on high tech.

MR. STEINBERG: I would underscore that with one little modification. I
think that the old joke about American politicians go to Dublin or to Rome
to campaign for their own domestic office. Now Israeli politicians go to
Russia. And this is a major factor in both Israeli and Russian politics
now. I think it has changed dramatically as a result of the dramatic
Russian immigration to Israel.

I think Russia will play a very limited role. I think Russia wants a seat
at the table for the reasons that we've talked about here. If there's going
to be a conference Russia wants to have a flag and a name next to EU and
the like. But the truth is Russia has practically no influence with
anybody. They don't have much influence with the Israelis. They never had
much influence with the Egyptians, at least since Nasser. And the Saudis.
They have some, they didn't have influence with the Iraqis, they were
beholden to the Iraqis but had little influence over them. And in any event
are not going to want to be seen as holding the Iraqis' coat at any Middle
Eastern conference.

So I think Putin will play this equally shrewdly which is to recognize that
they're not going to play the Primakov game, sort of sitting on one side of
the table while the United States sits on the other. I think they'll be
broadly supportive of any kind of multilateral effort, both because they're
part of it and because it goes to the broader question of some anxiety
about excessive U.S. influence in the world and therefore want to see a
balance. But I think the days of kind of distinctive Russian diplomacy
other than to protect their economic interests in Iraq, are over.

QUESTION: Will England from the Baltimore Sun.

If you could talk just for a moment about Afghanistan. With a new
government soon to be formed there what do you think Putin believes to be
Russia's role and interest in Afghanistan, and do you think Russia will be
trying to act in concert with Iran there?

MS. HILL: That picks up from Jim's, I was going to say realistic, but
cynical comments on Russia's capacity to influence. Even in Afghanistan
Russia's capacity for influence is pretty slight. In fact, I mean obviously
there's a great deal of resentment still about the Russian-Soviet role in
Afghanistan. I mean they haven't exactly got an illustrious history in the
country.

Clearly the Russians have their own preferences for who they thought they
wanted to see in power. We saw in the very early stages of the campaign
that they were still pushing Rabani [ph] as a potential president and they
had to back off about that. 

Certainly on the Iranian aspect, Russia and Iran have been major supporters
of the Northern Alliance along with some of the Central Asian states in
terms of sending through weapons and other supplies, but again it comes
down to the fact that they don't have any cash and so they're not going to
be able to take part in the deepest part of the reconstruction program in
Afghanistan. It's no longer the time when the Soviet Union could pump money
into an Afghanistan to buy Afghanistan's support in the region.

I think that the Russians are going to have to take a back seat at this,
although just like Jim says, they're going to want to have their flag at
the table, they want to still have a say. They are [inaudible] for the
longer term in stability in Afghanistan, but again, if they feel they're
not being consulted, the same with the Iranians, they do still have a few
mechanisms left to make their presence felt. I think that's the greatest
risk. If they feel they're not being consulted, if they feel they're not
being treated with specific respect for their importance in the general
area, we may see some more attempts to kind of make little pinpricks in the
process to remind those with past association with the Northern Alliance
and their past support. But I don't think they're going to be a major
factor in the decisionmaking about what happens next in Afghanistan.

MR. STEINBERG: Thank you all.

********

Web page for CDI Russia Weekly: 
http://www.cdi.org/russia
Archive for Johnson's Russia List:
http://www.cdi.org/russia/johnson
With support from the Carnegie Corporation of New York and 
the MacArthur Foundation
A project of the Center for Defense Information (CDI)
1779 Massachusetts Ave. NW
Washington DC 20036