Johnson's Russia List
#6252
18 May 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org

******

[unofficial transcript]
Council on Foreign Relations
May 14, 2002 
Washington, DC

Press Briefing on President Bush's Upcoming Summit Meeting with Vladmir Putin

Richard N. Perle
Resident Fellow, American Enterprise Institute for Public Policy 

Mark Medish
Former Senior Director of Russian, 
Ukrainian, and Eurasian Affairs, 
National Security Council; 
Partner, Akin, Gump, Strauss, Hauer & Feld  

Philip K. Verleger
B.P. Senior Fellow,
International Economics, 
Council on Foreign Relations; 
Senior Advisor, The Brattle Group 
 
Stephen R. Sestanovich
George F. Kennan Senior Fellow, 
Russian and Eurasian Studies, 
Council on Foreign Relations
Presider  

The Moscow-St. Petersburg summit will test the staying power of the close
Russia-America alignment that followed September 11. Putin's immediate
offer of support at that time-widely seen as 'historic'-created a positive
atmosphere and facilitated new cooperation in the war in Afghanistan. 

But many other long-standing disagreements remain unresolved. Putin now
wants to show that, far from accepting a one-way relationship, he is
getting concrete benefits from the U.S. Bush wants to show that his
Administration's general preference for unilateral action has not
jeopardized a long-term rapprochement with Russia. 

-----

Stephen Sestanovich:	...  people with exceptional authority to speak on
these matters.  Richard Perle, who is a resident fellow at AEI, will talk
about security issues.  We begin our discussion by looking at yesterday's
events and other security questions.  Mark Medish of Akin Gump, who was
senior director of Russian affairs at the National Security Council, will
talk about the political economy at this meeting.  Phil Verleger, who is BP
senior fellow in international economics here at the Council and is senior
advisor to the Brattle Group, will talk about energy issues, which are
increasingly discussed both as a security and an economic issue.  The
meetings in Moscow and St. Petersburg next week are likely to mark the
further consolidation of a cooperative relationship between the Russian and
American governments that both sides were working on last summer and fall,
particularly after September 11th.  I think even before that.  To see the
significance of this consolidation it's useful to measure where we are now
in relation both to winter and spring of a year ago and to this past winter
and spring.  A year ago I think it's fair to say was unclear what kind of
relationship either side wanted or expected.  In recent months a more
common question, sometimes a complaint, was whether the United States
wanted a one-sided relationship that would turn out to be politically
insupportable for President Putin at home.  As we've gotten closer to the
summit, the answers to these questions have I think become a little
clearer.  It's easier to understand what our ambassador in Moscow, Sandy
Vershbow, means when he talks about the current Russian-American
relationship as one of partnership, possibly leading to alliance.  We are
not there yet by any means, and indeed I hope all of our panelists will
call attention to obstacles and difficulties in the relationship that will
have to be addressed as we move forward.  With that, let me turn to them.
Richard, I hope you will start us off on security issues, and then we will
turn to the rest of the agenda.  
	
Richard Perle: Thank you, Steve.  It's ironic that I should be in this
position because it is my view that far more important than the security
issue are the other issues on the agenda.  The sooner we get past the
security issues and on to the rest of the agenda, the better.  I simply
mean by this that we should be moving towards a normal relationship with
Russia, very much unlike the abnormal relationship that once existed
between the United States and the Soviet Union.  In our normal relations
with most countries, we do not allow the agenda to be dominated by security
issues.  As Russia is not in any sense a successor to the Soviet Union as
an adversary to the United States, it's time to get beyond that.  I think
we began to do that with the withdrawal from the ABM treaty, a treaty that
only made sense in the context of the deeply adversarial relationship.
That has now been taken a step further, or at least in parallel with the
conclusion of an agreement on offensive nuclear weapons.  It's a short
agreement, three pages as I understand it, maybe less than three pages.  

S:	I think they said it's three pages single spaced.  

RP:	Well, then it's longer than it should have been.  Leave it to computers
and small type to get around.  The point of it is that size, character,
disposition of our nuclear arsenal should no longer bear any significant
relationship to the size, character and disposition of the Russian nuclear
arsenal because we are no longer in that relationship where we have to
calculate how many of our weapons would survive a first strike.  That
vocabulary of the past would be firmly in the past, and to the degree to
which we perpetuate it it carries with it an undertone of hostility that
really is a carryover from the Cold War.  So, I hope this is the last arms
control agreement with Russia and that we go from here to dealing with
Russia the way we deal with the United Kingdom or Brazil.  Our problems
with Russia now have to do largely with the Russian relationship to third
countries.  They are rather heavily focused on the confluence of business
and commercial interests and security concerns that flow from that
continuing sale of certain Russian products to countries that we would
rather not receive things that could become lethal with respect to the
United States.  Those issues can and should be ironed out, and in doing so
I think we need to pay attention to Russia's economic situation.  

Let me endorse Mark Medish's view that we should cancel the Soviet era
debt.  I see no reason why people struggling to create a free society
should be burdened by the debts of the totalitarian society, particularly
since that money was lent essentially for political reasons and the
political payoff has now been received.  The Germans, the French, the
British and even our own banks should relinquish that hold over debt.  It
would be best if the money were put to useful purposes.  There is room to
be creative about that.  

Let me say just one last thing.  This is a season of graduations.  I get to
go to one on the weekend.  My son is graduating from university.  This is a
summit of graduation, it seems to me.  Future summits, future meetings,
should have an entirely different character.  I hope that on this occasion
the president will say that Russia has graduated from the constraints of
the Jackson-Vanik amendment no longer applies to Russia.  Russia no longer
denies its citizens the right and the opportunity to emigrate, and under the
terms of the law that's the end of Jackson-Vanik as it applies to Russia.
Put that together with the relinquishing of the Soviet debt and the
abbreviated approach to arms control, in which we are not locking ourselves
into an elaborate complex set of arrangements because we don't believe
they're necessary, and I think we're well on the way to graduation.  

S: 	Thank you, Richard.  If I could push you just a little bit on the
question of relations with third countries, you didn't mention two very
difficult cases, Iraq and Iran.  It strikes me that it will be difficult to
think of this as a relationship, to quote Sandy Vershbow, leading to
alliance, if those problems remain big unresolved points of disagreement
between Russia and the United States.  How do we get at those?

RP:	I think the two are different, Iran and Iraq, really quite different in
this regard.  The problem with Iran, of course, is the continuing trade in
nuclear technology.  I hope we can persuade the Russians that the benefits
they gain are not worth the difficulty, the potential difficulty, in the US
relationship.  But I would not be opposed to recognizing their economic
concerns and finding a way to share the burden of restraint in that trade.
It's not unreasonable for us to do so.  Perhaps that could be done in the
context of relinquishing debt or some other arrangement.  Iraq is different
and I will be very surprised if when it comes to dealing with Saddam
Hussein, which I hope and trust the president intends to do as he strongly
suggested he intended to do in the State of the Union message, I will be
surprised if the Russians turn out to be more problematic than the French,
and maybe even less so.  Once Saddam Hussein is removed from office, I
think that will be the end of the difficulty between us and others, the
Russians included, over Iraq.  

S:	Since you urged us to turn to the other more wholesome parts of the
agenda, let's do that and hear from Mark Medish.

Mark Medish:	Thank you, Steve.  I thought I'd divide my comments into three
parts.  First, domestic developments in Russia, the political economic
contexts Steve mentioned.  Second, US interests in those developments.
Third, a prognostication about the economic side of this agenda.  As to the
domestic scene in Russia, I think it's important to start with the
observation that the big news of the past decade of transition in Russia is
that despite all the difficulties, hardships and setbacks, despite the
financial meltdown of 1998 and despite the enormity of the challenges that
still remain before Russia in its social, political and economic
transition, the fundamental direction of Russian policies is positive.  The
direction is positive and that direction is towards systemic modernization,
toward market economics, toward better governance, as well as integration
with international institutions.  President Putin and his team I think
deserve a lot of credit for committing themselves to this process.  None of
this was obvious just a few years ago.  None of it should be taken for
granted.  I think we're witnessing a far better scenario than many of the
scenarios that were quite possible for Russia's development.  The period of
big IMF programs is over and that's important, a change of chapters.  In a
sense, just as the will for large financial support from outside was on the
wane, the will for change within Russia has been on the rise, and that's a
very fortuitous and felicitous circumstance.  

The macro economic picture today is quite strong.  Russia has taken
advantage of some favorable external factors such as the price of oil.
It's attained fiscal surplus.  It has pursued sound monetary policies and a
sound exchange rate policy.  Foreign exchange reserves are high.  The
growth rate has been reasonably high for the past two and a half years or
so.  These trends have been backed up by some important structural policy
reforms, including tax code reform and land code reform.  However, much,
much more remains to be done on the structural side in Russia in order to
achieve sustainable growth to further reduce country risks for doing
business there and to raise living standards.  This goes to a whole set of
reform measures that of an institutional nature and a legal nature that
promote the business climate in Russia.  The good news in my view is that
President Putin and his team squarely recognize this challenge, and I would
direct your attention to President Putin's remarkable speech to the federal
assembly of Russia on April 18th.  I think it's mandatory reading for
Russia watchers.  It's quite remarkable both for style and content.  In
terms of content what is so striking is the candor, the frankness of
Putin's assessment of where Russia is and where it needs to go.  There
isn't a whiff of complacency in the speech.  That is quite encouraging.  In
terms of content, key themes include improvement of the business climate
through administrative reform, through deepening the rule of law, through
de-monopolization of the Russian economy, through pension and health-care
reform, through demilitarization of the economy, through military reform,
and through decisive integration with the world trading system.  These are
President Putin's themes.  I think they all add up to a message that it's
the economy, stupid, which is quite encouraging.  If we heard more speeches
like this from leaders of emerging market countries, we would put the World
Bank out of business.  I think President Putin is earning his credentials
as a pragmatic modernizer, which is not bad for an old KGB hand.  

Second, US interests in this regard I think are quite clear, namely to
promote and to foster these trends and these policies that will lead to
greater ability in Russia and the Eurasian region and that will lead to the
possibility of a fuller partnership with Russia in a whole range of areas.
We have a stake in Russia's integration, a national security stake in
Russia's integration.  We have a stake in bringing Russia into the
international, institutional fold, including the WTO and its relationship
with NATO.  Fortunately, in my view, after a somewhat long and winding path
in 2001, I think the Bush administration has come around squarely to this
view and the summit agenda that we've been able to glean reflects just how
constructive the relationship between the US and Russia has become.  We see
in it also the potential for ever closer ties coming from the relationship
ahead. President Bush used the following phrase to describe the arms
control treaty -- the haiku-like treaty just negotiated -- he said that it
would "liquidate a legacy of the Cold War," which is an interesting choice
of words. It almost sounds like a Soviet speechwriter choose it,
liquidating the Cold War, but it's a good theme for the summit and brings
me to my last piece, and that is the economic agenda, the soft issues, as
it were, which I think Dick Perle accurately said really are the core
agenda going forward.  Not to take the others for granted but this is
really the hard work ahead.  I see five baskets here.  Trade, aid, energy,
people and debt.  Very briefly, and I think there will be statements on
most of these if not all of them, maybe not all of them, but this is part
of the dialogue of which the summit is a key moment.  On trade, one key
issue is market economy status for Russia.  This is actually a very
technical point.  This has to do with Russia's treatment in the context of
anti-dumping procedures, but Russia has filed a petition for market economy
status.  It's noteworthy that Kazakstan was recently accorded that status
as a result of the quasi-judicial review that the Commerce Department
undertakes.  It might not be unreasonable to expect that Russia, whose
track record is not too far different from Kazakstan in terms of market
reform, might also qualify for that status.

M:	These Central Asian dictatorships are all the same.  

MM:	Your words.  Jackson-Vanik, which is tied to so-called permanent normal
trade relations or MFN, as it used to be called.  This is a bit of a
political morass because of tit for tat trade disputes that have been
unfolding in recent months.  I think it's a shame that the administration
didn't push for a full lifting of Jackson-Vanik at the end of last year
when they probably had an opportunity to do so.  Now Jackson-Vanik is
wrapped up in issues like chicken, steel, and actually WTO.  This is an
interesting point.  I think it's precisely because Russia WTO accession is
now not only a theory but a practical possibility and likelihood that trade
issues are intensifying because interest groups in both countries if they
want to make their points have got to make them now.  If you want
bargaining leverage in the trade negotiation, now is the time you'd better
build it up.  I'm not advocating that.  I think it's a shame.  But this is
the way trade negotiations normally happen.  We saw it in the Chinese case
as well.  I think it'll be tremendously important for the president to
embrace Russia's early accession to the WTO because our message to Russia
cannot be you must integrate but we won't trade with you.  We have to
willing to accept yes for an answer from the Russians.  If they reform, if
they change their institutions, if they change their laws to become a
market economy, we must be willing to trade with them on normal terms.  

I think the aid basket contains a number of interesting strands I won't
dwell on but they include our efforts and multilateral efforts to promote
small and medium enterprise development in Russia, to promote banking
reform in Russia and to push forward a business dialogue where obstacles to
investment are identified and resolved.  The third very interesting and
important area I think is energy, where I believe there is a potential for
a dialogue at least on a kind of new framework recognizing the
complimentary interest that Russia and the US have in the field of energy.
On the one hand Russia has huge needs for inward investment in this field.
On the other the US has a strategic interest in expanding the global supply
of oil and in expanding available sources of oil and exit routes for that
oil from Eurasia.  So, there is a lot of room for cooperation, I think
provided that it's private sector led and it becomes more possible I think
as Russia begins to stand on its feet and Russian companies begin to stand
on their feet.  

S:	We're going to hear about energy.  

MM:	I'll yield on energy.  People, and maybe people should have come first,
but they happen to be fourth on my list.  This is a simple point.  We have
an interest in expanding exchanges between our two countries at the people
level, not just at the highfalutin summit level.  This should be a summit
about expanding people to people ties.  It should be a summit about a
deeper exchange of views and exchange on social issues, including health
care.  I'm confident that the summit will reflect this.  Fifth, debt.  This
may well be one of the undeclared areas of discussion at the summit but I
think it's a potentially rich and very important one as Dick Perle
indicated.  This is another Cold War account we have an opportunity to
close, namely the treatment of Soviet era debt.  It is a burden on the new
Russian economy.  It is a legacy of the Soviet period.  There may be
creative ways to link debt relief to other policy objectives, including
cooperative threat reduction, that is, containing the nuclear threat, the
risks coming from fissile material in Russia.  Let me close with there is
sense in which summitry itself is a Cold War hangover.  In a sense we would
have a more normal relationship with Russia if we didn't have these
summits.  But the fact is we still have some unfinished business from the
Cold War.  I think the Bush administration and the Putin administration are
making some real progress here in closing the Cold War accounts.  The key
going forward is that they not miss even bigger opportunities for deepening
partnership, by continuing to define national interests here in the US and
in Russia in post-Cold War terms.  Thank you.

S:	Thank you, Mark.  I think we've all been a little bit surprised by the
evolution of the administration's effort to get Russia graduated from
Jackson-Vanik.  When they first began that process, the question seemed to
be really in a way how to take account of the fact that Jackson-Vanik had
long ceased to be just about immigration and had become about a much
broader human rights agenda.  Whatever you can say about the intentions of
the framers of Jackson-Vanik, and we have one with us, I think it's fair to
say it was never about chicken.  But Richard since you've asked to say a
word about this, maybe we can take that up before (Inaudible, overlapping).

RP:	No, I can say it certainly was never about chicken.

S:	(Inaudible).

RP:	I do want to clarify this.  Jackson-Vanik is not a problem.
Jackson-Vanik does not apply to Russia.  The law is very clear on this.
The provisions of the trade act that are known as Jackson-Vanik, the trade
act of 1974, say that non-market economy countries that deny their citizens
the right and the opportunity to emigrate are not eligible for most favored
nation status or what we now call permanent normal trade relations, nor are
they eligible for credits of guarantees by the government of the United
States.  Russia is not a country that denies its citizens the right and the
opportunity to emigrate and therefore Jackson-Vanik does not apply to
Russia, period.  The decision to grant permanent normal trade relations has
to do with a different provision of the trade act of 1974 that has nothing
to do with Jackson-Vanik, and that is a provision that any country, any
non-market economy, that was not receiving most favored nation status as of
the date of enactment in 1975 actually will not be eligible if they are on
a list that was prepared in the 1950s unless Congress authorizes it.  So,
the administration is in a provision of having to go to Congress for
authority to grant permanent normal trade relations, not because of
Jackson-Vanik, but because of an entirely different provision in the trade
act of 1974.  So, it is simply wrong to attribute any incumbrance on normal
trading relations with Russia to Jackson-Vanik.  
	
S:	Thank you.  Phil.

Philip Verleger:	And per your instruction, I'll keep it very short.  I
think the first guidance is hopefully it will do no harm.  As one who
worked here for 25 years on energy, I recall in the '70s trying to work on
our relationship with the Shah to guarantee oil supplies and then in the
'80s attempts to limit Soviet natural gas exports to Europe, one worries
that situations and energy investment cycles are so long that the efforts
should be guided by a market orientation approach.  So, the key issue
really is to start by aiming to strengthen the legal frameworks within the
Russian code to protect contracts and to protect minority shareholders in
various enterprises.  Once those can be established I think there can be a
substantial increase.  We're already seeing increases in investments in the
Russian oil industry, as Bob Ebel has pointed out is one where clearly
billions of dollars are required.  In the shorter run Russia and the United
States have a joint interest in supporting the private Russian oil
companies in their efforts to keep the Russian energy ministry from doing a
deal with OPEC.  Last December many of you will recall the oil exporting
countries demanded that Russia limit oil exports as a condition for OPEC
instituting a 1.5 million barrel a day reduction in production.  This has
caused some harm to the Russian producers.  The higher oil price, which is
to today close to $30 a barrel, is doing a clear harm to world economy.  I
think it probably also does harm to the Russian economy by raising the
value of the ruble and making it more difficult for other Russian
enterprises to export.  So, ironically Russia's interest probably in the
price of oil around $20 a barrel for oil, and if you do the boring
economics you find that $20 a barrel for oil is probably a stable, what
you'd call a competitive level, as near as we can determine one.  In
connection with that that also suggests that the United States probably
should look at a means of providing some support to Russian oil producers,
as well as its own, should the Saudis as Morse suggested in a recent
article and I and others have suggested attempt to coerce Russia into
cooperating into a production cut by dumping oil on the world market as
they did in late 1998 in an effort to bring about what they called a
stabilization and what others of us would call a monopolization of the
price of lifting the price to $30 a barrel.  The price increase that came
from 1999 to 2001 had some fairly serious economic impacts, one of which
was the recession that was building in 2001 before 9/11.  I think it is
terribly important to work with the Russian producers and try to get Russia
to work with us and work with other consuming countries not to go along
with OPEC.  I would add that the European countries have strong interest in
this as well, particularly since the European central bank has adopted a
very aggressive monetary policy to keep inflation to two percent.  Each
time they get a bump up in the price of oil, essentially that takes away
about a third to a half of Duisenberg's flexibility and resulting in the
last couple of years in the tight monetary policy that's been of some
complaints in Europe. 

I think a third element that the IEA has been pushing and talking to Russia
and about everyone else should be is continually aggressively pushing
towards market pricing of energy to consumers and Russia.  This shift, this
deregulation, has had the added effect it makes more oil available, more
natural gas available for exports to the rest of the world.  A fourth
inside-baseball type point is to essentially encourage private investment
by companies, joint ventures in Russian refining.  The Russian refining
industry is antiquated.  It tends to produce a great deal of heavy oil that
you use in boilers that competes with natural gas.  All you have to do is
looked at the energy statistics in that whole part of the world and there
is a lot natural gas out there, so that the conversion of refining capacity
would actually not double but raise by, say, 50 percent the volume of
energy products that could be exported in the petroleum side.  Lastly,
there was a piece a week ago in the op-ed pages of the New York Times that
suggested we should tried to talk the Europeans into accepting 30 percent,
more than 30 percent, of energy from Russia, and I would hope we don't do
that.  I think the Europeans have thought their energy policy out the way
we have tried to think ours out and one other point that they have wanted
to do is aim for a diversified supply of energy, and the last thing that
one wants to do is become excessively dependent on any one supplier.  I
guess that gets to one extra point is skipped over.  I think we should push
hard on building more pipelines, on building transportation systems out of
the Caspian.  We are going to differ with the Russians there.  The Russians
would like to have them go as much as possible through Russia.  Naturally,
sometime later on that gives them essentially a way to control supply and
gives them market power to raise prices.  Our policy should be one of
promoting competition across the board on energy, getting more producers
and making it possible for natural gas and oil to get to the market
unimpeded.  That is the way in which we keep prices down.	

S:  Phil, since this issue involves a lot of technical questions that
presidents are really going to be discussing, what are the most important
results that one can expect out of the summit or the associated
declarations that come either from the presidents themselves, even though
they may not be terribly familiar with them, or from commitments to do
things down the road, a couple of things that would tend to go furthest
toward the results that you're talking about, that would suggest to markets
that the United States and Russia are on that track?
	
PV: Well, the first thing that would be good for markets would be
really just don't talk about energy..

S:  	So, their technical ignorance is blessed.

PV:     No, no.  Energy is part of a whole economy.  What you'd rather have
them say is their strengthening contracts, strengthening the legal
frameworks.  Full stop.  Energy is part of that, no exceptions.  Second,
that the Russians agree that their private companies are free to produce
and export service much oil as they want, consistent with not depriving the
economy of oil needed during the winter but that there will be no
limitations put on the exportation of Russian oil to the market, either in
the form of products or the form of crude.  Third, that foreign investment
energy will not be treated as a special sector and that foreign investment
will be welcomed into the Russian energy sector on the same terms that it's
welcomed into any other sector with the investors given full protections.  	

S: 	Richard, you too get interested sometimes on the question of European
energy imports from that time the Soviet Union.  How should we look at this
question today given that the world has changed a little bit, given that
under current circumstances ring given that during current circumstances
really the only way for the Russians to increase exports and the way that
affects the world markets significantly is to Europe?

RP:  	Well, I think the answer is that our policy notion be exactly the
opposite of what it was or what some of us thought it should be in 1981.
In 1981 we were concerned that the Europeans and the Germans in particular
would become overly dependent on gas from the Soviet Union.  Ironically,
now the Germans are limiting the amount of gas which they will take from
Russia, with the results that the world is being deprived and German
consumers are being deprived, and those of us would like to see a
diminution of dependence on energy from one particularly troublesome region
of the world are all being deprived of the benefits of an increased Russian
ability to export gas to Europe.  I don't agree with Phil that 30 percent
is a reasonable limit when you refer to any one supplier, if the Russian
energy industry develops as we all hope it will and there are many
suppliers not just Gasprom, but you have the private companies to which you
rightly referred which should be permitted to operate freely, if you have
many Russian suppliers then I think 30 percent becomes quite meaningless,
and we should be doing what we can to open those markets.  So, if your
concern was that we not interfere with the marketplace, and I think we
shouldn't interfere with the marketplace except to keep the marketplace
open.  If it were up to me, the message is we don't want to interfere with
the marketplace and we believe that your independent energy companies
should be freed to export as they see fit.  We will help you open the
European market to exports because that is good for all of us.  

S:   You have a right of reply.  

PV:    I have a stolen right of reply even if I didn't have it.  I think I
see where the Germans are coming into this, and part of it is Gazprom.
Gazprom has exerted exercised monopoly power as has Ruhrgas.  One of
the points the Europeans are pushing on is to develop a more natural
competitive gas market.  The heart of this means moving in the same
direction we've moved in the United States, which is much shorter term
natural gas contracts, hopefully not with Enron-Dynegy type of effects, but
of the short-term contracts which typically gives consumers better prices.
German may also have the opportunity to look to Norway, to look to the UK
where there are huge reserves of natural gas as well.  I think also the
Germans have some concerns, and here I'm getting into very deep water, over
the transportation lines.  Ukraine, when the gas was cut off to Ukraine at one
point for non-payment, then cut off exports onto Europe, that can be solved
by constructing additional pipelines, hopefully not by Gazprom.  One other 
problem one has typically in high capital markets is that you have very few 
providers of pipelines.  I guess the last element that the Russian energy
infrastructure fails.  Many of the oil pipelines, some of the gas
pipelines, have been made with standards that don't meet the standards we
have here in the West, so we have some concerns as to the reliability and
pipeline failure, not a political problem.  But I can see the German
interests.  

DP:      I just think all those things notwithstanding when you get right
down to it is Ruhrgas protecting its monopoly and the German tendency
is to cartelize it and get people in one room to talk about it.
	
S:	All right, speaking of cartels, we're going to try to break this one up
right now and turn to members of the audience for your questions.  We've
got some roving mics here and I'm first going to recognize Angela Stent and
then Alan Wendt.

AS:	Thank you.  I think it's quite instructive that no one has talked about
the Russian domestic political situation as a topic of interest at the
summit.  For instance, Putin's desire to implement a system of managed
democracy, the erosion of media freedoms, the continuing war in Chechnya.
I would like the panel's views on whether you think in a normalized
US-Russian relationship, these subjects or Russia's democratic deficits are
no longer appropriate topics of conversation between the United States and
Russia?  

S:	Maybe I can plunge in here.  It seems to me that the United States is
the only country that can get away with that and that if the United States
doesn't the signal that is sent to every other country about the bearing of
those issues on Russia's standing as a democracy, it is the United States
that has the ability to keep those legitimate topics.  It is every
inclination on the part of any president, and I think Mark and I can say
this -- let's say, I've seen more than one president shy away from this --
to keep difficult issues of that sort off the agenda because they tend to
poison personal relations.  But in these relations it is the job of
presidents to remember that they are not just personal.  I think the stopgap
placeholder agreement that the presidents had at Crawford about a mechanism
to review media freedom is one that it might be interesting for the press
to pull out in the course of this coming summit to find out what sort of
follow through there has been on it.  Chechnya is a subject that could take
us the rest of the meeting.  I think it is clearly the case that President
Putin has made a lot of headway for gaining acceptance for the thought that
the problems he faces there are simply ones of terrorism of the kind that
we and others face.  The difference in this case is that I don't think
President Putin himself believes that, and the real question is whether our
own incredulity can be kept up at a sufficiently high level to maintain
pressure inside Russia to address this question, because it's only from
that direction that it will ever be successfully addressed.  Can we have
the mics roving around and I'll designate a follow-on questioner.  The next
question is right here and then Marvin Kalb.

M:	My question was just asked.  

S:	It was just asked.  Do you want a follow up?

MM:	If I may very briefly just amplify what Steve said with which I agree.
But I would note that there is a nexus between a lot of the economic themes
and themes of governance, a very explicit one in discussion of the rule of
law, in discussions of institution building.  I don't think the presidents
shy away from those things.  

S:	In that sanitized way you're absolutely right.  It is easier for
presidents to address questions in those terms.

MM:	Right.  My experience advising a US president is US presidents tend to
be leery of lecturing other people just for the purpose of feeling good.
If there is some prospect of influencing outcomes, we'll do so.  We'll
speak up for our values.  But just to feel good it doesn't really
contribute to an effective relationship.  

MK:	A number of you have addressed this issue but you got around it and I
wonder if you could address it perhaps more directly.  Is there a way at
this summit or beyond this summit for the US and Russia to work at an
energy arrangement, one major result of which would be a reduction of US
dependence upon Saudi oil?

RP:	If what you mean is a well prepared and carefully thought out set of
arrangements, which would address issues like pipelines, like investment in
the Russian energy sector, like access to the European and other markets,
like possible swap arrangements, I think the preparatory work has not been
done.  But it would be a very useful thing if out of this summit came some
expression of readiness to consider comprehensive discussions on energy
that would recognize the essential role of free markets in the production
and distribution of energy, but recognized at the same time that the energy
sector is not a free sector.  Therefore, collaborative actions that have
the effect of enhancing competition and production would be a subject for
future discussion and agreement.  I think that would be a very good thing
and it would be a very important signal to OPEC at the same time.

S:	Phil?

PV:	 Rich has said most of it and I think I said it originally in my talk.
Dependence on Saudi oil is irrelevant.  It's how much oil is supplied to
the world and the price level that results.  Thirty years ago the oil
exporting countries thought they could embargo oil to the United States and
cause harm.  They found they couldn't and they now recognize that.  It's a
question
of cutting production.  The reason one wants to push marketing opening,
investment in Russia and marketing opening efforts and particularly support
the Russian oil companies in resisting coercion by OPEC now is that puts
more oil on the market, that achieves a more competitive level of oil
prices and essentially reduces the Saudi leverage.  The larger number of
producers you have and the more natural gas that you have on the market,
substitution of gas for the heavy oil that comes out of the Russian
refineries, conversion to gasoline, all work to reduce the leverage that
Saudi Arabia has over the world energy market and the leverage on the
United States.  But to speak of our dependence on Saudi oil is incorrect.
It's really irrelevant.  

S:	There and then over here.

AC:	Two questions.  

S:	Can you identify yourself?

AC:	Ariel Cohen, the Heritage Foundation.  One on non-proliferation
activities, to what extent we can go beyond specific issues with Iran,
which are extremely important.  The Bushehr reactor, the missile
technology, training of Iranians in Russia, and look at a framework of
technology and possibly weapons grade uranium and plutonium leaking out of
Russia.  Richard Perle has done a lot of work on technology transfer in the
early '80s.  There was a COCOM that was working at the time.  We don't
have something on that level today.  To what extent we can expand our
intelligence cooperation with the Russians, if at all.  The second question
is to what extent we can go beyond the 19 plus one formula that is
being in fact discussed as we speak in Reykjavik and will be signed
probably on the 28th in Rome.  Thanks.

S:	Richard, you want to take a part of that at least?

RP:	Yeah, at least one part of it.  I think there are differences, clearly
perceived differences, and maybe there are real differences in our interest
and the Russian interest in for example the extent and the nature of the
trade with Iran.  Because we accept that Iranians in possession of nuclear
weapons and the missiles with which would be a threat to us, and the
Russians may not consider that those missiles will be aimed at them, we may
suggest that they should be concerned about it.  But we've seen lots of
people make short-term decisions on the basis of what they think are their
more immediate interests.  So, I think we need to say clearly and
unambiguously this is a threat to us.  Whether you regard it as a threat to
you or not we want to talk about ways that we can bring it to a halt.  The
problem has been unfortunately that various Russians with whom we have
discussed this deny that the activity is taking place in the first place,
and in the absurd way governments tend to behave, our response to that was
to turn over intelligence reports, whereupon the sources on which those
intelligence reports were based ceased to provide further intelligence.
So, I think we've decided to stop doing that.  We should have decided a
long time ago to stop doing that.  We should be discussing this in a
dispassionate and business-like way.  You believe that you define your
interests in the kind of activity that is going on with Iran.  Let's
side-step the question of what you admit to.  Define your interests and
let's talk about how those interests can be accommodated to ours.  As I was
suggesting earlier, I would not rule out sharing the financial burden that
results from foregoing a market, that for them is just a market but for us
is potentially very dangerous.

S:	I can add a word about that.  This is an issue, the flow of
sophisticated technology relevant to both nuclear weapons and ballistic
missile development that has been under discussion between the United
States and Russia for years.  The denial tended to characterize a sort of
earlier phase of this but a more successful dialogue was in fact
established, although it varied from issue to issue and problem case to
problem case.  Sometimes the result of making without compromising
intelligence very, very specific complaints about particular kinds of
equipment technology that were going to be transferred has very successful
results.  But the problem hasn't gone away in a way that would suggest a
consistent high-level commitment to the results.  Some commitment, but a
lower priority commitment, which allows exceptions to be made, winks to
take the place of real oversight, and that means that there is really no
alternative to a serious high-level discussion of this that tests whether
or not there can be in whatever way, whether it's through the assertion of
other common interests or through other kinds of understandings that you
suggest, Richard, a clear decision by a guy who presents himself, as Putin
does, as a can-do guy, that this problem is going to stop.  Because it
appears it has not stopped.  A lot of the big and complicated technical 
questions will arise when you try to have a discussion of that
kind, including above all what technologies one considers most serious and
dangerous and whether there can be any kind of agreement that gets us where
we want to be and makes a substantial dent in our security problem.  

RP:	It's like pornography.  We know it when you see it.  Defining it is not
the key enterprise.  If you want to get this solved, don't send a diplomat.
 Send a banker to discuss it.  

MM:	I might add on the Iran point, if we could establish a reliable and
verifiable framework on this, it would open up a realm of cooperation on
nuclear issues that has simply been unavailable so far, and that has to do
with the back end of the nuclear fuel cycle, where there are substantial
commercial opportunities.  But we can't just go there absent a reliable
arrangement and framework with the Russians on this.  On NATO, Ariel, you
asked about NATO and going beyond, I think the road is very much open.  I
think the agreement just reached on the NATO-Russia council represents
really a fundamental change of attitude on the part of both the Russians
and their NATO partners  on trying to treat this relationship as
substantive.  In order to go beyond that, I think both sides will have to
establish a track record on the issues that they decide to discuss in that
forum, whether it's joint rescue operations, counter terrorism,
non-proliferation.  If we establish a track record, then I think we have a
firm basis for moving down that open road.  Who knows?  Ten, 20 years from
now maybe we'll expand NATO to the max and also abolish it at the same time.  

S: 	Yeah, here and then Katherine.

ZN: 	Zigmund Nagorski, center for international leadership.  I have two
questions for Richard Perle.  When you started your intervention, you
mentioned that security should not be a priority issue in our relationship
with Russia.  Would you therefore advocate a reduced defense budget and in
which fields?  The second question is related to your graduation idea.
What kind of grades would you give the two presidents and what words would
be in the diploma.  

RP: 	The second question is easy.  I'd give President Bush an A plus and
for the reasons that were implied, actually quite directly in Angela
Stent's question, I would not give President Putin an A plus but I suppose
I'd give him a B plus.  He gets an A plus if he moves in the direction your
question suggested.  

M: 	I hope we get this on the record.

RP: 	On the record.

M: 	B plus has become a pretty bad grade.  I can tell you.  

RP: 	Let me tell you, my kid is graduating and he had plenty of B pluses.
On the question of the defense budget, I don't think the defense budget is
driven by a sense of a Russian threat.  

M: 	(Inaudible)

RP: 	Well, unfortunately, the structure of our defense establishment
reflects the Cold War in some important respects.  It's important to change
that, to transform the composition and orientation of our military forces
to deal with post-war contingencies.  That's what the debate about
transformation is all about and it's expensive ironically.  Getting the
Cold War behind us militarily will cost something, but it's not driven by a
concern about an invasion of Europe from Russia.  Most of what we're now
spending on defense actually has little to do with any sense of a threat
from Russia.  So, I'm not in favor of reducing the defense budget.  I'm in
favor of spending the money rather differently and investing in a
transformation that will give us a very different kind of force, as opposed
to the one that was built in the Cold War.  

S: 	Richard, can I follow up on that question to ask you this.  Ten years
is kind of a long time given the introduction that you gave to where we
are.  I refer to 10 years because it's the duration of this treaty that has
been agreed.  You can answer this either by describing your preferences or
your predictions as to how that downsizing will take place.  There will
presumably be a lot of pressures to make it faster, but that presumably
happens in part if people really come to believe, as I tend to think not
everybody does yet that the triad is irrelevant.  What's your sense?

RP: 	I think the decisions about the nature, size, composition of our
nuclear force should be driven by considerations that have little or
nothing to do with the nature, size, composition of the Russian force.  It
no longer makes sense to think of them in relation to one another.  I think
our force is much larger than it needs to be.  I'm not at all unhappy about
planning for reductions.  I hope the 10-year period doesn't slow the pace
of reductions.  I don't think we should keep nuclear weapons in the
inventory that we don't need.  I've never thought we should.  

S: 	That's because we have a treaty.  

RP: 	In fact in recent years the residual treaty arrangements from the Cold
War have tended to sustain higher levels.  I think the Russians would go to
even lower levels just for financial reasons.  We should go to lower levels
just for financial and other technical reasons.  Ironically, arrangements
that were meant to make us safer have probably kept the numbers
artificially high, at least in recent years, and they've caused us to incur
additional costs.  Let me give you just one example which is not
insignificant.  The cost of taking a submarine that is today a nuclear
missile-firing submarine and converting it so that it can fire weapons that
might be useful in an anti-terrorist contingency, varies accounting to
whether that conversion is done according to the rules of the old arms
control agreements or outside those rules.  Under the rules, it costs $700
million more to convert a single submarine, and those rules are just
patently absurd and irrelevant in today's world and yet they're still there.  

S:	Are they there in the new treaty?

RP:	I think the treaty is silent on this but I haven't seen the text in the
new treaty.  I hope they're not perpetuated.  That would be an absurdity to
do that.

M:	Very quickly, just to make the grading bipartisan.  From my point of
view our president started our Russia policy with a gentleman's fourth, as
we used to call it, and he's been allowed to retake the exam.  I think he's
going to get a pass or maybe even a high pass, depending on how things go
this year.  One concrete exam is it looks like we'll get an arms control
treaty, and this was the president who basically said read my lips, no new
treaties.  So, he studied.  

S:	Leaving aside grades, I'd put it a little more simply than the two of
you.  I would say Russian-American relations are better than they have ever
been.  

RP:	He gets an A plus from me despite the treaty.

S:	He made a little notation at the bottom.  

M:	Hi.  I'm Joe Cirincione, Carnegie Endowment.  Let's push this nuclear
discussion just a little further.  I don't think it's arms control
agreements that have kept our nuclear forces artificially high.  I think
it's our antiquated targeting policies.  The main difference between our
nuclear relationship with Russia and our nuclear relationship with Great
Britain and France is that we maintain elaborate plans to target and
destroy Russia and we do not maintain plans to target and destroy Great
Britain and France.  These targeting plans are the main rationale for
maintaining thousands of nuclear weapons on high alert rather than tens or
hundreds.  Richard, would you support truly liquidating the legacy of the
Cold War?  Would you support the elimination of our targeting plans for
Russia?  When we do that, wouldn't that be the sign that our relationship
had truly changed?

RP:	I don't want to get technical on you.  I don't know what you mean by
the elimination of our targeting plans.  We have a nuclear force.  It's a
nuclear force that is declining.  I think it's right that it should
decline.  The Cold War targeting doctrines didn't make a lot of sense
during the Cold War and they certainly make no sense now.  If the
suggestion is that we should have a nuclear force, even a smaller one, and
take any of the steps so that if we ever needed to use that force we could
us it, I think that would be absurd.  You might as well just get rid of the
force if you're not going to operate it in its entirety, and the entirety
has to include the capacity to target.  So, no.  I would not be in favor of
maintaining weapons that have no targets associated with them.  I do think
that the nuclear options that entail large numbers of nuclear weapons are a
thing of the past.  The technicalities of how we do the targeting should
adjust to that new reality.  But when I said the the agreements were
sustaining the levels, unless I'm mistaken Congress imposed a requirement
that we not go below certain levels that were the product of agreements,
even though those levels make no sense.  I think what Congress had in mind
was maintaining a capacity to bargain for future agreements.  We're more
than a decade after the collapse of the Soviet Union.  It's absurd to have
arrangements like that in place.

S:	I think what Congress was doing was saying that the United States could
not go below Start I levels until Start II was ratified.  It was in a way
bargaining to get already agreed agreements implemented.  

RP:	It was silly nevertheless.

S:	Do you want to say, although you seem to be in agreement on some things
and not on others, how much too big you think these forces are?  

RP:	I think when the political relationship changes, when we are no longer
mortal enemies, the numbers become unimportant.  I think the numbers ought
to go down for a lot of reasons, but I wouldn't spend a lot of time
worrying about the lowest number trying to choose the lowest theoretic
number.  At some point, by the way, if you take the number down too low it
becomes an encouragement to potential nuclear powers to increase their
numbers or even some other nuclear powers in the mistaken belief that this
could be beneficial to them.  You do ultimately raise the question in your
own mind of whether the force is variegated enough to be secure even if
there are some unexpected developments within the force.  So, I wouldn't
get hung up on the low level.  What's important is that neither of us is
poised to attack the others.  The numbers become unimportant in that
situation.  

IC:	Thank you.  Bloomberg Radio.  Mr.  Medish, getting back
to the notion that better political relations might follow better economic
relations, US companies, multinational companies, poured investment into
China long before the World Trade Organization was a gleam in Jiang Zemin's
eye.  What do you think is the prospect for Russia becoming a major target
of international investment?  What can this government do to promote it?
Please don't lean into the microphone.  

MM:	I'll try not to lean.  I think we have a limited gift to promote
investment in Russia.  Russia has to take actions on its own to create a
climate that attracts investment.  The global maxim is that investors chose
countries and not the other way around.  That's the bottom line and I
wouldn't expect anything different from a summit.  I think we've identified
a few areas of potentially enormous international interest in the Russian
economy including the energy sector, but there are others.  Russia is
obviously a very large market in the Eurasian land mass.  If it can get its
institutional and legal scheme right, if it can protect property rights and
contracts credibly and reliably, it will increase the chances it can
compete for international investment.  So far the level of foreign
investment in Russia has been meager as a percentage of GDP.  It needs to
aim probably for a 10-fold increase in the coming 10 years, but the ball is
very much in Russia's court to do this.  It won't be at the command of G7
leaders that investors flock to Russia.  

S:	Phil, do you want to add a word on that question?

PV:	I think all you have to do is look at the energy sector to see
precisely why this has happened.  The absence of a legal basis for property
rights and for absence of legal protections of minority shareholders has
really stopped in its tracks a rush to invest in Russia which was present
in 1990 and 1991 after the collapse.  It will take time and some confidence
building measures.  The difference with China is that there were
essentially none of the national companies and none of the privatization
methods that essentially turn title over to these Chinese companies.  So,
they started with a fresh slate.

S:	Okay, two on the aisle here.

WM:	Wayne Merry, the American Board and Policy Council.  At the Crawford
summit one of the major themes was the fight against terrorism, which
nobody has really discussed today.  We've been told that it affects every
aspect of US policy and certainly Putin used it as the basis for a very
successful and significant turn in his own relationship with the United
States.  Also, if this summit had taken place a year ago I think one of the
primary concerns from the American side would have been the developing
Russian-Chinese relationship and America concerns about developing Chinese
capabilities across the straits toward Taiwan.  Neither of these have been
addressed today but aren't these going to be subjects in which the United
States hopes to accomplish something at this summit, and if so what?
	
RP:	I don't know what will be discussed on the subject of the war against
terror.  There are undoubtedly ways in which we could cooperate.  I'm not
sure what is most important among them but I'll mention only one.  This is
not the happy side of the story.  I think there has been a lack of
cooperation from the Russia side in discussing openly and candidly their
biological weapons program.  The reason why that relates to the war against
terror is that for a rather long period of time Russia was in the Soviet
days the biological weapons program was arguably accessible by some other
countries that may now either be in the terrorist business or willing to
support terrorism, and I think it is vital that we know as much as possible
about the work that was done on resistant strains of toxins and on this
issue for reasons that I don't understand the Russians have been
un-forthcoming.  That seems to me to be intolerable over the long term and
I hope that is on the agenda at the summit.  

S:	Yeah, that's the kind of issue that Putin probably has a certain period
of time before it becomes his issue.  This is one where he's only just
matriculated, to use the terminology we had earlier.  But by the time he's
an upperclassman it may be a little harder to disassociate himself from
those.  I'd make an observation about the connection between the two issues
that you raised because it seems to me that the war on terrorism has
allowed a lot of countries to take actions that bear on their relations
with China, that they would not have been able to take without it.  Before
September 11th, all the major countries on China's periphery had better
relations with it than they did with the United States, leave aside Japan.
Today that's changed.  None of those countries would have been willing to
do that in the same way without the impact of those events, and nobody
would like to describe what you have now as an anti-Chinese entrant(?) but
invisibly it seems to me that has taken shape.  Sometimes even without
having to talk about things too much at summits and issue declarations,
huge geostrategic shifts can take place.  Jim Collins.

JC:	I'd like to come back to the question about what can the government do
about the economic relationship.  I agree with you that when Nirvana
arrives and the New York corporate structure is present in Moscow,
investment will flow.  That is going to be a long time.  So, my question
essentially to you is what do you do in the meantime when it's a very
imperfect world and one in which many of these qualities you're talking
about are not likely to be present for some time to come?  

M:	Nirvana is a ways off.  I think what we're already seeing in Russia is
some degree of a reversal of capital flight, which is an important first
step, that is, the flight of Russian capital from Russia.  It's unrealistic
to expect large amounts of foreign investment to flow into Russia if
Russian capital itself is running away from Russia.  I think the
consequence of the progress that the Russian economy has made over the past
two, two and a half, three years is that some of that capital flight is
beginning to reverse itself, which is very positive.  But getting to your
broader question, I think one of the things we can do both bilaterally and
multilaterally to help countries, emerging markets like Russia, is to
provide more export credit facilities and other financing facilities that
are willing to take risks in advance of private capital on its own wings.
I have the use of OPIC, of EXIM Bank, of the EBRD, of the World Bank
guarantee facilities, of the IFC within the World Bank group.  So, there
are a number of facilities that can be used to prime the pump to reduce
investor risk to some degree, and those ought to be vigorously pursued and
I think there are by and large have been and will continue to be.

RP:	Can I just add something to that.  I think we want to be very careful
about risk mitigation strategies because when we remove risk from
investment decisions we tend to get bad investment decisions.  What Russia
needs is investment that is successful, not investment that fails.  For
that the discipline of the marketplace is irreplaceable.  So, it seems to
me the most important thing we can do is to hammer away at the appreciation
that is essential of how free markets operate and what causes investment to
flow or not to flow.  We don't to lecture but I think the more we can
expose Russian officials and in particular the senior-most officials to the
logic of free markets the better.  It's not easy.  It's not easy against
the legacy of a command economy.  Some people would say it's not even easy
in the Senate of the United States to persuade everyone on the virtues of
free markets.  But that is the essential message.  When the Russians
understand what it takes to cause an investor to take a risk in a project
in his country, we'll start to see serious investment levels.  It's
happened in India, it's happened wherever governments have adopted the
right policy or created the right environment, the investment will
gravitate consistent with potential for profit and where the markets are
and that's the kind of investment we want.  

S:	Just to second what you said, Richard.  I remind people of Mark Medish's
endorsement of Putin's State of the Union speech.  It's really quite an
extraordinary speech because of its harsh and lecturing tone exactly on the
points that you made.  Its message page after page is there is no free
lunch in the world.  We should't think that we are going to be able to
alter the laws of economics or get a standing in the world economy by any
other means than by performance and by getting our laws and institutions
right.  It is an exceptionally harsh speech and it is informed explicitly
by worry because he begins by saying, how are we doing economically?  Well,
okay, he says.  Not a standard politician's answer.  There is nothing rosy
about it.  It's exceedingly harsh and realistic.  One hopes likely to have
results.  Phil and then Mark Levin.

P:	I think if there is some lecturing to be done that Putin could also
lecture us and lecture the Europeans on our policies adopted towards some
of the heavy industry that they have some comparative advantage.  I'm
thinking back in terms of aluminum, the problems the Russians had with
European exports of aluminum, and more recently President Bush's decision
to place import quotas on steel.  We are not at all living by our standards
on these issues, and quite rightly especially since the Russian economy is
oriented towards these commodity exports, they have suffered
disproportionately.  

S:	You can be sure that President Putin on this issue will not be guided by
Richard's statement about not wanting to lecture.  He will lecture rather
brutally on this point at their meeting.  Mark Levin.  

ML:	Mark Levin in CSJ.  I wanted to go back to the domestic slash democracy
issue and get the panel's view on if we don't want President Bush to
lecture President Putin about how to advance what we take as our basic
freedoms then what message should the president deliver to President Putin
and how best do you deliver that message?  If we're not at Nirvana on
economic issues, how do we even more the scale on these democracy issues?

RP:	The successful countries are the democratic countries.  Putin's
ambitions must be for a society that functions as the democracies function.
 If you want to see a backward country, find a place that doesn't allow
people to think, write, publish and behave in other ways that exhibit the
benefits of democracy.  It's just a pragmatic argument.  I don't know that
he needs to hear it every time they get together, but it certainly wouldn't
do him any harm.  

PV: I'd add to that as well that anything that broadens the relationship
in the way that Mark talked about when he was talking about people to
people exchanges is also good.  A president can't do that himself but he
certainly can meet with a lot of other people beside the president.  You
said that summits are a kind of Cold War legacy.  It is certainly a Cold
War legacy to have a summit that doesn't involve a lot of contact with
other people in a country and particularly civil society groups that are
most committed to this kind of change.  So, that is certainly one measure
by which the president's visit will be evaluated.  Charles, what's happened
to our mics?  Then General Rowny.  

CF:	Charles Fairbanks, Central Asia Caucuses Institute.  An aspect of
Russia's cooperation with us on the war against terrorism is the question
of Afghanistan, whose continuing and probably future instability is a major
future problem that we're going to have.  Is there something that isn't
apparent in Russia's relationship with the Northern Alliance?  It seems
very contrary to our interests there.  But I wonder how much people are
dwelling on this around the time of the summit.  

S:	I'm drawing a blank there except to say that my assumption is that the
interests of other states in the region, particularly the Uzbeks, must
surely be as great as that of the Russians and probably as much intentioned
as our own approach to constituting a unified Afghan government that runs
beyond Kabul.  General Rowny.  

GR:	I'd like to come back to the humanitarian issues.  Ed Rowny, former
arms controller.  Even in the last two or three years of Reagan's time in
office in his second term, even though arms did have relevance then,
President Reagan kept hammering away on the humanitarian issues.  We
mentioned Jackson-Vanik here but there are others.  We touched on the press
but no one has mentioned the religious crackdowns that have happened
lately.  So, in view of this I agree that you don't want to lecture just
for sake of lecturing and because it makes you feel good.  But I think
President Reagan felt good when he lectured but I think he did it with a
passion because I think he believed that this was what was going to bring
Gorbachev around, bring the wall down.  I'm a little disappointed at
Richard's mellowing here and his grading.  I would give President Bush an
A, and I would give Putin maybe a C at best.  I know he has difficulties in
bringing around the Duma and a lot of his society but that is what he is
the leader of, that is what he is supposed to do.  I would say that
particularly in view of his KGB background I would say if I were advising
the president hit the humanitarian issues hard and don't shrink away from
them.  Then if that happens and Putin responds, maybe he can come up to a
B, and then we can give Bush an A plus.  

RP:	I think it's in part because of President Putin's background that he
deserves a little extra credit.  He's a guy who had embarked on a quite
different career and is rather suddenly president of Russia and I think
he's doing pretty well under the circumstances.  We'll see.  It's too soon
to say what the final course grade is going to be, but I think he's doing
all right.  I am certainly not against saying what needs to said about the
human rights and democracy issues, but I think the right audience for that
is in fact the Russian people as a whole, as opposed to President Putin by
himself at a summit table.  We shouldn't underestimate the ability of an
American president who has access to the Russian people as a whole on an
occasion on this, to help move them, help convince them.  President Reagan
put great emphasis on his speeches on these issues but they were to the
Irish parliament and they were to students at Moscow University.  It wasn't
what he said even to Gorbachev in private that mattered most.  So, there
certainly should be no inconsistency in the messages, but the more
important messages is the one that causes the Russian people to think and
reflect about their own future.

S:	Richard, I agree with what you said about the importance of public
statements, but it does seem to me that if they're not supported in private
the message, particularly by somebody like Putin that I'm just doing this
for my audience back home.  It doesn't matter very much.  I think both
Gorbachev and Putin have given us some reason to think that they are
actually influenced, maybe even at the level of personal vanity, by
acceptance.  So, reinforcement, even maybe especially one on one, seems
appropriate and appropriate particularly because we see signs that the
student is capable of doing better than his current level of work.  Mark?

M:	I would agree with what Richard has said but just to add one thing.  The
cruel irony of Jackson-Vanik situation is that Russia lets its people go.
It is we and the Europeans who don't grant them visas on an easy basis.
That is the cruel irony of the current situation.

S:	You know.  I'm absolutely right.  I know I said yes, yes, one more
question.  This is my fault and then I'm going to let people go.  But
anybody who wants to.  Okay, since we've got an audience of people eager to
crash out of here, we'll do this quickly.

LG:	This will be a short question.  I don't know that the answers can be
short.  I'm Lincoln Gordon, presently at the Brookings Institution.  My
question has to do with Central Asia, those portions of it which were part
of the Soviet Union in the old days and Russian attitudes toward American
activities in that region.  I sense at least among some just reading some
Russians a feeling that there is an analogy to the Monroe Doctrine.  This
is a natural Russian sphere of influence.  We happen to have sovereignty
over it, but leaving that aside, it's a natural place for sphere of
influence. My question is this a serious problem down the pike and if so 
is there anything Mr.  Bush can do to minimize it?
	
M:	One thing can do to minimize it is not to established a too-categorical
policy toward a long-term presence in the region because the United States
may very well need that long-term presence.  This is a possibility that
does not need to be rubbed in Putin's face but it is not something that
should be foresworn.  I think it becomes more difficult if we have a very
categorical policy here.  What you say about a natural sphere of influence
represents one kind of Russian reaction here.  But the reason the Monroe
Doctrine analogy breaks down is that the Russians themselves have been
bellowing for years now and Putin himself most vociferously that they face
a threat from the south that other countries need to work with them on.  In
that respect, what the United States is doing in Central Asia represents
the fulfillment of his dreams.

S:	Thank you very much for joining us today.  Thanks to all the panelists.  

*******

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