[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
U.S. POLICY TOWARD RUSSIA, PART III: ADMINISTRATION VIEWS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
October 19, 1999
__________
Serial No. 106-91
__________
Printed for the use of the Committee on International Relations
U.S. GOVERNMENT PRINTING OFFICE
63-831 CC WASHINGTON : 2000
COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM F. GOODLING, Pennsylvania SAM GEJDENSON, Connecticut
JAMES A. LEACH, Iowa TOM LANTOS, California
HENRY J. HYDE, Illinois HOWARD L. BERMAN, California
DOUG BEREUTER, Nebraska GARY L. ACKERMAN, New York
CHRISTOPHER H. SMITH, New Jersey ENI F.H. FALEOMAVAEGA, American
DAN BURTON, Indiana Samoa
ELTON GALLEGLY, California MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina ROBERT MENENDEZ, New Jersey
DANA ROHRABACHER, California SHERROD BROWN, Ohio
DONALD A. MANZULLO, Illinois CYNTHIA A. McKINNEY, Georgia
EDWARD R. ROYCE, California ALCEE L. HASTINGS, Florida
PETER T. KING, New York PAT DANNER, Missouri
STEVE CHABOT, Ohio EARL F. HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South BRAD SHERMAN, California
Carolina ROBERT WEXLER, Florida
MATT SALMON, Arizona STEVEN R. ROTHMAN, New Jersey
AMO HOUGHTON, New York JIM DAVIS, Florida
TOM CAMPBELL, California EARL POMEROY, North Dakota
JOHN M. McHUGH, New York WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas GREGORY W. MEEKS, New York
RICHARD BURR, North Carolina BARBARA LEE, California
PAUL E. GILLMOR, Ohio JOSEPH CROWLEY, New York
GEORGE RADANOVICH, California JOSEPH M. HOEFFEL, Pennsylvania
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
Richard J. Garon, Chief of Staff
Kathleen Bertelsen Moazed, Democratic Chief of Staff
Mark Gage, Senior Professional Staff Member
Marilyn C. Owen, Staff Associate
C O N T E N T S
----------
WITNESSES
Page
The Honorable Strobe Talbott, Deputy Secretary, U.S. Department
of State....................................................... 8
APPENDIX
Prepared statements:
The Honorable Benjamin A. Gilman a Representative in Congress
from New York and Chairman, Committee on International
Relations...................................................... 40
The Honorable Strobe Talbott..................................... 42
Additional Material:
Question for the Record, submitted by The Honorable Earl Pomeroy,
a Representative in Congress from North Dakota................. 51
Response to Question for the Record raised by Representative Earl
Pomeroy, answered by letter dated November 8, 1999 (with
attachments) from The Honorable Barbara Larkin, Assistant
Secretary, Legislative Affairs, U.S. Department of State....... 52
Attachments to Letter from The Honorable Barbara Larkin:.........
(1) Letter directed to The Honorable Gennadiy Nikolayevich
Seleznev, Chairman of the State Duma of the Russian
Federation, Moscow, dated September 30, 1999, from The
Honorable James F. Collins, United States Ambassador,
Moscow, Russia............................................. 54
(2) Letter directed to His Excellency Sergey Vadimovich
Stepashin, Prime Minister of the Russian Federation,
Moscow, dated June 29, 1999, from The Honorable James F.
Collins, United States Ambassador, Moscow, Russia.......... 56
U.S. POLICY TOWARD RUSSIA, PART III: ADMINISTRATION VIEWS
----------
TUESDAY, OCTOBER 19, 1999
House of Representatives,
Committee on International Relations,
Washington, D.C.
The Committee met, pursuant to notice, at 10 a.m. In Room
2172, Rayburn House Office Building, Hon. Benjamin A. Gilman
(chairman of the Committee) Presiding.
Chairman Gilman. The Committee will come to order.
Over the last 2 years, our Committee on International
Relations has held a number of important hearings concerning
developments in Russia. Looking back over the testimony we have
taken in those hearings, particularly those of the last 2
weeks, I believe that we have to make several conclusions of a
serious nature, conclusions that should persuade us that a
thorough reexamination of our current policy toward Russia is
now warranted and long overdue.
First, it is my belief that it is time for an accounting by
Russian officials of their lack of any real action over the
past few years in the face of the fantastic and growing
corruption in their country. Given estimates that anywhere from
$100 billion to $500 billion in Russian moneys have been
siphoned out of the Russian government budget and the Russian
economy, that accounting is long overdue.
A sincere and thorough accounting might readily find that
the highest officials in the current Russian government,
including those in the Kremlin and in the Russian security and
police agencies, are themselves culpable in this massive
thievery. Still, our nation ought to press for such an
accounting, because we need to show the Russian people by our
actions, not just our statements, that we as a nation don't
condone this kind of corruption.
Second, it is time to begin an exploration here in our
nation of where that Russian money has gone. One of our
witnesses in a recent hearing, a retired analyst with the U.S.
Central Intelligence Agency, has speculated that much of that
money may have come to rest here in our own nation.
Whether such an exploration is carried out by our House
International Relations Committee or by our House Banking
Committee, which has jurisdiction over international financial
issues, a thorough examination of that flow of money should be
considered. If such huge amounts of Russian money have been
siphoned, stolen or laundered, with much of it perhaps having
ended up in some of our own banks, investments and real estate,
do we dare make a complacent assumption that those who have
arranged that thievery will not put their financial power to
use here in America in ways we would not approve?
Third, it would appear that loan funds provided by the
International Monetary Fund, particularly the almost $5 billion
tranche provided in July 1998, may well have been diverted,
through redemption of Russian bonds, to benefit Moscow's
``tycoons.''
Fourth, even if IMF loans are not being diverted in Russia,
they are just replacing, and only in part, moneys that are
disappearing from the Russian government budget. In light of
these facts, while we can and should audit IMF funds and while
we might even just transfer them from one account to another
without ever sending them to Moscow, we should understand that
if the Russian government is increasingly insolvent due to the
incompetency, or worse, of its officials, we are simply
hastening the day when Russia may default on its IMF
obligations by continuing to provide those loans.
Finally, if current trends continue in Russia, it is highly
unlikely that we will see the stability in that nuclear-armed
country that both Democrats and Republicans support here in our
own nation. The signs of deterioration are evident in Russia,
including impoverishment of large numbers of Russians,
epidemics, growing anti-Semitism and possible fascist
movements.
Certainly, those trends alone should lead us to re-examine
our current policy toward Russia, but the massive corruption in
that country requires it, in my view. Let me note that, over
the past 3 years, our Committee has held several hearings
during which we have asked dozens of witnesses to share their
insights on our relationship with Russia. Many of those
witnesses have raised warning flags about our policy and
whether it has actually been achieving what we would like to
achieve in Russia and adequately serving our own nation's
interests with regard to that important country.
I think it is clear that, where the Yeltsin government in
Moscow has had a shared interest with us to see something
happen, such as to ensure the denuclearization of the States
that border Russia, it has worked diligently to support such
objectives. However, where that government has interests that
are starkly at odds with our own nation's objectives, such as
Russia's support for the ugly dictatorship of Alexander
Lukashenko in Belarus, or the obvious, on-going proliferation
of dangerous Russian weapons technology to Iran, our current
policymakes little, if any, progress.
Some observers now question, in fact, whether progress
toward democratization in Russia is as substantial as we would
like to believe and whether elections there have resulted in
more of a facade of democracy than in a growing accountability
of those elected to the people who have elected them.
In my capacity as Chairman of our Committee, I have shared
with the President and top Administration officials over the
past few years my concerns regarding the direction of our
policy toward Russia and what our policy has actually been
achieving. Let me make one thing clear. No one disagrees that
we need to engage with Russia. But many of us have for some
time now questioned how well our current policy of engagement
with Russia is working. Raising such questions does not make
one an isolationist or a partisan.
Such questions have been raised by Members of this
Committee for some time now, in the hearings I have mentioned
as well as in past letters written to the President and in
opinion pieces published in our major papers. In particular,
the fact that the House passed the ``Iran Non-Proliferation Act
of 1999'' to establish sanctions for Russian proliferation to
Iran by a unanimous vote of 419 Republicans and Democrats just
one month ago, ought to clearly show that there is a bipartisan
concern over our current policy toward Russia.
Finally, let me note that it is unlikely that a partisan
approach is behind the retired Foreign Service and Central
Intelligence Agency personnel who have alleged in recent months
that our Administration has mishandled our policy toward
Russia.
This morning our Committee is pleased to welcome Deputy
Secretary of State Strobe Talbott, who represents the
Administration's views on our policy toward Russia, and who
will hopefully respond to such allegations by former personnel
of our Foreign Service and the CIA. Mr. Talbott has been the
``point man'' on the United States' policy toward Russia since
early 1993, serving first as the State Department's Ambassador
at Large for Russia and the other former Soviet Republics,
serving as well on the National Security Council's Interagency
Group on Russia, and supporting the bilateral process of the
so-called ``Gore-Chernomyrdin'' Commission.
After assuming his current post of Deputy Secretary of
State, Mr. Talbott has remained heavily engaged in the conduct
of policy toward Russia, as evidenced by the very frequent
meetings that he has had recently with top Russian officials.
We are pleased, Mr. Talbott, to have you join us this
morning, and I would like now to recognize our Ranking Minority
Member, Congressman Gejdenson, for any opening remarks he might
care to make at this time. Mr. Gejdenson.
Mr. Gejdenson. Thank you, Mr. Chairman; and it is great to
have Secretary Talbott here with us. I think that anybody who
assumed that the transition from the Soviet totalitarian
government to a democratic and free society would be an easy
one had no sense of history or knowledge of it.
What we have gone through here is an unprecedented
historical transformation. A totalitarian government with a
centrally run economy is in the process of trying to transition
to a democratic society, one with a free market and democratic
institutions. I think all of us understood this would be a
difficult and challenging road, but we have some tremendous
successes.
We have deactivated over 1,500 nuclear warheads, destroyed
300 missiles, and we now have the Ukraine, Kazakhstan and
Belarus as nonnuclear nations. I agree with you, Mr. Chairman,
the situation in Belarus is a distressing one. Think how much
more distressing it would be to be viewing Mr. Lukashenko today
if he still had nuclear weapons.
The advancement of human rights and the promotion of basic
freedoms and press freedom, travel freedom, and even elections
are now routine in much of what had been the Soviet Union and
Russia. These aren't modest achievements when you think about
one of the few countries on the European continent that had no
history of democratic institutions or civil society.
American bilateral aid, by and large, 98 percent of it
spent on American goods and services, has begun to build that
civil society using our resources to build a civil code, a
criminal code, and trying to help develop a legislative
process, transparency in Russian capital markets, enacting
policies that could fight money laundering and corruption.
These battles will go on for some time.
When we take a look at where we are today and where we want
to go, the answer is clear. We don't want to go back to where
we were with Russia. We don't want the kind of confrontation
that could cost us billions of dollars and many lives, or a
return of the Cold War which had some very hot elements to it.
We want to move forward in trying to include Russia in a
civilized society, helping them combat crime and corruption,
trying to deal with issues of nonproliferation, regional
threats and electoral reform.
We at the end of World War II spent $90 billion in 5-years
on the Marshall Plan, trying to save Western democracy. The
billions that we have spent on Russian are far less than that
in today's dollars. Money is not the only answer here, but
there is no country in Europe, in my opinion, that is either a
greater challenge or more important to American security than
our relationship with Russia. I credit Mr. Talbott and the
Administration for getting us through some very difficult
times. I am sure there are going to be very difficult times
ahead, but I think we are on the right course.
We have to constantly make sure that the IMF and other
programs are monitored, everybody agrees with that. But while
reviews are always important, I would like to hear from the
Chairman, or others on his side, any alternatives they have to
the present policy, what kind of actions we can take. I think
the Chairman is right. Nobody wants to disengage. Anybody who
argues for disengagement doesn't recognize that there are still
lots of very important issues for American's national security
in this relationship that we can't abandon.
Chairman Gilman. Thank you, Mr. Gejdenson.
Do any other Members seek recognition?
Mr. Royce.
Mr. Royce. Thank you, Mr. Chairman; and I thank you also
for holding these hearings.
The relationship between the United States and Russia
remains critical, and I am looking forward to hearing from
today's witnesses about where we have been and where we are
going. But I would like to point out that 5 years ago this very
Committee held hearings on Russian organized crime.
Unfortunately, we were ahead of the curve.
At that time, I said that our aid to Russia should be
conditioned on assurances from the Russian government and our
government that all is being done that can be done to monitor
and counter the growing threat of Russian crime syndicates
before they choked off the infant democratic experiment in the
former Soviet Union. My concern was about countering a real
threat to the chances for a successful political and economic
transition in the former Soviet Union and about stopping an
international crime wave before it crested on our own shores.
Unfortunately, that was not done, and we are all here 5 years
and billions of dollars later, and these concerns may have
risen to the level of a scandal, frankly.
American taxpayers deserve better. Our important
relationship with Russia deserves better, as does the integrity
of the American financial system. Over the last several weeks,
the Administration has been telling us that our relationship
with Russia has been moving in the right direction. It has
stood behind the Internation Monetary Fund's yet again
commitment to reform.
Many of these problems were quite evident 5 years ago. Some
of us on this Committee raised these issues, but these things
were allowed to slide.
I hope today's hearing is about better understanding where
we have been so that we can better understand where we are
going, both with the international financial institutions and
with the overall U.S.-Russia relationship. It is my hope that
this Committee and the Congress will redouble its oversight
efforts to help see that something positive comes out of the
serious shortcomings in the management of our relations with
Russia that are now so evident to all.
I thank you again, Mr. Chairman, for holding these
hearings.
Chairman Gilman. Thank you, Mr. Royce.
Mr. Lantos.
Mr. Lantos. Thank you very much, Mr. Chairman.
I want to welcome Secretary Talbott, and I want to take
this opportunity to publicly commend him for his extraordinary
contributions to U.S. foreign policy during the course of the
last 7 years and particularly for his leadership in terms of
U.S.-Russian relations.
This is not a case, Mr. Chairman, of whether the glass is
half full or half empty. As one who made his first visit to the
Soviet Union in 1956 and has been back to the Soviet Union and
subsequently to Russia on a very regular basis, most recently
last month, I am as aware of all the shortcomings and
difficulties that Russia confronts as anybody in this
Committee, but I am equally aware of the enormous achievements
of the last few years in which our policy played a key role. So
to put this hearing in some kind of a perspective, allow me to
just enumerate some of the facts about Russia in the fall of
1999.
Russia, after 1,000 years of autocratic and dictatorial
regimes and 7 decades of a Communist dictatorship, is now a
developing political democracy. There are free elections in
Russia. We would have given our right arm for free elections
10, 15, or 25 years ago. The Russian parliament, the Duma, will
be elected in free elections. The new Russian president will be
elected in free elections! Russia has a free press. Russia has
a free press. We would have given our right arm at the time of
Pravda and Izvestia and Moscow television controlled by the
Communist Party for a free press. Every Russian citizen has the
right to travel abroad. Everybody has a passport.
As one who spent a lot of time in the 1980's fighting for
human rights and religious freedom in Russia, I am delighted to
remind ourselves there is religious freedom in Russia. All
religious faiths are free to practice, to build new places of
worship. I just visited some while I was in Russia months ago,
and I think it is important to underscore that. There is a
burgeoning and growing market economy.
Now, there is corruption. That corruption is about 1,000
years old. There is crime. Crime used to be a monopoly of the
government. It has now become privatized. But to be surprised
that there is crime and corruption in Russia reveals to me a
degree of historical amnesia which is almost frightening. There
is far less crime and far less corruption in Russia than at any
time in Russian history. Only these activities, as I said, have
become privatized.
Since you, Mr. Chairman, talked about the mistakes of the
Administration, allow me to point out that the collapse of the
Soviet Union unfolded during the tenure of the previous
administration, the Bush Administration, and I think it is
important to realize, as we so ruthlessly at times criticize
Boris Yeltsin, that we have come to know many Boris Yeltsins
during the course of the last decade.
Boris Yeltsin was the first democratically elected
President of Russia in 1,000 years. We did not pick him. The
Russian people picked him. Boris Yeltsin stood on top of the
tank when the attempt was made to reverse the trend of history
and make Russia again a totalitarian police state. Now we have
plenty of reservations, I do, about Boris Yeltsin in 1999, but
I think it is important to realize that at a certain point in
time, just like Gorbachev, he played a critical and historic
role in setting Russia on a new path of democracy and openness.
Finally, Mr. Chairman, if I may make just one additional
point. You started your opening comments about the vast amounts
of funds that have been spirited out of Russia, and you are
absolutely correct. There has been large capital flight out of
Russia. This capital flight represented overwhelmingly
resources of Russia. That doesn't make the capital flight any
better. These are funds that should be put to the use of the
Russian people, but these were not foreign aid funds, and these
were not IMF funds, in large measure. As a matter of fact, the
total amount of aid and assistance to Russia during this whole
period of the last decade is a fraction of the capital flight
from Russia during this same period. So it is important to keep
our perspective.
The bulk of the money shipped out of Russia, however
undesirable, deplorable a phenomenon it was, it was not Western
money. It was money and resources of the Russian people that,
given the new oligarchy, they were able to spirit out of the
Russia.
The final observation, Mr. Chairman, since there is a great
deal of confusion, some of it deliberate, about the West
provided minimal economic aid to Russia, during the course of
the last decade, and it is the failure to lubricate the process
of transformation from a totalitarian police state with a
dysfunctional economy to a democracy with a market system which
is the core problem we face. West Germany provided much more
aid to East Germany in one single year, in any single year of
the last decade than the whole of the aid from the West,
governments, international institutions or whatnot, to Russia
during this decade. West Germany provided $100 billion of aid
to East Germany every single year. Total Western aid, European
countries and international institutions was less than that
during the whole decade to Russia and the other successor
states.
I look forward to Secretary Talbott's presentation.
Chairman Gilman. Thank you, Mr. Lantos.
Mr. Rohrbacher.
Mr. Rohrabacher. Thank you very much, Mr. Chairman.
Mr. Talbott, I worked in the Reagan Administration for 7
years. I was one of Ronald Reagan's speech writers for 7 years.
Chairman Gilman. Allow me to briefly interrupt, Mr.
Rohrabacher. I have asked some of our Members to go over to the
Floor to vote, and we will continue our hearing without taking
a break.
Please proceed, Mr. Rohrbacher.
Mr. Rohrabacher. I seem to remember during that time period
that you were one of a chorus of critics of President Reagan's
policies. Many of the things that we have heard today that have
been touted as great achievements I frankly believe, Ronald
Reagan deserves credit for much of this, whether it is free
press or free elections or free travel. I remember during
Reagan's tenure people were saying that Ronald Regan was being
very unrealistic in trying to demand that type of reform in
Russia, and in fact, it was his tough stance that I think
brought about this great change.
While you were not in power then and were criticizing
Ronald Reagan, you are somewhat influential in American policy
toward Russia today. During this transition, for the last 6
years at least, you have been helping direct the policies that
have molded Russia as it is today as compared to some of the
more bold things that I say started during the Reagan
Administration.
Today, I respectfully disagree with my friends on the other
side of the aisle. The transition is not going well. As far as
I am concerned, it appears that the legacy of Ronald Reagan
when he left office, his legacy of hope and of progress and of
democracy in Russia, now is being squandered. It is going down
the drain in a swirl of corruption, where the hopes and the
dreams of the Russian people are being dashed.
How my colleague, whom I do respect and I think is one of
the most knowledgeable Members of our Committee, Mr. Lantos,
can suggest with the massive corruption that is going on in
Russia today that the problem is we didn't give them enough
aid, it stretches credibility. I mean, it just stretch's one
belief in what kind of policy can we have.
I am the Chairman of the Space and Aeronautics
Subcommittee, and I have dealt directly with the policies of
this Administration concerning the space station. That is just
one little element, and just in the space station, this
Administration has had policies that have led to corruption and
undermined the transition that Russia should be going through.
Mr. Chairman, just one thought on that, this Administration has
been insisting on government-to-government relations when it
should have instead been insisting on an opening up of their
government to commerce and to direct contacts with the outside.
In terms of the space Administration, Mr. Talbott, as you
know, we pushed for direct contracting with Russian providers
and Russian industries. This Administration insisted that we
spend money through the government, through the Russian
government, which is part of the money that has just
disappeared. That is the one I know most about because that is
the one I am personally involved with here. But you take that
and stretch it across the wide variety of dealings that we have
with the government in Russia--and I will have to say that,
yes, I agree with Mr. Lantos--it should be no surprise that
there was going to be private sector corruption during this
transition.
What is a surprise is this Administration's policies in
light of the fact that this was a predictable situation. The
Administration's policies, I believe, have led to a capital
drain in Russia and led to the institution of corruption in the
Russian government and, again, has squandered the legacy that
Ronald Reagan left us so many years ago.
I thank you very much. I am looking forward to your
testimony.
Chairman Gilman. Thank you, Mr. Rohrabacher.
If there are no further comments by any of our Members, I
will proceed with our witness.
Mr. Talbott, as I indicated, has had a long career in
government. He has also had a long career with ``Time''
Magazine, serving as its diplomatic correspondent, White House
correspondent, State Department correspondent, and East
European correspondent, then as the Washington Bureau Chief and
finally as editor at large from September 1989 to March 1993.
Joining the Clinton Administration in early 1993, Mr.
Talbott first served as Ambassador at Large for the New
Independent States in the former Soviet Union from April, 1993,
to February, 1994, and then assumed his current post as Deputy
Secretary of State.
Chairman Gilman. Mr. Talbott, you may summarize your
written statement which, without objection, will be inserted in
the record in full. Please proceed.
STATEMENT OF THE HONORABLE STROBE TALBOTT, DEPUTY SECRETARY,
U.S. DEPARTMENT OF STATE
Mr. Talbott. Thank you, Mr. Chairman, very much, and I will
do as you suggest and submit my full statement for the record
and make some briefer comments here at the outset which I hope
will be responsive to at least some of the points that you and
your colleagues have made here in the opening.
First of all, Mr. Chairman, in addition to thanking you and
your colleagues for holding this hearing at what is obviously a
very relevant time to be discussing these issues, I want to
thank you for the statement that you made in your opening
comments with regard to engagement. That is welcome news, and I
want to engage with the Committee very much on the premise of
what you expressed, and that is that it is not a question of
whether we should disengage from Russia but how we can engage
better.
The second point I would like to make is that, obviously,
we can indeed do better in this regard, as we can in virtually
all aspects of national policy and foreign policy.
The third point is you called for a reexamination of the
premise or assumptions underlying our policy. I want to assure
you, Mr. Chairman, as I have done in the past when I have
appeared before this Committee, that those of us working on
policy toward Russia and the other New Independent States of
the former Soviet Union are constantly in the process of
reexamination of the premises and assumptions, and an important
part of that ongoing reexamination is a chance to exchange
views and analysis and recommendations with key Members of
Congress. So it is very much in that spirit that I am here
before you today.
I would suggest, as a general matter, as an assumption
which I hope the Committee will help me reexamine during the
course of this hearing, that the most fundamental standard we
should apply to our policy at large toward Russia and also to
every specific detail of that policy on every front is very
simple: Does it advance the interests of the American people?
As a result of pursuing that policy or investing those taxpayer
dollars, are the American people going to be better off, are
they going to be safer over the long run? That is the standard
that we apply, and I assume that that is the one you would want
us to apply, and we can take that general principle and apply
it to specifics during the course of the day.
Secretary Albright sends her greetings, by the way, Mr.
Chairman. She is traveling in Africa on a very important
mission--recently laid out a kind of a template for our
relations with Russia, and she basically divided our policy
into two categories: Those initiatives and ongoing efforts that
are intended to increase our security by pursuing arms control,
by reducing Cold War arsenal, by curtailing and stopping
proliferation of weapons of mass destruction, an issue on which
you personally have shown considerable leadership in this body,
Mr. Chairman, and I know you are going to want to talk more
about that during the course of the hearing, and also
encouraging stability and integration in Europe, which is a
topic I hope we can come back to at some point.
The second category of initiatives that we rely on to try
to affect the situation in Russia has to do with support for
Russia's own internal transformation, and this I believe goes
to a number of the points that you and your colleagues have
made.
Russia is very much a work in progress. Its redefinition of
itself is a suspenseful and uncertain enterprise. It is also an
ongoing one. There has been significant progress, as a couple
of Members of the Committee have also pointed out, and there
have also been very real setbacks. I think it is certainly
worth keeping in mind what might have been, even as we
contemplate the difficulties that we are grappling with today,
including the ones that we are going to be talking about this
morning.
Perhaps the single most important positive aspect of what
is happening in Russia is democracy and democratization, the
fact that the Russian people are now able to express their
hopes and their fears, their aspirations and their
apprehensions at the ballot box, and they will be doing so very
shortly. They will be going to the polls in December and
electing a new Duma, and then next year they will be electing a
new president. Meanwhile, they are at a grassroots level,
assembling the building blocks of a civil society, and a civil
society is one that is capable of dealing with crime and
corruption, which, of course, has been one of the themes that
you and your colleagues have mentioned this morning.
Finally, in this regard, Secretary Albright has asked me to
reiterate the case that she has made before this Committee and
elsewhere for more resources than the Congress is currently
willing to support in order to defend and advance American
interests around the world, but particularly in Russia.
If the Russians are going to succeed in the positive
aspects of what they are trying to do, it is going to be with
the help of the outside world. The United States must continue
to be a leader in that effort.
It is the conviction of the President and the
Administration that the foreign operations appropriations bill
that the President felt compelled to veto yesterday failed for
many reasons, including that it contained a 30 percent cut for
programs in Russia and the other New Independent States of the
former Soviet Union. The funding levels proposed by the
Congress would have forced us to make unacceptable tradeoffs
between our core economic and democracy programs, as well as
programs that prevent the proliferation of weapons of mass
destruction.
I hope we can come back to some of those specific issues,
because it relates to the ongoing workings of our own
democratic process as we seek to do as much as we possibly can
to help Russia and other countries that are in transition to
democracy around the world.
I think that the negative or cautionary points that the
Chairman made before you took the chair, Mr. Bereuter, in his
opening statement and that Mr. Royce and Mr. Rohrabacher made
are not in a way profoundly contradictory of some of the
positive comments that Mr. Gejdenson and Mr. Lantos made.
Rather, they are part of the interaction between Russia's
dreadful past, which Mr. Lantos knows particularly well, and
its aspiration for a better future.
I cannot help but recall that in 1956, when Mr. Lantos
first visited Russia--I am a little younger than he is and I
was just becoming aware of what was going on in the world--and
1956 made a big impression on me because that, of course, was
the year that Soviet troops crushed a revolution in Hungary as
the Hungarian people sought to gain their independence. That is
an emblem I think of the kind of Russia that we never want to
see again, and it is worth bearing in mind even as we grapple
with these other problems.
Now with regard to crime and corruption, if I could just
say a word on that, because it has figured very prominently so
far.
The word accountability has come up several times. I want
to assure you, Mr. Bereuter, and through you the Committee,
that accountability will continue to be a watchword in the way
that we Administer all of the programs supported by the U.S.
Congress in Russia. Mr. Leach, who is not here today, held
extensive hearings with Larry Summers not long ago in which
they talked about applying the principle of accountability to
international financial assistance.
But in the final analysis, Russia is going to succeed or
fail only if it can institute the principle of accountability
in the way it does business. It isn't just a matter of how we
assist Russia. It is a matter of how Russia governs itself, and
that I think goes back again to the question of democracy as
the sunlight that will ultimately serve as a disinfectant to
get rid of this terrible scourge of crime and corruption in
Russia. Once again, I am sure we can explore this during the
course of the hearing.
It is a little strange in some ways, given the
extensiveness of the comments that were made by the Chairman
and other Members of the outset, that perhaps the single most
disturbing thing happening in Russia wasn't even mentioned this
morning, and I would like to say a word about it now. That is
the conflict that is currently under way in the North Caucasus,
which has real potential to create instability not only in
Russia at a time that that country can ill afford it but also
in neighboring countries which are no longer in the same state
as the Russian Federation.
I want to stress this here at the outset, because I think
that if this situation is not developed in a favorable and
acceptable manner, it will jeopardize everything else that we
are talking about of a positive nature in Russia today,
including Russia's evolution as a civil society.
The conflict is, of course, taking place on the territory
of the Russian Federation within the boundaries of the Russian
Federation. Chechnya, Dagestan, Ingushetia, these are all
republics inside of Russia, and we must recognize that Russia
has an obligation to protect its citizens not only against
terrorism but also the kind of instability that has erupted in
that region over the past weeks. But we also believe very
strongly and we have conveyed to the Russians at all levels
what I would call the parameters of U.S. Policy, and I want to
use this hearing today to lay those out. They are basically
five concerns.
First, that a spread of violence in the region will be
contrary to everyone's interests except those who rely on
violence as a means to their political ends, including the
political end of separatism or tearing parts of Russia out of
the Russian Federation.
Second, Russia's last war in Chechnya, 1994 to 1996,
demonstrated that there cannot be a purely military solution to
the problem there. I will say, by the way, that we have heard
from high levels of the Russian government, including from the
prime minister himself recently, that this is a principle that
they accept. To turn that principle into reality, there must be
a vigorous and conscientious effort to engage regional leaders
in political dialogue.
The third factor or parameter is that all parties should
avoid indiscriminate and disproportionate use of force.
The fourth is the one that I referred to earlier, and that
is that Russia's significant progress toward developing a civil
society, which means inclusive democracy and rule of law, will
be in jeopardy if it permits a backlash against citizens
because of their ethnicity or religion, that is to say, if
there is a tendency in the heartland of Russia or in the
capital of Russia to round people up and deport them because
they have Islamic last names or are of a darker complexion than
ethnic Russians.
Then the fifth and last principle is that in defending its
own territory, Russia should take special care to respect the
independence and security concerns of neighboring states,
especially Georgia and Azerbaijan.
I hope it is all right, Mr. Bereuter, for me to have added
that issue to the agenda, and I am ready to enter into a
discussion with you and your colleagues on all the issues that
have come up here this morning.
Mr. Bereuter. [Presiding.] Secretary Talbott, thank you
very much for your testimony. I regret the fact that all
Members were not here to hear it, since you departed so
dramatically from your written statement, which was made a part
of the record. I particularly appreciate the five principles
that you have just enunciated. I think they are important. We
will try to bring them to the attention of the Members.
Mr. Bereuter. Based upon arrival, we will now turn to the
gentleman from North Carolina, Mr. Ballenger, under the 5-
minute rule for questions.
Mr. Ballenger. Thank you, Mr. Chairman; and, Secretary
Talbott, good to see you again. I miss all the fun we had in
Central America since you are spending all your time in Russia
nowadays.
But I would like to ask a couple of questions, and you
brought up Chechnya, so let me just ask, from the reports we
get from the news media, there seems to be substantial support
for the Chechnyans from elsewhere, Iraq, Iran or somewhere like
that. The fundamentalist Moslem effort seems to be developing
or have already developed in both physical and individual aid.
It seems to be appearing. Is that true or could you give us
some background on that?
Mr. Talbott. The short answer is, yes, there does indeed
seem to be a dangerous degree of what might be called
internationalization of the conflict. There is no question that
radical elements operating from bases out of Chechnya have had
support from elsewhere, primarily in the arc of countries from
the Arabian Peninsula to South Asia.
We have had very frank and specific discussions with the
Russian authorities about this. We are following up on any
leads that they give us because they allege--the Russians
allege--that some of the bad actors, if I can put it that way,
who are behind some of the trouble in the North Caucasus are
also people who have, we believe, carried out acts of terrorism
against American targets and American citizens.
I might add that this is an issue that we have discussed
with other countries as well because, if I could make a general
point here, it would be a good thing, it would be a hopeful
thing if the Russian government could see the problem that it
faces in the North Caucasus as a global threat, that is, a
threat to civilized nations and legitimate governments all
around the world. To deal with it as such, which means to deal
with it in cooperation with other countries, including the
United States, and to deal with it in a way that meets
international norms, rather than treating this problem in the
North Caucasus as a reason to draw back from the world and to
do things in the old Russian way.
I think part of what is happening in the Caucasus is that
some evil history is coming home to roost. The people who live
in the Caucasus have, of course, been fighting a running battle
with Moscow from the time of the czars. The population of
Chechnya, for example, was lock, stock and barrel deported
under the most brutal conditions by Stalin to Kazakhstan, many
to their deaths, and one Moscow government after another,
czarist, Communist, post-Communist, has allowed conditions of
terrible poverty and social backwardness to fester down there
which, of course, makes it easier for both indigenous and
international terrorist and extremist elements to come in and
prey on that.
Mr. Ballenger. If I could mention real quickly--it appears
also that in the money that has disappeared, especially IMF
money, at least from what we read in the newspapers, that IMF
was very strict in the way money was managed in Mexico and
South Korea and Indonesia and Brazil, but it doesn't seem that
they paid much attention to what was going on with their money
in Russia. Is that a mistake?
Mr. Talbott. I think with respect, Congressman, that is an
overstatement, and in fact our Treasury Department, which has,
through Secretary Summers, addressed this issue at length in
hearings that Mr. Leach and the Banking Committee ran about 6
weeks ago, has addressed this in detail. But, as a general
proposition, the willingness of the international financial
institutions, the IMF, the World Bank to put money into Russia
has always been conditioned on transparency, accountability,
sound practices, as well as macroeconomics stabilization
policies on the part of the Russian government.
Now was it perfect? No, of course it was not. There was no
recipe book on the shelf on how to assist a country in this
situation because we never had anything quite like this.
Going back to well before this most recent round of
revelations and speculation developed, the International
Monetary Fund and the Treasury were tightening up safeguards,
and for the last year no new IMF money has been going into
Russia at all except in this most recent program which is
basically to help the Russians restructure their own debt. In
other words, it is money that is going in a circular account
within the IMF and is not available for any kind of misuse or
malfeasance.
In fact, back in 1996 there were several cases where
disbursements were delayed because the Russians weren't meeting
their end of the standard. What we have been trying to do over
the past year is to tighten those standards up and to get
through to the Russians that if they ever want to see any more
IMF money they have got to clean up their own act.
Mr. Bereuter. Thank you. The time of the gentleman has
expired.
The distinguished Ranking Member, Mr. Gejdenson of
Connecticut.
Mr. Gejdenson. Thank you, Mr. Chairman.
Let me ask you two or three questions. First, it may take a
little time in hindsight to see what you would have done
differently if you had it to do over again, and second, while I
think Mr. Lantos' assessment is correct, we have gone from a
state where the government had the monopoly on crime in Russia
to the public taking it over to some degree. We don't want to
forget the history as we try to convince the Russians to deal
with their criminal problems and money laundering and other
criminal activities. The problem in Russia, historically at
least, has not been a too-weak police force. How do we make
sure they don't go back and use, whether it is the Chechnyan
situation or the economic crisis, an excuse for reinstating
police-state kinds of actions.
Last, if you could go over the IMF situation, the last loan
it seems to me was basically as if we had refinanced the loan
without really refinancing it. We found a new mechanism where
we set up a fund and then we used that fund to pay down some of
the debts. So it is almost like a restructuring.
But don't we have the basic problem, anyplace the IMF goes,
that what it is really doing is replacing capital flight and
what we hope is that this stabilizes the situation and then
reduces the need for further infusions? That worked in Mexico
very successfully, where we made a profit I guess on the
infusion of American and IMF funds.
Do we need to take a whole new look at the IMF, whether it
is in Indonesia, Russia, or anyplace else, on instituting a
more sophisticated mechanism, a more complex mechanism than we
have today? Because I think you are starting to lose public
support for simply infusing cash in the hope that you will
stabilize the situation.
Mr. Talbott. Mr. Gejdenson, I am going to accept your
invitation to make what might be called not-so-much New Year's
resolutions as engage in a little retrospective self-criticism,
because I think it is in the spirit that Chairman Gilman
established at the outset. I want to do so, though, in the
following context, and I invite the Committee to join me in
this.
The really key question, I think, is whether the
fundamental objectives that we have been trying to serve,
whether the mechanisms we put in place to serve those
objectives, have been borne out by the experience of the last 7
years or whether they should be overhauled and fundamentally
changed. I would strongly suggest--and we could come back in
terms of specifics to discuss the point further--that actually
the assumptions and the mechanisms stand up pretty well.
That does not mean with the wisdom of 20/20 hindsight we
can't see some things that we should have done better. I, for
example--and I am going to limit myself to one thought that I
have some personal responsibility for and let others speak for
others--I think we should have been more public and emphatic in
pushing a money laundering bill with the Russians. Now, we did
push it, but we tended to do it in a way that was quiet, on the
pretty sound theory that you are more likely to be able to
influence a government if you are not lecturing them in public
but working with them in private. But I think, in retrospect,
we should have pushed the money laundering bill more in public.
I am interested to see a press report that a colleague just
handed me that Prime Minister Putin told Attorney General Reno
today that his Administration will put the money laundering
bill back in front of the Duma and try to get one in place,
better late than never. We might have been able to ameliorate
some of that problem if we had pushed it harder and earlier.
I think that with regard to our technical assistance to
Russia, exchange programs, working with grassroots
organizations, helping them develop civil society institutions,
helping them manage the transition both to democracy and to a
market economy, we should have done more. We should have put
more money in early in this Administration, never mind the
previous Administration. I wish we had asked for more and
gained support for more at that time.
With regard to the Caucasus, I think we should have been
more explicit on the cautionary points and the dangers that we
saw during the previous Chechen war than in fact we were.
Frankly, it is one reason we want to make absolutely sure and
take advantage of every opportunity to get it right this time.
I guess the general point I would make--I see the red light
is on, but if I could just have one more crack at the last of
your questions--the key thing here for keeping money in Russia
is that the Russians themselves can develop an investment
climate or environment that will attract both Russian capital
and foreign capital. An awful lot of the capital flight that
has come out of Russia has been fleeing, as it were, lousy and
capricious tax laws and inadequate property protections and
things like that.
Again, I think the kind of macro answer to the problem is
democracy, and for the Russians over time to elect people to
the Duma who will put in place both laws and enforcement
mechanisms for those laws that will address those needs.
Chairman Gilman. [Presiding.] Thank you, Mr. Gejdenson.
Mr. Talbott, earlier I stated my belief that we need to
reexamine our policy approach toward Russia as we seek to
continue to engage Russia. Can we expect the Administration now
to reexamine its past approach and take on a new approach in
light of the vast amount of capital leaving Russia, the
corruption, and the problems, internal problems in Russia? Are
we going to be taking a new approach with regard to our policy
toward Russia?
Mr. Talbott. I may have touched on this, Mr. Chairman,
while you were out voting, but I said that I welcome the chance
to look at specific ways in which we can do a better job, and I
certainly acknowledge that there are ways that we, working with
Congress and, by the way, with our international partners, can
do a better job. I am echoing here something that I heard, I
think, from one of your colleagues in an opening comment.
We are always listening carefully to those who offer
constructive criticism, notably including those in the U.S.
Congress, and one of the things we are listening for is what is
an alternative, what is a better way to do this. That doesn't
mean our default position is to reject a better way if we hear
it proposed; quite the contrary, and maybe in the course of our
remaining discussion this morning, you can suggest some ways
which we can do better.
On the issue that seems to concern you particularly, Mr.
Chairman, the Treasury Department over the past year has been
taking very real and I think concrete measures to ensure that
there is a higher standard of assurance that money provided by
the international financial institutions does what it is
intended to do and goes where it is intended to go.
With respect to bilateral assistance programs, because very
little of it is in cash, because very little of it goes into
Russian wallets or bank accounts or even into the treasury
there, we have a higher degree of assurance that there won't be
malfeasance. In fact, there have been relatively few, if any,
serious allegations of that money going awry.
Chairman Gilman. Mr. Secretary, some of the analysts and
experts that we have had appear before our Committee stress
that instead of more lending to Russia by international funding
institutions, we ought to consider directing more funding to
the people of Russia for projects that directly benefit those
people. They suggest, for example, housing in some very
critical areas and, where there are shortages investment to
promote employment. What are your thoughts about that kind of
assistance instead of going through the International Monetary
Fund and international banking institutions?
Mr. Talbott. I think it should be in addition to, rather
than instead of, and whatever the IMF and the international
financial institutions do in the future will depend on Russia
being able to meet these more stringent safeguards and
conditions that I made a moment ago.
We ought to keep in mind that while there obviously has
been a lot of problems with the international financial
institution assistance, the work that the IMF did in Russia,
going back to 1992 at the time of the Bush Administration, was
actually quite important in a positive way as well. It helped
the Russians over the initial phase of their transition. It
helped keep perhaps the most dangerous beast of all,
economically speaking, hyperinflation, at bay, and it basically
bought them some time to dismantle the old Soviet command
economy.
That said, Mr. Chairman, I take the point to which you are
referring. We have in the past looked at ways of helping with
the housing market. There was some specific work done in 1993
and 1994 in housing for Russian officers who were being
withdrawn from the Baltic States. Having all Russian forces out
of the Baltic States on schedule was an extraordinarily
important development. We also have a whole series of
investment funds operating with the cooperation of the U.S.
Government to support small- and medium-sized businesses in
Russia.
But these are only going to succeed if Russia can put in
place the laws and the regulatory mechanisms that will not only
attract that money but will keep that money in Russia, rather
than having it take advantage of the freedom that now exists to
send it elsewhere.
Chairman Gilman. I hope you will be encouraging that.
Mr. Secretary, notwithstanding the Administration's
diplomatic efforts and the imposition of sanctions by the
Administration on 10 Russian entities, entities in Russia have
continued to transfer dangerous weapon technology to Iran
without any significant interruption. Many analysts believe
that the volume and the pattern of the continued transfers to
Iran from Russia could not exist without the acquiescence, if
not the encouragement, of at least some elements in the Russian
government. Do you feel that we have been successful in our
efforts to curtail the flow of sensitive missile and related
technology from Russia to Iran, and what steps are we taking in
that regard?
Mr. Talbott. We have made some progress, but nowhere near
enough. There has been certainly movement on the Russian side,
both to put in place laws and executive orders and also
enforcement mechanisms, including watchdog facilities or
Committees in suspect or vulnerable entities and companies.
The key point and the area where there needs to be the most
progress, and it needs to come soon, is in implementation of
those laws. It is not good enough, in other words, for them
simply to say we recognize that it is contrary to Russia's
interest as well as the United States, not to mention Israel,
for Iran to acquire ballistic missile technology, and
therefore, we are not going to permit it. We have to actually
see, as it were, with our own eyes that this kind of activity
is being curtailed.
I think that we have worked quite well with the Congress in
general on this issue and with you personally, Mr. Chairman,
and your Committee. We have some reservations about the
particular bill that you have sponsored. We are concerned that
it could be counterproductive in some ways, but we are prepared
to use the coming days and weeks to see if we can narrow our
differences on this. It is useful to us, by the way, when we
talk to the Russians to point to the very high level of concern
in the U.S. Congress.
Chairman Gilman. We appreciate your continued efforts in
that direction.
Mr. Lantos.
Mr. Lantos. Thank you, Mr. Chairman.
There are so many unspoken, underlying assumptions in this
dialogue that I would like to take a moment to deal with them
head on.
Unlike Germany and Japan at the end of the Second World
War, two countries we defeated and where we installed our own
government, when the Third World War ended, which we called the
Cold War, and the Soviet empire collapsed, we did not install
an American government in Moscow. There was no General Douglas
MacArthur sitting in the Kremlin as there was a General Douglas
MacArthur running Japan.
I think it is important to separate in our own minds the
flaws and failures and mistakes and stupid and corrupt policies
of Russian governments in the last 10 years, as if those would
have been our mistakes. We did not defeat Russia in battle. We
did not have an American proconsul sitting in Moscow calling
the shots. These were Russians. They made their own mistakes.
They engaged in their own corruption. They engaged in their own
criminality.
I think it is important to clear up our own mind on this
issue, to understand that. We did not run Russia. We had a very
marginal influence on Russia, and a very marginal influence
because our financial involvement was minimal.
You mentioned, Mr. Chairman, the desirability of helping
them with housing assistance. If my memory serves me right, the
Agency for International Development has provide $200 million
for housing aid in Russia. This is about a dollar and a quarter
per Russian for the last decade, and it is about 80 cents per
American. So we were not a major factor in Russian housing, and
you only need to visit Moscow to realize how little has been
done in the field of housing.
I would like to ask you, Mr. Secretary, to deal with the
basic instrumentality that we as a country used in attempting
to improve efficiency, productivity, and cooperation with
Russia, namely, the GoreeChernomyrdin Commission. I followed
very closely the work of the GoreeChernomyrdin Commission. I
was enormously impressed by the series of achievements of that
commission across a tremendous spectrum of issues ranging from
space cooperation to--you name it. The agenda was endless.
Since you played a pivotal role as a top Russian expert in the
work of the Gore-Chernomyrdin Commission, I would like to ask
you to indicate what, in your view, have been the achievements
of that commission, even though the name will now have to be
changed.
Mr. Talbott. It is now, of course, the Gore-Putin, and
before that was the Gore-Stepashin and before that Gore-
Primakov and long ago was the Gore-Chernomyrdin Commission.
But, by the way, the Vice President has been in touch with
Prime Minister Putin to indicate a willingness to continue the
work of the binational commission, as we call it.
A general point, Mr. Lantos, and then a couple of specific
ones. The original idea that I think has been more than
vindicated is that it is a useful thing to have upper working
levels, I would call it, of various agencies and departments of
the U.S. Government working on real world problems with
comparable levels in the Russian government. We have learned a
lot and it has given us insights into both the problems and the
possibilities on the Russian side. I would like to think that
they have learned a lot seeing how a country that has been a
new independent state for 220 years is able to work with these
issues.
In the specific area, the Vice President spent an awful lot
of time, particularly during the early days of the commission,
working on security issues, and that meant particularly the
denuclearization of the former Soviet Union. The commission
gave him a way of helping make sure that Ukraine and Belarus
and Kazakhstan would not be nuclear weapon states. Also, the
commission has been a forum for cooperative threat reduction,
which is a program we hope to continue and indeed enhance if we
can persuade you and your colleagues to fund the enhanced
threat reduction program under the bill that was just vetoed.
This would, among other things, take American money and
invest it in the safety of the American people the following
way: by helping scientists in Russia, particularly nuclear
weapons scientists, missile technology specialists and that
kind of thing, make the conversion to a civilian economy and to
peaceful enterprises rather than being quite so vulnerable to
ads in the Baghdad Daily help-wanted section, if I can put it
that way.
Then there is the whole issue of export controls. The
question on which Chairman Gilman has been so concerned, which
is to say the leak of Russian technology to rogue states,
particularly Iran, is an issue that the Vice President pursued
vigorously with Mr. Chernomyrdin and his successors and made
some very real progress there.
We also used the commission to establish a mutual legal
assistance agreement with Russia which helps in the area of
rule of law, establishing a basic framework for bilateral law
enforcement cooperation which has actually come in quite handy.
We have had some real law enforcement issues to talk to them
about in recent weeks because of the revelations with regard to
the diversion of money.
Then, finally, there is the issue of space. The
GoreeChernomyrdin Commission established Russian participation
in the international space station and has allowed us to forge
a commercial space launch agreement that enables joint
ventures, and that, in turn, produces real revenues for the
United states.
So I think it is a classic example of win-win for both
sides, and I hope it persists not only through this
Administration and this particular Vice President and Russian
prime minister, but on into the next Administration.
Mr. Lantos. Thank you very much.
Chairman Gilman. The gentleman's time has expired. Thank
you.
Mr. Rohrabacher.
Mr. Rohrabacher. Mr. Talbott, I certainly agree with you
that those of us who are critical of the Administration's
policy should also have positive alternatives and should not
just say you did this wrong or did that wrong, and I take that
criticism of the Congress to be constructive criticism of us. A
lot of times we don't do that.
However, let me note that among those of us who believe
that you have failed in establishing the policies that would
lead to a more stable, prosperous Russia, there are many people
who have been involved with offering alternatives to the
Administration's policies and the Administration has chosen to
go another direction. One example, which I would use because I
am very involved with this particular area, as I mentioned in
my opening statement, is the goal that you just established
which is to see that there was a transition for Russian
scientists to move outside of their military work, and that it
is something that would be nonthreatening to the United states
and perhaps something involved with private sector space or
other engineering projects.
That is a goal, not a policy, let me add. What you have
outlined there is not a policy. It is a goal, and certainly the
Republicans agree with that, and I have been a champion of that
for many years, through my involvement in the Space and
Aeronautics Subcommittee. Chairman Sensenbrenner pleaded with
this Administration over and over again to have a policy toward
Russia in terms of the space station that would ensure that
Russia was able to be a contractor, of which it was capable,
but not be a partner, and that the money that we would then
make available for Russia would be sent to Russian companies,
Energiya, et cetera, for fulfilling certain obligations.
Instead, this Administration insisted on government-to-
government relations, insisted on making Russia a partner, of
which it was incapable. Then the money that we shipped to
Russia, instead of going to a company and going to those
scientists that you are talking about, went into the Russian
space agency, which in turn was sucked into a black hole and
disappeared--hundreds of millions of dollars, if not billions
of dollars.
Mr. Sensenbrenner and I have been deeply involved in trying
to have a positive program toward the goals you suggested but
through a different policy, a different method of achieving it.
Let me just say, this Administration's policies have failed
miserably in this regard, and it is unfortunate.
Mr. Curt Weldon, whom we all know and who takes a very
special interest in Russia, has suggested instead of having
money guaranteed or coming from the United States into Russia
via the IMF or just direct grants, that we should set up a
mortgage fund, for example, which Curt was advocating, which
could have been used to provide money for homeownership
throughout Russia. Instead, the Administration opposed Mr.
Weldon's idea and, instead, of course, went forward with grant
programs and direct government-to-government programs rather
than trying to get the money to the Russian people themselves.
Again, a considerable sum of that money has simply disappeared.
I would be pleased to have you comment on my observations
that your goals are certainly laudable but your policies to
achieve those goals have been miserable failures. I wish you
success in the future, but I think we need a change of those
policies.
One last thought, and that concerns Chechnya. This
Committee has heard me over and over and over again complaining
about this Administration's policy toward Afghanistan, and over
and over again I have said that Afghanistan would destabilize
all of central Asia and Pakistan. Is it not now true that the
miserable failure of this Administration in Afghanistan is what
has brought about this Chechnyan war? Because isn't Chechnya
being financed by drug money from Afghanistan? Isn't that what
is going on right now? Again, laudable goals, a lot of good
rhetoric from the Administration, but a miserable failure in
shepherding through this transition to democracy in Russia.
Any comment on any or all of what I have said? I have said
this with a spirit of trying to offer constructive
alternatives.
Mr. Talbott. I can see that, Mr. Rohrabacher, and the red
light is on, so I will simply thank you for your good wishes,
certainly.
I also say, in an equally serious vein, that part of the
problem we are dealing with here--and, by the way, I have had a
chance to work with Congressman Weldon on a number of
occasions, more as it happened in the Balkans, but I am aware
of his interest in housing.
The institutions that you are talking about that he would
like to see us work through, alternatively, don't really exist
in Russia. So it is a question of how you get them up and
running. Indeed, as a goal of policy, I think it would be a
very good thing if we could work with the Russians to help them
develop what we consider to be a modern and effective mortgage
market. It isn't there now, but, particularly with more support
for some of our bilateral assistance, I think that is certainly
an area where we could do more in the future.
I think that regarding your comments on the connection
between Afghanistan and Chechnya, I look at it quite
differently. Afghanistan is very much a problem in its own
right. It is a problem with deep historical roots, as you
understand; and its own complex role in the collapse of the
Soviet Union and the Cold War has produced some aftereffects
that our predecessors didn't anticipate and we are having
trouble dealing with, no question about that. However, I think
you are overdrawing the connection between Afghanistan and
Chechnya.
I would actually make a point that is a little more, what
shall I say, sharp with regard to the Russian Federation on
Chechnya. In some ways it is not so much Afghanistan that has
come back to haunt them in Chechnya. It is more the policy that
the Russian Federation pursued in 1993, of stirring up trouble
in the South Caucasus and particularly in Georgia. There were
Chechen fighters who went down and helped the Auka separatists
in Georgia in 1993 who gained some skills and some enthusiasm
and backing that they brought back into Chechnya. That is the
point that we often make to the Russians while talking through
this problem with them.
Chairman Gilman. The gentleman's time has expired.
Mr. Berman.
Mr. Berman. Thank you, Mr. Chairman.
Yesterday, the President vetoed the foreign operations
bill. The Republicans printed up talking points and ran to the
House Floor to claim that this was an effort by the President
to raid the Social Security Fund in order to fund foreign aid,
thinking that the American people are stupid.
They read this as if it was an edict coming from some party
Committee at the top, with talking points in the greatest form
of democratic centralism. This very program is less than one
percent of government expenditures in the context of
appropriation bills, which in several areas far exceed what the
President requested. That this now became the basis for making
a plausible or serious contention that the Social Security Fund
was raided.
Today we have heard a lot of talk about the importance of
our anti-proliferation efforts, of dealing with loose nukes, of
dealing with Russian scientists, engaging them seriously. I
wasn't quite clear on Mr. Rohrabacher's point regarding the
space station, but what I do know is that the Administration
requested $1.032 billion for aid to the Newly Independent
States, obviously Russia and all the other ones in the former
Soviet Union.
This year's level of funding was $801 million. The
Administration asked for an addition of $307 million for an
expanded threat reduction initiative. The Republican majority
in both Houses cold cocked them and simply threw out this
requested program and cut the foreign assistance level to all
of the Newly Independent States by $65 million. I am wondering
to what extent the expanded threat reduction initiative had in
it items that would have funded programs to protect our nuclear
security, to stop proliferation, to strengthen export
monitoring and suspect plans, to provide the kinds of programs
that would deal with the goals that apparently people on both
sides laud in terms of the Administration's interest with
respect to Russia.
Mr. Talbott. Lots, is the short answer, and let me
elaborate just a little bit. I think that the expanded threat
reduction initiative is about as vivid an example as we are
ever going to see of how American taxpayer dollars spent in the
right way at the right time cannot only save immense amounts of
money down the road--a stitch in time--but can also enhance the
safety of the American people.
Russia is going to get back on its feet. We are in an
interim period here, and I don't know how long it is going to
last, when the problems that we cope with coming from that vast
country tend to be associated with the weakness of that state,
rather than the strength of that state. It is probably going to
be a strong state again; and when that day comes, we will, I
would hope, be in a position to look back and congratulate
ourselves, or our successors and progeny will, for having done
the right thing at the right time, and this is a perfect
example.
This is a 5-year program, as you know, totaling $4.5
billion, with lots of different agencies involved and lots of
objectives including the ones that you have mentioned. It will
help tighten up export controls so that Russian technology in
these times of both indiscipline and a certain amount of
desperation are less likely to go out of Russia and end up in
places like Iran and other rogue states. It will prevent or at
least curtail the proliferation of weapons expertise by helping
to keep gainfully and peacefully employed 8,000 to 10,000
additional scientists. It will redirect biological weapons'
expertise to civilian science projects.
There is actually one other point, which is a bit of a
detail, Mr. Berman, but it is very much on my mind. This has to
do with conventional forces in Europe, a treaty that is under
negotiation right now.
We are trying to use our good offices to induce an
agreement between Russia and Moldavia and Russia and Georgia to
get Russian military equipment and personnel out of those
countries in accord with the wishes of the host governments.
There is money in the expanded threat reduction initiative that
would help bring about that goal as which will not only help
put in place another treaty that is very much in the interest
of the United States, but will help undergird the independence
of two small deserving Republics that used to be Republics of
the U.S.S.R.
Mr. Berman. Mr. Chairman, my time has expired. At some
point in the hearing I think it would be interesting--I know
Mr. Delahunt may be pursuing part of this--but in the context
of the Senate rejection of the test ban treaty, I would be
curious about Secretary Talbott's reaction to how that will
play.
Mr. Rohrabacher. [Presiding.] Perhaps with unanimous
consent we might grant you one extra minute to ask that
question. With unanimous consent, so ordered.
Mr. Berman. Thank you.
How will that play into the Administration's efforts to get
the flexibility in the ABM treaty to deal with the kind of
national missile defense to deal with the rogue states that our
policy is so focused on?
Mr. Talbott. I am sometimes accused of being an optimist,
so let me begin on an optimistic note. I would answer your
question this way. If the Administration can be more successful
in persuading the Senate that the CTBT is indeed in the vital
interests of the United States, that will certainly help in
numerous ways. I would hope that the word bipartisan, which I
have heard used several times here this morning, would end up
being part of the vocabulary of a happy ending on the CTBT.
That issue is, of course, still very much open. The
President has made clear that we are not going to do anything
to undercut the CTBT. We are going to continue the moratorium
on testing, and we are going to use every avenue that we can to
reengage with the Senate on this.
Mr. Berman, I might just say to you that I was in Europe
when the Senate voted down the CTBT, and that news had a
devastating effect on a lot of our very closest and best
friends in Europe. I haven't come to the question about NMD,
which may require a whole new set of lights here; but the long
and short of it is that they are very much hoping that we will
be able to make sure that the United States is a leader in the
area of achieving a comprehensive test ban, just as it is in
every other aspect of arms control.
You and I have in other settings talked occasionally about
South Asia, India and Pakistan. One of the principal benchmarks
of nonproliferation that we have been pursuing with the Indians
and the Pakistanis, and we are going to engage with the Indians
now that their elections are behind them, is CTBT. I would say,
to use Olympic terms, the degree of difficulty has maybe gotten
a little harder in that argument, but I hope it is not
impossible.
Why don't I hold on the connection to NMD and maybe we can
come back to it.
Chairman Gilman. [Presiding.] Thank you, Mr. Berman.
Mr. Royce.
Mr. Royce. Thank you.
Secretary Talbott, one of the observations that you have
made is that the President has vetoed the foreign aid bill
yesterday. I think one of the arguments is because the aid
provided to Russia is 30 percent less than the aid that the
Administration wanted to be provided. Indeed, overall, I guess
we provided $3 billion less in foreign aid than the
Administration wanted, and so they vetoed the bill.
I thought I would explain our thinking here in Congress and
then ask for your response on this issue. We remember the words
of Boris Fyodorov, who was the former Russian finance minister,
who repeatedly warned that providing more IMF loans to the
Russian government would simply allow the government to ignore
corrupt activities while the IMF moneys kept it afloat. As a
matter of fact, at one point he is quoted as saying, ``I told
Mr. Summers that if you release the loan without conditions it
will end up in Switzerland.'' I think his exact words were,
``It will end up in a bank in Zurich.''
These are the concerns we have with putting more money into
the problem, and I will tell you why. In the Banking Committee
last month, we heard testimony from Russian Duma members. There
were seven separate members from seven different political
parties, and every one of them gave us, during our meetings
with them here, the same advice that the Russian finance
minister had given the U.S., in which they said, ``Don't do
this by picking a government and giving the aid to the
government. Instead, build institutions.'' It should be the
rule of law, not of men, and they asked us why we were so
focused on propping up Yeltsin and Chernomyrdin and supporting
government-to-government aid rather than trying to force
reforms.
This was the point they made. How credible is it, they
said, when Boris Yeltsin twice had vetoed the bill passed by
the Duma against Russian money laundering when several hundred
billion dollars had been laundered outside of the country, and
here we continue to provide the aid even as the Administration
vetoes the very bill that would stop it. These are the
questions raised by Duma members. These are the questions
raised by former finance ministers in Russia, and that is why
we are not eager to provide all of these additional billions in
aid. We have already done that.
So I would just like to understand what it is going to take
to get the President to sign the foreign aid bill. I mean, will
we have to spend the $3 billion in additional aid money?
Mr. Talbott. The short answer is, more money for advancing
and defending the interests of the United States.
By the way, Mr. Royce, knowing of your Chairmanship of the
Africa Subcommittee and your knowing of where my boss is today,
namely, in Africa, I am sure she would want for me to stress
the importance of more support for our various Africa programs
and initiatives; but you have asked me to address the specific
issue of Russia.
You have actually touched on several different points here.
Let me say, in a way that I intend as much more than courtesy,
I think it is a terrific thing that you are meeting with Duma
members and interacting with them. When I appeared before the
Senate Foreign Relations Committee several weeks ago, there was
a delegation from the Duma there as well. I hope that
congressional parliamentary exchanges can be more and more a
part of our interchange with Russia.
The long and short of it is that this 30 percent cut simply
squeezes the life out of an awful lot of programs that we feel
go to the very heart of what we are trying to do in Russia. It
is a goal, if I can use Mr. Rohrabacher's word, a policy goal
for which I hear a lot of support from this Committee. That is,
helping the Russians make this transition that we are talking
about, not pumping money into the Russian treasury and
certainly not putting money into hands that are dirty or that
will allow it to find its way out of the country.
We are talking about nonproliferation programs. We are
talking about democracy. We are talking about buildup of the
NGO community there, exchanges which I continue to think are
absolutely vital, building up a free media.
Now, on the point that Boris Fyodorov, who I know well and
have worked with over the years, has made, the real answer to
your question is that Mr. Summers and the leadership of the IMF
have made clear that they are in a new mode with regard to
lending to Russia, and it is not a new mode that started when
the revelations came out this summer. It goes back to August of
last year and the Russian financial crisis. They have
instituted much tougher safeguards to protect against a lot of
the things that Mr. Fyodorov is warning about.
Just to say one other thing. Mr. Berman, who has now left,
asked about the expanded threat reduction program. If I am not
mistaken, half of the funds in that program are for the benefit
of non-Russian New Independent States, that is, other countries
besides Russia and very much for the benefit of the United
States itself.
Chairman Gilman. Would the gentleman yield a moment?
Mr. Royce. I will yield.
Chairman Gilman. Thank you.
Mr. Talbott, the President had requested an increase in aid
to Russia to fight proliferation and raised that initiative in
his State of the Union speech in January, but I don't believe
there was ever any followup to our Committee or to the Congress
with regard to that proposal. Could you comment on that?
Mr. Talbott. I am not entirely clear what you mean there. I
can assure you that there has been followup in that we have
continued to work on the problem of nonproliferation at
virtually every level. There is going to be a continuation of
expert level talks later this week. Ambassador Galuchi remains
engaged with Dr. Kokiyef. It figured on the agenda of the
meeting in Auckland between President Clinton and Prime
Minister Putin. So we have continued to pursue the
nonproliferation agenda, but I have a feeling you have
something more specific in mind.
Chairman Gilman. The President proposed this in his 1999
State of the Union message, but we didn't see any followup by
him personally with regard to that proposal, and I was
wondering if you might want to comment on that.
Mr. Talbott. Let me do this. Perhaps after the hearing, I
can get some clarification both of what you are referring to
from the President's side and where you feel there is lack of
followup. I can assure you there is no issue on which we more
want to followup with you than that one, because it is almost
literally the case that hardly a meeting goes by with our
Russian counterparts where we don't press this agenda, and
particularly the issue of Iran, that you are so concerned
about.
Chairman Gilman. Thank you.
Mr. Royce. Reclaiming my time, Mr. Chairman, since the
subject of Africa was brought up, I do want to make the point
that we had a real change in Nigeria because we disengaged
completely with respect to aid. Just another perspective--and I
was there for the elections in the Nigeria--the IMF and the
United States disengaged. We did not continue to reward. We
demanded and we sought leverage and we got that leverage, and
eventually we had free elections several months ago in Nigeria
and a duly elected government. So there is more than one
approach. It is because we want to make certain that there is
leverage exerted that Republicans raise these points, and I
wanted to share that with you.
Mr. Talbott. Mr. Royce, you know both Russia and Nigeria,
and you don't need to hear from me the profound differences
between them. Russia is now entering its fourth round of
democratic elections since it became a democracy, and I am sure
you are not suggesting disengagement is the way to go to with
Russia.
Mr. Royce. What about leveraged engagement?
Mr. Talbott. I like that. Conditional engagement, leveraged
engagement, effective engagement, all of those I would
certainly subscribe to.
Chairman Gilman. Mr. Delahunt.
Mr. Delahunt. Yes. Thank you, Mr. Chairman.
I think what I am hearing, Mr. Secretary, is the concern
expressed by those that have spoken before me on the other side
of the aisle is that this is a government-to-government
relationship in terms of assistance and loans, grants. Your
position is that, particularly early on in the private sector
or in the quasi-private sector, those institutions simply did
not exist.
Now, presumably once there was a viable private sector,
with institutions in which the Administration could have
confidence in terms of their integrity, that consideration in
terms of commercial relationships and providing assistance
might very well be considered. Is that a fair statement in
terms of where we are along the continuum of progress within
Russia?
Mr. Talbott. Yes, Mr. Delahunt.
Mr. Delahunt. In defense of the Administration, I think
there did not exist that option, in the early years of this
decade. Even in a mature democracy like ours, with institutions
such as our banking system that are well regulated, corruption
exists. In this morning's newspaper there was a front-page
story relative to fraud in a small bank somewhere in the south
that amounted to an excess of $500 million. We have been
through a period in our own history, the S&L debacle, for
example.
So I want to be clear I don't disagree with where you have
gone, and I would agree with the comment by Mr. Lantos that
there was not an option available.
It would also appear that some would suggest the reason or
the cause of capital flight in Russia is corruption--that as
soon as the money comes in from wherever, it is taken out and
put in Swiss bank accounts. Is there any evidence of that or
would you suggest that it is primarily the tax laws of the
Russian state that create an incentive for Russian citizens to
seek havens elsewhere on the globe to avoid paying these
confiscatory taxes? If that be the case, is the Russian
government and the Duma addressing that particular issue in
terms of making fundamental changes within their own tax code?
Mr. Talbott. Mr. Delahunt, can I first offer my condolences
on a certain athletic event that occurred?
Mr. Delahunt. I would prefer you remain silent, Mr.
Secretary. Don't pick on the scab, please.
Mr. Talbott. Speaking of scab, sitting behind is my
executive assistant Phil Goldberg, who is from Boston and who
barely came in this morning, but he is such a good public
servant that he is here to serve the national interest.
Mr. Delahunt. He is also a man of great courage to be here
this morning.
Mr. Talbott. I think both sets of points that you have made
are very germane, and this actually--we have lost Mr. Royce--
but something that Mr. Royce said earlier actually resonates
with the point that you made.
One reason that the Russians felt, including Mr. Fyodorov,
that they had to make a clean break with the past and do a
hellbent-for-leather privatization, which created a lot of
controversy back in the early part of this decade, was because
Russia became an independent and democratic country but it was
still a country that was dominated by the Soviet system. The
state ran everything and the state owned everything, and they
made the calculation, on which I think history will pass
judgment, but on which we cannot pass final judgment, that the
only way to deal with that was just dismantle the old system
virtually overnight, even though they didn't have a new one to
put in place.
You are certainly also right that the problem of corruption
was very much part of the legacy from the old system. I
remember the first time I ever heard the word ``kleptocracy''
was in the context of the Soviet Union and not Russia. They
have, in fact, if you look at what has happened in the NGO
sector and the small business sector, made incredible strides.
There are lots and lots of little businesses doing OK in Russia
today.
Now, bigger businesses that require investment, and this
goes to your second point, operate under a huge burden, and it
is the one that you identify. It is not just the tax law but it
is also property laws which are either inchoate or chaotic or
very capricious; and, as a result, it is not a good climate for
investment, whether it is from Russian investors or from
foreign investors. Now, are they doing something about it? Not
yet and not very fast.
The real question is, what will happen when they have a new
Duma? They are going to the polls on the 19th of December to
elect a new Duma. I am not about to hazard any predictions
about what is going to happen in that election or any other
democratic election coming up on the horizon, but I can tell
you that there are pressures building within the Russian
economy and within Russian society to get a grip on some of
these core problems, crime, corruption, lousy tax system, right
at the top.
Chairman Gilman. Thank you, Mr. Delahunt.
Dr. Cooksey.
Mr. Cooksey. Thank you, Mr. Chairman.
Mr. Talbott, starting in 1995-1996--I think it was in the
1993 to 1994 period--a former State Department official, a Mr.
Wayne Merry, was in charge of reporting the political
activities from Russia back to the States and to our embassy in
Moscow. He wrote an article that was in a publication, and he
said during 1993 and 1994 there was an unmistakable shift in
the Clinton Administration's priorities from, ``telling us what
is happening to'', ``telling us that our policy is a success.''
I understand that Mr. Wayne Merry had had some important
Foreign Service positions and he was in a position, or his role
or his responsibility was, to help policymakers here make
decisions; and yet during the 1996 campaign, the message that
was given to the public was that our foreign policy program in
Russia was indeed a success story. Why do you think he came to
this conclusion? Why did this former State Department official
feel that they want to give a message that our economic policy
there had been a success? Was it just a political statement to
get through a campaign or was this part of policy? What was the
policy of the Administration, the State Department?
Mr. Talbott. A couple of points here, Dr. Cooksey.
First, since you are citing Wayne Merry, let me just say I
remember him well. I worked with him in two of my capacities
and I think two of his because he was in the Department of
Defense, if I am not mistaken, after leaving the Department of
State. He is a fine public servant and a very fine analyst.
I disagree with his analysis in this case and, insofar as
you have accurately conveyed it, his opinion or his
characterization of the instructions that Embassy Moscow
received from Washington. Our instructions to our embassy,
whether it was under Ambassador Pickering or Ambassador
Collins, has always been to tell it like it is and, by the way,
Wayne Merry always did and often very compellingly.
I don't think that the word success is really appropriate
yet, and probably won't be for quite some time to come. You
proclaim something a success when you see how it has turned
out. Russia is a long way from establishing itself either as a
success or as a failure.
What we try to do is monitor the trends and the
developments, and we have had a lot of discussions here along
those lines. Russia is a mixed bag. There are extraordinarily
promising and favorable developments, the most important of
which is democratization. There are also deeply disturbing and
dangerous developments, crime and corruption being one cluster
of those issues, and the resumption of violence in the Caucasus
being another. Russia is a country, not for the first time in
its history, God knows, that is undergoing a struggle between
its best possibilities and the worst of its past and the worst
that is still there in the present.
Mr. Cooksey. Thank you.
I certainly respect your credentials because you do have a
good background on Russia, and I know you have spent a lot of
time there, but it is also my understanding that you reported
that part of the driving force behind the policy. Our
responsibility--and, quite frankly, I think Congress fails in
this responsibility--our responsibility as Members of
Congress--our constitutional responsibility, is oversight. I
feel that a lot of times Congress is not aggressive enough in
carrying out its oversight responsibilities to make sure that
the taxpayers' money is spent properly. There is the feeling I
think across the country and certainly in my District that
probably the taxpayers' money has not been well managed in our
effort to help the Russian people come out of this period of a
command economy, central economy, a period of Communist
political model.
Do you think this is an accurate perception? If so, do you
think that the policies were used because there was some
naivete on the part of the people that were making the
decisions? What is the future?
Mr. Talbott. They are all very fair questions, and I
totally agree that I think this hearing bears it out that
Congress has a critical role to play, not only in giving
Administration witnesses a chance to explain and defend our
policy but also in interacting with parliamentarians from
Russia and from other countries who are trying to learn how we
do business in this country.
I think that we, the U.S. Government, going back over the
two Administrations who have been involved in the post-Soviet
transition, have done a solid job that you can represent as
such to your constituents in protecting the integrity of our
assistance programs for reasons that we have already talked
about. But if you have any specific questions in that regard
either now or to followup after the hearing, I will be glad to
answer them.
I can tell you that we have the highest standards of
accountability and safeguards in the money that goes from us,
the United States of America, to various projects in Russia.
The more controversial and problematic area is the
international financial institutions, and there again I think
that the verdict of history will be positive. I think that the
fact that the IMF was willing to step in early, going back to
the Bush Administration but continuing into this
Administration, to help the Russians get over the first and the
worst and the most dangerous part of the transition, has to be
counted against the fact that the Russians--we can't want
reform for Russia more than Russians themselves want it--fell
down on the job in a number of respects. I mean, the worse year
for them was 1998, a year that, by the way, also included an
international financial crisis; but the Russian government at
the time, Mr. Kiriyenko's government, could not get the Duma to
put in place the kind of laws, including tax laws, that were
necessary in order to justify some of the risks that the IMF
had taken. The IMF, as a result, has tightened up further its
conditionality.
Mr. Cooksey. Good. Thank you, Mr. Talbott.
Thank you, Mr. Chairman.
Chairman Gilman. The gentleman's time has expired. Thank
you, Dr. Cooksey.
Ms. Danner.
Ms. Danner. Thank you, Mr. Chairman.
I made notes of some of the statements that you have made
as we have gone along. You made a comment that we need more
money for Russians, that this is to the benefit of the American
people. I am wondering if some of the American people we
represent who are here right now, let us just say the senior
citizens who have to decide between purchasing their drugs for
their well-being or food, and there certainly are many of them
in our country, students who are looking at education needs,
where they know they don't have the facilities or the
technological advances that exist today, married couples who
are paying as much as $1,400 more in income tax each year
because they are married, what we call the marriage tax
penalty--obviously, you can see I am a cosponsor of that
legislation or even the general infrastructure of our country.
Following up on what John Cooksey had to say, I wonder how
many of our people, the people that we represent, think that we
spend our money well? They remember that we spent an awful lot
of the American taxpayers' dollars for the Cold War when Russia
was the enemy. Now we are spending money because they are our
purported friend. So, friend or enemy, Russia is costing us a
lot more money.
So the question is, how well is it spent. The oversight
question came up, and your last comment was that we are
protecting the integrity of our assistance programs. As I was
making note of that, I thought I heard you say something about
the fact that you could provide us with some information on how
you are doing that. I know that I would certainly appreciate
that information, and I can assume that the other Members of
this Committee would like to know exactly how you are indeed
protecting the integrity of our programs. Because if we are
going to spend this money, if my senior citizens, if my young
people know that they have less for their needs because we are
sending money overseas, I think the very least they can be
expected to receive in return is evidence that this money is
well spent.
I, like many of my colleagues, do fear and feel that much
of it does make its way to Swiss bank accounts, and I would
like to note that we are putting in process and in progress
some kind of a program to ameliorate that problem. In Russia,
recently I understood that in, for example, Saint Petersburg,
as many as 70 percent of the populace lives in communal
apartments with families of eight or more, and one bathroom and
one kitchen shared by eight families. Even the bathroom shared
by eight families staggers my imagination. But we would like to
know that the money goes to the people and not to the
government, to a few people who are sending it possibly into
Switzerland.
So if you would provide us with that information, I think
we would all appreciate receiving it.
Mr. Talbott. Thank you very much, Ms. Danner.
You have raised a specific issue and a more general issue.
I will provide to you and to Dr. Cooksey and, if the Chairman
wants, to the Committee as a whole a breakdown on the programs
that we are funding and would hope to fund in the future under
what we call the Freedom Support Act, which is the umbrella for
those regions.
One of the things you will see is that a great many of
those programs involve either technical assistance where our
people with know-how go over there and explain how to do
things, how to run a stock market, how to set up a securities
exchange commission, how to run an NGO or local election. So
money doesn't change hands. Exchanges, of course, mean bringing
them over here and sending our people over there. Again, money
does not fall into harm's way.
Then there is also a good deal of highly sophisticated
equipment used to dismantle Soviet era nuclear weapons, weapons
that used to be aimed at the United States but, again with a
lot of controls, to make sure that nothing is diverted.
As to what you tell your constituents more generally, I
would hope that in discussing this issue with them that you
would remind them during the Cold War the United States spent
literally trillions of dollars to deter the Soviet Union, to
contain the Soviet Union and, let us face it, to be prepared to
make global thermonuclear war against the Soviet Union. That
was a very expensive, as well as a very dangerous operation,
dwarfing the amount of money we are talking about now. Waging
the peace and waging the relationship with a Russia that is no
longer our enemy is much less expensive but I think requires a
little bit more in the way of resources than the Congress is
currently willing to give us.
Chairman Gilman. The gentlelady's time has expired.
Mr. Tancredo.
Mr. Tancredo. Thank you, Mr. Chairman.
I have two questions, one dealing directly with your
testimony today, Mr. Talbott, and one with the speech you
actually gave in Colorado a little over a month ago, and I will
deal with the latter first, although it may take us afield. I
hope it doesn't do so. I hope it doesn't go to far.
You stated that in the speech that you gave at the Aspen
Institute, and I quote the old system of nation states, each
sovereign in its exercise of supreme, absolute and permanent
authority, is giving way to a new system in which nations feel
secure enough in their identities and in their neighborhoods to
make a virtue out of their dependence on one another.
You went on to say, this means pooling sovereignty in
certain areas of governance and in other areas granting greater
autonomy to regions. You said it means simultaneously
relinquishing some powers upward and devolving others downward.
I wonder if you could help me here by being a little more
specific about which powers you think, for instance, the United
States should devolve downward or relinquish upward in order to
achieve this new system of nation states.
Mr. Talbott. The short answer is none. I wasn't talking
about the United States in this speech that I gave.
I am sorry, I am having trouble looking at you.
Mr. Tancredo. Some people have that, probably when there is
no one in between.
Mr. Talbott. I should look you in the eye when I say this.
I was talking very specifically about what is happening in
Europe. I was talking about the institution of the European
Union and the way in which the phenomenon of European
integration as represented by the European Union can be used to
avert in southeastern Europe, and particularly the Balkans, the
kind of crisis that has occurred there.
Mr. Tancredo. I do recognize and should perhaps have made
that more specific in my question, that you were talking about
Europe. But when you say the old system of nation states is
essentially dissolving, I can hardly assume that meant only in
Europe in your mind.
Mr. Talbott. I can't leave it entirely to the Chairman. I
am not sure we have time today to pursue this, but I would like
very much to pursue this. I do not think that the United States
is a classic Westphalian nation state. I was talking about
nation states which means, of course, states built up around
particular nationality groups that came about as a result of
the treaty of Westphalia in Europe, and Europe is now moving
beyond that.
I think one of the United States' great strengths and one
of the reasons to be both very proud and also very protective
of our sovereignty and national interest is that we are more
than a nation state. We are a state made up of many, many
different nationalities. You have a country on the map today
called France which is made up of mostly of French, and
Germany, Germans, and Sweden, Swedes, and so forth and so on,
and that tends to talk about people of a particular ethnic
group, a particular language group, and very often a particular
religious group.
In the United States, we are a wonderful, rich mixture.
There is no such thing as American nationality in the same
sense that there is in the old European state, and I tried
elsewhere in that speech with what is probably overlong, as
this answer may be, to make the distinction between the United
States and the EU in that regard.
Mr. Tancredo. I am certainly glad to hear that at least
that distinction exists in your mind, although it is again a
little difficult to understand or see a world developing in a
way that one half of a significant chunk of it would be
operating in the manner in which you describe in devolving or
evolving into something else, where the United States would
only be an observer; but, nonetheless, I am glad to hear that
this is a distinction you carry on.
The last part of the question is dealing with your response
to a question by Congressman Lantos when he specifically asked
you to respond to the GoreeChernomyrdin Commission or whatever
iteration it is in now, and you went on to tell us that you
were quite excited by the outcomes and believed it, in fact,
had been quite successful.
Going back then to something that Mr. Cooksey brought up, I
refer to Mr. Wayne Merry again who also wrote, especially after
you characterized Mr. Wayne Merry as you did, as a very
competent employee, a very professional individual, he wrote
that every program or project associated with the so-called
GoreeChernomyrdin bilateral commission's meetings always had to
be deemed, quote, a success. He argued that the commission
should have been disbanded long ago, making a case that it was
part and parcel of the Administration's interest to have State
Department tell it, in his words, that our policy is a success.
So how should we gauge your response in light of this
characterization by Mr. Merry and your characterization of Mr.
Merry?
Mr. Talbott. I think my characterization of Mr. Merry is
both accurate and generous, and my response to him is total
disagreement. I haven't read everything that Mr. Merry has
written of late, but I assume you are accurately
characterizing. I think he is just plain wrong on the facts and
on the merits.
For those of us working with the Vice President on the
binational commission, we are well aware that there were some
areas where we could have a brass-ring type success--for
example, getting Kazakhstan to accede to the nonproliferation
treaty which involved some work with the Russians. That
happened. That is a success. You can chalk that up. But getting
Russia to cooperate for reasons that have to do with its own
self-interest in curtailing and eliminating the illicit
transfer of dangerous technology to Iran, that is an ongoing
effort and an uphill one, but certainly not one that we would
ever have instructed anyone to characterize as a success, not
least because we are accountable to the U.S. Congress, and we
have to come up here and describe to you how it is going, and
the answer is it is ongoing and it is difficult, but we want to
keep doing it.
Chairman Gilman. Thank you, Mr. Tancredo.
Mr. Davis.
Mr. Davis. Secretary Talbott, I have agreed to yield about
a minute of my time to Representative Pomeroy.
So, within that timeframe, we have discussed today a number
of issues that relate to moving Russia closer to a democratic
society, our attempts to influence how the money is spent
within that country, and our attempts to influence a movement
toward the rule of law. My question for you is, based on the
lessons we have learned here in dealing with Russia, what can
we begin to talk about in terms of changing the way we use the
IMF to more realistically influence how the government and
institutions within that country move closer to the rule of law
and putting money in places we would like to see it put in? In
other words, are there more creative or aggressive ways that we
can use the IMF to try to influence their internal affairs or
should we just continue to look at some of the other
alternatives in addition to the IMF to try to accomplish those
goals?
Mr. Talbott. That is the first and I hope only question
today that I am going to candidly dodge in a sense. I think it
is such a good question that I really should defer to my
colleagues at the Treasury Department on that because they are
the custodians, and very good custodians there by relationship
with the IMF.
Larry Summers has been part of, and if I can put it this
way, the IMF/Russia team from the beginning of the
Administration is deeply engaged on this. He has testified on
it to Mr. Leach, and I wouldn't want to get out in front of him
on this. I am sure he would accept the general proposition that
of course we can do better, but what he would want to do is put
a context in answering your question that takes account of the
IMF global responsibility, its mission worldwide. I think it is
a very good question, and I hate to make work for Larry, but I
suggest you find some way of asking it to him.
Mr. Davis. Thank you.
I would like to yield the balance of my time to
Representative Pomeroy.
Mr. Pomeroy. I thank very much the gentleman for yielding.
Mr. Secretary, I commend you on superbly stated testimony.
It is very clear and very, very good.
I hope that going forward, if there is a partisan debate
about Russia--and I, for the life of me, don't understand why
that is necessarily so, we have plenty of other things to fight
about--it will concern what best advances our interest, what
best reduces a nuclear threat, either through direct engagement
over there or proliferation, and what best further achieves a
restoration of stability in the march to democracy and free
market economy over there, as opposed to the inane battle of
who lost Russia, as if Russia is lost in any event.
I think that your testimony would help all of us refocus
the debate in a much more constructive path than it seems to be
unfolding. But my question involves the building of financial
infrastructure capable of supporting growth of free market
enterprise at a household level, at a small business level, on
a big business level; and I find that insurance, the ability to
allay risk, is a critical dimension of building economic
viability, especially in a system that doesn't have the
meaningful risk protection available presently.
There is a vote that has been highly contentious in the
Duma. In fact, they passed a very restrictive, basically anti-
competitive insurance measure that would have kept out foreign
insurers, significantly reducing insurance capacity within
Russia. Yeltsin vetoed that bill, to considerable political
risk. Who understands his political calculations? In any event,
it was unpopular for him to veto that bill, and the bill I
understand is being considered in the Duma on an override
effort.
I am wondering if the Administration would like to put into
the record any comments it might have about the role of
insurance in Russia's march toward building a vibrant, free
economy and thoughts about this measure in particular.
Mr. Talbott. I am sure we would. Would you mind if I did
that in writing in followup to this meeting? Because it is such
an important and good question that I want make sure the words,
especially after your kind remarks, are exactly the right ones.
I mean, insurance is another part of what might be called the
economic infrastructure of reform that has an awful long way to
go. I know that there are some American companies that are very
vigorously pursuing entry into that market and that they are
having some difficulty. I don't know the legislation you are
speaking of, but let me look into that and get a letter back
either to you or to the Chairman.
Mr. Pomeroy. Mr. Secretary, I would appreciate that very
much and would alert you that I think the measure is pending in
the Duma. It may even be slated for voting on this week and so
would urge that you do that quickly.
In the event that you want to take a pass on it, that is
fine, too, but I think a statement might be help from the
Administration.
Mr. Talbott. I think I hear you saying that it is a
statement we should make fairly promptly.
Mr. Pomeroy. Correct.
Mr. Talbott. Make sure that Jim Collins and our colleagues
in Moscow get it around there.
Mr. Pomeroy. I am going to say it is an issue that is
important, it is out there, and if you choose to make a
statement, it ought to be done promptly. If you choose to pass,
I understand.
Mr. Talbott. Thank you.
Chairman Gilman. The gentleman's time has expired.
Since Mr. Talbott has limited time, and we have a vote on
the House Floor, I am going to ask our Members to limit
themselves to 1 minute, and we will try to get to everyone.
Mr. Campbell.
Mr. Campbell. Secretary Talbott, on October 6th, Ken
Timmerman said the following about you. I want to read it to
you, and I want you to respond for the record.
Chairman Gilman. Please be brief so each Member can query.
Mr. Campbell. ``The Shahab-3 missle in particular--is
capable of targeting Israel with nuclear, chemical or
biological warheads and should, in my view, have Mr. Talbott's
name written all over it.''
Let me briefly summarize the more detailed chronology I
provided in the written statement for Mr. Talbott's
responsibility for the Shahab-3 missile.
Later in the colloquy, I speak to Mr. Timmerman:
Mr. Timmerman, your comment about the Shahab-3 having
Strobe Talbott's name on it is chilling. I wanted to ask you if
it is your belief that Deputy Secretary of State Strobe Talbott
knew of the diversion of the technology, whether he could have
taken steps to prevent it and chose not to.
Mr. Timmerman: Yes, on both counts, Mr. Campbell. I was
certainly not privy to the type of classified briefings to
which Mr. Talbott was privy. One of the most astonishing things
that I found out was that, after Mr. Talbott was initially
briefed by the Israelis in September or October 1996, he never
once asked a question of our intelligence agencies until the
Israelis came back and briefed Mr. Gore through his aid, Leon
Fuerth.
I then further asked Mr. Timmerman: Again, just for the
sake of getting the full story out, if he, Mr. Talbott, were
here, he might say he undertook a lot of steps but they were
publicly known. You categorically state that he knew and did
nothing. On what do you base that judgment, Mr. Timmerman?
For the first 3 months, I am saying between late 1996 and
February, 1997, absolutely nothing was done. This I have both
from U.S. Government sources and from Israeli sources.
Afterward, Mr. Talbott was tasked specifically by the Vice
President's office--he was put in charge of dealing with the
Russians on this issue. He had exchanges with the Russians, but
he never pressed them.
I end the quotations, and I ask you to make your response.
Mr. Talbott. Nonsense, is my response.
Chairman Gilman. The gentleman's time has expired.
Mr. Campbell. Mr. Chairman, it is not fair to the witness.
I ask unanimous consent to allow the Secretary to respond to
the serious charges which I quoted.
Mr. Talbott. The suggestion, the allegation is utter
nonsense. You will understand, of course, Mr. Campbell, that in
this setting neither I nor any of us can get into intelligence
matters in a detailed reconstruction of the way in which this
Administration, notably including the Vice President, has dealt
with the very real issue which has been kind of a theme
throughout the morning of the leakage of dangerous technology
from Russia to Iran.
I can tell you that this Administration and, insofar as I
have been part of the policy, which is considerable, I myself
have been quite assiduous in following up on all information
that we have gotten and pressing the matter with the Russians.
I think that we can review the history of this episode if you
want in some other setting, but the bottom line is that when we
knew there was a problem we acted on the problem, and we are
several years down the road now. We are closer to a solution to
that problem as a result of our unstinting work with the
Russians to get a grip on this, but we are not as close as we
need to be for the problem to be----
Chairman Gilman. The gentleman's time has expired.
Mr. Payne.
Mr. Payne. Thank you, Mr. Chairman.
Let me say, Mr. Talbott, it is good to see you, and
certainly I know of your record of public service, and I don't
know of any that has a more impeccable record, and it is a
pleasure to see you.
First, I also would like to add my dismay to the $2 billion
that has been cut from the President's request for Russia, $1
billion less than last year. But also I might add that 40
percent of the development fund for Africa has been cut, $175
million from essential loan programs, $157 million cut from
global environmental programs, $87 million cut from debt relief
for the poorest countries in the world, $50 million cut from
African development loans, $200 million cut from economic
development and democracy building in Africa and around the
world, $35 million cut from the Peace Corps. It makes
absolutely no sense when we are trying to make the world safer.
I come from one of the poorest districts in the country,
but I have to totally disagree with my colleague from Missouri
when he says that Americans are outraged about the President's
$13 billion request for the foreign aid bill, which is less
than one percent of what we spent on foreign aid. I think it is
disgraceful that we spent so little. The greedy are really
taking from the needy. I think that foreign aid is a hedge on a
world that is safe and secure.
If you can in New York City and Manhattan get a bite from a
mosquito that comes from three continents away--and you die--
and you are cutting money from world health, it is silly. If we
are worried about our children and our children's children,
about balancing the budget, we are going to have a world that
is going to be unfit to live in if we continue the nonsense of
this tunnel vision, this head-in-the-sand silliness that we see
in the House.
I guess my minute is up. So I don't have a question. Thank
you.
Chairman Gilman. Thank you, Mr. Payne.
We are pleased that we have with us the gentlelady from
Ohio, Ms. Kaptur, who is the Ranking Member on the Agriculture
Subcommittee on Appropriations.
Ms. Kaptur. I thank the Chairman very much and my
colleagues for allowing me to sit in on this important hearing,
and I will be brief.
The first statement I just wish to make to Mr. Talbott in
welcoming him back to the House is that I hope you will use
your full powers within the Administration to get additional
precinct monitors into Ukraine for the upcoming elections.
There are 30,000 precincts, and perhaps all Americans living
and working in the Ukraine could volunteer that day. I think
the situation is becoming more serious.
You don't have to respond to that.
But the major reason I am here today is to say I hope that
when you leave today you and the staff members that are here
with you from State will be imbued with greater fervor to deal
with the issue of Russian food security as fundamental to
Russian stability. Your testimony deals primarily with military
security, which I can understand, but I would hope, Mr.
Talbott, that you could spearhead an effort within the
Administration and your allies here in Congress to take a fresh
look at how to better use the food aid and its monetized value
to achieve reform in Russia and her surrounding former client
states.
We know that collective farms were fundamental to the
structure, the architecture of the Russian system. They have
collapsed, and their entire social welfare system was tied to
that.
Chairman Gilman. The gentlelady's time has expired. Thank
you very much, Ms. Kaptur.
Mr. Manzullo.
Mr. Manzullo. Mr. Secretary, you referred earlier in your
testimony to theater missile defense systems. Let me ask you to
comment on the recent series of stories that I have seen in the
newspaper of granting concessions to Russia to literally
abandon or modify greatly the ABM treaty, especially in light
of the fact that, in 1995, the Clinton Administration said that
shoring up the ABM treaty was of high priority.
Mr. Talbott. Mr. Chairman, I want to just agree with and
respond affirmatively to Mr. Payne and Ms. Kaptur.
Chairman Gilman. We have very limited time.
Mr. Talbott. Right, and perhaps we can followup.
Mr. Manzullo. Could you answer mine? Mine is more of a
question. Theirs is a statement.
Mr. Talbott. I understand that. That is exactly what I was
saying, and if the Chairman feels we have run out of time, I
would be glad to pursue this with you, either in person or by
letter.
The word concession is not in the vocabulary of the
dialogue that we are conducting with the Russian Federation on
the subject of national missile defense and the Antiballistic
Missile Treaty and START III. The word cooperation, however, is
very much part of that vocabulary.
President Clinton has made clear repeatedly that we and
Russia face a common problem, which is the proliferation of
ballistic missiles to third countries, rogue states that could
threaten both American territory and Russian territory, and we
should therefore work cooperatively to meet that threat. That
will require, almost certainly, amendments to or adjustments in
the ABM treaty, but it will also require new levels of thought
and ultimately work in the area of cooperative strategic
defense. It is in that context that this issue arises.
Mr. Manzullo. Thank you.
I have to go vote. If I could send you a letter for more
detail, I would appreciate it.
Mr. Talbott. I would be happy to respond.
Chairman Gilman. We want to thank our witness for appearing
today. The Chair may submit to the State Department questions
on behalf of the Committee's Members for expeditious answers in
writing, and I thank you once again, Mr. Talbott, for being
here today.
The Committee stands adjourned.
[Whereupon, at 12;20 p.m., the Committee was adjourned.]
=======================================================================
A P P E N D I X
October 19, 1999
=======================================================================
[GRAPHIC] [TIFF OMITTED] T3831.001
[GRAPHIC] [TIFF OMITTED] T3831.002
[GRAPHIC] [TIFF OMITTED] T3831.003
[GRAPHIC] [TIFF OMITTED] T3831.004
[GRAPHIC] [TIFF OMITTED] T3831.005
[GRAPHIC] [TIFF OMITTED] T3831.006
[GRAPHIC] [TIFF OMITTED] T3831.007
[GRAPHIC] [TIFF OMITTED] T3831.008
[GRAPHIC] [TIFF OMITTED] T3831.009
[GRAPHIC] [TIFF OMITTED] T3831.010
[GRAPHIC] [TIFF OMITTED] T3831.011
[GRAPHIC] [TIFF OMITTED] T3831.012
[GRAPHIC] [TIFF OMITTED] T3831.013
[GRAPHIC] [TIFF OMITTED] T3831.014
[GRAPHIC] [TIFF OMITTED] T3831.015
[GRAPHIC] [TIFF OMITTED] T3831.016
[GRAPHIC] [TIFF OMITTED] T3831.017
[GRAPHIC] [TIFF OMITTED] T3831.018