[Senate Hearing 110-707]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-707
 
                 RUSSIA'S AGGRESSION AGAINST GEORGIA: 
                       CONSEQUENCES AND RESPONSES

=======================================================================

                                HEARING



                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                       ONE HUNDRED TENTH CONGRESS



                             SECOND SESSION



                               __________

                           SEPTEMBER 17, 2008

                               __________



       Printed for the use of the Committee on Foreign Relations


                   Available via the World Wide Web: 
              http://www.gpoaccess.gov/congress/index.html


                     U.S. GOVERNMENT PRINTING OFFICE
46-828 PDF                 WASHINGTON DC:  2009
---------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001


                COMMITTEE ON FOREIGN RELATIONS          

           JOSEPH R. BIDEN, Jr., Delaware, Chairman          
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
JOHN F. KERRY, Massachusetts         CHUCK HAGEL, Nebraska
RUSSELL D. FEINGOLD, Wisconsin       NORM COLEMAN, Minnesota
BARBARA BOXER, California            BOB CORKER, Tennessee
BILL NELSON, Florida                 GEORGE V. VOINOVICH, Ohio
BARACK OBAMA, Illinois               LISA MURKOWSKI, Alaska
ROBERT MENENDEZ, New Jersey          JIM DeMINT, South Carolina
BENJAMIN L. CARDIN, Maryland         JOHNNY ISAKSON, Georgia
ROBERT P. CASEY, Jr., Pennsylvania   DAVID VITTER, Louisiana
JIM WEBB, Virginia                   JOHN BARRASSO, Wyoming
              Antony J. Blinken, Staff Director          
       Kenneth A. Myers, Jr., Republican Staff Director          

                             (ii)          

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page

Burns, Hon. William J., Under Secretary for Political Affairs, 
  Department of State, Washington, DC............................     8

      Prepared Statement.........................................    12


Casey, Hon. Robert P., Jr., U.S. Senator From Pennsylvania.......     7


Dodd, Hon. Christopher J., U.S. Senator From Connecticut.........     1


Lugar, Hon. Richard G., U.S. Senator From Indiana................     4


Nelson, Hon. Bill, U.S. Senator From Florida.....................     6


              Additional Material Submitted for the Record

Prepared Statement of Hon. John F. Kerry, U.S. Senator From 
  Massachusetts..................................................    48


Prepared Statement of Hon. Barack Obama, U.S. Senator From 
  Illinois.......................................................    49


Additional Questions for the Record Submitted to Under Secretary 
  of State William J. Burns by Senator George Voinovich..........    50


Additional Questions for the Record Submitted to Under Secretary 
  of State William Burns by Senator Robert P. Casey, Jr..........    53


              ...................................................

                                 (iii)

  


                 RUSSIA'S AGGRESSION AGAINST GEORGIA: 
                       CONSEQUENCES AND RESPONSES

                              ----------                              


                     WEDNESDAY, SEPTEMBER 17, 2008

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:03 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Christopher 
Dodd, presiding.
    Present: Senators Dodd, Feingold, Nelson, Cardin, Casey, 
Webb, Lugar, Hagel, Coleman, Corker, Voinovich, Murkowski, and 
Isakson.

        OPENING STATEMENT OF HON. CHRISTOPHER J. DODD, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Dodd. The committee will come to order.
    Let me welcome my colleagues, as well as our witnesses and 
the audience this morning, to be a part of this very important 
hearing, ``Russia's Aggression Against Georgia: Consequences 
and Responses.''
    And we thank you very much, Mr. Secretary, for being with 
us this morning.
    Let me, once again, express the apologies of my dear friend 
and colleague from Delaware, Senator Biden, who would normally 
be sitting here holding that gavel, but, as I presume everyone 
in the audience knows, he's otherwise occupied, and couldn't be 
here this morning. So, I'm designated as acting chairman of the 
Foreign Relations Committee, and delighted to be filling in for 
him this morning on this very important hearing.
    I'm going to share some opening comments, and then turn to 
Senator Lugar for any opening comments he may have. We don't 
have a packed room of members yet, so any of my colleagues who 
would like to be heard on this issue may have that 
opportunity--several of whom have been to Georgia and can bring 
some particular expertise. Senator Biden, in fact, was in 
Georgia in the midst of the events as they unfolded. And then 
we'll get to you, Mr. Secretary, to respond to some questions 
we may have.
    At some point here I'm going to try and put up a map, as 
well. I always find having maps can help, it certainly helps me 
when I can see exactly the geography and where various elements 
are that have been the source of the difficulties over the last 
number of weeks. So, when we get to that, if we have a chance, 
we'll put that up, and then describe where some of the ethnic 
populations also reside, which I think may help clarify, for 
those who are looking at this, some of the difficulties that 
are posed by this issue.
    Last month's war between Russia and Georgia began in a 
small region of South Ossetia, but it obviously cast a very 
long and broad shadow across continents. In the aftermath of 
the conflict, the United States and our allies certainly face 
some serious new challenges. And as we survey the situation in 
Georgia today, we face, as I see it, three strategic questions. 
First, What can we do to shore up Georgia's democracy, economy, 
and its institutions? Second, How do we convince Russian 
leaders that their actions in Georgia are antithetical to their 
own stated goal of becoming a successful, respected member of 
the international community? And third, What can and should the 
Euro-Atlantic community do to prevent the consequences of this 
war, which has already taken a heavy toll on Russia and 
Georgia, from undermining ambitions of the entire region?
    In many respects, the first question is the most urgent 
one. In the course of the conflict, tens of thousands of 
Georgians were driven from their homes. In some areas, entire 
villages were burned to the ground by South Ossetian forces 
armed and supported by Russia, and their residents have been 
told they will never be allowed to come back. As winter 
approaches, the situation could become a serious humanitarian 
crisis, as well. Georgia's problems have been compounded by 
Russia's gratuitous destruction of critical economic 
infrastructure far outside the autonomous regions of South 
Ossetia and Abkhazia. Georgia's main rail line, cement factory, 
and even its national forests were all targeted by the Russian 
military.
    There are two ways to undermine, if not topple, a 
democratic government: Either militarily or by crushing and 
strangling the economy to make life so miserable that the 
government's mandate comes into question. Many expert observers 
believe that having failed in the first approach, Russia now 
seems to have shifted to the second. Russians undoubtedly will 
know that the reason that young democracies survive is that 
each year people's lives get a lot better. That happened in 
Georgia, of course. Before the Rose Revolution in 2003, 
Georgia's whole economy was barely $5 billion a year. By last 
year, it had grown to $10 billion. Next year, it was going to 
be almost $14 billion. Hundreds of thousands of Georgians have 
joined the country's new middle class. If Russia can halt that 
progress, it'll cripple Georgia's young democracy. Georgians 
don't want a handout. They know how to grow their economy out 
of this conflict situation. They've done it before. We have 
pledged to them, rightly so, that the United States and the 
international community are not going to turn our back and walk 
away from this situation. The administration's speedy 
commitment of assistance and other important signals of support 
from the international community will go far to persuading 
international investors, who have supported the country's 
growth, to come back and to help them to rebuild on their own.
    We also need to help ensure Georgia's institutions remain 
true to the principles on which they were founded. Georgia 
remains a very young democracy, as we all know, and is 
certainly not immune from the political problems that challenge 
other countries at this stage of development. It'll be 
absolutely critical for Georgians to maintain unity in the face 
of serious adversity, but, at the same time, this crisis cannot 
become an excuse for any actions by the government that 
compromise Georgia's standing as a proud democracy.
    Second, we will need to continue reassessing our approach 
for dealing with Russia. We simply cannot allow Russia to act 
like the Soviet Union. We cannot allow them to go around 
intimidating or toppling democracies. In many respects, this 
question is bigger than Georgia and bigger than Russia itself. 
It is a matter of what kind of a world we're going to live in, 
in the 21st century, and whether small democracies are allowed 
to thrive in that world, or whether they're going to get 
bullied by the largest kids on the block.
    Russia has a critically important relationship with the 
United States and the West, but it's a relationship that is now 
badly off track. Obviously, we want to work with Russia on a 
wide range of issues. The United States has supported Russia's 
attempt to join international organizations, and tried to 
partner with Moscow on a wide range of issues. Russia's 
increasing integration into the international community has had 
significant benefits for the Kremlin and the Russian people. 
The country's economy has grown rapidly in recent years, and 
Russians are understandably very proud of that progress.
    With integration and success come responsibilities, as 
well. Once a country becomes part of the international 
political and financial networks, reputations matter, and 
matter a great deal. And if you develop a reputation for 
flaunting the rules, then you'll pay a price for that.
    It should be clear to the leaders in Moscow that there are 
some real costs associated with failures to play by the rules 
of the international system. Russia's benchmark RTS stock 
market index has lost more than half its value. Now, there are 
reasons for that loss other than these events, but, 
nonetheless, certainly such a loss has a lot to do with that 
conclusion. Three-quarters of a trillion dollars since its peak 
in May, I might add. Yesterday, and again today, the situation 
has been so bad that the index halted trading altogether. 
Capital flight from the country has spiraled, and risk premiums 
for investment in Russia are nearing stratospheric levels. 
Russia's economic success has been the signature achievement of 
the country's leadership, even if it has been largely 
predicated on high energy prices. If Russia does not 
reestablish a reputation as a country that abides by the rules 
both at home and abroad, then it may sacrifice both its 
international standing and its economic success.
    Finally, the crisis also has significant regional 
implications. Georgia is an East-West land bridge between the 
Caspian Sea and the Black Sea. When the Russian attack severed 
communications, Armenia was cut off from its one trade route to 
the West. Azerbaijan saw its economic lifeline, its oil export 
route to the West, close down. And the countries in Central 
Asia realized that their only alternative to exporting oil 
through Russia was in great danger.
    Georgia's location in the Caucasus makes it absolutely 
critical, a bridge for goods, energy, and ideas, but also makes 
it an attractive target for those who would like to stop 
commerce and contact between East and West. Beyond Central Asia 
and the Caucasus, what happened to Georgia will have echoes in 
the Ukraine, in Moldova, the Baltics, and Eastern Europe. If 
leaders in these countries are intimidated to the point that 
they begin acting in opposition to their democratic interests, 
it'll be a major blow to the processes that the Euro-Atlantic 
integration has transformed much of the region so successfully.
    Geopolitically, we are witnessing a major moment in 
history. Future generations will remember the war in Georgia as 
a turning point. The only question is, What type of turning 
point? Will it mark the moment that Russia recognized the 
political and economic costs of military conflict with its 
neighbors was prohibitively high and permanently abandon the 
practice, or will it usher in a new era of insecurity in which 
no country in the region, Russia included, feels confident in 
its ability to prosper in the absence of outside pressure. How 
the United States and our allies respond, not only over the 
coming days and weeks and months, but over the coming years, in 
my view, will have a significant impact on determining which of 
these scenarios comes to be the case.
    We are grateful to Ambassador Burns for being with us this 
morning, and look forward to discussing these critical issues. 
And we thank you, Mr. Ambassador, for your work.
    With that, let me turn to the former chairman, Senator 
Lugar, of Indiana.

          OPENING STATEMENT OF HON. RICHARD G. LUGAR, 
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. Well, I join the chairman in welcoming our 
distinguished witness. Under Secretary Burns is uniquely 
qualified to discuss the challenges posed by Russia's invasion 
of Georgia. He's an outstanding public servant, and we are 
fortunate to have him at the forefront of our diplomatic 
efforts.
    On August 7, Russian military forces invaded the sovereign 
territory of Georgia. Russia's aggression should not have been 
a surprise. For years, Moscow has been implementing a policy 
designed to apply the maximum possible pressure on Georgia:
    First, Russia shut off energy exports to Georgia, claiming 
that terrorist attacks had damaged the gas pipeline running 
between the two countries.
    Second, Moscow instituted a trade embargo against Georgia, 
cutting off all commerce between them, and closing road 
connections.
    Third, mail deliveries and direct flights between the two 
countries were suspended.
    Fourth, Russian authorities arrested thousands of Georgians 
living in Russia, and deported them. At least two Georgians 
died during that process.
    Fifth, Russian diplomats disrupted and frustrated the 
diplomatic efforts underway to find a resolution to disputes 
between Georgia and the enclaves of South Ossetia and Abkhazia. 
In some cases, they even refused to appear at scheduled talks.
    Sixth, the Russian military conducted a large military 
exercise just north of the Georgian border that coincided with 
increased artillery and small-arms fire between Georgian troops 
and Russian and South Ossetian troops.
    Seventh, Russia asserted increasing control over the 
administration of Abkhazia and South Ossetia, and expanded the 
number of Russian officials with extensive military and 
intelligence backgrounds in these regions.
    Eighth, Russia reinforced its military presence in both 
Abkhazia and South Ossetia in recent months without consulting 
Georgia, as is required under existing agreements.
    Ninth, Russian military aircraft violated Georgian airspace 
on numerous occasions.
    Tenth, Moscow established administrative relationships with 
both South Ossetia and Abkhazia, breaking previous commitments 
made through the Commonwealth of Independent States, and 
distributed thousands of Russian passports to Abkhazians and 
South Ossetians.
    These events should not have left much doubt in anyone's 
mind that Russia was looking for a way to justify military 
action in Georgia. American leaders counseled the Georgian 
Government not to respond to this intimidation. I spoke on the 
telephone to President Saakashvili in April and urged him not 
to take actions that would invite a Russian military response.
    When I visited Tblisi, 2 weeks ago, President Saakashvili 
asserted that his government had no choice, and that Georgia 
had to defend itself. We may never know definitively who fired 
first, but it's clear that Russian--Russia implemented an 
extraordinarily provocative plan to lure Georgia into combat.
    Moscow has agreed to several cease-fire agreements, but has 
not yet met its obligations under any of them. Russian troops 
must withdraw from Georgia, and the international community 
must ensure that conditions on the ground do not permit Russia 
to determine political events in Georgia.
    The European Union's announcement that it is sending 200 
observers to Georgia is a welcome initiative, but much more 
needs to be done. The United States has moved to provide 
Georgia with significant humanitarian and reconstruction 
assistance. I saw, firsthand, the important role the United 
States is playing in alleviating the suffering in Georgia. I 
joined USAID workers in distributing cots and blankets to 
displaced persons in Tblisi, and observed military servicemen 
unloading supplies from a C-17. I expressed my strong support 
for the administration's $1 billion aid package when Secretary 
Rice called to brief me on the details. This is a good first 
step. But, by itself it will not ensure the survival of the 
democratic free-market Georgian government.
    Georgia's Prime Minister estimated a need for at least $3 
billion to $4 billion for budget support and infrastructure 
repair. He forecasts that, unless action is taken quickly, 
Georgia's GDP could fall more than 10 percent, in contrast to 
the 10-percent annual growth the young economy had been 
experiencing.
    Moving the Georgian economy back to a sound footing is 
imperative. Russia has not emerged from this conflict 
unscathed. Recent press reports suggest that Moscow's stock 
market, as the chairman mentioned, has lost nearly 50 percent 
of its value and more than $20 billion of capital has fled the 
country. In recent days, the Russian Central Bank has spent 
$4.5 billion to prop up the ruble. This level of financial 
shock would have crippled the economies of many countries 
around the world, but the tens of billions of dollars Russia 
receives from its oil and gas exports are allowing it to absorb 
these economic losses.
    The conflict in Georgia cannot be separated from Europe's 
dangerous dependence on natural gas from Russia. In fact, the 
conflict in Georgia makes it all the more important for 
European leaders to act on energy security. Commitment to 
energy diversification, including new pipelines circumventing 
Russia, is essential to the security of our European allies.
    The Kremlin has shut off energy supplies to six different 
countries during the last several years. These energy cutoffs 
were intended to demonstrate Russian willingness to use its 
commanding energy export position to back its demands for 
foreign and economic policy concessions. A natural-gas shutdown 
experienced by a European country in the middle of winter would 
cause death and economic loss on the scale of a military 
attack. Such circumstances are made more dangerous by the 
prospects that nations might become desperate, increasing the 
chances of armed conflict and terrorism.
    In addition to the administration's assistance package, 
there were several steps the United States must take in the 
near term. We must redouble our efforts to extend a Membership 
Action Plan to Georgia. The failure to extend MAP to Georgia 
and Ukraine at the summit in Bucharest was a mistake that sent 
the wrong signal to Moscow and the international community. A 
MAP would be powerful symbol of the West's support for an 
independent Georgia.
    Finally, the U.S. must lead the international community to 
establish a diplomatic structure to consider and solve the so-
called ``frozen conflicts.'' These trouble spots, like Abkhazia 
and South Ossetia, must not be permitted to become incentives 
or excuses for conflict. In addition to the zones in Georgia, 
the Transdnistria region of Moldova, the Nagorno-Karabakh 
standoff between Armenia and Azerbaijan, and the Crimean region 
of Ukraine could trigger armed conflict. Peaceful solutions are 
possible, but they will require the attention of the United 
States and our allies.
    I thank you, Mr. Chairman, for holding this hearing, and we 
look forward to hearing from our distinguished witness.
    Senator Dodd. I thank you very much, Senator Lugar.
    And, as I mentioned earlier, let me ask my colleagues of 
any of them have any brief comments.
    Senator Nelson.
    Senator Bill Nelson. Very brief, Mr. Chairman.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Bill Nelson. I just want to say to our members of 
the committee, that the resurgent Russia's actions have 
enormous ramifications in things that you wouldn't think of. 
For example, Russia is a partner with us on the international 
space station. NASA has gotten itself into a fix that we're 
going to shut down the space shuttle in 2010, and now they're 
not going to have the new system ready until 2015 or 2016, the 
new rocket; it's a Aries rocket with a Orion capsule. That's a 
5-or-6-year gap that we only have one way to get to the space 
station that we built and paid for, and that is on the Russian 
spacecraft Soyuz, which we have been using, along with our 
space shuttle, to get to and from the international space 
station.
    Now, if we've got a Russia that is trying to exclude itself 
from the family of nations' normal standard operating 
procedure, it's going to make it increasingly difficult for us 
to get along with them. But, what is facing us right now--and 
this is a ramification that people don't realize--is, for that 
5-year period, we've got to contract with the Russians to build 
those spacecraft in order to get us to and from, and to have 
the safety lifeboat attached in case they had to abandon the 
space station. There's a 3-year lead time. That contract has to 
be signed right now. And we have to waive the law that says 
that we can't do business with Russia because they're helping 
Iran on its nuclear program. That's an issue in front of this 
committee right now. It's a waiver of that law. I support it, 
simply because there's nothing that we can do about it. We've 
got to get to and from our space station. But, because of the 
aggression of Russia in Georgia, we now have this complication 
facing us, in ways that we would normally never think of, in 
our ability to get to and from our space station.
    Senator Dodd. Very good point.
    Senator Hagel.
    Senator Hagel. I'll wait.
    Senator Dodd. Very good.
    Senator Casey.
    Senator Casey. Just briefly, Mr. Chairman.

            STATEMENT OF HON. ROBERT P. CASEY, JR., 
                 U.S. SENATOR FROM PENNSYLVANIA

    Senator Casey. Thank you for chairing the hearing and 
calling it.
    I think that one of the difficulties here is, as much as 
our Government--and I think there's bipartisan support for 
condemnation of what Russia's done--it's complicated by the 
fact that we have some shared interests. One of them is that we 
want to do everything possible, as the chairman has done over 
his career, and Senator Biden, as chairman of this committee, 
even when he wasn't chairman, and certainly the work of our 
ranking member, Senator Lugar--is to do everything possible--
and Nunn-Lugar is the model for this--is to do everything 
possible to make sure that working in a bilateral way, with the 
Russian Federation, as well as other countries in a 
multilateral way--to do everything possible to remove the 
threat of weapons of mass destruction, and, in particular, to 
focus on fissile material, which is all over the world, in many 
places in the former Soviet Union. So, that imperative is in 
front of us.
    So, I think, even as we make it clear about our stated 
position as a country against this action by the Russians, as 
well as our intention to extend the Membership Action Plan to 
Georgia, we have to keep our eye on the ball as it pertains to 
fissile material and weapons of mass destruction. And that's 
the difficulty, because I think there's a real frustration that 
the American people feel, that sometimes more specific action 
can't always take place, beyond condemnation and beyond 
engagement in diplomacy. But, I think we have to be very 
conscious of the international threat that fissile material in 
the hands of terrorists, as well as the weapons of mass 
destruction, pose.
    So, Mr. Secretary, I don't envy the difficulty that you 
have in striking that balance, but we appreciate your presence 
here and the leadership--the bipartisan leadership over many 
years, on the threat posed by weapons of mass destruction.
    Thank you.
    Senator Dodd. Thank you, Senator Casey.
    Senator Coleman.
    Senator Coleman. Mr. Chairman, I yield my time, in the 
interest of hearing the witness.
    Senator Dodd. Very good.
    Senator Corker.
    Senator Corker. I yield my time, in the----
    Senator Dodd. Senator Voinovich.
    Senator Voinovich. I'll yield my time, as well.
    Senator Isakson. I yield my time.
    Senator Dodd. Very good.
    Mr. Ambassador, welcome. And we thank you for being with us 
this morning.
    And let me just say to you and my colleagues, whatever 
supporting documents and materials beyond your statement will 
be included in the record.
    And I've asked, by the way--and I don't know if they've 
been distributed or not--for maps of Georgia. And though it may 
not be quite so clear--although you can point out--I think it 
may be marked on the maps themselves exactly where these areas 
are, including South Ossetia and Abkhazia, so you can get some 
sense of their location. There is actually another map that 
we're going to make available to you, as well, that shows where 
the ethnic populations are, which I think may be helpful to 
take a look at.
    Mr. Ambassador, the floor is yours.

    STATEMENT OF HON. WILLIAM J. BURNS, UNDER SECRETARY FOR 
     POLITICAL AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

    Secretary Burns. Thank you very much, Mr. Chairman, Senator 
Lugar, members of the committee. I want to thank you for this 
opportunity to discuss the Georgia crisis and its implications, 
particularly for our relationship with Russia, where I've 
served for the last 3 years as U.S. Ambassador.
    With your permission, I'll submit my written statement for 
the record and offer a very brief summary.
    Senator Dodd. So ordered.
    Secretary Burns. The causes of the current crisis are 
complicated, with mistakes and miscalculations on all sides. 
Georgia's decision to use force to reassert its sovereignty 
over South Ossetia, against our strong and repeated warnings, 
was shortsighted and ill-advised, but there was no 
justification for Russia's disproportionate response, for its 
provocative behavior in the runup to the crisis, or for sending 
its military across international boundaries to attack Georgia 
and seek to dismember a sovereign country.
    With a cease-fire in place, the uncertain beginnings of 
Russian withdrawal from Georgia underway, and Georgia's own 
economic recovery moving ahead, this is a moment to take stock 
and look ahead. A great deal is at stake.
    Russia's actions in Georgia, particularly its reckless 
decision to recognize South Ossetia and Abkhazia, are 
deplorable. Russia's behavior raises serious questions about 
the future of our relations with a resurgent, nuclear-armed, 
energy-rich, great power which has much potential, but more 
than its share of troubles and complexes, and whom we do not 
have the luxury of ignoring.
    As we consider the contours of an effective strategy, I 
would highlight a few elements:
    First, it is essential to continue to make common cause 
with our European allies. Our cohesiveness and collective 
determination is the key to effecting Russia's calculus. 
American actions have far more impact as part of a chorus than 
as a solo performance, and unity among European countries is 
also crucial. We have worked closely with President Sarkozy and 
the EU leadership in recent weeks. We will continue to do so 
as, standing together, we press Russia to fulfill all its 
commitments under the August 12 and September 8 agreements. 
While much is made of Europe's energy dependence on Russia, the 
wider truth is that Russia needs Europe, too, as the market for 
75 percent of its gas exports and as a critical bridge to a 
better economic future.
    Second, the United States and Europe must continue to work 
together urgently to support Georgia's economic revival and 
territorial integrity. Senator Biden and other members of this 
committee were absolutely right, at the outset of this crisis, 
to highlight the importance of a major American assistance 
initiative. And Secretary Rice proposed, on September 3, a $1 
billion economic package for Georgia, with the first phase of 
$570 million this year. In the second phase of funding, next 
year, we hope for strong bipartisan backing for aid that goes 
beyond immediate humanitarian and reconstruction needs and 
includes new resources to strengthen Georgia's independent 
media, rule of law, and civil society. We look forward to 
working closely with the Congress in this effort, and also 
intend to coordinate with our European allies, including at the 
donor's conference planned by the EU later this fall. In the 
meantime, we will also be assessing Georgia's security 
assistance needs, again in cooperation with our NATO partners, 
using the newly established NATO-Georgia Commission. The NATO 
Secretary General and a delegation of NATO permanent 
representatives were in Tblisi yesterday to underscore our 
collective support for Georgia.
    Third, we are working to reassure our friends throughout 
the region of our long-term commitment to their economic 
modernization, democratic development, and well-being. Russia 
obviously has vital interests throughout its own neighborhood, 
and a great deal of natural influence to bring to play, but 
that does not entitle it to a region of privileged interests or 
veto power over the sovereign choices of its neighbors.
    We also recognize that out of crisis sometimes come 
opportunities. Turkey, which I visited earlier this month, is 
showing real leadership in exploring possibilities for easing 
tensions in the South Caucasus. The leaders of Turkey and 
Armenia had an unprecedented meeting in Yerevan, a week ago, 
and progress toward normalization between Turkey and Armenia 
could open up trade and transportation routes for the entire 
South Caucasus. Moreover, it could help open up new avenues for 
settling the Nagorno-Karabakh conflict between Armenia and 
Azerbaijan. This is also an important moment to reassure NATO's 
newest northern members.
    Fourth, the United States needs to redouble our efforts, 
with our partners in Europe and Eurasia, to diversify energy 
supplies and transit routes and avoid a singular reliance on 
Russian oil and gas imports. Improving energy efficiency is a 
significant ingredient, as is development of renewable energy 
sources. The EU's competitiveness and antimonopoly regulations 
can also be a valuable tool to promote greater transparency and 
reliability.
    Fifth, it is important to reinforce for Russia the 
consequences of its actions in Georgia as a means of ensuring 
its compliance with its commitments to President Sarkozy. We 
and our European partners have made clear that there will be no 
``business as usual'' with Russia while those commitments 
remain unfulfilled. For our part, the administration has 
withdrawn the 123 Agreement on civil nuclear cooperation with 
Russia and suspended United States-Russian bilateral military 
programs. We continue to review other options.
    In many ways, the most damaging consequences thus far for 
Russia have been self-inflicted economic and political wounds. 
Since August 7, investor confidence has plummeted; at least in 
part because of the Georgia crisis, Russian financial markets 
have lost nearly a third of their value, with losses in market 
capitalization of hundreds of billions of dollars. Capital is 
fleeing Russia, with $7 billion leaving the country on August 8 
alone, according to Russian Finance Minister Kudrin. The ruble 
has depreciated by nearly 10 percent since the Georgia crisis 
began. The Russian Central Bank has spent billions of dollars 
of its reserves to try to halt the slide of the ruble.
    The opportunity costs for Russia are even greater, the most 
important of which may be the country's ambitious plans to 
diversify the economy and rebuild infrastructure. At a moment 
of critical economic choices, at a moment when Russia can 
innovate, diversify beyond hydrocarbons, and develop to the 
full its greatest resources--its enormously talented people--it 
is in danger of missing an historic chance and stagnating 
amidst mounting corruption, cronyism, and demographic ills.
    Russia's diplomatic isolation was vividly exposed at the 
recent Shanghai Cooperation Organization Summit, when not one 
of its partners joined it in recognizing Abkhazia and South 
Ossetia. Nicaragua's solitary support for recognition of those 
two breakaway regions is hardly a diplomatic triumph. In a rare 
step, the G-7 Foreign Ministers also issued a statement sharply 
criticizing the behavior of the remaining member of the G-8.
    Finally, our long-term strategy toward Russia needs to be 
based on a sober assessment of our own interests and 
priorities, and of what's driving Russia today. Flush with 
petro dollars and reborn pride, the Russia we see before us is 
a muddle of conflicting impulses, of angry chauvinism and 
accumulated grievances alongside some very 21st-century 
connections to the global market and new attachments to a world 
in which foreign travel and private property are what animate 
much of the next generation and the emerging middle class.
    On the one hand, some Russian strategists clearly see 
opportunities in American difficulties, and see taking us down 
a notch as the best way to assert their own prerogatives and 
expand their role. Another aspect of that inclination was on 
full and ugly display in the Georgia crisis, the very 19th-
century notion that intimidating small neighbors is what makes 
great powers great. Those impulses are fed by the increasingly 
authoritarian bent in Russian politics over recent years. They 
are beguiling and cathartic for a country that, a decade ago, 
was about as far down on its luck as a great power can go, but 
they are not the same thing as a positive agenda for realizing 
Russia's potential in the decades ahead.
    On the other hand, there is the Russia about which 
President Medvedev spoke eloquently during his election 
campaign, a Russia that aspires to become a modern, rules-
based, 21st-century, great power with a diversified, integrated 
economy and a political system that gradually opens itself to 
the rule of law. That vision of Russia has hardly been on 
display in recent weeks. Indeed, it has very nearly receded 
from view. But, the realities of Russia's circumstances may yet 
force it back to the surface.
    It's hard to predict which set of impulses will prove 
strongest in the years ahead, or whether the costs and 
consequences already evident in the Georgia crisis will sink 
in. The truth is, we are likely to have a relationship with 
Russia, for some time to come, which mixes competition and 
political conflict with cooperation. On some critically 
important issues, like combating nuclear terrorism and 
nonproliferation, we have a hardheaded interest in working with 
Russia, as we will be doing when my Russian counterpart joins 
the rest of our ``P5-plus-1'' colleagues in another round of 
discussions on Iran, the day after tomorrow, in Washington. 
Nowhere is our cooperation and our leadership more important 
than on the whole complex of nuclear challenges, from setting a 
good example for the rest of the world in managing and reducing 
our own nuclear arsenals, to ensuring the safety and security 
of nuclear materials on the basis of the visionary programs 
which Senator Lugar has done so much to promote. On other 
issues, like Georgia, we and our partners will need to push 
back hard and systematically against Russian behavior.
    Dealing with Russia in the years ahead will require equal 
parts firmness, steadiness, and patience. It will require us to 
put sustained effort into a common strategy with our European 
partners. It will require us to keep a clear sense of 
priorities. It will require us to keep the door open to long-
term, mutually respectful partnership with Russia, if Russia 
chooses to make that possible, and if it chooses to become a 
responsible stakeholder in the international system, but to 
defend our interests resolutely in the meantime. It will 
require us to keep a sense of strategic confidence and 
initiative, as well as a sense of the internal weaknesses and 
growing interdependence with which Russian leaders must 
ultimately contend. And it will require us to continue to focus 
energy and attention on a relationship with Russia that may 
often prove frustrating, and sometimes even dangerous, but that 
matters enormously, not only to our interests, but to the 
future of global order.
    Thank you very much.
    [The prepared statement of Ambassador Burns follows:]

 Prepared Statement of Hon. William J. Burns, Under Secretary of State 
       for Political Affairs, Department of State, Washington, DC

    Mr. Chairman, Senator Lugar, members of the committee, thank you 
for the opportunity to discuss the Georgia crisis and its implications, 
particularly for our relationship with Russia.
    The causes of this conflict--particularly the dispute between 
Georgia and its breakaway regions of South Ossetia and Abkhazia--are 
complex, with mistakes and miscalculations on all sides. But key facts 
are clear: Russia's intensified pressure and provocations against 
Georgia--combined with a serious Georgian miscalculation--have resulted 
not only in armed conflict, but in an ongoing Russian attempt to 
dismember that country. Russia sent its army across an internationally 
recognized boundary, to attempt to change by force the borders of a 
country with a democratically elected government.
    With a cease-fire in place, the uncertainty of Russian withdrawal 
from Georgia underway and Georgia's own economic recovery moving ahead, 
this is a moment to take stock and look ahead. Today I will seek to 
explain how we got here, how we're responding and the implications for 
our relationship with Russia.

                       BACKGROUND TO THE CONFLICT

    The collapse of the U.S.S.R. was marked by ethnically based 
violence, especially in the South Caucasus. This involved clashes 
between Azeris and Armenians, Ossetians and Ingush, Russians and 
Chechens, Abkhaz and Georgians, and others. These clashes deepened into 
a series of wars in the early 1990s that ended without lasting 
solutions. Uneasy truces followed, and the conflicts in areas outside 
Russia became known as ``frozen conflicts.''
    Two of the disputed regions lie within the internationally 
recognized territorial borders of Georgia: Abkhazia and South Ossetia. 
In 1992, following 2 years of armed conflict between Georgians and 
South Ossetians, an armistice was signed by Russian, Georgian, and 
South Ossetian leaders. The leaders also agreed on the creation of a 
tripartite peacekeeping force of 500 soldiers each from Russia, 
Georgia, and North Ossetia, a territory which lies within the borders 
of Russia. In practice, however, the North Ossetian peacekeeping 
contingent ended up being staffed by South Ossetians. Fighting in 
Abkhazia was brutal in those years and, as a result, large numbers of 
ethnic Georgians were expelled from their homes in Abkhazia; before the 
fighting, the ethnic Abkhaz had been a minority--under 20 percent--in 
Abkhazia.
    The next year, 1993, South Ossetia drafted its own constitution, 
and 3 years after that, in 1996, South Ossetia elected its own 
``President'' in an election in which mainly ethnic Ossetians--not 
ethnic Georgians--voted. In 2001, South Ossetia elected Eduard Kokoity 
as President, again with most ethnic Georgians boycotting the election. 
The following year, in 2002, he asked Moscow to recognize South 
Ossetia's independence and absorb it into Russia. Throughout this 
period, Russia acted to support the South Ossetian and Abkhaz 
leaderships. That support was not only political, but concrete, and 
never more so than through the continued presence of Russian military 
forces, including those labeled as peacekeepers.
    Georgia emerged from these post-Soviet wars in weak condition. 
While then-President Shevardnadze deserves credit for helping end the 
fighting, Georgia could not find its feet; its economy remained weak 
and its government relatively ineffective. In the autumn of 2003, 
President Shevardnadze acquiesced in an attempt by a local Georgian 
strongman--Ajaran leader Aslan Abashidze--to steal Georgia's 
parliamentary election. This triggered a popular uprising of hundreds 
of thousands of Georgians, leading to the so-called Rose Revolution and 
Mikheil Saakashvili's election as President.
    Following his 2004 election, Saakashvili and his government moved 
swiftly and effectively to improve governance in Georgia, reducing 
corruption, pushing through economic reforms, and welcoming foreign 
investment. The Georgian economy started to grow rapidly. At the same 
time, Saakashvili made clear his intention that Georgia follow the path 
of other successful post-Communist democracies and draw closer to, and 
eventually join, NATO and the European Union. Although they have 
developed significantly in the past few years, Georgian democratic 
institutions remain weak and much work needs to be done to deepen 
democratic practices and continue economic reforms; authoritarian 
practices still exist alongside more democratic ones. We have made 
known, and made clear in public, our concerns with some of these 
democratic deficits.
    This progress, however, was paralleled by increasing tensions 
between Georgia and the Russian-supported breakaway territories. After 
the Rose Revolution, more clashes occurred between Georgians and South 
Ossetians, and between Georgians and Abkhaz. Then in 2006, South 
Ossetians voted for a split from Georgia in a referendum that was, 
again, largely boycotted by ethnic Georgians in South Ossetia. Although 
there were efforts to resolve the differences through negotiations, by 
late 2007 talks had essentially broken down.
    As Georgia's ambitions to draw close to Europe and the 
transatlantic community became clearer, its relations with Russia 
deteriorated. In the summer of 2006, Georgia arrested several Russian 
military intelligence officers it accused of conducting bombings in 
Gori. Moscow responded by closing Russia's only road crossing with 
Georgia, suspending air and mail links, imposing embargoes against 
Georgian exports and even rounding up people living in Russia 
(including school children) with ethnic Georgian names and deporting 
them. At least two Georgians died during the deportation process. In 
March 2007, what we believe were Russian attack helicopters launched an 
aerial assault, combined with artillery fire, on the Georgian 
Government's administrative offices in Abkhazia's Upper Kodori Valley. 
In August, Russian fighter jets violated Georgian airspace, and then 
unsuccessfully launched a missile toward a Georgian radar station.
    This past year, although Moscow lifted some of the economic and 
transport embargoes, it further intensified the political pressure by 
establishing an administrative relationship with both South Ossetia and 
Abkhazia. In March 2008, Russia announced its unilateral withdrawal 
from Commonwealth of Independent States (CIS) sanctions on Abkhazia, 
thus removing the CIS prohibition on providing direct economic and 
military assistance. Then in April, following the NATO summit in 
Bucharest where NATO leaders declared that Georgia would one day be a 
member of the Alliance, then-President Putin issued instructions 
calling for closer official ties between Russian ministries and their 
counterparts in both of the disputed regions.
    Russia also increased military pressure as Russian officials and 
military personnel were seconded to serve in both the governments and 
the armed forces of the separatist regions. South Ossetia's ``Prime 
Minister,'' ``Defense Minister,'' and ``Security Minister,'' for 
example, are all seconded Russian officials. And while Russian 
peacekeepers in Abkhazia were specifically mandated to facilitate the 
return of internally displaced persons and refugees, we saw no net 
return of Georgians to Abkhazia in over a decade. On April 20 a Russian 
fighter jet shot down an unarmed Georgian unmanned aerial vehicle over 
Georgian airspace in Abkhazia. Russia also increased its military 
presence in Abkhazia without the required consultation with the 
Government of Georgia. In late April, Russia sent highly trained 
airborne combat troops with howitzers to Abkhazia, ostensibly as part 
of its peacekeeping force. Then in May, Russia dispatched construction 
troops to Abkhazia to repair a railroad link to Russia.
    During this buildup of tension, the United States frequently called 
on Moscow to reverse Russian actions and to participate with us and key 
European allies in a diplomatic process to resolve these conflicts. In 
June and July, for example, the U.N. Friends of Georgia group, which 
included the United States, Germany, the U.K., and France, urged fellow 
Friend Russia to engage in invigorated negotiations to advance 
Georgia's peace plan for Abkhazia. Yet Russia resisted, in one case 
even failing to show up for a meeting in mid-June that President 
Medvedev promised Russia would attend. In July, Georgia accepted the 
Western Friends' request that Russia and Georgia join the U.N. Friends 
and the Abkhaz for discussions to reduce tension and advance the peace 
process. But once again Russia's Foreign Ministry refused to send a 
representative.
    During this time, we urged Georgian officials both publicly and 
privately, on many occasions, to resist the temptation of any military 
reaction, even in the face of repeated provocations, which they were 
clearly facing. President Saakashvili did, to his credit, offer 
extensive autonomy to Abkhazia, including a guarantee that a Vice 
President of Georgia would be from Abkhazia. In July, Secretary Rice 
traveled to Tbilisi to seek to intensify diplomatic efforts to reduce 
the growing tensions. Working closely with counterparts from Germany, 
France, and the U.K., she called for intensified diplomatic efforts on 
an urgent basis. While expressing support for Georgia, she also 
cautioned President Saakashvili against any temptation to use force to 
resolve these conflicts, even in the face of continued provocations.
    Unfortunately, Russia resisted these European-American efforts to 
intensify diplomatic efforts to stave off a wider conflict. After 
Russian military aircraft overflew Georgian airspace in July, in 
violation of Georgia's sovereignty, while Secretary Rice was visiting 
Tbilisi, President Saakashvili recalled Georgia's Ambassador to Moscow.
    August began with two bomb explosions in Georgian-controlled 
territory in South Ossetia, injuring five Georgian policemen. On August 
2, a firefight broke out in South Ossetia that killed six South 
Ossetians and one Georgian policeman. On August 3, Russia declared that 
South Ossetia was close to a ``large-scale'' military conflict, and the 
next day, South Ossetia evacuated hundreds of women and children to 
Russia. On August 5, Moscow issued a statement saying that it would 
defend Russian citizens in South Ossetia. It is important to note that 
these were mainly South Ossetians--that is to say, Georgian citizens--
to whom Russia had simply handed out Russian passports. On August 6, 
both Georgia and South Ossetia accused each other of opening fire on 
villages in the region.

                               THE CRISIS

    Throughout this period, the United States worked with both Georgia 
and South Ossetia, and with Russia, seeking to tamp down the growing 
conflict. On August 7 Georgia's Minister for Conflict Resolution 
traveled to South Ossetia for negotiations, but his South Ossetian 
counterpart refused to meet with him and his Russian colleague failed 
to show up. On the night of August 7, shooting broke out between 
Georgia and South Ossetian Armed Forces in South Ossetia. Georgia 
declared a cease-fire, but it did not hold. The Georgians told us that 
South Ossetians had fired on Georgian villages from behind the position 
of Russian peacekeepers. The Georgians also told us that Russian troops 
and heavy military equipment were entering the Roki Tunnel border 
crossing with Russia.
    We had warned the Georgians many times in the previous days and 
weeks against using force, and on August 7, we warned them repeatedly 
not to take such a step. We pointed out that use of military force, 
even in the face of provocations, would lead to a disaster. We were 
blunt in conveying these points, not subtle. Our message was clear.
    Georgia's move into the South Ossetian capital provided Russia a 
pretext for a response that quickly grew far out of proportion to the 
actions taken by Georgia. There will be a time for assessing blame for 
what happened in the early hours of the conflict, but one fact is 
clear--there was no justification for Russia's invasion of Georgia. 
There was no justification for Russia to seize Georgian territory, 
including territory well beyond South Ossetia and Abkhazia, in 
violation of Georgia's sovereignty, but that is what occurred. On 
August 8, the Russians poured across the international border, crossed 
the boundaries of South Ossetia past where the conflict was occurring, 
and pushed their way into much of the rest of Georgia. Several thousand 
Russian forces moved into the city of Gori and other areas far from the 
conflict zone, such as Georgia's main port of Poti, over 200 kilometers 
from South Ossetia. Russia also seized the last Georgian-held portion 
of Abkhazia, where there had been no fighting.
    The full story of that invasion and what occurred is still not 
fully known. We have received evidence of the burning of Georgian 
villages in South Ossetia. Russia's invasion resulted in a large number 
of internally displaced ethnic Georgians who fled South Ossetia to 
Tbilisi and other Georgian towns. Although Russian forces attempted to 
prevent access to the area by humanitarian aid workers, some Human 
Rights Watch researchers were able to reach the area and reported that 
the Russian military had used ``indiscriminate force'' and ``seemingly 
targeted attacks on civilians,'' including civilian convoys. They said 
Russian aircraft dropped cluster bombs in populated areas and allowed 
looting, arson attacks, and abductions in Georgian villages by militia 
groups. The researchers also reported that Georgian forces used 
``indiscriminate'' and ``disproportionate'' force during their assault 
on South Ossetian forces in Tskhinvali and neighboring villages in 
South Ossetia. Senior Russian leaders have sought to support their 
claims of Georgian ``genocide'' against the South Ossetian people by 
claiming that 2,000 civilians were killed by Georgian forces in the 
initial assault. Human Rights Watch has called this figure of 2,000 
dead ``exaggerated'' and ``suspicious.'' Other subsequent Russian 
Government and South Ossetian investigations have suggested much lower 
numbers. We are continuing to look at these and other reports while we 
attempt to assemble reliable information about who did what in those 
days.

     THE CEASE-FIRE, RUSSIA'S FAILURE TO HONOR IT, AND RECOGNITION 
                     OF SOUTH OSSETIA AND ABKHAZIA

    In the days that followed the Russian invasion, our attention was 
focused on halting the violence and bringing about a cease-fire. 
President Bush spoke with a number of European leaders as well as with 
President Saakashvili, President Medvedev, and Prime Minister Putin in 
an effort to halt the fighting. Secretary Rice dispatched Deputy 
Assistant Secretary Matthew Bryza to Tbilisi to maintain contact with 
the Georgian leaders, working with Ambassador John Tefft. She herself 
worked with the Georgians and Russian Foreign Minister Lavrov, and with 
key Europeans including the French as the European Union (EU) 
President, and Finnish Foreign Minister Stubb, in Finland's role as 
Chairman-in-Office of the Organization for Security and Cooperation in 
Europe (OSCE), to seek to halt the fighting.
    On August 14, Secretary Rice flew to France to consult with 
President Sarkozy, and then flew to Georgia to seek--and successfully 
obtain--President Saakashvili's signature on a cease-fire agreement. 
President Sarkozy had negotiated a six-point agreement which included 
the following:
          1. No resort to force.
          2. A definitive halt to hostilities.
          3. Provision of free access for humanitarian assistance.
          4. Georgian military forces must withdraw to the places they 
        are usually stationed.
          5. Russian forces must withdraw to their positions prior to 
        the outbreak of hostilities. While awaiting an international 
        mechanism, Russian peacekeeping forces will implement 
        additional security measures.
          6. Opening of international discussions on security and 

        STABILITY MODALITIES IN ABKHAZIA AND SOUTH OSSETIA.

    The U.S. role in this process was central and timely. The Georgians 
had questions about the cease-fire agreement, so we worked with the 
French who issued a clarifying letter addressing some of Georgia's 
concerns. Secretary Rice conveyed the draft cease-fire agreement and 
the letter to President Saakashvili the next day. Based on these 
assurances, some additional assurances from the French, and the 
assurances of our support, President Saakashvili signed the cease-fire 
agreement on August 15.
    The Ceasefire Accord provides for the withdrawal of Russian forces 
from Georgia to their positions before the hostilities began, and 
allows for peacekeepers in South Ossetia, limited to the numbers 
allowed under previous agreements, to conduct patrols a few kilometers 
from the conflict zone in South Ossetia, not including any cities and 
not in ways that impede freedom of movement. The Ceasefire Accord does 
not establish a buffer zone; it does not explicitly grant the Russians 
the right to set up checkpoints around Georgia's ports or along 
Georgia's main highways and other transportation links; and it does not 
explicitly grant the Russians the right to have any forces whatsoever 
in places such as Poti, 200 kilometers from South Ossetia.
    This agreement was signed--and should have been honored 
immediately--by Russian President Medvedev, who had promised to French 
President Sarkozy Russia's immediate withdrawal upon President 
Saakashvili's signature of the cease-fire. Yet Russia has still not 
lived up to the requirements of the cease-fire agreement. In these 
circumstances, with Russia's having failed to honor the terms of the 
cease-fire agreement and its promise to withdraw its forces, Secretary 
Rice flew to Brussels for an emergency NATO meeting on August 19 and, 
with our allies, produced a statement in support of Georgia's 
territorial integrity and sovereignty--a statement that was stronger 
than anyone thought possible.
    Russia recognized the independence of Abkhazia and South Ossetia on 
August 26. It did so despite numerous United Nations Security Council 
resolutions that Russia approved and that explicitly affirmed Georgia's 
territorial integrity, and that the underlying separatist conflicts 
must be resolved peacefully, through international negotiations. This 
irresponsible action was condemned by the EU, NATO's Secretary General, 
and key Allies.
    Following the EU summit on September 1, President Sarkozy traveled 
to Moscow on September 8 to again seek Russia's compliance with the 
cease-fire.
    This has been a fast-moving situation, but that is where we find 
ourselves today.

                         OUR STRATEGIC RESPONSE

    In the face of this Russian assault on Georgia, the United States 
is pursuing three key objectives.
    First, we must support Georgia. We seek to stabilize the situation 
on the ground; help the country recover and thrive economically; 
preserve Georgia's sovereignty; maintain our support for its 
territorial integrity, and democracy. We are active, working with our 
European allies, in putting pressure on Russia to adhere to the cease-
fire. Russia must withdraw its military forces from Georgia, back to 
the lines of August 7; Russia is allowed limited patrolling rights by 
its recognized peacekeepers in the immediate vicinity of South Ossetia 
only until such time as an international mechanism is developed to take 
their place. So we are working fast with the EU and the OSCE to put in 
place just such a mechanism. We are also preparing to launch 
international discussions on South Ossetia and Abkhazia, again working 
closely with our European partners.
    We have already taken immediate steps to address Georgia's 
humanitarian needs. The United States has provided more than $38 
million worth of humanitarian aid and emergency relief, including food, 
shelter, and medical supplies, to assist the people of Georgia. U.S. 
aircraft made a total of 62 relief flights to Georgia from August 13 
through September 4, and on August 24 and 27, 115 tons of emergency 
relief commodities arrived in Batumi on the USS McFaul and the USCGC 
Dallas. In addition, a third ship, the USS Mount Whitney anchored in 
Poti on September 5, unloaded an additional 17 tons of emergency relief 
commodities that was delivered by USAID nongovernmental organization 
partners. On September 3, the Office of the U.N. High Commissioner for 
Refugees (UNHCR) reported that 90,500 individuals have returned to 
places of origin, following the August conflict. However, UNHCR staff 
note that the number of returnees may be significantly higher due to 
the passage of time, as well as the difficulty of accurate, in-field 
returnee counts. According to UNHCR, approximately 30,000 individuals 
may be displaced in the long term. We have been working with the 
Government of Georgia and seven relief organizations to ensure that our 
assistance gets to internally displaced people and other conflict-
affected populations.
    On September 3, Secretary Rice announced a major effort to help 
meet Georgia's pressing humanitarian needs, repair infrastructure 
damaged by Russia's invasion, sustain commercial confidence, and 
restore economic growth. Five hundred and seventy million dollars, the 
first phase of a $1 billion United States economic support package, 
will be made available by the end of 2008 and will include emergency 
budget support to the Georgian Government. We will be working 
extensively with Congress in the days to come to fine tune how the 
assistance will be delivered. We are hopeful that there will be strong 
bipartisan backing for a second phase of support, an additional $430 
million of support and other urgently needed reconstruction and 
humanitarian assistance to be provided in future budgets.
    Georgia, like any sovereign country, should have the ability to 
defend itself and to deter renewed aggression. The Department of 
Defense has sent an assessment team to Tbilisi to help us begin to 
consider carefully Georgia's legitimate needs and, working with our 
allies, develop our response. For several years, the United States has 
played a significant role in preparing Georgian forces to conduct 
counterterrorism missions, first as part of an effort to help Georgia 
rid its Pankisi Gorge of Chechen and other extremists and then as part 
of multinational coalition efforts. NATO's North Atlantic Council 
decided on August 19 to develop a NATO-Georgia Commission aimed at 
supporting Georgia's relations with NATO. NATO has also decided to help 
Georgia assess the damage, including to the Georgian Armed Forces, and 
to help restore critical services necessary for normal public life and 
economic activity. NATO has already sent an advisory support team to 
Georgia and its Special Representative for the Caucasus and Central 
Asia. The North Atlantic Council Permanent Representatives plan to 
visit Georgia in the near future. Finland's Foreign Minister Alexander 
Stubb, the OSCE Chairman-in-Office, showed strong and effective 
leadership in working with French Foreign Minister Kouchner to lay the 
diplomatic foundation for the cease-fire agreement and activate the 
OSCE's crisis response mechanisms.
    Our second key objective is to work together with our friends in 
the region to support their independence, sovereignty, and territorial 
integrity, as well as their European and transatlantic aspirations, and 
overall stability in the region. Since 1989, the United States--under 
the leadership of Presidents George H.W. Bush, President Clinton, and 
President George W. Bush--has supported the right of every country 
emerging from communism to chose the path of its own development, and 
to choose the institutions--such as NATO and the European Union--that 
it wants to associate with and join. Each country must show itself 
ready to meet the standards of the institutions it seeks to join. That 
is its responsibility, and Georgia and Ukraine should be treated no 
differently than other European countries seeking to join European and 
transatlantic institutions.
    Concurrently the United States is committed to redoubling efforts 
to ease tensions and resolve conflicts throughout the region. Recently, 
the leaders of Turkey and Armenia took an important step toward 
reducing their long-standing tensions. We applaud the initiative of 
Armenian President Sargsyan to invite his Turkish counterpart to 
Yerevan, and President Gul's willingness to accept the invitation. 
Their meeting creates a new atmosphere in the relationship, and gives 
hope that a long-overdue thaw has begun. The normalization of relations 
between Turkey and Armenia could also help open up trade and 
transportation routes for the entire South Caucasus.
    Closely connected is resolution of the Nagorno-Karabakh conflict. 
Its costs can still be counted in terms of refugees and displaced 
persons--nearly a million altogether--provinces denuded of populations, 
lost economic opportunities, and disrupted trade. The U.S. Government 
will do all it can to encourage the parties to show greater flexibility 
and creativity in their negotiations. We will do everything possible to 
promote a just and lasting settlement of the Nagorno-Karabakh conflict 
that proceeds from the principle of our support for Azerbaijan's 
territorial integrity, and ultimately incorporates other elements of 
international law and diplomatic practice.
    The United States, working closely with our allies, will also look 
at ways to emphasize the importance of expanding the Southern Corridor 
for energy supply, bringing oil and gas from the Caspian region to 
Europe. The development of energy resources and competitively 
transporting them to market supports the sovereignty, independence, and 
economic development of the countries of the region. Diversification of 
sources of energy and their routes to market, alternative energy 
sources, and energy efficiency efforts, is critical to Europe as well.

                 IMPLICATIONS FOR RELATIONS WITH RUSSIA

    Finally, our strategic response must include the longer term 
consequences of the invasion of Georgia for our relationship with 
Russia. Since 1991, three U.S. administrations have based policy toward 
Russia on the assumption that Russia sought to become a nation 
integrated with the international system and its institutions. Since 
1991 Russia has asserted its own interest in becoming a part of the 
world and a part of international institutions. And Russia has made 
progress in this regard, with American and European support. But with 
its invasion of Georgia, its continuing refusal to implement the cease-
fire it has signed, and its claim to a ``region of privileged 
interests,'' Russia has put these assumptions and aspirations at risk.
    Russia and the Russian people are paying a considerable price for 
their country's disproportionate military action. Today's Russia is an 
emergent economic power and a net exporter; its interdependency, which 
connects it with the rest of the world in very different ways than in 
the past has fueled the country's newfound prosperity over the past 8 
years. This same interdependency has raised the costs of military 
intervention in Georgia. While much is made of Europe's energy 
dependence on Russia, the wider truth is that Russia needs Europe too, 
as the market for 75 percent of its gas exports and a critical bridge 
to a better economic future. Since August 7, investor confidence has 
plummeted. At least in part because of the Georgia crisis, Russian 
financial markets have lost nearly a third of their value, with losses 
in market capitalization of hundreds of billions of dollars. Serious 
capital outflows have taken place; the Russian Finance Minister 
admitted that $7 billion left the country on August 8; private 
estimates range as high as $20 billion for capital flight over the past 
6 weeks. The ruble has depreciated nearly 10 percent since August 7 and 
the Russian Central Bank has spent billions of its reserves to try to 
halt the slide.
    The opportunity costs for Russia are even greater, the most 
important of which may be the country's ambitious plans to diversify 
the economy and rebuild infrastructure. At a moment of crucial economic 
choices, at a moment when Russia can innovate, diversify, and develop 
to the full its greatest resource--its enormously talented people--it 
is in danger of missing a historic chance and stagnating amidst 
mounting corruption, cronyism, and demographic ills.
    A great deal is at stake. Russia's actions in Georgia, particularly 
its reckless decisions to invade Georgia and recognize South Ossetia 
and Abkhazia, are deplorable. Russia's behavior raises serious 
questions about the future of our relations with a resurgent, nuclear-
armed energy-rich Great Power, which has much potential but more than 
its share of troubles and complexes--and whom we do not have the luxury 
of ignoring.
    It is important to reinforce for Russia the consequences of its 
actions in Georgia as a means of ensuring compliance with its 
commitments to President Sarkozy. We have made clear that there will be 
no ``business as usual'' with Russia while those commitments remain 
unfulfilled. For our part, the administration has withdrawn the 123 
agreement on civil nuclear cooperation with Russia, and suspended U.S.-
Russian bilateral military programs. We continue to review other 
options.
    It is essential to continue to make common cause with our European 
allies. Our cohesiveness and collective determination is the key to 
affecting Russia's calculus. American actions have far more impact as 
part of a chorus than as a solo performance, and unity among European 
countries is also crucial. We have worked closely with President 
Sarkozy and the EU leadership in recent weeks. We will continue to do 
so, as standing together, we press Russia to fulfill all its 
commitments under the August 12 and September 8 agreements.
    Russia's diplomatic isolation was vividly exposed at the recent 
Shanghai Cooperation Organization summit, when not one of its partners 
joined it in recognizing Abkhazia and South Ossetia. Nicaragua's 
solitary support for recognition of those two breakaway regions is 
hardly a diplomatic triumph. In a rare step, the G-7 Foreign Ministers 
also issued a statement sharply criticizing the behavior of remaining 
member of the G-8.
    Our long-term strategy toward Russia needs to be based on a sober 
assessment of our own interests and priorities, and of what's driving 
Russia today. Flush with petro-dollars and reborn pride, the Russia we 
see before us is a muddle of conflicting impulses--of angry chauvinism 
and accumulated grievances, alongside some very 21st century 
connections to the global market and new attachments to a world in 
which foreign travel and private property are what animate much of the 
next generation and the emerging middle class.
    On one hand, some Russian strategists clearly see opportunities in 
American difficulties, and see taking us down a notch as the best way 
to assert their own prerogatives and expand their role. Another aspect 
of that inclination was on full and ugly display in the Georgia crisis, 
the very 19th century notion that intimidating small neighbors is what 
makes Great Powers great. Those impulses are fed by the increasingly 
authoritarian bent in Russian politics over recent years. They are 
beguiling and cathartic for a country that a decade ago was about as 
far down on its luck as a Great Power can go--but they are not the same 
thing as a positive agenda for realizing Russia's potential in the 
decades ahead.
    On the other hand, there is the Russia about which President 
Medvedev spoke eloquently during his election campaign, a Russia that 
aspires to become a modern, rules-based, 21st century Great Power with 
a diversified, integrated economy and a political system that gradually 
opens itself to the rule of law. That vision of Russia has hardly been 
on display in recent weeks--indeed it has very nearly receded from 
view--but the realities of Russia's circumstances may yet force it back 
to the surface.
    It's hard to predict which set of impulses will prove strongest in 
the years ahead, or whether the costs and consequences already evident 
in the Georgia crisis will sink in. The truth is we are likely to have 
a relationship with Russia for some time to come which mixes 
competition and political conflict with cooperation.
    On some critically important issues, like combating nuclear 
terrorism and nonproliferation, we have a hard-headed interest in 
working with Russia, as we will be doing when my Russian counterpart 
joins the rest of our P5+1 colleagues in another round of discussions 
on Iran the day after tomorrow in Washington. Nowhere is our 
cooperation and our leadership more important than in the whole complex 
of nuclear challenges--from setting a good example for the rest of the 
work in managing and reducing our own nuclear arsenals, to ensuring the 
safety and security of nuclear materials, on the basis of the visionary 
programs which members of this committee have done so much to promote. 
On other issues, like Georgia, we and our partners will need to push 
back hard and systematically against Russian behavior.
    Dealing with Russia in the years ahead will require equal part 
firmness, steadiness, and patience. It will require us to put sustained 
effort into a common strategy with our European partners. It will 
require us to keep a clear sense of priorities. It will require us to 
keep the door open to long-term, mutually respectful partnership with 
Russia--if Russia chooses to make that possible, and if it chooses to 
become a responsible stake holder in the international system--but to 
defend our interests resolutely. It will require us to keep a sense of 
strategic confidence and initiative, as well as a sense of the internal 
weaknesses and growing interdependence with which Russian leaders must 
ultimately contend. And it will require us to continue to focus energy 
and attention on a relationship with Russia that may often prove 
frustrating, and sometimes even dangerous, but that matters enormously 
not only to our interests, but to the future of global order.
    Thank you, and I look forward to taking your questions.

    Senator Dodd. That was an excellent, excellent statement, 
Mr. Ambassador, and we thank you for it.
    I'd like to recognize the Ambassador from Georgia, who's 
with us in the audience here. We thank you, Mr. Ambassador, for 
being with us this morning.
    We have a good participation by members, and so, I'm going 
to put the 7-minute clock on. I'm not going to bang any gavels 
around, but just so we can kind of keep it in that order, we'll 
give everyone a chance and maybe we can get several rounds.
    Let me, if I can, pose two or three questions to you, and 
then--rather than go through--ad seriatim, here. The first is--
Russia claimed, as we all know, it intervened to protect 
``their citizens in South Ossetia.'' The citizens they alluded 
to live within the borders of another country, and yet were 
given citizenship, it almost seems, on a whim by the Kremlin. 
And given the presence of large ethnic Russian minorities in 
the Ukraine, in Kazakhstan, and the Baltics, to what extent are 
you concerned that this incident in Georgia would imply that 
these countries are now at some risk?
    Second, Russia has argued that Georgia lies within their 
country's sphere of influence, and what is our position to that 
claim? To your knowledge, have Russian officials outlined what, 
precisely, it means to be a country within their sphere of 
influence or sphere of interest? And where that sphere of 
influence ends is the second question I have for you.
    Third, I'd like to know what concrete steps, beyond the 
ones you've talked about here, that the United States and our 
allies should consider taking in the coming days.
    And last--and you and I talked about this privately, and I 
spoke with Senator Biden yesterday about it as well, is the 
level of assistance we're talking about. Obviously, there are a 
lot of pressures, fiscally, and I'm concerned about paying 
Peter from Paul's account, by moving money around. There are a 
lot of issues in the region. To what extent are you giving any 
thought to how we do this in a way that does not jeopardize 
other important relationships that depend upon our financial 
assistance?
    So, those are the three or four questions I have, and if 
you'd address them, I'd appreciate it.
    Secretary Burns. Yes, sir, Mr. Chairman.
    First, with regard to the assistance question you raised 
last, as I mentioned in my opening statement, what we're 
seeking is $570 million in assistance, mostly focused on 
humanitarian assistance and immediate reconstruction needs, 
before the end of the calendar 2008. And you make a very 
important point about the importance of keeping our priorities 
in view and not robbing Peter to pay Paul. And we've tried to 
take that into account as we've looked through the various 
moneys that we've put together. Some of it, about $250 million, 
would come in direct budget support, which, again, as Senator 
Lugar mentioned, is--meets a very immediate need of the 
Georgian Government. Some of it comes through the OPIC program, 
for which we need authorization from the Congress. Some of it 
comes from the Millennium Challenge Corporation.
    So, we've tried to put together a mix that will help 
provide an immediate boost, an immediate signal of confidence 
in Georgia's economic recovery. Because, just as you said, Mr. 
Chairman, Georgia had made quite significant strides in recent 
years by making some smart economic choices and attracting 
foreign investment and making Georgia an attractive place to 
invest. We're working carefully with the Europeans, as well, 
who, earlier this week, approved about $700 million in 
assistance over a period of 3 years, and with the IMF, which 
has approved a $700 million standby loan--again, as a way of 
sending a strong signal of support.
    So, we look forward very much to working with the committee 
as we sort through the numbers. We'll be very mindful of the 
need to keep our priorities in view, but we're also mindful of 
the importance of sending a strong signal of support for 
Georgia right now.
    Senator Dodd. Well, I agree with that. We all do. It's just 
a question of how we're doing this. You've outlined it well.
    Secretary Burns. Yes, sir.
    On the question you raised about spheres of influence, 
again, as I said in my opening remarks, it's obvious that 
Russia has vital interests in its own neighborhood, that it has 
a lot of influence to bring to play. But, that does not entitle 
it to, what President Medvedev has termed, a region of 
privileged interest, and it doesn't entitle it to a veto over 
the sovereign choices of its neighbors.
    The best guarantee for--whether it's Russians or any other 
ethnic or national minorities in neighboring countries--has to 
do with stability, the security, the prosperity, the well-being 
of those states, and the ways in which they take care of all 
their citizens, including minorities, whether that's in the 
Ukraine or Kazakhstan or anyplace else. And so, I think it 
underscores the importance of helping to strengthen those 
societies, which is something that, as you know, we've been 
committed to do, on a bipartisan basis, for many years. And I 
think that's the best answer to the concerns that are raised.
    But, as I said, it's one thing to recognize the natural 
influence that Russia has to bring to play, and what its vital 
interests are. That is not the same thing as entitling anyone 
to a sphere of influence.
    Senator Dodd. The other issue I was interested in is what 
this may imply. Given the presence of large ethnic minorities 
in Kazakhstan and the Baltics, obviously in the Ukraine, to 
what extent are you concerned that the action in Georgia by 
Russia may portend some other similar actions in other 
countries arguing the same sphere-of-influence argument?
    Secretary Burns. Well, I think it's certainly something 
that we and others are concerned about, and need to be 
concerned about. As I said, I think the best prescription for 
dealing with that concern is doing everything we can to help 
demonstrate, over the long term to all of those countries, our 
support for their own development. And I think that's the best 
way to address that concern.
    Senator Dodd. Very good.
    Senator Lugar.
    Senator Lugar. Mr. Secretary, you are in a unique 
situation, having just served as our Ambassador to Russia for 3 
years before you assumed your new post. And so, I ask these 
question, really, with the thought in mind that you have as 
good a grasp of current Russian politics and leadership as 
anyone that I know. As you suggest, we must be thoughtful about 
a common cause about working, obviously, with our European 
allies. And my impression, at least, having just visited NATO 
and EU, is that there was remarkable concurrence; not that 
every country has the same view of Russia, but the ability to 
stay unified through each of the stages, support President 
Sarkozy, or others, was remarkable. Likewise, I noted a 
feeling, on the part of most of the countries, toward the 
United States that was much more comfortable. Some, because of 
the Iraq war, have felt very uncomfortable. This has changed 
some perceptions substantially. But, it also has led to a call 
by the Baltic states for some definition of what does article 5 
mean? Would somebody come to rescue us, in the event that there 
was a disruption of some sort? Or, as we noted, the Poles' 
rapid signature on the missile defense agreement. One 
motivating factor was surely that even if article 5 did not 
bring military assistance, there would be American troops 
manning the missile sites, and that this was a selling point to 
the Polish people. That's an argument that perhaps has not 
quite permeated our thinking here, but, nevertheless, was 
deeply felt by many in Poland.
    Now, my question is--the Russians, obviously, have noted 
all of this. We had the ``2 plus 2'' talks, with the Secretary 
of State and Defense and their counterparts in Russia, that 
appeared to be constructive. There appeared to be some headway 
in thinking about the START treaty's renewal, which will need 
to occur sometime in 2009. On the Russian side, in fact--a 
request, really--their position was for more intrusive 
inspection than, apparently, we were prepared to do under the 
Moscow Treaty. When the Senate ratified the Moscow Treaty we 
were always told it would be buttressed by the START Treaty, 
but now there is a chance that START will not be there. So, 
this is very serious, in terms of cooperative threat reduction.
    But, the Russians took that very seriously, as I 
understand, in the ``2 plus 2.'' They also took somewhat 
seriously the problem of the missiles from Iran, but, even if 
not from Iran, from somewhere, with the thought, at least, of a 
discussion of Russians being, perhaps, at our missile sites in 
Poland and the Czech Republic.
    That was just a short time ago. Now we are in this 
condition. And I just wanted you to reflect on how do we move 
diplomatically to a situation where we proceed with the START 
negotiations with more missile defense in a pan- European, pan-
world situation in other areas where we can make some headway? 
Is it conceivable that, without criticizing the Russians, we 
say, ``We have some agenda items here that we need to 
discuss''? Can you do that? At the same time, all the 
repercussions of Georgia are redounding around.
    Finally, I just would throw this in, because I want the 
rest of the time for you to answer the question. Clearly, the 
Russian leadership was surprised by the economic repercussions, 
although Foreign Minister Lavrov has said, ``You, in the United 
States, have created the problem. It's your subprime mortgages 
and the whole demise of your economy that's caused European 
stock markets to fall, including our own.'' On the other hand, 
clearly, the rush of capital out of Russia, the risk premiums, 
the ruble problems are substantial, yet President Putin has 
remained, apparently, very popular. The nationalistic idea of 
``Russia, we're back, we're rich,'' and so forth, having still 
permeated the atmosphere, how do we deal with the first agenda, 
the cooperative security, and at the same time work our way 
through the rocks and shoals of the economic crisis and the 
problems of President Putin and his popularity?
    Secretary Burns. Well, Senator Lugar, as you know as well 
as anyone, it's a complicated path, but, I think, to answer 
your question, it is conceivable that we can continue to work 
with Russia in a hardheaded way on some of the issues that you 
described, which are crucial, not only to our interests and 
Russia's interests, but to the rest of the world, because the 
truth is, the United States and Russia have both unique 
capabilities and unique responsibilities in the nuclear field. 
And so, whether it's with regard to our own arsenals, the 
future of the START treaty, whether it's with regard to the 
creativity and will that we can bring to bear to deal with 
broader problems of missile defense, or whether it's with 
regard to the safeguarding of fissile materials and nuclear 
installations and facilities in Russia itself. All of those, it 
seems to me, remain cold-bloodedly very much in both of our 
interests, and I think it is conceivable that we can continue 
to work together on those issues, while, at the same time, in a 
big and complicated relationship, making very clear the deep 
concern that, not only we, but our European partners, have 
about Russian behavior during the Georgia crisis and about the 
potential for other kinds of Russian behavior that's going to 
undermine our own interests.
    On the question with regard to the economic consequences of 
this crisis and the popularity of Prime Minister Putin and the 
Russian leadership, it just seems to me that, over time, some 
of those consequences are going to sink in. There's no doubt, 
as you said, but that the sense of reborn pride and national 
assertiveness that has grown in the years in which Mr. Putin 
was president and now in the presidency of Medvedev, is 
something that is popular with a lot of Russians. But, what's 
also popular is a sense that standards of living are rising, a 
sense, which is very understandable, that it's a society which 
is beginning to make progress and integrate itself into, not 
just the global economy, but international institutions.
    And I think what's becoming clear in this crisis is that 
there are some consequences for the kind of national 
assertiveness and overdoing of things which we've seen in the 
Georgia crisis. And how and when that's going to sink in, I'm 
honestly not certainly, but I do think it's going to have an 
impact as Russians try to calculate costs and benefits for 
their own future.
    And I think, you know, as I said, many of those 
consequences and costs are self-inflicted, but there are ways 
in which I think we and our European partners and others in the 
international community can help shape those choices for 
Russians, over time, in terms of the actions that we take, as 
well.
    Senator Lugar. Thank you very much.
    Senator Dodd. Thank you very much, Senator.
    We've been joined by Senator Webb and Senator Murkowski. 
Thank you both for coming.
    Senator Casey.
    Senator Casey. Thank you very much.
    Mr. Ambassador, we want to thank you for your service and 
your thoughtful statement today. In light of what I spoke of 
earlier with regard to consequences, I'm glad that in your 
statement you outlined some of them because sometimes that 
doesn't get a lot of attention.
    On page 10 of your prepared statement, you cite at least 
two consequences that are currently in play here. One is the 
withdrawal of the 123 Agreement on Civil Nuclear Cooperation 
with Russia. That's one. Another consequence is the suspension 
of U.S.-Russian bilateral military programs. And then you say 
that the administration would review other options. I think 
that's important, that we have that on the record. And, of 
course, support for the NATO membership and Membership Action 
Plan for Georgia, being another important priority.
    And I wanted to focus on two areas. I'll get to the nuclear 
questions of which I spoke a moment ago, but the first area 
that I wanted to ask you about was the Conventional Forces in 
Europe Treaty, the so-called CFE Treaty. I was--last year, 
offered a Senate resolution, which passed the Senate, 
condemning Russia's decision to suspend their compliance with 
the Conventional Forces in Europe Treaty. And, as you know from 
having Pennsylvania roots, we have over the years, used the 
expression ``canary in the coal mines'' as a way of predicting 
what might happen in the future. And I think, in many ways, the 
Russian decision to suspend their compliance with that treaty 
might have been that kind of ``canary in the coal mines,'' a 
warning or a precursor of what we see, or what we have seen 
just in the last month or so.
    But I wanted to ask you about the impact of the Russian 
military maneuvers in and around Georgia, on their compliance 
with the CFE Treaty, and then, second, anything you can tell us 
about talks with Russia about returning to compliance with that 
treaty.
    Secretary Burns. Well, Senator, we've--we have had 
conversations, as you know, with the Russians, periodically, 
about trying to find a way to return to compliance with the--
and implementation of the CFE Treaty. They've been abeyance 
since the Georgia crisis, but it's something that we're 
prepared to consider, over time. The specific military measures 
that the Russians took, recognizing that they had suspended 
their compliance with the treaty, certainly go beyond the CFE 
limits which had existed before, and it seems to me that it's 
in all of our interests to try to restore, you know, some of 
the rules and some of the architecture which helped preserve 
stability and security in Europe for many years. We've made 
clear our willingness, through the adapted CFE Treaty, to 
adjust to new realities, but it's going to be important for the 
Russians also to recognize their stake in a set of rules that 
protect not only wider European interests, but their own, as 
well.
    Senator Casey. And just for purposes of explanation, if 
you're an American watching a hearing like this, and you hear 
this reference to this treaty, and you hear about the 
significance of it, what does it mean to our security, our 
national security, to make sure that the Russians are in 
compliance with this kind of a treaty?
    Secretary Burns. Well, I think what the CFE Treaty does, 
as, you know, many other parts of European security 
architecture have done, is provide a degree of transparency and 
predictability to how you move conventional forces around in 
Europe. When you remove that degree of transparency and 
predictability, it causes a lot of uncertainty and, 
potentially, instability in the region. And so, that's why 
we've believed that that framework is very important, and 
that's why, at least for our part, we're committed to trying to 
find a way back toward the adopted CFE Treaty. But, as I said, 
it takes a Russian recognition of the importance of that, as 
well.
    Senator Casey. And I wanted to move, finally, to the issue 
I spoke of earlier, which is the nuclear threat that's--hangs 
over the world and, I think, arguably, most people would 
assert, and I know our ranking member has done work on this 
over a career--Senator Lugar and I and others have tried to 
really focus on this to make sure that we're doing everything 
possible to catalogue fissile material around the world, a lot 
of it which is in the old Soviet Union. And I think it was 
important in your statement that you said a couple of things 
about this issue and about the imperative, the hardheaded 
imperative of working--continuing to work with the Russian 
Federation on this. You say, and I quote--I'm quoting from page 
11--``Setting a good example for the rest of the world in 
managing and reducing our own nuclear arsenals,'' number one, 
and, number two, ``ensuring the safety and security of nuclear 
materials,'' and you go on from there.
    Tell me--and you made reference to the threat that Iran 
poses--just a story in the paper yesterday about Iran's 
capacity--its own capacity--that has been pointed to recently 
with regard to enrichment. And I want you to speak--and I know 
we only have a little more than a minute--but just speak to 
that imperative that you have, in the next couple of weeks and 
months, dealing not just with the question of Iran, but, more 
generally, the threat of nuclear terrorism as it pertains to 
our relationship with Russia.
    Secretary Burns. Well, Senator Casey, with regard to 
nuclear terrorism, the United States and Russia launched, a 
little more than a year ago, I think, a very important 
initiative, the Initiative to Combat Nuclear Terrorism, which 
now has about 70 countries which have signed up, and which 
deals with what is a very serious and growing threat around the 
world. And, again, as I mentioned before, an area where the 
United States and Russia really do have both unique 
capabilities and unique responsibilities. And we aim to 
continue to support and strengthen that initiative.
    With regard to Iran, as I mentioned, we continue to work 
with the Russians, the Chinese, the key EU players--the 
British, the French, and the Germans--in an effort, along two 
tracks, to make clear, first to the Iranians, what's possible 
if they agree to suspend their enrichment programs, but, at the 
same time, the consequences of their failure to do that.
    As you mentioned, the IAEA, the International Atomic Energy 
Agency, issued another report, a couple of days ago, which 
reinforced its own serious concern about Iran's failure to live 
up to its obligations to the IAEA, and that underscores the 
importance of the six of us and the rest of the international 
community working as hard as we can along both of those tracks, 
but particularly now, after a number of months in which the 
Iranians have failed to respond to the latest Security Council 
resolution, as well as to the very generous package of 
incentives that we all put on the table, the importance of 
demonstrating consequences for their inaction. And that's an 
area where we hope and believe we can continue to work with 
Russia and our other partners.
    Senator Casey. Thank you very much.
    Senator Dodd. Thank you very much, Senator.
    Senator Hagel.
    Senator Hagel. Mr. Chairman, thank you.
    Secretary Burns, thank you for your good work.
    I want to talk a little bit about an area that Senator 
Lugar explored with you, and that is the larger context of our 
relationship with Russia. It has been noted here this morning, 
partly in your very complete statement, which I read, in 
addition to your comments and your testimony, as well as my 
colleagues' line of questioning, that we have many common 
interests with Russia, and those common interests will 
continue--what the Senator from Pennsylvania was talking about: 
Proliferation, nonproliferation efforts, energy, Iran, the 
Middle East, Iraq. We are living in a world where these common 
interests are now woven into the same fabric. And the reality 
of what took place in Georgia, as you have noted and we all are 
aware, complicates that relationship.
    And my question is--recognizing that this administration 
has but 4 months left in office, and that is a factor, which I 
recognize, but, more to the point, so to the Russians and the 
Georgians and our European allies, that we are going to have a 
new President, we are going to have a new administration, we 
are going to have a new Congress--but, that stated, what 
initiatives are we taking to find some new higher ground to 
develop new venues, new opportunities, new formats to 
reconstruct a relationship with Russia?
    You mentioned the ``2 plus 2'' talks, as Senator Lugar did. 
For example, are President Bush and President Medvedev talking 
on any kind of a regular basis? Are Secretary Rice and Minister 
Lavrov talking on any kind of a regular basis? You talk about 
our common interests, as well, with our European allies and our 
European partners, and we are working with them, and working 
through NATO, and the various forms that we have with the 
Europeans on these issues, but what are we doing with Russia? 
It seems to me that's a pretty essential part of wherever we 
go. We do know--and I think, with Senator Nelson's comments at 
the opening of this hearing, there's just but one reflection on 
this reality, that we're going to have to find some new common 
ground and new high ground to deal with Russia, which includes 
Georgia, which includes Central Asia, and their interests, as 
perceived by them--not just perceived by us, but their optics. 
And we're going to have to reverse the optics, to some extent; 
at the same, time, defend and recognize and honor the interests 
of any sovereign nation, which Georgia is.
    But, there's going to have to be a very delicate balance 
struck here that we work our way through this, as you know so 
well, and as Senator Lugar has noted--you probably understand 
it as well as anybody in the government today.
    So, if you could take that as a reference, and not a 
particularly succinct question, but I'm interested, really, 
in--Are we doing anything, taking any new initiatives with 
Russia, to find some higher ground here to get us into the new 
few years?
    Secretary Burns. Well, thank you, Senator. We certainly do. 
And I mentioned a couple of the initiatives that had been 
underway and, I think, continue to have potential, 
notwithstanding the Georgia crisis, whether it's the Global 
Initiative to Combat Nuclear Terrorism, the ``2 plus 2'' talks, 
and the efforts that we've made to try to find, and build on, 
common ground, especially in the nuclear field, the efforts 
that we've made to talk about potential cooperative approaches 
in areas like missile defense. I think those all remain very 
important areas of potential cooperation, alongside the 
Cooperative Threat Reduction Programs that Senator Lugar had 
highlighted before.
    The reality is, as I mentioned, that our relationship with 
Russia for some time to come is likely to be a mix, and 
sometimes an uneasy mix of competition, and sometimes political 
conflict alongside cooperation. And I think it's going to be 
difficult to navigate that path with the Russians in the years 
ahead, because Russia's a society that's gone through its own 
very complicated transitions, and I described some of the 
impulses and tensions that are at play, I think, in Russia 
today. But, we don't have the luxury of ignoring Russia or that 
relationship, and so, we're going to have to be very hardheaded 
in how we engage both in working with our European partners to 
push back, hard and systematically, in instances like the 
Georgia crisis; to try to ensure that we're doing everything we 
can to support our other friends in Russia's own neighborhood 
to avoid such crises in the future; to try to be creative in 
helping to solve some of the so-called frozen conflicts, like 
Nagorno-Karabakh, which I think had within them the seeds of 
future problems in the region; to do everything we can to 
encourage diversification of energy supplies and energy 
security, to enhance energy security throughout the region--
again, working with our European partners and our friends 
throughout Eurasia.
    Senator Hagel. In all due respect, Mr. Secretary, I 
understand all that, and you've covered that ground, but let me 
go back to my question. Are we doing anything new, anything 
fresh, taking the reality that we have before us, as has been 
noticed this morning, the disproportionate response from Russia 
in Georgia? And what's happened since then? Have we done 
anything new? Has the President talked to President Medvedev 
very often? Is there anything new? I know what you've just 
noted, here, and what's been on the books and on track, but are 
we thinking in any different way? Because just as Senator Lugar 
said, just one element of NATO membership, article 5--does 
America understand--do all peoples of the nations that are 
members of NATO understand what article 5 means? We seem to 
kind of dance around these issues. Our Defense Department has 
been, as you noticed in--noted in your testimony, been in 
Georgia, examining, exploring, coming back with some assessment 
of what Georgia's military needs are going to be. Have we made 
a decision there? Have we factored that into any regional 
component of this? But, also, to the point, what are we doing 
new, if anything, with Russia--the United States?
    Secretary Burns. Well, Secretary Rice has spoken with 
Foreign Minister Lavrov this week, and we remain engaged with 
the Russians. And we need to, as I said, in a very hardheaded 
way, to push as hard as we can with our European partners to 
get them to comply with the commitments they've made to 
President Sarkozy with regard to the Georgia crisis; also, to 
engage with them in a very hardheaded way about some of the 
regional issues that you just described; and also, to continue 
to look for ways in which we can work together in our mutual 
interests on some of the other issues that we've discussed, 
especially in the nuclear area.
    So, it seems to me there's no good alternative to that kind 
of very tough-minded engagement with the Russians. There's too 
much at stake, not just in our own relationship, but the more--
wider international interests.
    And so, as I said, the Secretary remains very much engaged 
with her Russian counterpart. There haven't been any recent 
conversations, that I'm aware of, between the President and 
President Medvedev. But, we need--we need to work hard at this 
relationship. And the Russians themselves need to look at their 
own self-interest, not only in their relationship with us, but 
in what they have at stake in this crisis and in their behavior 
beyond it.
    Senator Hagel. The President has not spoken with President 
Medvedev since the Russian incursion into Georgia?
    Secretary Burns. I'm not aware of any recent conversation, 
Senator, but Secretary Rice has certainly spoken to Minister 
Lavrov since then.
    Senator Hagel. Thank you.
    Senator Dodd. Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman.
    Under Secretary Burns, President Bush announced, on August 
13, that the U.S. military would lead the U.S. Government's 
humanitarian response in Georgia, but, the next day, Secretary 
Gates appeared to contradict the President, stating that the 
overall response was under the direction of the State 
Department. But then, on August 15, Secretary Rice reaffirmed 
the Department of Defense's lead. In the few weeks that 
followed, reports variously stated that State, Defense, or 
USAID were in charge. And on September 3, President Bush again 
referred to the military as the leading--as leading the 
humanitarian response.
    Mr. Burns, it seems to me there is a real lack of clarity 
as to which agency is leading and coordinating the humanitarian 
response in Georgia. Could you please set the record straight 
and tell us which U.S. agency is responsible for coordinating 
the humanitarian response in Georgia?
    Secretary Burns. Well, sir, I mean, it won't surprise you, 
but the answer is that AID, the Agency for International 
Development, and the Defense Department have worked very 
closely together on this issue. And, you know, each brings 
particular assets to the task. What the U.S. military has done 
is rapidly facilitate the movement of humanitarian supplies, 
which are sorely needed by the Georgian people and the Georgian 
Government. And so, you had U.S. naval vessels bringing in 
humanitarian supplies over recent weeks, which is a natural way 
to take advantage of that asset.
    At the same time, on the same day that General Craddock, of 
SACEUR, visited Georgia, he was accompanied by Henrietta Fore, 
the head of the Agency for International Development, which I 
think helped demonstrate the role that both the civilian and 
the military side can play, and must play in this instance.
    AID has been very active on the ground in working with 
Georgia. We had a large economic team, an interagency team, 
working with our Georgian counterparts to try and assess both 
humanitarian and reconstruction needs. So, it really was an 
interagency effort in which we've all worked together.
    Senator Feingold. So, you're saying there is no lead 
agency.
    Secretary Burns. No, sir. In the--it's a combined effort. 
It really is. And the Defense Department, in the early stages, 
took the lead in moving humanitarian supplies to Georgia, which 
was a natural step to take; they had the means to do it. It's 
the same kind of thing we do in other crisis situations around 
the world. But, over time, what we've seen is the State 
Department taking the lead, under Under Secretary Reuben 
Jeffrey, and trying to work with the Georgians to develop a 
longer term plan for reconstruction. So, there are a number of 
different agencies that have had a role----
    Senator Feingold. Is there a plan in place to transition 
this from the military to State and USAID?
    Secretary Burns. Yes, sir. And that plan, as I said, has 
been very much a part of what Reuben Jeffrey did when he 
visited Georgia and put together a reconstruction plan, which 
is reflected in the assistance package, which we're--you know, 
which we have proposed and want to work with the Congress on.
    Senator Feingold. Well, is the military still undertaking 
humanitarian initiatives? And, if so, will this continue as 
Russians troops draw down and stability, I hope, is restored?
    Secretary Burns. The military's role has been to move 
humanitarian supplies. That's still ongoing. But, I think we're 
beginning to move from a phase of provision of humanitarian 
supplies toward a longer term reconstruction----
    Senator Feingold. Are they doing any other humanitarian 
efforts, the military?
    Secretary Burns. Some on the ground, in terms of 
distribution of supplies, but it's mostly in getting the 
supplies to Georgia, where the Georgian Government, NGOs, and 
others have worked to make sure they get to the people who need 
them, refugees and others.
    Senator Feingold. Situated in a difficult neighborhood, 
Georgia is obviously an important ally for the United States. 
And in the aftermath of the 2003 Rose Revolution, the 
administration has been a vocal supporter of President 
Saakashvili. Some experts, however, suggest that the United 
States support has been too focused on the President himself, 
whose commitment to democracy has been questioned, rather than 
on Georgia's democratic institutions and building the rule of 
law, which does seem fragile.
    Just last week, Assistant Secretary of State Daniel Fried 
testified that, quote, ``Georgian democratic institutions 
remain weak, and much work needs to be done to deepen 
democratic practices.'' Could you give me, sir, an assessment 
of U.S. support for democratization efforts in Georgia and 
whether the promised $1 billion will actually include 
programming for this purpose?
    Secretary Burns. Yes, sir, it will. And, as I mentioned in 
my opening statement, in the second tranche of that assistance, 
we have very much in mind to propose to the Congress and work 
with you to provide new resources in areas like civil society, 
rule of law, independent media, because it is true that Georgia 
needs to make improvements in those areas, to build democratic 
institutions. They've faced problems in the past, including at 
the end of last year, that need to be addressed. And it's very 
much a part of our long-term support for----
    Senator Feingold. What kind of dollars are we talking 
about, in terms of that piece?
    Secretary Burns. Well, in the second tranche of assistance, 
we're talking about a total of $430 million.
    Senator Feingold. In Assistant Secretary Fried's House 
testimony last week, he was asked whether he agreed that 
comments made by Russian Foreign Minister Sergei Lavrov 
regarding the United States having to, quote, ``choose between 
a virtual project or a real partnership,'' could be interpreted 
to mean that cooperation from Russia with regard to Iran and 
nuclear weapons is dependent on abandoning support for Georgia. 
And I know Senator Casey was getting into this a bit. Secretary 
Fried seemingly concurred, when he answered that the choice is, 
quote, ``between cooperation with Russia and support for 
Georgia,'' unquote. And he acknowledged that Russia has been 
more a partner than not in cooperating on efforts to deal with 
Iran's nuclear weapons program.
    Do we have to choose between support for Georgia and 
working with Russia to prevent Iranian nuclear weapons 
programs? And, if so, which is more important to our national 
interests?
    Secretary Burns. No; I don't think we need to choose. I 
think Russian policy on issues like Iran is not driven by 
sentiment, it's driven by their own self-interest. I think the 
Russian regime understands that a nuclear-weaponed Iran is not 
in their interest, either. And I think they see a self-interest 
in working with us, and with others, to try to prevent that 
from happening.
    At the same time--and I think this is true of a lot of 
complicated great-power relationships--we need to continue to 
make very clear our opposition to what the Russians have done 
in Georgia, to Russian behavior there. And, as I said, that's 
going to be characteristic of a relationship that's going to 
combine some areas of competition and political conflict with 
areas in which think we can, in a hardheaded way, cooperate.
    Senator Feingold. Thank you.
    Thank you, Mr. Chairman.
    Senator Dodd. Thank you very much.
    Senator Corker.
    Senator Corker. Thank you, Mr. Chairman. And thank you for 
your service. I think the ranking leader and yourself have 
chronicled well the events in Georgia.
    And I want to welcome the Ambassador. I was in Georgia 3 
weeks ago and had the opportunity to meet with your President, 
Saakashvili, at length, and separate meetings with your Prime 
Minister and Finance Minister, and go to Gori and see the 
bombing--unnecessary bombing of civilian residences, the razing 
of farms. And we thank you for being here.
    I would--I want to ask a very specific question and then 
step back to some of the more broad questions.
    The funding. I sat down at length with the Finance Minister 
and Prime Minister, talking about the type of assistance that 
they needed. And I think all of us understand how their GDP has 
grown rapidly; the standard of living of Georgians has risen as 
a result, and they want to make sure that people continue to 
invest there. They have a 22-percent foreign direct investment 
each year. And so, it's the economic side, I think, that 
they're most concerned about.
    The Prime Minister had a very--he did as good as any 
government-relations person here in Washington, presenting his 
case, and focused on something called the Phoenix Fund, where, 
in essence, they wanted to make sure that--they wanted us to 
know that our money was going for direct infrastructure 
investment, not to their budget, necessarily. I've noticed that 
our aid is crafted differently, differently than what they 
actually ask us to fund. He wanted to put our billion dollars, 
if we were able to give it, into a revolving fund that went for 
specific infrastructure investment, and having those who 
invested in that fund oversee it to ensure that that was what 
was occurring. I've noticed that you've asked for aid that 
would actually go directly to their budget. And I'm just 
curious, I mean, that's not what they asked for. I'm wondering, 
since that will be the most specific thing that we do in the 
near term, why we chose to aid them in this way. And I support 
aid to Georgia, but this is not actually what they asked for.
    Secretary Burns. Well, Senator, we've worked very closely 
with the Georgian Prime Minister and the Georgian Government to 
try to make sure that the assistance that we provide, with your 
support, goes in the areas that are going to serve their needs 
most, and including the Phoenix Fund. And so, to the best of my 
understanding, that's a large part of what we intend to do; in 
other words, to focus on those reconstruction projects which 
are going to be crucial to rebuilding the Georgian economy. So, 
I'd be glad to get back----
    Senator Corker. But, I've noticed $250 million of our aid 
was not going for that, it was going--it looked--it appears to 
me, based on what your testimony and others have been, is that 
it's going, actually, to their budget to help with--they were 
going to use their own resources for that, and we were going to 
ensure that our resources went to infrastructure, per the 
Phoenix Fund. You all are investing in a different way.
    Secretary Burns. Well, let me get you a more detailed 
answer on that, Senator, because I don't want to mislead you. 
But, I think, again, to the best of my knowledge, what we've 
tried to do is work very closely with the Georgian Prime 
Minister, especially, who, as you said, is a very impressive 
man, to make sure that the moneys not only we, but the 
Europeans and others are providing is--has gone in a direction 
which is going to help them recover quickly. So, let me follow 
up on that and----
    Senator Corker. If you could do that, and if you could 
explain how the other funding that's coming in is complementary 
to what we're doing--I know things around here happen quickly. 
The wind blows through and we do things that sometimes aren't 
that well thought out. If you could let us know exactly how all 
that is working together--more specifically, why we're not 
funding them in the way they've actually asked us to, that 
would be good to hear.
    Secretary Burns. Be glad to----


    [The information requested was not available at the time 
this hearing was prepared for printing.]


    Senator Corker. And, again, thanks for your service.
    It's interesting, Senator Hagel's line of questioning. And 
I certainly am very, very supportive of Georgia, and just, 
actually, was stunned by the way they've embraced democratic 
principles and free enterprise, many of which--many of them 
were educated here. On the other hand, you look at--I look at 
us and Mexico and Canada, for instance, I look at our active 
involvement in Georgia and Ukraine and other places. I look 
at--I was just in the Czech Republic not long ago, and our 
missile defense system potentially being partially there and in 
Poland. And, you know, an undercurrent of statements could be 
made that we, in essence, are kind of sticking a stick in the 
eye of the Russians. I think Senator Hagel's line of 
questioning was oriented toward, maybe, a lack of active 
involvement with Russians.
    Just wondering, since you had been there, Ambassador, if 
you might help us a little bit with the psyche, from their 
perspective, as to what our actions have been in that area.
    Secretary Burns. Yes, sir.
    Well, the Russians' leadership certainly hasn't been shy 
over the last year in expressing their concerns and their 
opposition in a number of areas, whether it's been Kosovo's 
independence, the missile defense plans in Poland and the Czech 
Republic, or the whole issue of NATO enlargement, or the next 
steps in NATO enlargement, to include Ukraine and Georgia. 
We've engaged, certainly during my time as ambassador in 
Russia, I think, in a very intensive way, to try to work 
through each of those issues and to accommodate Russian 
concerns, as best we could. But, the honest answer is, Russians 
have been--the Russian leadership has been deeply disturbed by 
a number of those steps, and that does create, notwithstanding 
our best efforts, the backdrop against which they shape some of 
their choices.
    I think what it underscores for me is not that we 
necessarily need to accept their concerns, or indulge them; we 
need to understand them. And we----
    Senator Corker. Are we making--just from what it's worth, 
it doesn't appear that we're making much of an effort, if you 
will, quote, ``to understand them.''
    Secretary Burns. Well--I mean, I think--I mean, I can only 
speak to my own experience--certainly made a lot of effort to 
try and understand, at least, the kind of concerns that are 
developing, you know, in a society which, as I said before, has 
gone through a very rough period, especially in the 1990s, 
which, you know, are often seen outside Russia as a period of 
democratic rebirth, but we're--for a lot of Russians, it was a 
very tough period. Economic uncertainty, disorder of--you know, 
for many Russians, a sense of lost dignity and national 
humiliation. Now, as I said, you don't have to agree with that 
assessment. That's--but that's very much how a lot of Russians, 
anyway, have seen their predicament in the 1990s. And what you 
see today is a Russia, in some ways, floating on high energy 
prices, that finds a fair amount of satisfaction in asserting 
itself.
    I think, given all the interests that we have at stake in 
our relationship with Russia, it is very important, in a tough-
minded way, to stay engaged with them, to look for structures, 
whether it's the ``2-plus-2'' structure that we revived last 
year, economic structures that we've talked about in the past, 
where we're engaging with Russia on these issues, making very 
clear what our concerns are, but trying to see if we can't find 
common ground. We haven't found that in the Georgia crisis, and 
that's been a very disturbing episode. But, I don't think it 
means that we shouldn't make the effort to engage with Russia 
on these issues. And we have to hope that the Russian 
leadership is going to be prepared to make the same kind of 
effort, and show, through its behavior in meeting its 
commitments following the Georgia crisis, that it's also 
committed to that kind of a more constructive relationship. I 
think it's very, very important for both of us to make the 
effort.
    Senator Corker. Mr. Chairman, since you're not a gavel-
banger, and I didn't give an opening statement, I'd like to ask 
one more question.
    Senator Dodd. Go right ahead.
    Senator Corker. What kind of advice are you giving to 
Georgia as it relates to South Ossetia and Abkhazia? I mean, 
that's not going to go back in the box. OK? These areas, in the 
foreseeable future, are not going to be governed by the country 
of Georgia. It's just not going to occur, it doesn't appear to 
me. I don't think any rational person thinks that's going to 
occur. They want to join NATO. Part of the NATO requirements 
are, there are no boundary disputes within country. Pretty 
complex problem. What are you--what are you coaching them to 
do, and what are they talking about doing, to resolve that 
issue? Because it's not going to return in any normal fashion 
anytime soon.
    Secretary Burns. Well, Senator, I--the United States, like 
our European partners, is certainly going to continue to 
support Georgia's territorial integrity. The Russians committed 
themselves, in both the August 12 and September 8 agreements 
with the French, with President Sarkozy and the European Union, 
to an international discussion, an international process to try 
to sort through the security, stability, the future of those 
two breakaway regions. And that's something that we're going to 
continue to push the Russians to adhere to.
    In the meantime, I think it's very important to everybody 
to understand that there's no way in which you're going to 
solve that problem, pursue that international process, by using 
force. The Georgians have made a commitment to non-use of force 
now, in terms of trying to deal with that issue. And the 
immediate challenge for Georgia, which we're fully committed 
to, is trying to rebuild its economy, to strengthen its 
sovereign, so that Georgia itself is, as it was becoming over 
the last few years, a very attractive place, a place whose 
economy is growing, that's attracting foreign direct 
investment, that's beginning, notwithstanding political 
difficulties at home and the weakness of democratic 
institutions, to apply the rule of law. And I think that's--
that, it seems to me, is the best course for Georgia, with a 
lot of support from the rest of us.
    And, again, to do everything we can to try to support that 
kind of an international process, which is called for in both 
the six-point agreement that was reached on August 12 and 
reinforced on September 8. Much easier said than done, I 
understand that, but that's the position I think we're going to 
continue to push.
    Senator Corker. Thank you.
    Senator Dodd. Thank you very much, Senator.
    Senator Nelson--Senator Webb.
    Senator Webb. Thank you, Mr. Chairman.
    And I appreciate, Senator Nelson, very much letting me go 
first. I have an 11:30 commitment that I can't move, so I'm 
going to talk fast.
    First of all, Mr. Secretary, I can't think of anyone in 
government that I'd rather be listening to on this subject than 
you. I appreciate you being here.
    Nine days ago, when the Armed Services Committee received 
testimony, I asked a question about a reprogramming that was 
taking place in the Department of Defense. I believe it was $30 
million from existing DOD operation and maintenance funds that 
was going to go to the Georgia situation. And I would 
appreciate it if you would remind them of my request on that. 
This is, you know, a time-sensitive area, because of the other 
commitments that the military has around the world.
    Secretary Burns. Yes, sir, I will.
    Senator Webb. The question that I had, really, is from the 
other perspective. When we look at Europe, and that is NATO, we 
spend a good bit of time discussing the situation with respect 
to Russia, and Russia's intentions, and these sorts of things. 
And having spent a good bit of my life either writing about 
military alliances in our country, specifically NATO, and 
having spent 3 years when I was Assistant Secretary of Defense, 
before I became Secretary of the Navy, working extensively with 
NATO, one of the concerns that I have is, in this NATO 
enlargement process that followed the demise of the Soviet 
Union, we are at risk of changing the formula itself from 
something that was clearly an alliance to an area that in some 
cases could be called a system of protectorates, if you were 
looking at what we're doing in historic terms. And NATO itself, 
not to simplify, seems to be breaking into three different 
groups. We have the old NATO countries, many of which are 
renewing historic relationships in Central and Eastern Europe. 
Germany is a good example of that. We tend to look at the 
balance of trade with China, but Germany, right now, has the 
highest balance of trade in the world. I think it's $280 
billion last year. So, they're moving in a historic direction, 
to international comity--the business side, particularly.
    We have the new countries, which are very dependent, in 
security terms. And then, we have the United States, that is 
becoming the overarching security guarantor. And if you look at 
that with respect to the Georgia situation, one can only ask 
what the implications would have been if Georgia were part of 
the NATO Alliance right now. We've talked about the obligations 
under article 5, but we also have a system of government that I 
don't think we can call a mature political system right now. In 
your own testimony, you talked about some initiatives that we 
would have, in terms of helping them improve that. We have the 
question of how the United States really should be dealing with 
the situation of a clearly resurgent Russia.
    What part of that should be made through these military 
guarantees? That's the point that we really need to understand, 
as a government and as a country, that when someone comes into 
NATO, we are giving a formal obligation to defend these 
countries. And then, the third piece of that is Russia itself. 
How does Russia view this? There were two questions with 
respect to that, before myself. And in what way do we really 
respond, as Russia does have this resurgence and figures out 
where the boundaries of that really are?
    And, I thought, in a part of your testimony that related to 
the economic price that Russia has already paid, is a good 
indicator of other levers that are available than simply 
military guarantees. So, that's really the conundrum, at this 
point. What I'm trying to examine, further admissions into 
NATO, and how that will impact the way we deal, not only with 
Russia, but with our military obligations.
    Secretary Burns. Senator, very good and very difficult 
questions.
    With regard to NATO's expansion and the transition that 
NATO is going through right now, I absolutely agree with you. 
Article 5 commitments, formal membership is not something to be 
taken lightly by any of us; and certainly in this 
administration, I'm sure in the next one, people don't take 
that lightly, and that's why there's such a protracted, 
methodical process that exists, because we're not talking, 
today, about membership, or immediate membership for Ukraine or 
for Georgia. What the United States has been talking about and 
supporting, as Senator Lugar said, is simply the next stage, 
the Membership Action Plan, which is designed to help countries 
who are interested in membership get ready for it, to see if 
they can meet the criteria for it. And you mentioned a number 
of the criteria that apply. And as, I think, NATO considers 
those very complicated decisions, and very consequential ones, 
too, in terms of the article 5 commitments that might one day 
come along with them, it's very important to stay engaged with 
the Russians, as well, because, you know, their influence, 
their behavior, is going to shape European security and 
stability in some very important ways in the future.
    As I said before, that doesn't mean we have to indulge all 
of the concerns the Russians raise, but we do need to engage 
them in a serious way. We have a Russia-NATO Council, right 
now, which is the mechanism for doing that.
    Senator Webb. I would suggest, also, that this--it does not 
necessitate our lack of support for another country if we say 
that that country may not be ready for a formal obligation from 
the United States through NATO. That's really the question 
here. We continually hear the words ``sphere of influence'' 
when the administration comes over and testifies, but an 
enlarged NATO, particularly if there's not true alliance in 
these countries, in terms of their ability to increase our own 
security, is, in effect, a sphere of influence, as well, 
wouldn't you say?
    Secretary Burns. Well, certainly the Russians perceive--I 
mean, they've expressed a lot of anxiety, over the years, about 
NATO's expansion, and particularly with regard to the question 
of Ukraine, which is, I think, in many ways, the brightest red 
line of all for many in the Russian political elite.
    Having said that, I also agree with you that there are a 
number of different ways in which you can support the 
stability, the security, the well-being of countries which 
deserve that support. That's why Ukraine recently had a summit 
meeting with EU leaders to talk about the possibility of 
membership in EU and ways in which you can tighten that 
relationship.
    So, I absolutely agree with you, there are a lot of 
different ways, working bilaterally, working with the 
Europeans, looking at other European institutions, in which we 
can both strengthen those ties and strengthen those countries.
    Senator Webb. Thank you.
    And I appreciate Senator Nelson's patience.
    Senator Dodd. Thank you very much, Senator. Good questions.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    And thank you, Secretary. So appreciate your comments, your 
insight.
    Senator Hagel was asking some interesting questions about 
possible new areas of engagement: Are there other areas where 
we can work collaboratively or more cooperatively with Russia? 
And I would just throw out to you what I believe is an 
opportunity for us, as an Arctic nation. We don't have a 
tendency to think of the United States as an Arctic nation, but 
you certainly know and recognize that. The administration is 
working on the rollout of a new Arctic policy that we are 
looking forward to reviewing. But, we also recognize that, up 
in the Arctic right now, there is so much that is new. 
Boundaries are ill-defined. We all know who our Arctic 
neighbors are, but, in terms of opportunities that present 
themselves, whether it's energy and resource exploration or 
working collaboratively and cooperatively on maritime issues, 
issues of commerce, environmental issues, we really don't have 
any baggage with our neighbors yet on this.
    Now, there was a statement, just this morning, from Mr. 
Medvedev, who--you know, he's looking at the Arctic, and 
certainly we've seen some actions from them in the past that 
indicate that they want to secure their interests in the Arctic 
and recognize that strategic significance.
    I do think that this is one area where we might be able to 
cement some more cooperative relationships, if we're proactive 
now. I can't miss this opportunity to remind people, that as we 
all learned from ``Saturday Night Live,'' we, in Alaska, can 
view Russia from our house. So, we've got an interest here. 
We've got an opportunity to make something of this. We are an 
Arctic nation. And Russia is our Arctic neighbor up there. So, 
I throw that out to you for consideration.
    I did want to ask just a very quick question about energy 
interests up there. I understand that, in some of the reports, 
Russia's aerial bombings in Georgia were specifically directed 
at the oil and gas pipelines that bypass Russia. Is that 
accurate? And can you verify the extent of the damage that was 
sustained by any of those pipelines?
    Secretary Burns. Yes, ma'am. First, let me say I agree with 
you on the Arctic. I think we do have some common interests, 
not just with the Russians, but with a number of other Arctic 
countries, and I think that's an area where we need, as you 
well know, to continue to work together on.
    Second, with regard to pipelines in Georgia, I'm not aware 
of any concrete evidence of targeting of those pipelines or of 
actual damage done to the two main pipelines that pass through 
Georgia. It's certainly of enormous concern for all of us, 
because of the significance, as the Chairman mentioned earlier, 
of the transit routes that go through Georgia. But, I'm not 
aware of any specific damage done to those pipelines----
    Senator Murkowski. OK.
    Ambassador Burns [continuing]. During the crisis.
    Senator Murkowski. Did we miss any signals here? And I know 
it's probably easy to be, kind of, the Monday-morning 
quarterback, or what have you. But, looking back, were there 
any warning signs that we missed that would have indicated that 
Russia was willing to take military action as a message to 
Western nations? Did we miss something here?
    Secretary Burns. I honestly don't think so. I mean, the 
situation--this is a situation, a crisis and a set of tensions 
that's been building for some time. I think we--we, the 
Europeans, and others, could see those tensions building. As I 
said, there were mistakes and miscalculations on all sides. We 
worked very hard, both with the Russians and with the Georgian 
Government, to urge restraint and to urge that the problems of 
Abkhazia and South Ossetia be resolved politically and 
diplomatically. The German Foreign Minister had made a very 
serious effort, in the 6 or 8 weeks before the crisis, to try 
to revive some of the diplomatic mechanisms. The Russians as--
in one instance, as Senator Lugar mentioned, unfortunately had 
refused to take part in a meeting that the Germans had 
organized.
    So, I think the warning signs were clear, and we all worked 
very hard to try to restrain the parties and to try to point 
them back in the direction of a diplomatic resolution. And it's 
deeply unfortunate that the crisis erupted in the way that it 
did. And it's deeply unfortunate, in particular, that the 
Russian Government behaved in the way that it did.
    And our focus now, working with the Europeans, is not just 
on rebuilding Georgia, but it's trying to get the Russians to 
live up to the commitments that they've made in the August 12 
and September 8 agreements.
    So, I think you could see the tensions and the dangers 
building, not just over the week before the crisis, but really 
over recent months and over the past year. And we tried very 
hard to avoid what we saw take place.
    Senator Murkowski. How important is it at all--there have 
been statements made--the Deputy Assistant Secretary Matthew 
Bryza was quoted as saying, ``Whoever shot whom first is now no 
longer an issue at all.'' There was a short article in the Post 
this morning about cell phone records, trying to pinpoint, you 
know, who started it. How important is it to determine that? 
And, I guess, a bigger question is, to what degree does the 
United States place any of the responsibility of the conflict 
on the Georgian leadership?
    Secretary Burns. Well, I think that, you know, the picture 
about what exactly happened in the 24-48 hours before full-
scale conflict broke out is still not a very clear one, and it 
may never be entirely clear. And, you know, we'll continue to 
sift through the evidence that our Georgian friends have shared 
with us, that we've seen from others, as well.
    And, I think, the other important thing to keep in mind, as 
I mentioned before, is that you can't really just look at the 2 
or 3 days before the crisis, you have to look at the backdrop 
of provocations and tensions which were building, steps that 
the Russian Government took in April, for example, to expand 
government-to-government relations with local governments in 
South Ossetia and Abkhazia, which were a direct infringement on 
Georgia's sovereignty. So, there's a whole catalog of problems 
that were building.
    Of course it's important to try and sort through exactly 
what happened, and I think that's a process that's going to 
continue.
    As I said before, to answer your last question, the truth 
is that there were mistakes and miscalculations on all sides. 
Despite our warnings, the Georgian Government decided to use 
force to reassert its sovereignty in South Ossetia. And we 
believe that was ill-advised. But, that in no way is a 
justification for what was an obviously disproportionate 
Russian response, which took Russian forces 200 kilometers into 
Georgia from where the conflict and crisis was occurring in 
South Ossetia. There's no justification, no excuse for that. 
And, to this day, Russia remains--Russian behavior remains 
inconsistent and in violation of some of the commitments that 
they had made to President Sarkozy.
    Senator Murkowski. Thank you. I appreciate it.
    Thank you.
    Senator Dodd. Thank you very much, Senator.
    Let me, if I may--and--excuse me, Senator Nelson. I 
apologize.
    Senator Bill Nelson. In August, the U.S. and Poland signed 
an agreement with the Polish Government--it has not been 
ratified by the Parliament--to place 10 U.S. interceptor 
missiles, a two-stage version of the three-stage version of the 
national missile defense system--in Poland with the radar in 
the Czech Republic. My question is, the rapidity with which 
that was approved by the Polish executive branch, how much was 
that tied to the fact of a resurgent and aggressive Russia in 
the minds of the Poles?
    Secretary Burns. Senator, I think it clearly affected the 
conclusions that the Polish Government drew. Now, it does come 
against the backdrop of a long, drawn-out negotiation over this 
issue, so much of the ground had been covered on the particular 
agreement about missile defense and the 10 interceptors. But, I 
think it's clear that the Georgia crisis did have an impact on 
the that calculation, in the end.
    Senator Bill Nelson. Now, given the fact that the placement 
of those missiles--still to be developed, because the two-stage 
version has not been developed--given the fact that they are 
there for the avowed purpose of--as a deterrent to a nuclear 
missile coming from Iran, having to do, nothing, with regard to 
the nuclear arsenal of Russia, why then was this fostered in 
such a fast track by the Poles, vis-a-vis Russia, when it has 
nothing to do with any deterrence on Russia?
    Secretary Burns. I can't speak for the Polish Government on 
exactly how their--you know, their calculus unfolded during 
that period. As I said, there had been a long negotiation 
between the two of us over this issue that had made a fair 
amount of progress up until that point, and there were only a 
few issues that remained to be sorted through. So, as I said, 
it does seem to me that the unfolding Georgia crisis did have 
``an impact''--I can't tell you how big an impact--on Polish 
calculations, but----
    Senator Bill Nelson. Could it have been because Russia had 
objected, in the first place, to a national missile defense 
system in Eastern Europe, that the Poles saw this as an 
opportunity to say, ``This is a red line for us. We're going to 
show our independence from you, Mr. Russia''?
    Secretary Burns. It could be, Senator. I honestly don't 
know. But, you know, certainly the Russians have made no secret 
of their concern about that particular program in Poland, as 
well as in the Czech Republic.
    Senator Bill Nelson. Well, Mr. Secretary, you're the best 
and you're the brightest. How has the announcement by the 
Polish executive branch affected the relationship between the 
United States and Russia, since clearly Russia has said they 
don't want this system in Eastern Europe?
    Secretary Burns. Well, sir, the Russian leadership has 
contained its enthusiasm----
    [Laughter.]
    Ambassador Burns [continuing]. For that program over the 
years, and particularly for that step. The Russian public 
statements have been quite outspoken and quite hostile about 
that step that we would take in the agreement with Poland, 
notwithstanding our best efforts to make clear that it 
represents no threat to Russia and that it's directed against a 
potential Iranian missile threat. But, no, they've been 
absolutely clear and unsubtle in expressing their concerns 
about this.
    Senator Bill Nelson. As to the possible admission of 
Georgia into NATO, what is the position of Germany and France?
    Secretary Burns. Well, sir, I'd say two or three things.
    First, all of us in the NATO Alliance agreed, at the 
Bucharest Summit, that not only should the road remain open for 
new members, including Georgia and Ukraine, but it was a pretty 
strong statement that, somewhere down the road, those countries 
are going to become members of NATO.
    On the immediate question of a Membership Action Plan for 
Ukraine and Georgia, which we supported--the United States 
supported at the Bucharest Summit, and continues to support--
there are reservations on the part of some other governments. 
And they can speak to them better than I can. But, certainly, 
Germany and France made clear at the Bucharest Summit that they 
were concerned about whether Georgia and Ukraine were ready to 
take that step.
    I don't think that the--as I understand them, that the 
concerns expressed by Germany and France were a function so 
much of their concern about Russian reaction as they were a 
function of their genuine uncertainty about whether Ukraine and 
Georgia were ready to take that step yet. And that's an issue 
that we're going to continue to work through with our partners 
in NATO. And I can't predict exactly, you know, what's going to 
happen on that issue as we move toward the December foreign 
ministerial meeting of NATO.
    Senator Bill Nelson. In the NATO Alliance, is it not true 
that, for any additional member, it has to have the unanimous 
consent of all NATO parties?
    Secretary Burns. Yes, sir; I believe that's the case.
    Senator Bill Nelson. Therefore, if Germany and France 
object, Georgia doesn't come in.
    Secretary Burns. Well, certainly with regard--again, we're 
not talking about membership, at this stage. I think none of us 
believe that Georgia or Ukraine are ready, today, for 
membership. And what we've been discussing, a MAP program, is 
not an invitation, it's not a promise, even, of membership. 
But, you're absolutely right, that if there are differences 
within the Alliance over that issue, then it's going to take 
some more time to sort through it.
    Senator Bill Nelson. Well, I've heard a little more 
strongly that Germany and France are objecting to this.
    How do you work through the mental manipulations that we 
can bring in Kosovo, but--and over the objections of Russia--
but Georgia can come over the objections of Russia? Tell me how 
you work through that parallel situation.
    Secretary Burns. Senator, do you mean in terms of Kosovo 
and South Ossetia and Abkhazia or----
    Senator Bill Nelson. Independence. I'm sorry.
    Secretary Burns. Independence.
    Senator Bill Nelson. Independence.
    Secretary Burns. Yes. Yes. Well, I guess, in Kosovo, you 
had what we regard to be a unique set of circumstances, a set 
of circumstances in which, for a period of almost a decade, you 
had the U.N. administering a particular area of Kosovo, you had 
an international security force which was responsible for 
maintaining order there, you had a very carefully worked-
through system of protection of minority rights in Kosovo, 
again, which was overseen by an international authority, you 
had a long period of diplomatic effort, led by Mr. Ahtisaari, 
you know, who had been appointed by the U.N. Secretary General, 
to try and sort through a workable diplomatic outcome for 
Kosovo's future. And then you had a period in which the so-
called troika--the United States, European Union, and Russia--
worked very hard, after Mr. Ahtisaari had come up with his 
plan, to try and produce an outcome. And, against that 
backdrop, the judgment that we and our European partners made 
was that stability in Europe was, in fact, undercut by 
continued stagnation or stalemate on this issue. Russians made 
very clear their opposition to that conclusion.
    I think if you look at the situations in South Ossetia and 
Abkhazia, those three or four ingredients that I mentioned 
don't apply. You didn't have that long period of U.N. or 
international administration, you didn't have an international 
security force which was keeping order, you didn't have that 
long period of internationally led, U.N.-led negotiation, you 
don't have a system in place to protect minority rights and try 
to allow for the return of refugees. And so, for all those 
reasons, I think the situations are a little different.
    Senator Bill Nelson. Thank you, Mr. Chairman.
    Senator Dodd. Thank you very much, Mr. Ambassador.
    Let me, if I can--just ask a couple of questions here 
before I turn to Senator Lugar for any followup he may have.
    Obviously, and as you've stated it well here, and as I 
think it's been generally acknowledged here, the Russian 
reaction was excessive. But, you indicated in your statements, 
too, the question of whether or not this matter could have been 
avoided. Now, with 20-20 hindsight, to what extent do you 
believe that any actions taken by President Saakashvili could 
have been more moderated in a way that might have avoided the 
situation that occurred, or was that--was it unavoidable, in 
your view, that this was going to happen, no matter what 
occurred? To what extent have we examined that side of the 
equation in examining this question?
    Secretary Burns. Well, Senator, I think we've tried to 
examine it very carefully. And I don't have a perfect answer 
for what is a very good question. I think that, you know, 
everyone, in different ways, contributed, through mistakes and 
miscalculations, to this crisis. I don't think it was 
inevitable that it unfolded exactly in the way that it did, 
when it did. But, certainly the tensions have been building for 
a long time. And the Russians were preparing for a scenario, at 
least, in which force could be used in the way in which it was 
used. I can't honestly tell you that, had events not unfolded 
exactly in the way in which they did at the beginning of 
August, that we would have seen this crisis right now. But, you 
know, I think there were a set of tensions there which have 
been building, which we tried very hard to avoid by reviving 
diplomatic mechanisms, and were, in the end, unsuccessful at 
doing that.
    Senator Dodd. But, it's important, it seems to me, to 
analyze this question so we know, to a large extent, what 
occurred here--to make a judgment about this situation, but 
also, given the possibilities that we've talked about here this 
morning, that this issue goes far beyond the geography of 
Georgia and Russia; this is one that now has had huge 
implications for us, for our allies, and for NATO. All of these 
issues have been highlighted by the set of facts, beginning on 
August 7.
    I want to come back to the issue raised, maybe by Senator 
Webb or Senator Casey, about military assistance. I think 
Senator Webb may have raised it in the Armed Services 
Committee. I was reading a story--and I'm just quoting from the 
story itself, so I have no independent information to confirm 
all of this, but there were some issues raised by Robert 
Hamilton, who's a defense analyst and a regional expert at the 
Center for Strategic International Studies, and he allegedly 
said that the military assistance we're talking about here 
would leave Georgia's Armed Forces with the job of protecting 
the territory under its control--I'm quoting the story now--``a 
mission that they are certainly capable of fulfilling if the 
U.S. assists. Still, Russia is highly unlikely to accept 
assurance of a purely defensive United States and Georgia 
intent, so any American military aid could heighten tensions.'' 
Could you respond to that?
    Secretary Burns. Yes, sir, Mr. Chairman. It's obviously an 
issue that we have to weigh very carefully. President Bush has 
made clear our willingness to look at ways in which we can help 
the Georgians maintain their security, rebuild their security. 
That's something that we want to do in conjunction with our 
NATO partners, as well. And, as I mentioned, we've formed this 
new NATO-Georgia Commission. It's something that has to be 
approached carefully and methodically. The first stage is, 
obviously, to assess what the needs are, and that's what we're 
engaged in right now. And all I can assure you, at this point, 
is that, you know, as we assess those needs, and as we look, 
potentially, at what decisions might be made, we're going to do 
that very, very carefully.
    Senator Dodd. Well, we do that----
    Secretary Burns. We do----
    Senator Dodd [continuing]. In conjunction, it seems to me, 
with our NATO allies, who, it seems to me, have a direct vested 
interest in those decisions. If you're looking down the road 
though to NATO membership, it raises important questions. I 
asked Senator Lugar, a minute ago, ``Is there any nation that's 
ever been made a part of the MAP program that was ultimately 
denied admission to NATO?'' And I gather there's never been a 
case of that. So that, once you move in this direction, it 
seems to be, at least historically, there's a certain 
inevitability to where that leads, however long it takes. So 
while I'm not arguing with it, these kinds of decisions, it 
seems to me, are very important, at this juncture. There needs 
to be a lot of cooperation and a lot of consultation, rather 
than unilateral decision as to what those needs may be, if, in 
fact, we're going to be seeking additional cooperation.
    Senator Nelson pointed out that there may be some greater 
hesitancy on the part of principal NATO allies about an 
admission of Georgia to NATO, and it seems to me that if we go 
off unilaterally in this area, without the kind of deliberation 
and consultation, that, in fact, we may do some serious damage 
to the outcome of that decision.
    Secretary Burns. Mr. Chairman, it's a very fair point, and 
it's, in large part, the purpose of this NATO-Georgia 
Commission that's been created. We have the NATO Secretary 
General and all the permanent representatives of NATO in Tblisi 
over the last couple of days, so this is very much an effort in 
which we want to stay in the closest possible consultation, for 
all the reasons you mentioned, with our NATO partners.
    Senator Dodd. Very good.
    I see Senator Cardin has joined us. Ben, I'll yield back my 
little time and then turn to Senator Lugar.
    Senator Cardin. Well, thank you, Chairman--Mr. Chairman. I 
thank--Senator Dodd. I apologize for not being here for--
throughout the hearing. We had two other hearings today. But, 
this is a subject of great interest. The Helsinki Commission, 
which I chair on behalf of the Senate, has held hearings on 
this same subject.
    And I would just like to ask you one question, if I might, 
and that is--Russia is charting a new course. They're openly 
using their military outside their own territories, they've 
recognized a region which one would think could be a problem 
for themselves because of the Russian Federation itself and 
desire for independence in certain regions. My question is, 
Who's making the decisions in Russia today? I think most of us 
felt that Mr. Putin would remain as the major policymaker in 
the country, but perhaps President Medvedev has more influence 
than we originally thought. Can you help us in trying to sort 
out how the decisions are being made in Russia? We obviously 
need to have a way to impact decisions in that country to 
create a better relationship. It doesn't mean we agree with 
what they did. We don't. But, it's important for us to have an 
effective relationship with Russia. And can you just help us in 
trying to sort out, politically, what is happening in that 
country and whether it's a shared power between two, or whether 
Mr. Putin's still in control, or whether there are other 
forces, that perhaps haven't had the same type of visibility, 
that are impacting the decisions within Russia?
    Secretary Burns. Well, Senator, that's a really good 
question, and I'll just make two or three comments in response.
    And the first one is that, honestly, one thing I learned in 
3 years as Ambassador in Moscow is humility, because it's--it's 
a complicated political system and political leadership to try 
and understand.
    Second, I think President Medvedev, as any Russian 
President, has considerable amount of authority, particularly 
over national security and foreign policy matters. At the same 
time, it's obvious that Prime Minister Putin retains a great 
deal of influence. And so, you do have a circumstance of shared 
power, I think, in a lot of respects.
    There is, across the Russian political elite, including 
within the Kremlin and in the government, I think, a pretty 
strong consensus on some of the issues that we've talked about 
today, whether we like it or not, with regard to the 
reassertion of Russian national interests and a willingness to 
be pretty aggressive in asserting those interests. There's 
debate about tactics sometimes.
    I think it's going to also be interesting to see what kind 
of debate develops as the consequences, particularly the 
economic consequences, of the Georgia crisis become clear.
    Now, the fall in the Russian stock market is not entirely 
due to the Georgia crisis. It predated it, to some extent. But, 
the Georgia crisis has certainly aggravated that. And so, I 
think, over time--I certainly hope--that that will cause at 
least some rethinking about the approach and the policies that 
the Russian Government embarks upon. Because the issue is not 
whether Russia is a great power or whether Russia is 
influencing its neighborhood. It obviously is, and it does. The 
question is how it exercises that power and influence, whether 
it pays attention to the rules that govern the behavior of 
other states in the international system today. And so, you 
know, I think, over time, as those consequences become clear, 
you may see some debate over tactics and over the kinds of 
behavior that we've seen recently. But, at this point, it's a 
popular leadership throughout much of Russia----
    Senator Cardin. Let me try to pin you down on your best 
estimate, or best intelligence, as to how the decision to use 
their military within Georgia, beyond just the disputed areas, 
but to go into Georgia itself--Mr. Putin, if I am correct, I 
believe, was at the Olympics when that decision was made. He 
then went back to Russia. But, do you believe that was a 
decision that had been thought out for some time, involving 
both the President and Prime Minister, or was this a decision 
made on the ground by the president, or how did that come 
about?
    Secretary Burns. I don't honestly know, Senator. I'm sure 
there are contingency plans in place for Russians, as there are 
for the United States or any other country, but exactly how 
that decisionmaking unfolded over that period of time in early 
August, I don't know. The President of Russia is empowered, 
under the Russian constitution, ultimately with making those 
decisions. And so, I assume that it was President Medvedev, 
ultimately, who made them. But, clearly Prime Minister Putin 
and others in the leadership had significant input into that.
    Senator Cardin. And if you were--as you are advising our 
government, we need to invest in both the Prime Minister and 
the President? You believe it's truly shared, or is the Prime 
Minister the principal architect of what's going on?
    Secretary Burns. Sure, no, I think it's important for us to 
stay engaged, as we do with lots of countries around the world, 
with the President, as well as with the Prime Minister, who 
has--whomever it is in Russia who has responsibilities for 
economic, domestic, social issues, where we have a lot at 
stake, too, in terms of our economic engagement.
    Senator Cardin. Do you see any friction developing within 
Russia itself? Is there any disagreements, or this is a pretty 
unified team?
    Secretary Burns. Oh, I think it--Senator, I think it 
depends on the issue. On some of, you know, the behavior that 
we've seen over the Georgia crisis, my sense, anyway, is that 
it's a fairly unified group at the top. But, I think, on other 
issues there's a debate that goes on over economic policy, over 
some other aspects of foreign policy. It's not always obvious 
to us on the outside, but my sense is that there's a debate 
that sometimes goes on about tactics. On this set of issues, my 
impression is that there was a fair amount of consensus in the 
Russian leadership.
    Senator Cardin. Thank you, Mr. Chairman. I appreciate it.
    Senator Dodd. Thank you very much, Senator.
    Senator Voinovich.
    Senator Voinovich. Thank you very much. I apologize. Two 
markups at the same time as this hearing.
    And I'm so happy that you're where you are right now. 
Because of the Presidential election, I think there are some 
folks out there that see us in kind of a state of flux, and I 
think that having you where you're at sends a good signal out 
to the rest of the world, we've got somebody that knows what 
they're doing there, at the highest level of our government and 
the State Department.
    First of all, I'd like to say that I'm pleased that Sarkozy 
has taken some leadership role. And it looks like the club is 
working together. I always think that, when you're dealing with 
Russia or China, that the best way to do it is there are dues 
that you play--pay in the club. If you behave certain ways, you 
belong to the club, and if you don't behave that way, then 
you're no longer in the club. And I think they want to be part 
of the club, and the issue is, you know, how far off are they 
going to go?
    The second issue is the issue of energy. And I recently met 
with the ambassadors from the Balts, and I was surprised, 100 
percent of their natural gas coming from Russia, half of it, 
half their oil. And they're vulnerable, in terms of--if Russia 
decides to use that as some kind of a weapon. And I'd 
interested to know, you know, has anybody sat back and looked 
at some of the initiatives that we could take to work with 
others to try and come up with some alternatives so that 
they're less vulnerable, just as, quite frankly, we're 
vulnerable when somebody else controls the supply and the cost 
of what you do? And in our particular case, some of the people 
that we're giving oil money to are now buying the debt of the 
United States. So, you've got somebody controlling the price, 
the supply, and they buy your debt, you've got some significant 
problems. So, I'd be interested in--is there some thought in 
that area?
    And the other area that I'm concerned about is the whole 
NATO issue. And I've been one that's really pushed expansion of 
NATO and studied history, and once those countries got their 
independence, I said the one thing I want to do is--let's get 
them into NATO, because that'll be--they'll be more secure that 
way. And I just shudder to think about the Balts, for example, 
where you've got large Russian populations, so if they weren't 
in NATO today, I'm not sure that--who knows what would be going 
on there. But, we've got a big meeting coming up in December, 
and the real issue--and I--again, is--What position are we 
going to take in regard to expansion of NATO? The Ukraine is 
really interested in being invited. And where do we stand in 
that regard?
    Secretary Burns. Thank you very much, Senator.
    To start with the NATO question first, I mean, the United 
States position, in the runup to the Bucharest Summit and 
today, remains supportive of extending the next step in the--
what can be a drawnout membership process for Ukraine and 
Georgia--the Membership Action Plan, which is the stage, as you 
well know, where you--a country gets ready for the possibility 
of membership--that we continue to support that.
    Now, exactly what's going to transpire at the December 
ministerial meeting, or--is hard to predict, at this point, 
because, as you well know, there are some other key partners in 
NATO who have their reservations about whether Ukraine or 
Georgia are ready for that step next. And so, I can't predict 
for you exactly the tactics, let alone the outcome, of that.
    But, it's a question that deserves to be weighed very, very 
carefully, for all the reasons that you mentioned.
    Senator Voinovich. Have--one of the other Senators raised 
the issue of article 5. Has there been--is there a definition 
of when that occurs?
    Secretary Burns. Well, with actual membership----
    Senator Voinovich. Yeah.
    Ambassador Burns [continuing]. In NATO, as opposed to a 
Membership Action Plan----
    Senator Voinovich. No; what I'm saying is, is that--someone 
asked the question, ``If Georgia had been in NATO, and what 
occurred, would that have triggered article 5 of the NATO''--in 
other words, would have gotten us all involved in saying, 
``You've got to get out of there.''
    Secretary Burns. Well, it certainly, it seems to me, would 
have. I mean, if Georgia had been a member of NATO, the--
article 5 applies to all members of NATO. But, again, it's 
another of the reasons why this process is a very careful, 
thorough one, why there are criteria that--and one of the 
criteria, as you well know, Senator, is to have good relations 
with your neighbors as you move ahead in that direction. So, 
it's something that we support, but which is going to be the 
subject, I'm sure, of some pretty serious discussion within the 
Alliance in the runup to the December meeting.
    Senator Voinovich. Do you think that what's happened makes 
it more likely or less likely that it'll occur?
    Secretary Burns. It's hard to predict, but, I think, for 
some partners in NATO, it probably isn't going to ease the 
concerns that they had before. But, it's hard to predict, at 
this stage, and I think a lot's going to depend on how this 
crisis unfolds, whether or not we see Russian compliance with 
its commitments, the commitments it made in August and again in 
September.
    On the energy issue that you raised, Senator, I think it's 
a critically important issue, as I mentioned in my opening 
statement. I think there are a number of things that we and our 
partners can do to help strengthen energy security and reduce 
an over-reliance or a singular reliance on Russian gas and oil 
imports. They involve everything from improving energy 
efficiency, which you've actually seen in Ukraine over the last 
couple of years, after the extremely unfortunate temporary 
disruption of gas from Russia, two winters ago. One of the 
byproducts of that has been a greater effort at energy 
efficiency in Ukraine, which can pay big dividends in parts of 
the former Soviet Union and in Eastern Europe. Looking for 
renewable energy sources is also important. And then, 
obviously, looking at ways in which you can diversify supplies 
and transit routes so that you're making better use of the 
enormous energy supplies in Central Asia, as well as in the 
Caucasus itself. And so, I think we need to redouble our 
efforts in all of those areas.
    Russia is going to continue to be a big energy player, 
globally as well as in its own neighborhood in Europe and 
Eurasia. But, all of our interests are served best--and the 
Russians themselves subscribed to this at the St. Petersburg G-
8 summit, two summers ago--all of our interests are served best 
by genuine energy security, which means you're diversifying 
sources of supply and transit routes.
    Senator Voinovich. Did the--can I ask you something? Did 
the question that Bill Nelson raised about--is that--did you 
discuss that?
    Senator Dodd. About NASA?
    Senator Voinovich. About NASA and the fact that we don't--
we're--we've discontinued the use of the shuttle, and what 
we're going to do in the interim period.
    Senator Dodd. Ambassador Burns--I don't know how 
knowledgeable you are about the NASA programs and where we are 
with that, but----
    Secretary Burns. No; I'll take a stab at it. I mean, I 
think Senator Nelson described very----
    Senator Voinovich. I mean, I think that there was--I 
think--in fact, I've talked to somebody from the State--about 
getting a waiver so that--from that--I guess, the provision 
that says, ``If you do business with Iran, that you can't--we 
can't do business with you.''
    Secretary Burns. Yes, sir. And the administration fully 
supports that waiver, for the very practical reason, as Senator 
Nelson described, that, you know, our relationship with Russia 
in space cooperation has really been one of mutual dependence. 
I mean, we both benefited from it, but, particularly in the 
near term, we really do depend on Russia as our source of 
getting from here to the space station. And so, I think it's an 
area of cooperation in which we have a pretty clear self-
interest.
    Senator Voinovich. Thank you.
    Senator Dodd. Senator Lugar.
    Senator Lugar. In response to Senator Voinovich's question, 
my understanding is that the staffs, majority and minority, 
have considered the waiver, and that would be on the agenda for 
our business meeting, next Tuesday I believe, so that 
constructive action could be taken by the committee to meet 
that problem, I believe.
    I just want to raise two or three points, one of which is, 
in the Moscow Times today on this--September 17 issue--there's 
a letter to the editor by three partners of RST International, 
a business of strategic communication consultancy based in 
Moscow. The piece very candidly describes United States-Russian 
relations in political campaigns, our Presidential campaigns 
throughout the years, what positions candidates have taken, and 
then how things evolved after the elections, pragmatically, 
with the Russians. Whether one agrees with their political 
analysis, essentially they are indicating that, after our 
campaign is over, whoever is elected President will probably 
attempt to forge some type of a relationship with, not only 
Prime Minister Putin, but President Medvedev, and that we will 
proceed again from there. Which may or may not be the case. I 
just found it interesting that this is being published in 
Moscow--without knowing the circulation of the Moscow Times and 
how important that is, but it is a paper in Russia, presently 
now, and speculating, about our elections, for Russian readers.
    Another footnote is that the Pentagon, each month, provides 
an update of the Nunn-Lugar Program's progress in eliminating 
weapons of mass destruction. And during August, the month of 
contention in Georgia, 10 intercontinental ballistic missiles 
were destroyed in Russia and four shipments of nuclear warheads 
were sent to safe and secure storage. This is a fairly modest 
outcome, but, nevertheless, the program continues. The 10 
missiles destroyed join 720 others that have been destroyed 
previously during the last 16 years, and there are still a good 
number to go. But, I make the point that it is important that 
this process of cooperative threat reduction move ahead, even 
at fairly low profile, because the safety, not only of Russia 
and the United States, but the world really, is involved in the 
containment of all of this.
    Finally, I just am curious, I talked to General Craddock, 
our NATO commander, when I was in Brussels in early September, 
and he indicated that the Russian forces have a training 
exercise in the area around North Ossetia--that is on the 
border with South Ossetia--every August. So, they were down 
there again for a training exercise in August. I asked, ``Are 
they there only during August?'' Well, essentially that's when 
the exercise occurs. Which led me, to--just being the devil's 
advocate--what if the shooting between Ossetians and Georgians 
and so forth had occurred, say, October the 15th? Would the 
same troops have been there? Well, apparently not.
    Now, I raise this question, because it really gets to the 
heart of good intelligence on our part, on the part of the 
Georgians, on the part of our Embassy in Moscow. These are 
salient facts, when the Russians have not just conscripts, 
although some were conscripts in the South Caucasus, but 
professional soldiers in the area for a training exercise. 
General Craddock reports that aircraft that were flown by the 
Russians were often flown in very erratic ways at altitude 
levels that made it fairly easy for the Georgians, with very 
limited armament, to shoot them down. He also pointed out that 
Russian troops just advanced in single file, the tanks the 
troops and so forth, as opposed to a sort of spread formation 
that would have been normal in these things. So, you know, you 
ask, ``Well, why did the Russians win?'' He said, ``Well, there 
were a whole lot more of them.'' You know, by the time you have 
all of the tanks and all the troops, whatever may be the level 
of training or coordination, it was rather overwhelming force 
that then spread out over the country in one form or another.
    It also raised questions about the training of the Georgian 
troops. Certainly, the United States and others have been 
involved in this, but communication breakdowns between various 
segments. This was complicated by the fact that when the 
Georgian troops were flown back from Iraq, the Russians had 
taken over some of the garrisons where their weapons were 
stored. So when they returned they were, weaponless, or without 
the provisions that were required at that point.
    I mention this because this requires, I think, some careful 
analysis by Georgians, by ourselves, by others, as to 
specifically what happened. Not who triggered it and on what 
day or so forth, but, physically, why were Russians there on 
the border at that time and in those numbers? Why didn't 
somebody shut the tunnel so that 5,000 people could not come 
through? And this is, I think, very, very important. I 
appreciate that, at this point, people tire of the tediousness 
of going into this, play by play, but I simply raise this as a 
part of the hearing, because I suspect you would agree that 
this kind of postmortem analysis is important.
    Secretary Burns. Yes, sir, I absolutely do. And I think it 
is very important to engage in that kind of an analysis as a 
way, not just of understanding how this crisis unfolded, but 
avoiding ones in the future.
    Senator Lugar. Yes.
    Thank you, sir.
    Senator Dodd. Let me underscore that point with Senator 
Lugar. In a far less adept way, let me raise that issue--again, 
it's not that this is in any way to excuse the Russian 
behavior, which was excessive under any circumstances, but to 
understand what happened and how this unfolded is going to be 
very important. And at this juncture, while it still may be a 
little early, my hope would be--and, I think, certainly Senator 
Biden would agree, as the chairman of the committee--that at 
some point we get a more detailed explanation and analysis of 
actually what happened. It seems to be important.
    And I'd underscore the point that Senator Lugar and others 
have raised, as well, and it doesn't get said often enough, but 
the Nunn-Lugar proposals have just been remarkable in their 
achievement, and it's important to point out, in the midst of 
all of this, and contrary to the Senator's observation, I think 
it's fairly significant what happened in August, with those 
numbers, and then we need to understand it. This is not a two-
dimensional relationship; it's very complex, it's deep, and it 
needs to be well thought out.
    I presume I know the answer to this question, but let me 
ask it of it anyway, and that is, I presume the McCain 
Campaigns and the Obama Campaigns are being well informed, and 
are being advised on this issue, so there's knowledge within 
these two camps as to how all of this is progressing----
    Secretary Burns. I believe----
    Senator Dodd [continuing]. So that there's a seamlessness 
to all of this, I hope, come January, in terms of moving on?
    Secretary Burns. Yes, sir. I believe that's the case today. 
And certainly as we look ahead to transitions very the next few 
months, it's something that we'll pay a lot of attention to in 
the State Department. Yes, sir.
    Senator Dodd. In the case of Senator Biden, as the chair of 
this committee and having been to Georgia, has a deep knowledge 
and understanding of the issue already, but I would hope that 
would continue to be the case. It's very, very important, it 
seems to me, that this happens. We're going to have a new 
administration on January 20, and to the extent they are very 
aware and knowledgeable about what's transpiring, I think it 
will be very, very important, as well.
    Any other--further comments or questions?
    [No response.]
    Senator Dodd. Well, Mr. Ambassador, let me say again what 
others have said here--we're very fortunate to have you. You're 
extremely knowledgeable and competent, and I thought your 
comments today were very well taken. So, I appreciate, 
immensely, your service to the country. And we'll follow up 
with this.
    The committee will stand adjourned.
    [Whereupon, at 12:20 p.m., the hearing was adjourned.]
                              ----------                              


             Additional Statements Submitted for the Record


               Prepared Statement of Hon. John F. Kerry, 
                    U.S. Senator From Massachusetts

    Under Secretary Burns, thank you for coming before us today to 
testify on this important subject. Let me start by saying that I was 
frankly outraged by Russia's actions in Georgia last month. Russia's 
disproportionate military response against the sovereign, 
internationally recognized territory of Georgia, which includes South 
Ossetia and Abkhazia, is in violation of international law and is 
conduct unbecoming of a responsible international stakeholder in the 
21st century.
    Let's be clear: Georgia might have exercised better judgment to 
avoid falling prey to Russia's provocations, but I reject the notion 
that there is some sort of moral equivalence between Russia's and 
Georgia's conduct. South Ossetia is not Kosovo. And launching major 
military operations by air, ground, and sea deep into the territory of 
your smaller neighbor, attacking its cities and ports, and damaging its 
civilian and economic infrastructure is simply not acceptable.
    I am pleased to have worked with my colleagues on the Senate 
Foreign Relations and Armed Services Committees to clear an amendment 
to the defense authorization bill yesterday that sends this clear 
message to Russia, our allies, and the rest of the world.
    Make no mistake, Russia's actions have diminished its standing in 
the international community and should lead to a review of existing, 
developing, and proposed multilateral and bilateral arrangements. I 
look forward to hearing from you what sources of leverage we have 
available to encourage Russia to abide by its international 
commitments.
    Russia should immediately comply with the September 8, 2008, 
follow-on agreement to the six-point cease-fire negotiated on August 
12, 2008. And I hope that you, together with your counterparts in 
Europe, are delivering a clear message of your own to Moscow: If Russia 
continues to violate international law and its commitments, its long-
term relationship with the West will be adversely affected and its 
rightful place in the political, economic, and security institutions of 
the 21st century and a future partnership with our democracies will be 
jeopardized.
    Looking ahead, both Russia and Georgia must refrain from the future 
use of force to resolve the status of South Ossetia and Abkhazia, and 
both countries should work with the EU, the OSCE, and the U.N. Security 
Council to identify a political settlement.
    In the meantime, I will be supporting a robust Senate assistance 
package, as well as international efforts underway, to provide 
humanitarian and economic reconstruction assistance to Georgia, and aid 
the development of a strong, vibrant multiparty democracy. We also 
should redouble efforts with the EU, Georgia, and its neighbors to 
ensure the free flow of energy to Europe.
    The real test for American and European diplomacy in the months 
ahead will be how to back Georgia's people and its democratically 
elected government without antagonizing Russia and sliding back into 
more hostile relations reminiscent of the cold war. The United States 
continues to have interests in common with Russia, including combating 
the proliferation of nuclear weapons, halting Iran's nuclear program, 
and fighting terrorism.
    Over time, these shared interests can serve as a basis for improved 
long-term relations. But we are regrettably in a different place today 
due to Russia's pattern of aggressive behavior in Georgia and 
elsewhere. I know you will have thoughts on how we can strike a balance 
that passes this crucial test.


                                 ______
                                 

               Prepared Statement of Hon. Barack Obama, 
                       U.S. Senator From Illinois

    Mr. Chairman, thank you for holding this hearing on ``Responses to 
the Conflict between Georgia and Russia.''
    When Russian military forces invaded Georgia last month, I 
condemned Russia's aggressive actions, called for Russia to cease its 
bombing campaign and withdraw its ground forces, and stated that 
Georgia's territorial integrity must be respected. I spoke with 
Georgian President Saakashvili on August 9 and conveyed to him my deep 
regret over the loss of life and the suffering of the people of 
Georgia.
    For many months, I have warned about the potential for escalation 
of this simmering dispute. I called upon Russia to stop provoking 
Georgia and also warned Georgia not to fall for Russia's baiting. 
Instead of military escalation, I stated in April and again in July 
that there needs to be active international engagement to peacefully 
address the disputes over South Ossetia and Abkhazia, including a high-
level and neutral international mediator and a genuine international 
peacekeeping force in Georgia. No matter how the conflict in August 
started, it is clear that Russia escalated it well beyond the dispute 
over South Ossetia and Abkhazia. There is no justification for Russia's 
invasion of Georgia or recognition of South Ossetia and Abkhazia as 
independent states.
    Together with our European and other partners, we must take action 
on several fronts. First, neutral, international observers must 
immediately be deployed to Georgia to verify that the Russians are 
upholding their commitments. This means not only strengthening the OSCE 
observer mission in South Ossetia but also dispatching EU observers to 
all parts of Georgia including the conflict zones. These observers must 
not only monitor implementation of the cease-fire agreement but also 
investigate all claims of human rights abuses and ethnic cleansing.
    Second, the international community must continue to hold Russia 
accountable for its continued misconduct and violations of 
international law. So long as Russia continues to violate international 
law and refuses to respect the territorial integrity of its neighbors, 
the United States and Europe must work together to consider other 
measures, including suspension of Russian applications to join the WTO 
and OECD. Russia's recognition of South Ossetia and Abkhazia as 
independent states should be rejected.
    Third, we must make Georgia's economic recovery an urgent strategic 
priority. Senator Biden and I have called for $1 billion in 
reconstruction assistance to help the people of Georgia during this 
trying period. The administration has embraced this idea, and Congress 
should provide the funding immediately to demonstrate that Russia will 
not get away with its attempt to humiliate Georgia by destroying its 
infrastructure, military equipment, and villages. I also welcome and 
encourage European efforts to help rebuild Georgia.
    Fourth, a clear lesson of the Georgia crisis is that we and our 
European allies must pursue energy policies that reduce dependence on 
Russian oil and gas. This means working urgently to increase efficient 
use of energy, especially in those countries in the transatlantic 
community still recovering from wasteful Soviet practices. It also 
means developing alternative energy sources and alternative supplies 
for Europe and Eurasia. Just as the United States and Europe committed 
in the 1990s to the Baku-Tbilisi-Ceyhan pipeline, which can deliver 1 
million barrels of oil per day from Central Asia across a route that 
does not depend on Russia, today we must jointly build other 
alternative production and pipeline projects.
    Finally, events in Georgia make it more necessary than ever for the 
United States and Europe to reiterate their shared commitments to the 
sovereign right of all European countries to live in freedom from the 
threat of military or economic coercion. Beyond the attack on Georgia, 
the past few months and years have seen Russian cyberattacks in 
Estonia, use of energy blackmail against Ukraine, and threats to point 
missiles at Poland and other East European states. We must stand 
together against these acts.
    Russia today is not the Soviet Union, and we are not returning to 
the cold war. I will continue to press for direct dialogue with the 
Kremlin on issues of mutual interest, including keeping weapons of mass 
destruction out of the hands of terrorists, reducing our nuclear 
arsenals, and preventing Iran from acquiring nuclear weapons. Russia 
has the potential to become a responsible stakeholder in the 
international system, and I hope that one day it can be included in the 
wider Euro-Atlantic community. Russia's recent choices, however, are 
threatening this potential and reminding us all that peace and security 
in Europe cannot be taken for granted.


                                 ______
                                 

  Additional Questions for the Record Submitted to Under Secretary of 
           State William J. Burns by Senator George Voinovich

                            ENERGY SECURITY


    Question. Are Russia's actions in Georgia based on the "grand 
strategy" of energy security and the ``B-T-C'' (Baku-Tbilisi-Ceyhan) 
pipeline? [Note: The BTC pipeline runs from Azerbaijan to Turkey via 
Georgia, bypassing Russia.]

    Answer. We have no information indicating that energy was Russia's 
immediate motivation for invading Georgia, or that Russia targeted 
Georgia's energy infrastructure. While the Russian invasion may have 
rattled investor nerves, the Baku-Tblisi-Ceyhan (BTC) oil pipeline and 
the South Caucasus Gas pipeline--the anchors of the Southern Corridor 
through which Azerbaijani oil and gas flow to Europe--were not damaged 
by the Russian action. That said, the Russian invasion of Georgia 
should serve as a wake-up call to strengthen and expand a ``Southern 
Corridor'' of energy infrastructure, to transport Caspian oil and gas 
to European and world markets. The development of Caspian energy 
resources and diversified export routes are the best means for 
supporting the sovereignty, independence and economic development of 
Georgia, as well as other countries in the Caucasus, Central Asia and 
Central Europe. Senior U.S. leadership has taken this message to the 
region in recent weeks and will continue to do so.


    Question. In your opinion, how serious a problem is Europe's 
increasing dependence on Russian gas and oil?

    Answer. Europe is overly dependent on Russian energy supplies. 
Natural gas consumption in the European Union is expected to double 
over the next 25 years--with imports exceeding 80 percent by 2030--as 
gas becomes the fuel of choice for power generation, fueled by EU 
climate change commitments and the phasing out of nuclear power in some 
EU countries. A recent IEA estimate has European gas demand increasing 
by over 250 billion cubic meters (bcm/a) by 2015, and contracted 
volumes falling short by more than 118 bcm/a in the same year.
    Russia would like to increase its market in Europe and increase 
European dependence on Russian gas. Russia will not be able to achieve 
the goal of increasing its share of European market if Caspian energy 
can reach the European market independent of Russian delivery. The IEA 
has said that Russia could have trouble filling its existing European 
gas contracts as early as 2011--absent significant upstream 
investment--and Russian gas production declined in 2007 for the first 
time since 2000, decreasing by 0.8 percent over 2006. Additionally, 
Russia's heavy-handed approach to gas transit issues with Ukraine and 
its purchases of European midstream and downstream assets--all while 
giving limited European access to the Russian upstream--has concerned 
several EU countries.
    The EU needs to diversify its hydrocarbon sources, including the 
development of the ``Fourth'' or ``Southern Corridor'' of energy 
infrastructure to bring Caspian and Middle Eastern gas to Europe and 
explore its liquefied natural gas options.


    Question. What steps can/should European states take to decrease 
their dependence on Russian gas and oil?

    Answer. Diversification of energy sources, the appropriate use of 
competition and regulatory policies and enhanced grid 
interconnectivity, would complement ongoing EU efforts to develop 
alternative sources of energy and enhance energy efficiency efforts. 
All are critical to a long-term strategy to increase EU energy 
security.
    With 6.4 percent of the world's proven oil reserves and 25.2 
percent of world gas reserves, Russia is an important supplier of 
hydrocarbons. Russia supplies one third of European oil imports and 
almost 50 percent of the European Union's (EU) natural gas imports (27 
percent of overall EU gas consumption), but many Central and Eastern 
European states are dependant on Russia for over 80 percent of their 
natural gas imports.
    The Russia-Georgia conflict, combined with past Russian energy 
cutoffs to neighboring countries, should encourage Europe to diversify 
its supplies and mitigate its dependence. Enhanced European energy 
security will require the EU to insist on greater market integration. 
Enabling the development of a ``Fourth'' of 11Southern Corridor'' of 
energy infrastructure to bring Caspian Basin oil and gas to European 
and world markets, e.g., via the Nabucco or Turkey-Greece-Italy 
interconnector, would be prudent. The Caspian and Middle East 
(including Iraq and Egypt)--with their 84,490 BCM in reserves compared 
to Russia's 47,650 BCM--are critical alternative sources for meeting 
the EU's natural gas needs.
    Additionally, competition and internal market policy would increase 
the competitiveness and efficiency of electricity and natural gas 
markets. Passage of the proposed ``Third Energy Package'' and a more 
aggressive use of EU and national Competition Authorities could 
mitigate Gazprom's influence based on its dominant market position. The 
September 19, 2007 proposals, if enacted, would require the unbundling 
of the production and supply of electricity and gas from their 
transmission. These provisions could increase gas and electricity 
connections between member states, boosting efficiency and reducing the 
risk of an energy cutoff in member states that are highly dependant on 
one supplier--significantly enhancing EU energy security.


                                  NATO


    Question. Are Georgia's chances of being offered a NATO Membership 
Action Plan (MAP) at the NATO foreign ministers' meeting in December 
2008 bolstered or reduced in the wake of the Russia--Georgia conflict? 
Does the administration still support offering a MAP to Georgia in 
December?

    Answer. The administration continues to strongly support Georgia's 
aspirations for Euro-Atlantic integration, including its eventual 
accession to NATO. Georgia is an important partner of the Alliance and 
a valuable contributor to security, having provided important support 
in Kosovo and the third-largest contingent in Operation Iraqi Freedom 
before the August 8 invasion.
    At the Bucharest Summit last spring, NATO's leaders agreed that 
Georgia would become a member of NATO. they tasked allied foreign 
ministers to review Georgia's progress in December. Following the 
Georgia-Russia conflict, NATO reaffirmed its support for the 
commitments made at its summit in Bucharest and established the NATO-
Georgia Commission to supervise the process set in hand in Bucharest.
    Ministers have the authority to decide on MAP in December, and we 
believe the answer should be yes. Georgia's leadership recognizes that 
the country has work to do before allies could consider Georgia for 
membership, and this process would take years. Allies differ on when 
Georgia should enter MAP. In this context, it is important to emphasize 
that no non-NATO country has a veto over NATO enlargement.
    MAP is not the same as membership, it does not guarantee an 
invitation, does not set a timeline, and does not include a security 
guarantee. Georgia has made some noteworthy reform progress with NATO's 
support, but its efforts must continue, and MAP is the process that 
will help Georgia meet NATO standards. In fact, the prospect of NATO 
membership motivates countries to tackle difficult reforms, and the 
work that these aspirants undertake to meet NATO standards benefits 
their entire region, helping the aspirants to become more stable, 
democratic, and reliable.


    Question. Are Ukraine's chances of being offered a NATO Membership 
Action Plan (MAP) at the NATO summit in December 2008 bolstered or 
reduced in the wake of the Russia-Georgia conflict?

    Answer. The United States supports Ukraine's Euroatlantic 
aspirations, including its expressed desire to advance its relations 
with NATO. We continue to support a NATO Membership Action Plan (MAP) 
for Ukraine. MAP is a work program designed to help NATO aspirants make 
the reforms necessary to prepare them for NATO membership. At the 
Bucharest Summit in April 2008, the Alliance declared that Ukraine will 
become a member, but some allies differ on when Ukraine should take 
that next step. In this context, it is important to emphasize that no 
non-NATO country has a veto over NATO enlargement.
    It is also important that the Ukrainian Government be united in its 
readiness to pursue MAP. MAP is not the same as membership, it does not 
guarantee an invitation, does not set a timeline, and does not include 
a security guarantee. MAP does give aspirant countries the means and 
motivation to meet NATO's standards Ukraine has made some noteworthy 
reform progress with NATO's support, but its efforts must continue. 
Ultimately, these reform efforts benefit the entire region, helping 
aspirants to become more stable, democratic, and reliable.


                              CONSEQUENCES


    Question. The Bush administration has suggested that, as a result 
of Russia's incursion into Georgia, its accession to the World Trade 
Organization (WTO) could be in jeopardy. Is the United States 
contemplating holding up or opposing Russia's accession to the WTO?


    Follow-Up: If so, would that indicate a change in U.S. policy of 
encouraging Russia's membership and participation in the WTO and other 
multilateral economic organizations?

    Answer. The President said, ``By its recent actions, Russia is 
putting its [WTO] aspirations at risk.'' Secretary Rice has also 
stated, ``Russia's bid to join the World Trade Organization is now in 
jeopardy.'' While we have supported Russia's full integration into the 
global economy--operating under rules-based organizations benefits 
Russia, the United States and the world economy--if Russia continues 
down its current path this goal will not be achievable.
    Russia is responsible for the timing and progress of its accession. 
The Russian government is aware of the actions it needs to take in 
order to meet the terms for WTO accession and conform to the rules of 
the WTO. Russia must simply decide whether it will undertake these 
actions or not.


    Question. Should Russia be excluded from meetings of the G-8?

    Answer. While the United States has long supported Russia's 
aspirations to integrate into the world economy and institutions, 
Russia's invasion of Georgia and recognition of South Ossetia and 
Abkhazia put its aspirations in jeopardy. Such actions are not those of 
a responsible world partner.
    We are reevaluating our relationship with Russia. We are doing so 
in concert with our international partners, including other G-7 
countries. For example, Japan, as the G-8 Presidency, has postponed G-8 
meetings that were to have taken place in September and through the 
middle of October.
    Our immediate focus is to support Georgia and countries in Russia's 
neighborhood. We also seek full Russian compliance with all elements of 
the August 12 and September 8 Agreements.


    Question. I am concerned about Russia's potential response to 
economic sanctions by the U.S. and Europe. We have seen Moscow shutdown 
gas pipelines to the Ukraine/Western Europe. Moscow has most recently 
seized control of BP's Russian joint-venture. How would Russia respond 
to potential economic sanctions by the U.S. and/or Europe?


    Follow-up: The Russians are a very proud people. Is it possible to 
design targeted sanctions that would not risk deepening tensions 
between Russia and the West?

    Answer. Russia is indeed a proud country, one whose leaders chose 
to react against actions such as sanctions, in particular from the 
United States, against whom Russia and previously the Soviet Union 
traditionally measured itself. It is possible that Russia would seek 
ways to retaliate for any sanctions imposed on it. It is also possible 
that Russian leaders are aware of the severe costs Russia has already 
borne through its invasion of Georgia and may seek ways to avoid a 
further deterioration in their country's standing in the world.
    We will work with our European allies and other friends and allies 
to encourage Russia to make better decisions than some recent ones. We 
can do this, among other things, by making it clear that Russia failed 
to destroy Georgia's sovereignty and independence; that their invasion 
has done little more than demonstrate that Russia's military could 
overcome the armed forces of a much smaller and weaker country.


                                 ______
                                 

  Additional Questions for the Record Submitted to Under Secretary of 
         State William J. Burns by Senator Robert P. Casey, Jr.


    Question. In the aftermath of Russia's invasion of Georgia, senior 
Russian leaders contended that Russia's actions to protect a persecuted 
ethnic minority parallel NATO action in 1999 to protect the Kosovar 
minority against Serbian war crimes and ethnic cleansing. The decision 
by the United States and NATO allies to recognize Kosovo as an 
independent nation earlier this year was also cited by Russia as a 
legal precedent for its decision to recognize South Ossetia and 
Abkhazia as independent states. Do you view these statements by senior 
Russian leaders as a cynical exercise to justify their actions? Or is 
there a possibility that Western recognition of Kosovo, no matter how 
just or correct, spurred Russia to retaliate by recognizing separatist 
regions within an ally of the United States? How do we best respond to 
statements by Russian officials and their allies that Kosovo set the 
precedent for South Ossetia?

    Answer. Russia has tried to justify its recognition of South 
Ossetia and Abkhazia as independent states by comparing the situation 
in the separatist regions to that of Kosovo. However, Kosovo was a 
unique case and not a precedent for any other conflict, neither 
Georgia's breakaway territories nor any other separatist movement. When 
responding to Russian officials it is best to let the facts speak for 
themselves. In 1999, following the ouster of Milosevic's military from 
Kosovo, the UN Security Council set the framework for resolving 
Kosovo's status in UN Security Council Resolution (UNSCR) 1244, which 
was adopted without any dissents (China abstaining). Among other 
things, UNSCR 1244 denied Serbia a role in governing Kosovo; authorized 
the establishment of an interim UN administration for Kosovo; provided 
for local self-government; and envisioned a UN-led political process to 
determine Kosovo's future status. UNSCR 1244 contemplated independence 
as a possible outcome of that process.
    Thus, Kosovo was never a breakaway territory (like South Ossetia or 
Abkhazia), but had a status recognized by the UN Security Council. 
Unlike in Kosovo, there is no UN-sanctioned international 
administration is Abkhazia or South Ossetia. There is no international 
security force operating under UN authorization or mandate and Russia's 
actions in Georgia fly in the face of UNSCR 1808, the most recent of 
many Security Council Resolutions of Georgia, passed on 15 April 2008, 
which explicitly ``Reaffirms the commitment of all Member States to the 
sovereignty, independence and territorial integrity of Georgia within 
its internationally recognized borders. . . .'' There are no security 
guarantees to protect different ethnic communities, and Russia has 
failed for nearly two decades to create the conditions for the return 
of refugees. On the contrary, Russia has deliberately avoided using 
available avenues to bring resolution to the protracted conflicts in 
Abkhazia and South Ossetia.


    Question. Can you assure the committee that the events of the past 
month have not led to any disruption or delay in ongoing bilateral and 
multilateral efforts to reduce the threat of weapons of m ass 
destruction in the Russian Federation and former Soviet Union as a 
whole (the Nunn-Lugar Cooperative Threat Reduction Program)?

    Answer. Proliferation threat reduction under the Nunn-Lugar program 
remains on track despite Russia's attack on Georgia. Activities are 
ongoing since it still benefits the national security interests of the 
United States to provide assistance to eliminate nuclear weapons and 
their delivery systems at the source, to consolidate and secure 
potential WMD materials and prevent their smuggling, to increase 
transparency and a high standard of personnel conduct, and to redirect 
efforts of former WMD scientists toward productive use.
    Under the Nunn-Lugar Cooperative Threat Reduction (CTR) program we 
have had many successes with the countries that emerged from the 
breakup of the Soviet Union after 1991. For example, nuclear weapons 
are being transported securely from the operational bases where they 
are being deactivated to secure storage or dismantlement. Delivery 
systems such as strategic submarines with submarine-launched ballistic 
missiles, land-based silo-launched ICBMs such as SS-18s and SS-19s, and 
SS-25 road-mobile systems are being eliminated. Since 2001 when the 
limits of START I were met, the number of START-accountable warheads 
remaining on strategic delivery systems of the former Soviet Union has 
decreased from 6,000 to approximately 4,000, a net reduction of 
approximately 2,000 warheads in 7 years. It is in the U.S. interest to 
continue to cooperate in reducing proliferation risks not only through 
CTR but also through multilateral and other partnership programs, such 
as the Global Partnership Against the Spread of Weapons and Materials 
of Mass Destruction and Global Initiative to Combat Nuclear Terrorism.

                                  
