[Senate Hearing 111-71]
[From the U.S. Government Publishing Office]



                                                         S. Hrg. 111-71

        PROSPECTS FOR ENGAGEMENT WITH RUSSIA

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

                                HEARING



                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE



                     ONE HUNDRED ELEVENTH CONGRESS



                             FIRST SESSION



                               __________

                             MARCH 19, 2009

                               __________



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                     COMMITTEE ON FOREIGN RELATIONS

                 JOHN F. KERRY, Massachusetts, Chairman
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       Republican Leader designee
BARBARA BOXER, California            BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   JIM DeMINT, South Carolina
JIM WEBB, Virginia                   JOHN BARRASSO, Wyoming
JEANNE SHAHEEN, New Hampshire        ROGER F. WICKER, Mississippi
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                      David McKean, Staff Director
            Kenneth A. Myers, Jr., Republican Staff Director

                                  (ii)












                            C O N T E N T S

                              ----------                              
                                                                   Page

Cohen, Ariel, senior research fellow, Russian and Eurasian 
  Studies and International Energy Security, The Heritage 
  Foundation, Washington, DC.....................................    11

      Prepared statement.........................................    13


Kerry, Hon. John F., U.S. Senator From Massachusetts.............     1


Kuchins, Andrew, director and senior fellow, Russia and Eurasia 
  Program, Center for Strategic and International Studies, 
  Washington, DC.................................................    23

      Prepared statement.........................................    28


Lugar, Hon. Richard G., U.S. Senator From Indiana................     3


Sestanovich, Hon. Stephen R., senior fellow, Council on Foreign 
  Relations, Washington, DC......................................     5

      Prepared statement.........................................     8


              Additional Material Submitted for the Record

Responses to additional questions submitted for the record by 
  members of the Committee.......................................    42


                                 (iii)


 
                  PROSPECTS FOR ENGAGEMENT WITH RUSSIA

                              ----------                              


                        THURSDAY, MARCH 19, 2009

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 a.m., in room 
SD-419, Dirksen Senate Office Building, Hon. John F. Kerry 
(chairman of the committee) presiding.
    Present: Senators Kerry, Cardin, Casey, Webb, Kaufman, 
Lugar, Corker, Isakson, and Barrasso.

           OPENING STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    The Chairman. Good morning. This hearing will come to 
order.
    It's a pleasure to be here this morning with my colleague, 
Senator Lugar, to look at another country that has an enormous 
importance in its relationship with the United States and with 
the rest of the world.
    Regrettably, in recent years America's relationship with 
Russia has arguably reached the lowest and least productive 
phase in two decades. President Obama has spoken, importantly, 
of the need to reset United States-Russia relations, and we 
agree wholeheartedly.
    While it is not yet clear exactly what this new chapter in 
our relations can bring, it is clear that our common interests 
demand that we try to work together more constructively. Our 
differences are real, but so, too, is our potential to 
cooperate and particularly to lead together on important global 
challenges.
    From Iran's nuclear program to human rights in Burma to our 
presence in Afghanistan, there is scarcely an issue of global 
importance which could not benefit from greater cooperation and 
participation from Russia. Our challenge is to ensure that, to 
the extent possible, we enlist Russia to act, not just as a 
great power individually, but as a global partner with us and 
with our European allies.
    This hearing will explore what we can hope to accomplish 
through engagement, what motivates Russia at this moment in 
time, if that's different from other moments, how we can best 
respond to our continued disagreements, and how we can achieve 
greater cooperation on the issues where our interests clearly 
converge.
    Nowhere is our shared challenge greater, or shared 
leadership more vital, than in confronting the threat posed by 
nuclear weapons and nuclear terrorism. Yesterday, we 
celebrated, on the Senate floor, the 12,000th vote of my 
colleague, Senator Lugar, which is a milestone. I think he was 
telling us it places him as --the 13th in the record number of 
votes cast. And he is the senior Republican in the United 
States Senate. And obviously, Senator Lugar has been a leader 
in this field.
    And together with Sam Nunn, he sounded the alarm, early on, 
that Russia's unsecured nuclear materials posed a major threat. 
The Nunn-Lugar initiative was the start of a visionary effort 
to dismantle excess weapons and secure dangerous materials. It 
sparked long-term cooperation with Russia that has paid major 
dividends for national and international security, alike. We 
need more of that kind of vision now to rebuild relations with 
Russia, and we actually need to continue to see that task to 
its completion.
    Russia and the United States ushered in the Nuclear Age 
together. And now, together, America and Russia bear a special 
responsibility to dramatically reduce our arsenals. We have to 
make a serious joint effort to move the world in the direction 
of zero nuclear weapons, with recognition that, while the 
ultimate goal remains distant and complicated, every prudent 
step that we take to move in that direction makes us safer. In 
fact, America and Russia can accomplish a great deal together 
on arms control right now. We need to reach agreement on a 
legally binding successor to the START treaty, and President 
Obama has committed to pursuing these negotiations with the 
intensity that they deserve. With START set to expire in 
December, we need to make it a priority to strike a deal, or at 
least construct a bridge, before we lose the verification 
regime that has been vital to maintaining each country's 
understanding of the other's nuclear-force posture.
    I'm convinced that we can go well below the levels 
established by the Moscow Treaty. We should personally--I 
think, personally, we should set a near-term goal of no more 
than 1,000 operationally deployed warheads, and I'm confident 
that this can be done in a way that increases our national 
security rather than diminishes it. Obviously, we have to 
pursue such a goal in close consultation with our allies and 
our military, but that level, in my view, is more than enough 
to deter aggression.
    Vital to our efforts toward a nuclear-free world is a 
greater effort from Russia to prevent a nuclear-armed Iran. The 
President is right to open the door to direct engagement with 
Iran, but it's imperative that we back a strategy of engagement 
with a commitment to more effective multilateral sanctions if 
negotiations prove incapable of bringing progress. To do this 
effectively, we need Russia to be part of that process.
    We must also think carefully about missile defense. I have 
serious reservations regarding the rapid deployment of a 
largely untested missile defense system in Poland and the Czech 
Republic, and I intend for this committee to examine that 
policy closely.
    Many Russian leaders see these missile defense sites as 
somehow directed at Russia, at them. In fact, they are not. 
But, Russia can minimize our need for missile defense in Europe 
by helping to convince Iran to change its nuclear and missile 
policies. And both Russia and the United States could put more 
effort into jointly developing an effective defense against 
medium- and intermediate-range missiles.
    Our former colleagues in the Senate, Gary Hart and Chuck 
Hagel, are the coauthors of an insightful new report from the 
Commission on U.S. Policy Towards Russia that explores, in 
depth, many of these same avenues for greater cooperation. This 
report warrants serious consideration as we look for the way 
forward with Russia.
    Of course, we are going to continue to have some 
differences. Russia's neighbors have a right to choose their 
own destinies, and America and the world community will 
continue their support for sovereignty and for self-
determination. Georgia has a right to its territorial 
integrity. I visited Georgia, just last December, and I shared 
the concern of many over the failure to fully implement the 
cease-fire agreement, as well as the continued lack of access 
for international monitors in South Ossetia and Abkhazia. 
Russia, in my judgment, was wrong to manipulate the flow of 
energy to Ukraine for political purposes, and we should support 
Ukraine's democratically elected government. We also have 
genuine concerns about Russia's troubling backsliding on 
democracy, human rights, and the rule of law.
    As we consider the prospects for a new era in relations, we 
need to understand the dynamics that are at work in Russia. 
This includes Russia's politics and its economy, particularly 
the impact of the steep drop in the price of oil, the decline 
in Russia's foreign exchange reserves, and the 67-percent 
decline in Russia's stock market. I'm eager to hear the 
witnesses' thoughts on how those events are going to affect 
Russian foreign policy and our prospects for better engagement.
    Constructive relations and greater mutual confidence with 
Russia are undoubtedly a challenge, but the mutual benefits of 
doing this are clear, and they are compelling. In the 20th 
century, America and the Soviet Union expended unbelievable 
levels of resources, incalculable resources, and we expended 
them on our rivalry. The days when Moscow stood on the opposite 
site of our every single global crisis have passed. Now we need 
to enlist Moscow to be on the same side, whenever possible, in 
meeting the challenges of this new century.
    We have three distinguished panelists today. Stephen 
Sestanovich negotiated directly with the Kremlin as ambassador 
at large and adviser to the Secretary of State during the 
Clinton administration. Andrew Kuchins, director of the Russia 
and Eurasia Program at CSIS, is the author of an interesting 
and timely report entitled ``Pressing the Reset Button on U.S.-
Russian Relations.'' And Ariel Cohen is a senior research 
fellow at The Heritage Foundation, and we look forward to the 
testimony from each of you. Thank you for being with us today.
    Before you testify, let me turn to my distinguished 
colleague, Senator Lugar.

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

    Senator Lugar. Well, I join you, Mr. Chairman, in welcoming 
our distinguished witnesses. It's good to see each one of you 
here.
    Russia represents significant challenges, as well as 
opportunities, for the Obama administration. Moscow is at the 
intersection of many of the most important foreign policy 
issues facing the United States. We have common interests on a 
number of economic and security issues, including arms control, 
nonproliferation, antiterrorism, and global economic recovery.
    Russia is experiencing severe pain from the global economic 
downturn that would seem to increase incentives to cooperate on 
a range of issues. The ruble has plunged 50 percent against the 
dollar, the Moscow stock market has dropped as much as 80 
percent at various points amidst a collapse in oil prices. 
Although these economic conditions and common interests may 
create openings, we should be realistic in assessing the 
prospects for cooperation.
    Negotiating with Russia will be a far more complex and 
difficult proposition than simply appealing for a new 
relationship. Russian actions related to Iran, Afghanistan, and 
North Korea, for example, have exhibited a reflexive resistance 
to United States positions, even when we have substantial 
commonality of interests. Russia's repeated use of energy 
exports as a political weapon, and its treatment of Ukraine and 
Georgia, demonstrate an aggressiveness that has made 
comprehensive negotiations on regional problems impractical.
    In this context, we should avoid ratcheting between 
excessive expectations and severe disappointment. Rather, we 
should recognize that United States-Russian relations are 
likely to be strained for some time. We should consider, 
carefully, what initiatives can be advanced in such an 
environment.
    Our most time-sensitive agenda item with Russia is the 
preservation of the START treaty. In December 5, the 
verification regime that undergirds the START treaty will 
expire. The Moscow Treaty, which reduces deployed warheads to 
1,700, would also be a casualty, because it utilizes the START 
process. In other words, the foundation of the United States-
Russian strategic relationship is at risk of collapsing in less 
than 9 months.
    The Bush administration made little progress on this issue 
prior to its departure. I know that President Obama and Vice 
President Biden understand the urgency of the problem. However, 
everyone involved should recognize that we are dealing with a 
timeline that leaves little room for error or delay. I support 
efforts to negotiate lower United States and Russian nuclear 
weapons levels, to reduce Russia's tactical nuclear weapon 
stockpile, to cooperate on missile defense, and solve the 
conventional weapons stalemate. But, with the December 5 
deadline looming, we should carefully set priorities. 
Solidifying the START verification regime must be the primary 
focus. Both sides would benefit from a legally binding solution 
in which the common commitment to the START and Moscow treaties 
is retained.
    Reaching common ground on START would provide a foundation 
for continuing United States-Russian cooperation on reducing 
the nuclear, chemical, and biological dangers facing the world.
    Next year, nearly every nation will participate in a review 
conference on the Non-Proliferation Treaty. The NPT is under 
stress from the actions of Iran and North Korea and the 
concerns of neighboring countries. The treaty is also 
contending with the complications that arise out of an 
expansion of global interests in nuclear power. The national 
security of both Russia and the United States will suffer if 
the world experiences a breakdown of the nonproliferation 
regime.
    Before the review conference, Moscow and Washington should 
strive to achieve bilateral arms-control progress, as well as 
strengthen cooperation on nonproliferation issues. One 
important element of such cooperation is the establishment of 
an International Nuclear Fuel Bank. A nuclear fuel bank would 
help keep nuclear power safe, prevent proliferation, and solve 
energy problems by providing nuclear fuel and fuel services at 
reasonable prices to those countries that forgo enrichment and 
reprocessing. Unless the United States and Russia provide 
strong leadership in this area, the coming surge in demand for 
nuclear power will lead more and more nations to seek their own 
enrichment facilities, and that would pose unacceptable risk to 
the security of both Russia and the United States.
    If nonnuclear-weapon states opt for major nuclear power 
programs and their own fuel-making capabilities, it would 
produce enough nuclear material for tens of thousands of 
nuclear weapons every year. This could generate a raft of new 
nuclear-weapon states, exponentially increase the threat of 
nuclear terrorism, and provoke highly destabilizing arms races.
    The Obama administration must plan and carry out a 
realistic strategy that promotes United States interests while 
engaging with Russia in areas where we have common objectives. 
I look forward to the insights of our witnesses on the 
prospects for engagement with Russia and the priorities that we 
should be pursuing.
    And I thank the Chair and--very well, I'm advised that the 
Chair would like for me to recognize Steve Sestanovich as our 
opening witness, and I so do.

   STATEMENT OF HON. STEPHEN R. SESTANOVICH, SENIOR FELLOW, 
          COUNCIL ON FOREIGN RELATIONS, WASHINGTON, DC

    Ambassador Sestanovich. Thank you very much, Senator Lugar, 
other members of the committee. I appreciate the opportunity to 
discuss American policy toward Russia with you at this very 
timely hearing.
    I've prepared somewhat fuller remarks that I hope can be 
entered into the record.
    Senator Lugar [presiding]. They will be entered in the 
record in full.
    Ambassador Sestanovich. Of all the world's major states, 
Russia is the only one whose relations with the United States 
have deteriorated in the past 5 years. The worsening of 
relations--of Russian-American relations has involved real 
clashes of policy and perspective and angry rhetoric on both 
sides.
    Against this backdrop, the Obama administration's aim to 
press the reset button--we're probably going to hear a lot of 
that tired metaphor today--is welcome and needed. But, the 
question is, Are we talking about a smooth process of 
improvement, or a contentious one?
    There are some reasons to hope that, despite years of 
testiness, the resetting of relations between Russia--between 
Moscow and Washington can be a relatively smooth process. 
Leaders and policymakers in both countries seem, in general 
terms, to want more productive relations. They regularly speak, 
as you have, Senator Lugar, of a number of common interests, 
from nuclear nonproliferation to counterterrorism to stable 
international energy markets that ought to make it possible for 
Russia and the United States to cooperate. Today, not 
surprisingly, economic growth and recovery should be added to 
this list. As Senator Kerry noted, no problem ranks higher on 
the to-do list in both Moscow and Washington.
    If President Obama and President Medvedev want to show that 
Russian-American relations are rebooting nicely, it will be 
easy for them to do so when they meet on the margins of the G-
20 summit in London in 2 weeks. They should, at that time, be 
able to announce the prompt opening of talks on the extension 
of the START I treaty, or, even better, on a successor 
agreement that further reduces strategic arsenals. They could 
also recommit themselves to practical measures to discourage 
Iran from acquiring nuclear weapons, including diplomatic and 
military cooperation, and, if the threat requires, missile 
defense. They might further renew their determination to 
support a successful counterinsurgency effort in Afghanistan 
and encourage other states in the region and beyond to join 
them. They can announce an agenda of steps to address the 
concerns of both sides on issues of European security, 
including strengthening the OSCE, reviving the CFE Treaty, and 
consultations on Russia's proposals to enhance Europe's 
security architecture. This is a very substantial, but hardly 
exhaustive, list. It's not difficult to spell out comparable 
measures in other areas, whether it's trade and investment, 
energy cooperation, climate change, or the work of the NATO-
Russia Council.
    Members of Congress, I might add, can do their part to 
support the two Presidents. As you noted, Mr. Chairman, the 
Congress has been a source of leadership in this area in the 
past, especially in the visionary threat-reduction initiative 
sponsored by Senators Lugar and Nunn.
    Congress can, for one thing, indicate its reference--
readiness to graduate Russia and other states of the former 
Soviet Union from the provisions of the Jackson-Vanik amendment 
as soon as possible and without further conditions.
    Congress can also make it clear that it's ready to support 
the so-called 123 Agreement on civil nuclear cooperation that 
the Bush administration sent up to the Hill last summer, only 
to withdraw it when Russia invaded Georgia.
    Mr. Chairman, the steps I've described for improving 
Russian-American relations would amount to a textbook reset. 
But, what if the process isn't so smooth? Perhaps, instead of 
merely switching things off and starting over, we have to 
inquire into the relationship's deeper underlying problems.
    Some thoughtful observers argue that we need to pay closer 
attention to the way in which Russia defines its interests, and 
I completely agree. Moscow's actions and statements over the 
past several months have given us a feel for its thinking and 
suggests that its approach to security may actually complicate 
the rebooting of Russian-American relations.
    Consider, for example, the criticism of President Obama's 
suggestion that if the problem posed by Iranian nuclear and 
missile programs went away, so, too, would the need for 
American radars and interceptors to counter them. Or, consider 
the fact that, for 4 years, Russian policy has called for the 
curtailment of Western access to Central Asian airfields to 
transport men and materiel to Afghanistan, despite the negative 
impact this would have on our counterinsurgency campaign in 
that country.
    Other Russian policies demonstrate the same approach to 
security. We see it in the regularly repeated demand that 
Ukraine give up ownership of gas pipelines on its territory. It 
shows up in the suggestion that Europe needs new security 
institutions to limit NATO's ability to carry out the agreed 
policies of its members.
    What ties all these policies together, from missile defense 
to energy to Afghanistan, is a seeming conviction that Russian 
interests and those of other states, especially the U.S. and 
its European allies, are inevitably in conflict. Russian 
security continues to be viewed in unusually prickly zero-sum 
terms. The result is that real cooperation with other states is 
often considered risky and undesirable, even dangerous. This 
Russian outlook does not mean that a new American approach 
cannot succeed, and it certainly does not mean that we should 
not make the effort.
    As both Senator Kerry and Senator Lugar have noted, our 
interest in expanded cooperation with Russia is real, and it 
calls for sustained diplomacy to create a more productive 
relationship. Yet, the mismatch between our strategic outlook 
and Russia's does have implications for the way we think about 
this effort. Our goal is not simply the mundane mutual 
accommodation of interests that our diplomats pursue on a daily 
basis with other states. Alone among the great powers, Russia 
presents us with the challenge of trying to get its leaders to 
conceive of their interests in a fundamentally different, less 
confrontational way.
    Expanded cooperation with Russia is possible even within 
its current conception of its interests, but far more would be 
possible if its leaders viewed security in ways more congruent 
with the outlook of other European states.
    Is such a transformation possible? Of course. Nothing is 
more contrary to historical experience, or, for that matter, 
more insulting to Russia, than to suggest that it alone among 
the world's major states must remain permanently hostage to 
outdated, counterproductive conceptions of its interests, 
goals, and identity.
    American policy, then, should pursue practical 
opportunities for cooperation with Russia. That means advancing 
its interests into multilateral institutions of international 
life, where it's ready to contribute to them. Right now, 
Russia's accession to the World Trade Organization is the most 
important unexploited opportunity.
    We should do better in expanding bilateral cooperation, as 
well. Here, as Senators have noted, arms-limitation talks offer 
significant possibilities.
    And we should not miss openings to address the connection 
between the country's internal transformation and its play in 
the world. On this point, there's no more tantalizing 
invitation than President Medvedev's observation that whether 
Russia enjoys respect abroad depends on whether it observes the 
rule of law at home.
    In pursuing these cooperative steps, we should not forget 
the larger goal of our engagement with Russia--that is a 
relationship not limited to refighting battles of the last 
decade or the last century. That reset button remains to be 
pushed.
    Thank you, Mr. Chairman.
    [The prepared statement of Ambassador Sestanovich follows:]

Prepared Statement of Hon. Stephen Sestanovich, Senior Fellow, Council 
        on Foreign Relations/Columbia University, Washington, DC

    Mr. Chairman, I appreciate the opportunity to discuss American 
policy toward Russia with you and your colleagues at this very timely 
hearing.
    Of all the world's major states, Russia is the only one whose 
relations with the United States have deteriorated in the past 5 years. 
It's not a case, moreover, of what the child development specialists 
call a ``failure to thrive''--sickly underperformance without specific 
ailments. Nor is the problem simply the result of inattention by 
leaders in both Washington and Moscow who have other pressing things to 
worry about. The worsening of Russian-American relations has involved 
real clashes of policy and perspective--and active involvement by 
policymakers on both sides.

   Although contemporary scholars of international relations 
        believe that our time is marked by an absence of fundamental 
        antagonisms among the great powers, Russian officials are 
        saying, in effect, that they disagree. For them, security--and 
        what they insist is an American drive to weaken them--is still 
        the core problem of Russian-American relations.
   In his famous speech in Munich 2 years ago, then-President 
        Putin also complained that the United States ``imposes itself 
        on other states, in the economy, in politics, and in the human 
        rights sphere.'' On another occasion, he compared American 
        policies to those of the Third Reich.
   Here in Washington, Russia's image has suffered very severe 
        damage as well. Moscow's frictions with its neighbors are 
        widely seen to reflect neoimperialist aspirations--and are, 
        yes, sometimes compared to the policies of the Third Reich.

    Against this backdrop, the Obama administration's aim to press the 
``reset'' button is welcome and needed. Many opportunities are 
available for refashioning the relationship in ways that benefit both 
countries. But it should probably be said at the outset that neither in 
coping with modern gadgetry nor in diplomacy is pressing a ``reset'' 
button a guarantee of improved performance. In my experience, the 
``reset'' button is something you press when you don't really know what 
went wrong in the first place--what caused your computer to freeze up, 
or your daughter's hair-dryer to shut down, or the lights in part of 
your house to go off.
    Sometimes, of course, you don't need to understand what your 
gadget's problem is in order to fix it. If you're lucky, all it takes 
to get a computer running smoothly again is to reboot: Turn it off, 
wait a minute, then turn it on again. At other times, however, you may 
reset a fuse only to find that it immediately blows again. At that 
point, you need an expert who can tell you what the trouble is--and how 
big the repair bill is likely to be.
    There are some reasons to hope that, despite several years of 
testiness, the resetting of relations between Moscow and Washington can 
be a relatively smooth process, certainly smoother than many people 
expect.

   Leaders and policymakers in both countries seem, in general 
        terms, to want warmer, more productive relations.
   They regularly speak of a number of common interests--from 
        nuclear nonproliferation to counterterrorism to stable 
        international energy markets--that ought to make it possible 
        for Russia and the United States to cooperate.
   Today, not surprisingly, economic recovery and growth also 
        make the list of goals that could, and should, unite Russian 
        and American policy.

    If President Obama and President Medvedev want to show that 
Russian-American relations are rebooting nicely, it will be easy enough 
to do so when they meet on the margins of the G-20 summit in London in 
2 weeks.

   They should at that time be able to announce the prompt 
        opening of talks on the extension of the START I treaty--or, 
        even better, on a successor agreement that further reduces 
        strategic arsenals.
   They could also recommit themselves to practical measures 
        that will discourage Iran from acquiring nuclear weapons, 
        including diplomatic and military cooperation--and (if the 
        threat requires) missile defense.
   They might further renew their determination to support a 
        successful counterinsurgency effort in Afghanistan, and 
        encourage other states to join them.
   They can announce an agenda of steps to address the concerns 
        of both sides on issues of European security, including 
        strengthening the OSCE, revival of the CFE Treaty, and 
        consultations on Russia's proposals to enhance Europe's 
        ``security architecture.''

    This is a very substantial but hardly exhaustive list. It's not 
difficult to spell out comparable measures in other areas, whether it's 
trade and investment, energy cooperation, climate change, or the work 
of the NATO-Russia Council.

    Members of Congress, I might add, can do their part to support the 
two Presidents.

   They should, for one thing, indicate their readiness to 
        graduate Russia and other states of the former Soviet Union 
        from the provisions of the Jackson-Vanik amendment--as soon as 
        possible and without further conditions. In the past this 
        legislation played an extremely honorable and effective role in 
        strengthening American policy toward the U.S. S.R. It plays no 
        positive role in our policy toward Russia today.
   Congress can also make clear that it is ready to support the 
        so-called ``123'' Agreement on civil nuclear cooperation that 
        the Bush administration sent up to the Hill last summer, only 
        to withdraw it when Russia invaded Georgia. The U.S. definitely 
        needs more tools to provide support for Georgian sovereignty. 
        Among the instruments available for achieving this goal, 
        however, the 123 Agreement is not a useful one.

    Mr. Chairman, the steps I have described for improving Russian-
American relations would amount to a textbook ``reset.'' But what if 
the process isn't so smooth? Perhaps, instead of merely switching 
things off and starting over, we actually have to inquire into the 
relationship's deeper underlying problems? Some thoughtful observers 
argue that we need to pay closer attention to the way in which Russia 
views its interests. The Commission on U.S. Policy Toward Russia, 
chaired by former Senators Hart and Hagel, made this point just days 
ago, and I completely agree with it.
    To get a feel for Russian thinking, it's not necessary to explore 
the dark recesses of relations with the Bush administration over the 
past 8 years. Even in the past few months, Moscow's actions and 
statements have provided ample evidence of an approach to security that 
is likely to complicate the rebooting of Russian-American relations.

   Consider, for example, the Russian response to President 
        Obama's suggestion that if the problem posed by Iranian nuclear 
        and missile programs went away, so too would the need for 
        American radars and interceptors to counter them. For many 
        Americans, this linkage is no more than a statement of the 
        obvious--and a constructive, commonsense place to start 
        discussion. Yet Russian spokesmen, including President Medvedev 
        himself, have rejected it.
   Or consider the use of Central Asian airfields by the United 
        States and NATO to transport men and materiel to Afghanistan. 
        For 4 years, Russian policy has called for the curtailment of 
        such access, despite the negative impact it would have on our 
        counterinsurgency campaign in that country. It's possible that 
        President Medvedev did not actually demand that Kyrgyzstan shut 
        its base at Manas to Western troops before receiving increased 
        economic assistance. But he did not have to. In deciding to 
        take this step, the Government of Kyrgyzstan knew that it was 
        granting an openly articulated goal of Russian foreign policy.
   Other Russian policies demonstrate the same approach to 
        security. We see it in the regularly repeated demand that 
        Ukraine give up ownership of the gas pipelines on its 
        territory. It shows up in the suggestion that Europe needs new 
        security institutions so as to limit NATO's ability to carry 
        out the policies of its members.

    What ties all these policies together--from missile defense to 
energy to Afghanistan--is a seeming conviction that Russian interests 
and those of other states, especially the U.S. and its European allies, 
are inevitably in conflict.

   This is why, when Russian officials propose to work with us 
        on countering a possible missile threat from Iran, their 
        proposals always involve reliance on Russian radars, usually on 
        Russian territory.
   And it's why, for more than a decade, Russian policy has 
        sought to block the construction of pipelines that would bring 
        oil and gas from Central Asia and the Caucasus to international 
        markets without crossing Russian territory.
   For the same reason, Russia has not tried to block the flow 
        of supplies to Western forces in Afghanistan, except when that 
        flow leads to closer relations between the United States and 
        other post-Soviet states.
   We saw the same pattern this week when President Medvedev 
        addressed the Defense Ministry, explaining his proposals for 
        military reform as a response to the growing threat from NATO.

    Russian security, in short, continues to be viewed in unusually 
prickly zero-sum terms. The result is that real cooperation with other 
states is generally considered risky and undesirable, even dangerous.
    This Russian outlook hardly means that a new American approach 
cannot succeed. And it certainly does not mean we should not make the 
effort. Our interests in expanded cooperation with Russia are real, and 
they call for sustained diplomacy to create a more productive 
relationship.
    Yet the mismatch between our strategic outlook and Russia's does 
have implications for the way in which we think about this effort. Our 
goal is not simply the mundane mutual accommodation of interests that 
our diplomats pursue on a daily basis with other states. Alone among 
the great powers, Russia presents us with the challenge of trying to 
get it to conceive its interests in a fundamentally different, less 
confrontational way.
    Some commentators deride this idea, suggesting instead that we can 
do all the business we need with Russia as we find it (better this, 
they say, than obsessing about the Russia we wish for). And in any 
case, they believe, the interests reflected in Russian policy are 
largely immutable.
    Neither of these propositions is correct. Expanded cooperation with 
Russia is possible even within the prevailing conception of its 
interests, but far more would be possible if its leaders viewed 
security in ways more congruent with the outlook of other European 
states. Is such a transformation possible? Of course. Nothing is more 
contrary to historical experience--or for that matter, insulting to 
Russia--than to suggest that it alone among the world's major states 
must remain permanently hostage to outdated, counterproductive 
conceptions of its interests, goals, and identity.
    American policy, then, should pursue practical opportunities for 
cooperation with Russia. That means advancing its integration into the 
multilateral institutions of international life where it is ready to 
contribute to them. (Right now, Russia's accession to the World Trade 
Organization is the most important unexploited opportunity.) We should 
do better in expanding bilateral cooperation as well. (Here, arms 
limitation talks offer significant possibilities.) And, particularly 
where Russia's leaders have themselves acknowledged the legitimacy of 
the enterprise, we should not miss openings to address the connection 
between the country's internal transformation and its place in the 
world. (On this point, there is no more tantalizing invitation than 
President Medvedev's observation that whether Russia enjoys respect 
abroad depends on whether it observes the rule of law at home.)
    In pursuing these cooperative steps, we should not forget the 
larger goal of our engagement with Russia--a relationship not limited 
to refighting battles of the last decade, or of the last century. That 
``reset'' button remains to be pushed.
    Thank you, Mr. Chairman.

    The Chairman [presiding]. Thank you very much, Mr. 
Sestanovich, I appreciate it.
    Mr. Cohen, you can be next. If I could ask you, also, the 
next two witnesses, to do as Mr. Sestanovich with a good 
summary like that; your full testimonies will be placed in the 
record as if stated in full, but that'll give the committee 
more time to engage, and we appreciate it.
    Mr. Cohen.

 STATEMENT OF ARIEL COHEN, SENIOR RESEARCH FELLOW, RUSSIAN AND 
    EURASIAN STUDIES AND INTERNATIONAL ENERGY SECURITY, THE 
              HERITAGE FOUNDATION, WASHINGTON, DC

    Mr. Cohen. Thank you, Mr. Chairman, Senator Lugar. You've 
contributed so much for the improvement of United States-
Russian relations. Unfortunately, they're not in best shape 
today. Thank you, Senators, I am delighted to be here and will 
request that my full remarks will be entered into the record. I 
would also to append a forthcoming report coming out this week 
that The Heritage Foundation is publishing, ``Russia and 
Eurasia: A Realistic Policy Agenda for the Obama 
Administration.''
    President Obama expressed a desire to constructively engage 
Russia, and these concerns, of course, are valid. However, when 
we are looking at Russia's behavior over the last several 
years, especially with regards to its neighbors and the 
rhetoric that, frankly, is quite disconcerting with regards to 
the revision of the global security and economic architecture, 
questions arise what Russia is really trying to accomplish. 
Russia's opposition to missile defense in Central Europe, only 
10 interceptors, Russia's efforts, together with China, to push 
United States bases out of Central Asia; 2005 they accomplished 
our eviction from the K2 base in Uzbekistan, and this year the 
announcement about the Manas base in Kyrgyzstan.
    Russia is using European increased dependence on gas, 
natural gas, and energy in general, as a political tool. It's 
not just Ukraine, Mr. Chairman, it's also a country as 
significant as Germany.
    After the Georgian war, Russia does not respect the terms 
of the Medvedev-Sarkozy agreement and is planting five bases, 
military bases, in Abkhazia and South Ossetia, three in 
Abkhazia, the naval base in Ochamchire, the Bombora air base 
near Gudauta, and alpine Special Forces base in the Kodori 
Gorge, and two bases in South Ossetia.
    NATO's desire to cooperate with Russia on bringing under 
control the Iranian nuclear program is understandable; however, 
Russia not only supplied a civilian reactor to Iran, the 
Bushehr reactor, it also trained hundreds of scientists and 
engineers from Russia to work in dual-use technology fields, 
both nuclear and ballistic missiles. Russia has multibillion-
dollar interests in Iran, and is using Iran as a battering ram 
for its interests in the Middle East.
    The relationship between Russian and Iran is strong, and 
unless the great bargain is really achieved between our 
countries and--when I--I'm talking about the ``great bargain,'' 
I would caution that giving up the missile defense in Europe is 
probably a price too high to pay to enact it, but, overall, I 
am pessimistic in looking at the chances of achieving Russia's 
disengagement from Iran or getting Russia on our side.
    So, if we're looking at the complexity of Russian foreign 
policy, including the renewed patrols of Russian strategic 
bombers along the Atlantic and Arctic coastlines and into the 
Caribbean, when we're hearing the announcement that Russia may 
renew its basing for the strategic bombers in Venezuela and 
Cuba, the question arises, What can we accomplish?
    Looking internally in Russia, what President Medvedev 
himself called ``legal nihilism'' is dangerous for the flow of 
investment, both foreign and domestic, for protection of 
property rights and for defense of human rights. The notorious 
cases of murder of journalists such as Anna Politkovskaya, a 
murder in which two of the accused co-conspirators were 
acquitted by a Russian court, by a jury, the murder in which 
the people who ordered the murder, the killing, and the 
triggermen were not even put on trial, the killing of human 
rights attorney Markelov--and the list is long. One of the more 
media-exposed cases, a case of the two YUKOS trials, the YUKOS 
company was raided and dismantled by the law enforcement in 
2003-2004, its assets were auctioned off at prices under the 
going market prices, and today the second trial in which the 
partners in YUKOS, Khodorkovsky and Lebedev, are facing very 
long sentences that effectively may be the life sentences, 
whereas justice is not applied equally to other oligarchs who 
may have been involved in alleged crimes as bad or worse than 
these two.
    So, the Obama administration is facing tough policy 
changes. What can it do? It can certainly explore the ways to 
cooperate with Russia on Afghanistan. The threat of the Taliban 
is significant for Russia's allies in Central Asia. Taliban was 
the only country that recognized the secessionist Chechen 
regime in Chechnya. Russia would benefit from cooperation with 
NATO on Afghanistan, and Russia would benefit, in cooperation 
with us, to prevent Iran from becoming a nuclear power on its 
borders.
    However, on some of other issues that were mentioned here, 
such as the 123 Agreement, we need reciprocity from Russia. We 
need to stop Russian cooperation on Iran. We would like to see 
adequate liability protection for United States companies doing 
business in Russia, and provision of two-way market access to 
American companies in the Russian nuclear market.
    The Obama administration should communicate in the current 
negotiations that Russia's close ties with Venezuela, Cuba, 
Iran, and even Hamas and Hezbollah, are counterproductive. 
Russian embrace of Iran and Syria--I did not mention that 
Russia is planning to put two naval bases in Syria, is 
considering return to an anchorage in Libya, and is considering 
replanting its base, as it used to have during the cold war, at 
the Sokotra Island, near the entrance to the strategic Babel-
Mandeb Strait between the Red Sea and the Indian Ocean.
    So, when we're talking about pushing the reset button, we 
have to undertake a full assessment of our goals, vis-a-vis 
Russia, and formulate the policy, just as in the nuclear field 
we need to undertake the reassessment of our nuclear policy and 
targets. Unfortunately, this reassessment was not taken before 
the rhetoric about pushing the reset button began.
    Furthermore, we need to make clear to Russia that a new 
military venture against Georgia will not be tolerated. We need 
to boost our presence in the Arctic, because the Russians are 
talking about territorial claims in the Arctic the size of 
almost all of Western Europe, and the Arctic is very rich with 
hydrocarbons and strategic mineral reserves
    To conclude, Russia is, and will remain, one of the most 
significant foreign policy challenges for the Obama 
administration for years to come. Despite the recent toned-down 
rhetoric stemming from the economic downturn--and the economic 
downturn in Russia, relatively speaking, is worse than here--
there are rumblings in the Russian military, now, that the 
Medvedev-Putin administration is trying to calm down by talking 
about a massive bailout, a rearmament package that'll kick in, 
in 2011. But, the global--the importance of Russian policy in 
the global Obama agenda needs to be high and needs to be given 
a lot of attention. Unfortunately, the key officials to deal 
with that have not been nominated yet.
    Last, we should not forgo a core American foreign policy 
objective with regards to Russia--promoting democracy, good 
governance, transparency, and the rule of law. History has 
shown that the most dangerous times are ones when new powers--
or, in this case, a resurgent one--is attempting to challenge 
the status quo. The United States and our allies must remain 
vigilant and willing to defend freedom and prevent Russia from 
engendering shifts in the global power structures detrimental 
to our national security interests.
    Thank you.
    [The prepared statement of Mr. Cohen follows:]

   Prepared Statement of Ariel Cohen, Ph.D., Senior Research Fellow, 
  Russian and Eurasian Studies and International Energy Security, The 
                  Heritage Foundation, Washington, DC

           how the obama administration should engage russia
``Barack Obama and Joe Biden will address the challenge posed by an 
increasingly autocratic and bellicose Russia by pursuing a new, 
comprehensive strategy that advances American national interests 
without compromising our enduring principles.''

--``Meeting the Challenges of a Resurgent Russia'' http://
www.barackobama.com.

    President Barack Obama has expressed a desire to constructively 
engage Russia and has also expressed concerns over Russia's 
increasingly truculent behavior and the threat it poses to the current 
international system. These concerns are valid and the threat of a 
resurgent Russia is palpable.\1\ Moscow's efforts at carving out a 
``sphere of privileged interests'' in Eurasia and rewrite the rules of 
European security have negative implications for United States-Russia 
relations, international security, the autonomy of the independent 
former Soviet states, and Europe's independence.
    Despite these circumstances, the Obama administration seems to be 
rushing ahead with a ``carrots-and-cakes'' approach to the Kremlin, 
judging by Vice President Joe Biden's recent speech at the annual 
Munich international security conference. In this speech, the Vice 
President outlined the Obama administration's foreign policy vision for 
the first time on the world stage and suggested that America push ``the 
reset button'' on relations with Russia.\2\ Notably absent from this 
speech was any mention of any recent events in Eurasia.
    While in Moscow, U.S. Under Secretary of State for Political 
Affairs William Burns mirrored this approach. Burns stated that the 
U.S. was willing to review ``the pace of development'' of its missile 
defense shield in Europe in exchange for Russian cooperation on 
dissuading Iran from pursuing a nuclear weapon, and downplayed the 
importance of a U.S. air base in Kyrgyzstan from which the U.S. 
military has just received an eviction notice.\3\ Other diplomatic 
efforts to thaw United States-Russian relations are underway as well.
    According to The New York Times, President Obama sent a ``secret,'' 
hand-delivered letter to President Dmitry Medvedev 1 month ago. The 
letter reportedly suggests that if Russia cooperated with the United 
States in preventing Iran from developing long-range nuclear-missile 
capabilities, the need for a new missile defense system in Europe would 
be eliminated--a quid pro quo that President Obama has denied. The 
letter proposes a ``united front'' to achieve this goal.\4\ Responding 
to the letter, Medvedev appeared to reject the offer and stated that 
the Kremlin was ``working very closely with our U.S. colleagues on the 
issue of Iran's nuclear program,'' but not in the context of the new 
missile defense system in Europe. He stated that ``no one links these 
issues to any exchange, especially on the Iran issue.'' Nevertheless, 
Medvedev welcomed the overture as a positive signal from the Obama 
administration.\5\
    Secretary of State Hillary Clinton met with Sergei Lavrov, Russia's 
Foreign Minister, in Geneva on March 6, following a gathering of NATO 
Foreign Ministers in Brussels.\6\ As a token, Secretary Clinton brought 
a yellow box with a button and the words ``reset'' on both sides in 
English and Russian. Apparently, the State Department got the Russian 
word for ``reset'' wrong and instead it said ``overload.'' This is 
highly symbolic, as haste and incompetence in foreign affairs are the 
enemies of wisdom, or as the Russian proverb goes, ``Measure seven 
times before cutting.''
    President Obama is also likely to meet President Medvedev in London 
at the G-20 summit in April.\7\ This meeting will build on the progress 
made in Geneva and on other initiatives such as those in the secret 
letter. These meetings will also occur in a context where both the 
Obama administration and Russia want a new legally binding treaty for 
limiting strategic nuclear arms. Ostensibly, this new treaty will be 
designed to replace the 1991 Strategic Arms Reduction Treaty 
(START).\8\ START is scheduled to expire late this year, unless it is 
extended, which the Obama administration sees as problematic.
    Russian media leaks seem to reciprocate American overtures and 
suggest that the Kremlin may not deploy its Iskander short-range 
missiles in Kaliningrad; various speeches and comments by President 
Medvedev, and Prime Minister Vladimir Putin's statements in Davos on 
January 28 that ``great powers need to cooperate to find an exit from 
the current global economic crisis'' may be signals that Moscow is 
exploring ways to improve relations with Washington, albeit driven by 
the plummeting economy at home.\9\
    While an improvement in United States-Russian relations is 
certainly desirable, haste is ill advised for the Obama administration, 
which has not yet announced its key officials concerning Russia, nor 
conducted a comprehensive assessment of United States-Russian 
relations. Such an improvement cannot come at the expense of defending 
the U.S. and our allies from the threat of Iranian missiles; the 
independence and sovereignty of countries in the region; or the 
acceptance of a purported Russian sphere of influence. Foremost, the 
Obama administration must not allow Moscow to rewrite the geopolitical 
map of Europe or to pocket the gains that it has recently made in 
Georgia, including expanding and building military bases on Georgian 
territory and evicting the U.S. from Kyrgyzstan.
Privileged Sphere of Influence
    Since the watershed war with Georgia last August, Russia has been 
on the offensive across Eurasia and has been seeking to reimpose itself 
over much of the post-Soviet space. The Kremlin is so concerned with 
the expansion of its exclusive sphere of influence that even the severe 
economic crisis--which has sent the ruble plunging 50 percent against 
the dollar and dropped Moscow stock market capitalization 80 percent--
has not slowed Russia's push into the ``near abroad.''
    Currently, Russia has a number of military bases in Europe and 
Eurasia. The Russian military recently announced the establishment of 
three military bases in the secessionist Abkhazia and is building two 
more in South Ossetia: A naval base in Ochamchire; the Bombora air base 
near Gudauta; an alpine Special Forces base in the Kodori Gorge; and 
the two bases in South Ossetia: In Java; and in the capital 
Tskhinvali.\10\ Not only do these deployments violate the spirit and 
the letter of the cease-fire\11\ negotiated by French President Nicolas 
Sarkozy after the 2008 Russo-Georgian war, but they extend Russia's 
power projection capabilities into the Southern Caucasus, threatening 
the already precarious strategic position of Georgia and the East-West 
energy and transportation corridor of oil and gas pipelines and 
railroads from the Caspian Sea to Turkey and Europe.\12\
    More recently, Washington received an eviction notice for the U.S. 
military from Kurmanbek Bakiyev, President of Kyrgyzstan. With Russian 
President Dmitry Medvedev at his side, Bakiyev announced in Moscow last 
month that he wants the U.S. to leave Manas Air Base, a key military 
cargo hub at the airport of the Kyrgyz capital Bishkek that has been 
used by NATO and U.S. troops in Afghanistan since 2001.\13\ With this 
move, the Kremlin signaled the West that to gain access to Central 
Asia, Western countries must first request permission from Moscow and 
pay the Kremlin for transit.
    NATO's desire to cooperate with Moscow is understandable in view of 
what's going on with Afghanistan and Iran. However, part of the problem 
was ``Made in Moscow'': After the ``Yankee Go Home'' announcement by 
the Kyrgyz, Moscow offered to use its cargo planes and air space to 
resupply Afghanistan. And it is refusing to compromise on Iran. This is 
Tony Soprano geopolitics: ``Use my trucks and my garbage dumps--or you 
can't do business on my turf.''
    Closing Manas Air Base for the U.S. military will complicate 
efforts to send up to 30,000 more troops to Afghanistan--a key 
objective of the Obama administration. Russia's pressure on the Kyrgyz 
government to evict the U.S. from this base raises questions about 
long-term strategic intentions of the Moscow leadership, and its 
willingness to foster a NATO defeat in Afghanistan.
    Russia may mistakenly believe that, together with China and Iran, 
it would be able to pick up the pieces in Afghanistan and prevent the 
Taliban from extending their influence over allies in Central Asia and 
the Caucasus. However, radical Islamists--not America--are the long-
term systemic threat toward the ``soft underbelly'' of Russia's south--
a threat for which Moscow lacks answers.
    Russia has taken additional steps to secure its clout from Poland 
to the Pacific. It initiated a joint air-and-missile defense system 
with Belarus, which may cost billions, and initiated a Collective 
Security Treaty Organization's (CSTO) Rapid Reaction Force (RRF), 
intended to match the forces of NATO's Rapid Response Force. The CSTO's 
RRF not only could be used to fight external enemies, but is likely to 
be available to put down ``velvet revolutions'' and quell popular 
unrest.\14\ Russia also announced the creation of a $10 billion 
stabilization fund for the seven countries which are the members of the 
Eurasian Economic Community (EEC), most of which ($7.5 billion) Moscow 
will front.\15\ The reason for the spending spree is simple: Money and 
weapons consolidate control over allies.
    Russia's effort to secure a zone of ``privileged interests'' is 
consistent with policies formulated almost two decades ago by Yevgeny 
M. Primakov, leader of the Eurasianist School of Foreign Policy, Boris 
Yeltsin's spy chief, later a Foreign Minister, and then Prime Minister. 
In 1994, under Primakov's direction, the Russian Foreign Intelligence 
Service published a report calling for Russian domination of the ``near 
abroad''--referring to the newly independent states that emerged from 
the rubble of the collapsed Soviet empire.
    Since the Iraq war, the Kremlin championed the notion of 
``multipolarity,'' in which U.S. influence would be checked by Russia, 
China, India, and a swath of authoritarian states. Today, Putin and 
Medvedev are calling for a new geopolitical and economic architecture--
not only in Europe but throughout the entire world--based on massive 
spheres of influence.
    Russia's interests in Iran are commercial and geopolitical and 
militate against substantial cooperation or any potential ``grand 
bargain.'' The so-called bargain would involve the U.S. delaying or 
canceling plans for European missile defense, scaling back relations 
with Russia's ``near-abroad'' and overlooking Russia's domestic human 
rights situation in exchange for Russian cooperation on preventing Iran 
from going nuclear. Any such bargain is doomed to failure.
    Russia's commercial interests in Iran are well known and span from 
billions in arms sales and sales of nuclear technology to lucrative oil 
and gas contracts for Russian companies on- and offshore. Yet, while 
profitable, these commercial interests often have a geopolitical angle 
as well. While the Kremlin ostensibly seeks to help the West in 
stopping Iran from enriching uranium, it also supports Iran's nuclear 
program, knowing that sanctions will help to keep Iran in Russia's 
commercial sphere of influence. This serves the dual purpose of keeping 
the U.S. and its allies preoccupied and preventing Western companies 
from helping Iran to send its gas west through the proposed Nabucco gas 
pipeline.
    Beyond this, Russia sees Iran as a key platform to revive its 
regional and international influence and block or challenge U.S. 
influence at the same time.\16\ Russia uses Iran as a geopolitical 
battering ram or wedge against the U.S. in the gulf region. Therefore, 
Russian arms sales to Iran are not only an economic and export issue, 
but a geopolitical one. It is necessary to understand that Russia and 
Iran favor a strategy of what their leaders call ``multipolarity,'' 
both in the Middle East and worldwide. Thus, the Kremlin believes that 
it is not in Russia's national interest to have a ``pro-Western'' Iran 
on its soft underbelly. In addition to these factors, any effort to 
enter such an arrangement will demand an excessively high price from 
Moscow that will continue to rise; it will also undercut America's 
friends and allies.\17\ These factors must be taken into account when 
considering any version of a ``grand bargain.''
Global Revisionism
    Despite the economic crisis that provided a reality check for 
Moscow, Russia is doing its best to continue to pursue a broad, global, 
revisionist foreign policy agenda that seeks to undermine what it views 
as a U.S.-led international security architecture. Russia's rulers want 
to achieve a world order in which Russia, China, Iran, Syria, and 
Venezuela will form a counterweight to the United States. Moscow is 
doing so despite the dwindling currency reserves and a severe downturn 
in its economic performance due to plummeting energy and commodity 
prices.\18\
    In December 2008, the Russian navy conducted maneuvers in the 
Caribbean with Venezuela, while the Russian air force's supersonic 
Tupolev TU-160 ``Blackjack'' bombers and the old but reliable TU-95 
``Bear'' turboprop bombers flew patrols to Venezuela, as well as close 
to U.S. air space in the Pacific and the Arctic.\19\
    A top Russian Air Force general recently announced that the Kremlin 
is considering a Venezuelan offer to base strategic bombers on a 
military airfield on La Orchila island off the coast of Venezuela. The 
Russian Government is also considering basing bombers out of Cuban 
territory, where there are four or five airfields with 4,000-meter-long 
runways. The Air Force official remarked that ``if the two chiefs of 
state display such a political will, we are ready to fly there.'' \20\
    Russia is also developing the Syrian ports of Tartus and Latakia in 
order to manage an expanded Russian naval presence in the 
Mediterranean, and may possibly revive an anchorage in Libya and 
Yemen.\21\ These are only some examples of how Moscow is implementing 
its global agenda. While some of these moves may be mostly symbolic, 
combined with a $300 billion military modernization program they signal 
a much more aggressive and ambitious Russian global posture. Russia is 
also overtly engaging the Hezbollah and Hamas terrorist groups.
    If Moscow's vision were to be realized, given the large cast of 
state and nonstate ``bad actors'' currently on the international stage, 
Russia's notion of ``multipolarity'' would engender an even more 
unstable and dangerous world. Additionally, the very process of trying 
to force such a transition risks destabilizing the existing 
international system and its institutions while offering no viable 
alternatives.
Russia's Strategic Energy Agenda
    On the energy front alone, the Obama administration will face a 
multiplicity of challenges emanating from Moscow. The Bush 
administration signed a ``123 Agreement'' on civilian nuclear 
cooperation and nonproliferation with Russia in May 2008, before the 
war in Georgia. The 123 Agreement, so called because it falls under 
section 123 of the U.S. Atomic Energy Act, is necessary to make nuclear 
cooperation between the countries possible. The agreement would 
facilitate Russia's foray into international nuclear waste management 
and reprocessing business by potentially providing Russian access to 
U.S. commercial technologies.\22\
    The agreement, however, ran into severe congressional opposition: 
Representative John Dingell (D-MI), then-chairman of the Energy and 
Commerce Committee, announced that, ``Even without Russia's incursion 
into Georgia, Russian support for Iranian nuclear and missile programs 
alone is enough to call into question the wisdom of committing to a 30-
year agreement to transfer sensitive nuclear technologies and materials 
to Russia.''\23\ As the Obama administration is signaling a new thaw in 
the relationship, senior Russian officials hope that the administration 
will revive the agreement, which could bring billions of dollars to the 
lean Russian coffers.\24\
    Europe's Dependence on Russian Gas. The Europeans, especially the 
Germans, are concerned with carbon emission reductions, while 
downplaying nuclear energy and coal as alternative sources of energy to 
natural gas. Russia is the primary source of Europe's gas habit. Thus, 
an environmental concern becomes a major geopolitical liability. 
Bulgaria, Slovakia, and Finland depend on Russian gas for up to 100 
percent of their imports, and are not pursuing alternatives, such as 
liquefied natural gas (LNG). Germany depends on Russian gas for 40 
percent of its consumption, a share that is set to increase to 60 
percent by 2020.
    Russia strives to dominate Europe, particularly Eastern and Central 
Europe, including Germany, through its quasi-monopolistic gas supply 
and its significant share of the oil market and of other strategic 
resources. Russia controls a network of strategically important 
pipelines and is attempting to extend it by building the Nord Stream 
pipeline along the bottom of the Baltic Sea to Germany; the South 
Stream pipeline across the length of the Black Sea; and even control 
gas pipelines from North Africa to Europe.
    Russia has shown a pattern of using revenues from its energy 
exports to fuel its strategic and foreign policy agendas. It grants 
selective access to Russian energy resources to European companies as a 
quid pro quo for political cooperation and government lobbying on the 
Kremlin's behalf. It has selectively hired prominent European 
politicians, such as the former German Chancellor Gerhard Schroeder and 
former Finnish Prime Minister Paavo Lipponen, to promote Russian 
interests and energy deals and has offered positions and lucrative 
business deals to other European political heavyweights, such as the 
former Italian Prime Minister Romano Prodi.
    Russian energy giant Gazprom has been on a shopping spree, 
acquiring European energy assets. Europe is projected to be dependent 
on Russia for over 60 percent of its gas consumption by 2030, with some 
countries already 100 percent dependent on Gazprom.\25\ Russia has 
shown a willingness to use this dependency and its energy influence as 
a tool of foreign policy, shutting down or threatening to shut down the 
flow of gas to countries perceived to be acting against Moscow's 
interest, as in the cases of Ukraine, Georgia, and Azerbaijan.
    Russia is in the process of creating an OPEC-style gas cartel with 
Iran, Qatar, and other leading gas producers, to be headquartered in 
Moscow. This cartel would allow Moscow and Tehran to dictate pricing 
policy, weigh in on new projects, and oppose any new pipelines they 
want. This may bring about even greater domination of Europe's gas 
supply than they currently enjoy, and eventually, domination of the 
global LNG markets as well.\26\ Any EU dependence on such a cartel will 
diminish its ability to support gas-exporting countries whose pipelines 
bypass Russia, will challenge EU energy liberalization and gas 
deregulation policies, and may have dire foreign policy consequences.
    The U.S. certainly should explore all available diplomatic avenues 
to curb Russian anti-American policies, yet the new administration must 
be prepared for the contingency that the United States may have no 
choice but to counter Russian revisionism through disincentives, rather 
than limiting itself to persuading the Kremlin to embrace the 
international system.
The Rule of Law: Backsliding to ``Legal Nihilism'' \27\
    The Obama administration should not neglect the deterioration of 
the rule of law in Russia, which has been taking place for the past 6 
years. The rule of law is necessary to foreign and domestic investment 
in Russia; to protect the rights of investors, including property 
rights; and to facilitate the development of civil society and human 
rights. Russia's track record of the rule of law under the Communist 
regime was abysmal, and even before that was problematic at best. Under 
President Medvedev, originally a law professor, there will hopefully be 
some change for the better.
    Under the administration of Boris Yeltsin (1992-1999), the Russian 
courts, despite their corrupt practices and lack of judicial 
sophistication, slowly but surely were becoming more independent. In 
2002-2003, however, a reversal began to take place. Specifically, the 
state increasingly used so-called telephone justice--a practice in 
which senior officials of the executive branch call upon judges or 
their staff, including in the Supreme Court system, and tell them how 
to decide cases.\28\ The state also began interfering more heavily even 
in relatively small disputes under the guise of protecting ``paramount 
state interests.'' Russia's judges are dependent on the state for their 
careers and social benefits, such as appointments, apartments, cars, 
vacations, promotions, etc. Thus, the state yet again has brought the 
courts under its control and subjugated the judicial branch to the 
executive.
    State officials have been increasingly involved in hostile 
takeovers and appropriations ranging from intellectual property in film 
(even cartoons); to lucrative trademarks, such as the Stoli vodka; and 
most of all, to companies developing natural resources.\29\
    The Watershed. The first Yukos case (2003-2004), in which the most 
successful and transparent Russian oil company was taken over, was a 
watershed in the downturn of Russian rule of law, and symbolizes its 
demise. Yukos was broken up based on trumped-up tax charges, although 
many government officials clearly stated that its owner, Mikhail 
Khodorkovsky, was perceived as a political threat, because he supported 
liberal political parties, Internet projects, and institutions of civil 
society, among other reasons.\30\
    The persecution of Yukos undermined the notion of justice being 
universal because it selectively targeted a politically inconvenient 
corporation. Other Russian oligarchs, who were often involved in 
unsavory business practices but were politically loyal to the regime, 
were not prosecuted.
    Yukos property was sold at auction to the state oil company Rosneft 
at prices considerably lower than the market value. Rosneft is 
controlled by President Putin's confidantes and political allies. It is 
hardly accidental that after the Yukos affair, Russian and Western oil 
companies came under tremendous pressure from the Russian state, which 
used the bureaucracy, such as tax and environmental protection 
agencies, to strip them of their property rights. The victims of this 
policy included Exxon, Shell, British Petroleum, William Browder's 
Hermitage Capital, and the Russian companies Rusneft and Metchel, to 
mention a few.
    Having targeted Khodorkovsky, the richest and most successful man 
in the country, the executive branch demonstrated that it can do 
anything to anybody--all the oligarchs and politicians quickly got the 
message that, in the words of Star Trek's The Borg, ``Resistance is 
futile.''
    Today, Khodorkovsky is facing a new trial scheduled to begin around 
April 1--around the same time Presidents Obama and Medvedev meet in 
London for the first time. The trial is widely believed to be a 
political vendetta and to have no legal merit. As the new trial gets 
underway, the only hope expressed by Russian experts is that President 
Medvedev, who spoke about the ``legal nihilism'' which is plaguing 
Russia, may order an impartial trial, or pardon Khodorkovsky 
afterward--a long shot indeed.\31\
    Journalists Murdered. Unfortunately, President Medvedev seems not 
to be excessively concerned about the October 2006 murder of crusading 
journalist Anna Politkovskaya, whose killers were acquitted by a Moscow 
jury this past February.\32\ Moreover, the prosecutors never presented 
the court with the names of those suspected of ordering her murder, nor 
that of the suspected gunman, while an internal security service 
colonel closely connected to the conspiracy was never put on trial for 
her murder.
    Nor has Medvedev pressed to find the killers of human rights lawyer 
Stanislav Markelov, who was gunned down a stone's throw from the 
Kremlin together with another journalist, Anastasia Baburova, this past 
February.\33\
    Nothing was done to solve the murders of other journalists, 
including defenestration of Kommersant Daily's military correspondent 
Ivan Safronov, the poisoning of Yuri Shchekochikhin, Deputy Editor of 
Novaya Gazeta,\34\ where Politkovskaya and Baburova worked, or the 
fatal 2004 shooting of Paul Klebnikov, an American of Russian descent 
who was editor in chief of Russian Forbes.\35\ It took an intervention 
by Mikhail Gorbachev to stop, at least for now, threats against Yulia 
Latynina, a brave writer and investigative journalist. Violations of 
Russian law and constitution tragically continue, despite all the talk 
of restoring legal norms and fighting corruption. No progress was 
reported in the mysterious poisoning. No progress was reported in the 
Russian cooperation over the mysterious assassination of Alexander 
Litvinenko, a Russian former secret service officer poisoned in the 
United Kingdom with the help of the radioactive element polonium. It is 
still unclear who authorized, ordered, and supervised this 
assassination. In fact, the suspected assassin is running for the mayor 
of the Russian Olympic town of Sochi.\36\
    Yet, without a fundamental legal reform, a fight against 
corruption, and return to judiciary independence, Russia will linger at 
the bottom of the Transparency International Corruption Index, and The 
Heritage Foundation's Index of Economic Freedom.\37\ If Russia does not 
return to internationally recognized legal practices, investment 
inflows are likely to slow down, and capital will continue to flee. 
According to a recent study, the Russian courts acquit 1-2 percent of 
the accused, whereas, for comparison, even under the Soviet dictator 
Joseph Stalin, Soviet courts acquitted 10-12 percent of those accused, 
and in Europe, the acquittal rates are 20-40 percent. This is hardly a 
picture of the rule of law.\38\
Russia Policy for the Obama Administration
    To meet today's challenges and preserve the security of Europe and 
Eurasia, the Obama administration should conduct a comprehensive 
assessment of United States-Russian relations and then prepare a 
detailed foreign policy agenda that protects American interests; checks 
the growing Russian influence in Europe, the Middle East, and Eurasia; 
deters aggression against the U.S., its allies, and its strategic 
partners; encourages Russia to adhere to the rule of law at home and 
abroad; and to act as a responsible player in the international system.
    Specifically, the Obama administration should use its political 
capital to maintain and expand transatlantic unity by showing 
leadership within NATO. Russia is seeking to divide the United States 
and its European allies, not only through energy sources, but also by 
exploiting existing differences over missile defense, the Iraq war, and 
other issues. In its attempt to undermine the global posture of the 
U.S. and its allies, the Kremlin offers incentives for European powers 
to distance themselves from the United States. Germany, with its 
growing dependence on Russian natural gas and its opposition to further 
NATO enlargement and missile defense deployment in Central Europe is a 
good example. Essentially, in order for Russia to successfully carry 
out its foreign policy agenda it needs to delay and thwart any strong, 
unified energy-policy response from the United States and its allies. 
Moscow is seeking to gain power and influence without being countered 
by any significant challenge. The National Security Council and the 
U.S. State Department should develop a mechanism for regular 
consultation with our allies with regards to Russia, with coordinated 
initiatives toward regional conflicts, institutional enlargement, 
conventional weapons control, and energy policy.\39\
    The Obama administration should refrain from resubmitting the 123 
nuclear agreement with Russia for congressional approval until Russia 
meets the following three conditions:
    (1) Russia discontinues its support of Iran's military nuclear 
energy program and provides full disclosure. Indeed, it is Russian 
nuclear fuel that undermines Iran's claim that it needs uranium 
enrichment. Russia must discontinue any efforts that advance Iran's 
heavy-water-reactor program, enrichment activities, spent-fuel 
reprocessing programs, missile technology transfer, or engineer and 
scientist training for nuclear and missile technology. Russia must 
disclose its past activities in support of the Iranian program, as well 
as what it knows about any third party assistance. Russia should work 
with the United States and other nations to compel Iran to discontinue 
any fuel enrichment or spent-fuel reprocessing, which would give Iran 
access to bomb-grade material. The U.S. should use the prospect of the 
123 Agreement as an incentive to halt Russia's interactions with Iran 
on nuclear issues.\40\
    (2) The Obama administration through the Office of the United 
States Trade Representative should also request that Russia provide 
adequate liability protection for U.S. companies doing business in 
Russia. Even with a 123 Agreement in place, U.S. companies would likely 
forgo commercial activities in Russia due to a lack of liability 
protection. Indeed, many countries use the lack of liability protection 
for U.S. companies as a means to protect their domestic nuclear 
industry from U.S. competition.\41\
    (3) The U.S., through the Office of the United States Trade 
Representative, should demand that Russia provide two-way market access 
to American companies. This agreement should not be simply an avenue to 
bring Russian goods and services to the U.S. market; it is equally 
important that U.S. companies are allowed to compete for business in 
Russia. While Russian nuclear technology is second to none, foreign 
competition will assure that the highest quality standards are 
maintained throughout the country.\42\
    The Obama administration, through the National Security Council and 
the U.S. State Department and Departments of Energy, should work with 
American allies and partners to diminish dependence on Russian energy 
and shore up the East-West energy corridor. This is a vital component 
of any strategy designed to stem Russian aspirations to neutralize and 
``Finlandize'' Europe by weakening its strategic alliance with the 
United States. The U.S., under President Obama's leadership, should 
encourage its European allies to diversify their sources of energy, to 
add LNG and non-Russian-controlled gas from the Caspian, and nuclear 
energy and coal, as well as economically viable renewable energy 
sources. The U.S. should also encourage Russia to act as a responsible 
supplier of energy by opening development of its resources to 
competitive bidding by Russian and foreign companies, whether private 
or state-owned. Since the U.S. is interested in a level playing field 
in the energy and natural resources area, the Obama administration 
should offer political support by encouraging European and American 
companies' efforts to bring natural gas from the Caspian to Europe. 
Washington should also encourage Moscow to decouple access to Russia's 
natural resources sectors from the Kremlin's geopolitical agenda in 
compliance with the Energy Charter that Russia signed, but did not 
ratify.
    The Obama administration, through the National Security Council and 
the U.S. State Department, should oppose the Kremlin's support of anti-
American state and nonstate actors (Venezuela, Cuba, Iran, Syria, 
Hamas, Hezbollah). Russia's revisionist foreign policy agenda has 
extended to cultivating de facto alliances and relationships with a 
host of regimes and terrorist organizations hostile to the United 
States, its allies, and its interests. Even as the United States seeks 
Russia's assistance in ending Iran's nuclear program, Moscow is selling 
Tehran sophisticated air-defense systems and other modern weapons and 
technologies, including dual-use ballistic missile know-how, ostensibly 
for civilian space purposes. Russia cannot improve relations with the 
United States while maintaining ties with aggressive powers and 
terrorists. The Obama administration should advise Russia to distance 
itself from the likes of Hugo Chavez, Mahmoud Ahmadinejad, and other 
troublemakers with global reach.
    Washington should undertake necessary strategic planning before 
initiating new strategic nuclear-arms-control negotiations with Russia. 
The White House and the Kremlin appear eager to negotiate a new arms 
control treaty governing strategic nuclear forces on both sides. But at 
this early juncture in the Obama administration, the White House has 
not conducted the necessary reviews of the broader national security 
strategy, let alone more technical analyses regarding the future 
military requirements of the U.S. strategic nuclear force. At the 
outset, the Obama administration needs to establish a new policy that 
pledges to the American people and U.S. friends and allies that it will 
serve to ``protect and defend'' them against strategic attack. The 
administration, therefore, should defer negotiations on a new strategic 
nuclear arms treaty with Russia until after it has drafted the national 
security strategy, the national military strategy, issued a new 
targeting directive, and permitted the military to identify and 
allocate targets in accordance with the protect-and-defend 
strategy.\43\
    Further, the Obama administration need not be overly concerned 
about the expiration of START. U.S. and Russian strategic nuclear 
weapons, specifically those that are operationally deployed, will be 
controlled under the 2002 Strategic Offensive Reductions Treaty (SORT, 
commonly called the Moscow Treaty for the city where it was signed). 
The Moscow Treaty requires both sides to reduce the number of 
operationally deployed strategic nuclear warheads to between 1,700 and 
2,200. It will not expire until the end of 2012. Thus, there is no 
reason for the U.S. and Russia to negotiate a new treaty limiting 
strategic nuclear arms against the artificial deadline of START's 
expiration. Indeed, it would be unwise to do so because an effective 
arms control treaty requires careful planning and preparation.
    Washington should maintain missile defense plans for Poland and the 
Czech Republic. If a ``grand bargain'' between Moscow and Washington 
abandons the third site in Poland and the Czech Republic, it would 
compromise American interests, damage relations with important allies 
and open up the United States to extortion. Moreover, Russian interests 
in Iran militate against such a deal. Nor should the administration 
cancel America's ballistic defense program in response to Russian 
threats--or in response to recent promises by President Medvedev not to 
deploy short-range ballistic missiles to the Belarussian-Polish border 
or to the Kaliningrad exclave. To cancel this program as a concession 
to the Russians would send a clear signal of American weakness, 
encouraging further aggression against Russia's neighbors. Russia must 
not come to believe it can succeed in altering U.S. policy through 
threats, or it will continue to use these and other destabilizing 
gestures more consistently as tools of foreign policy--to the detriment 
of American and world security. Backing down on missile defense would 
also strengthen the pro-Russian political factions in the German 
Foreign Ministry, dominated by Social Democrats, in the German business 
community, and elsewhere in Europe. However skeptical some in the Obama 
administration may be of the functionality and cost-effectiveness of 
the missile-interceptor system, the fact is that this is the only 
defense the U.S. and its allies currently have against a potential 
Iranian ballistic missile launch, as well as a powerful symbolic 
bargaining chip in discussions with Russia. The U.S. should also engage 
Russia in discussions on ballistic missile cooperation--without 
granting Moscow a veto over missile deployment in Europe.
    Washington should support Georgia's and Ukraine's territorial 
integrity and sovereignty. Such support should involve the Departments 
of State, Defense, Energy, and USAID and be coordinated by the National 
Security Council. During the Presidential campaign, Candidate Obama 
made multiple laudable statements expressing firm support for Georgia's 
territorial integrity, denying the validity of Russia's recognition of 
Abkhazia and South Ossetia, and expressing a willingness to extend NATO 
Membership Action Plans (MAPs) to Georgia and Ukraine (which were 
recently replaced by the Bush administration with Strategic Cooperation 
Charters). Likewise, Secretary Clinton's words on her recent visit to 
Brussels were encouraging: ``We do not recognize any sphere of 
influence on the part of Russia, or their having some kind of veto 
power over who can join the EU or who can join NATO.'' Yet there are 
lingering doubts whether the U.S. will follow through on its stated 
principles of supporting Georgia, especially its NATO aspirations and 
defense reform plans.
    President Obama should now provide the firm foundation for a policy 
devoted to deterring Russia from taking similar action in the future, 
for example against Ukraine or Azerbaijan. The Obama administration 
should implement the Strategic Cooperation Charters signed with Ukraine 
and Georgia on December 19, 2008, and January 9, 2009, respectively. In 
negotiations with Russia, the Obama administration should also stress 
that the U.S. will not tolerate any foreign adventures in Georgia. If 
such admonitions are not made, this may be taken as a de facto green 
light for a new conflict.
    While there is little chance that Russia will renounce its 
recognition of Abkhazia or South Ossetia, the Obama administration 
should explore every option for making Russia pay a diplomatic and 
economic price for its recent acts of aggression against Georgia's 
territorial integrity, sovereignty, and international law. To do 
otherwise will only invite Russia to try more of the same in the 
future. The White House should rethink the format of the G-8. It should 
expand the current G-8 to G-20, in which Russia, China, Brazil, India, 
and other major powers participate, while holding future meetings of 
the leading industrial democracies in the G-7 format. This will send a 
clear signal to Moscow that if it chooses to remove itself from the 
boundaries of acceptable behavior in the club of the largest 
democracies, it will no longer enjoy the benefits of being part of that 
club.
    The United States must boost its presence in the Arctic. Russia has 
designs on a great part of the Arctic--an area the size of Germany, 
France, and Italy combined. Recently, the deputy chairman of the Duma, 
the polar explorer Artur Chilingarov, announced that Russia will 
control the Northern Sea Route, which is in international waters.\44\ 
The Arctic has tremendous hydrocarbon and strategic mineral reserves. 
Controlled by Moscow, the Arctic would offer Moscow another means of 
consolidating Russia's global energy dominance. The United States 
should ensure that its interests are respected in the region by 
modernizing and expanding its icebreaker fleet, updating its surveys of 
strategic resources, and expanding efforts with NATO and other Nordic 
states (Canada, Norway, and Denmark, etc.) to develop and coordinate 
Arctic policy. As much as the Arctic may seem a distant priority given 
the economic and defense challenges facing the Obama administration, 
the United States cannot afford to ignore this strategically vital 
region.
    Finally, The administration should appeal to President Medvedev to 
stop what he himself has called law enforcement's ``nightmarish 
practices'' toward business; start reforming the legal system; ban the 
so-called power ministries (i.e., the secret police and law 
enforcement, including the Investigatory Committee of the Ministry of 
Internal Affairs) and their leaderships from engaging in expropriations 
and extortion; fight corruption in the judiciary and in law 
enforcement; and allow enforcement of foreign arbitral awards in 
Russia. The Obama administration should also request that President 
Medvedev order renewed investigations of the Politkovskaya and the 
Markelov cases, and ask for the release of Khodorkovsky from 
incarceration through either a fair trial or a Presidential pardon. 
While unlikely, these measures, if undertaken, would be a strong signal 
to the U.S., to the Western business community, and to the Russian 
people, that when it comes to the rule of law, a clean break with the 
lawless past is underway, and that Russia may be joining the community 
of civilized nations.
Conclusion
    Russia is and will remain one of the most significant foreign 
policy challenges facing the Obama administration. Despite the recent 
toned-down rhetoric stemming from the economic downturn, the Kremlin 
needs an ``outside enemy'' to keep its grip on power at home. Yet, this 
truculence clashes with Russia's need to fight the financial crisis in 
cooperation with major economic powers; attract foreign investment; 
switch the engine of its economic growth from natural resources to 
knowledge and technology; and ensure steady commodities exports. From 
the Kremlin's perspective and due to the democracy deficit in Russia, 
the legitimacy and popularity of the current regime necessitates 
confrontation with the West, especially with the United States. The 
image of an external threat is exploited to gain popular support and 
unite the multiethnic and multifaith population of the Russian 
Federation around Prime Minister Putin and President Medvedev.
    Despite the need to attract investment, the Kremlin is likely to 
pursue an antistatus quo foreign policy as long as it views the United 
States as weakened or distracted due to the combined effects of the 
economic crisis; U.S. involvement in Afghanistan and Iraq; the presence 
of the Taliban and al-Qaeda in Pakistan; the need to deal with the 
fast-developing prospect of a nuclear-armed Iran; and preoccupation 
with the Arab-Israeli conflict.
    The Obama administration must raise the profile of Russian, 
Eurasian, and Caspian energy on the U.S. foreign policy agenda. Further 
failures to stem Russia's revisionist efforts will lead to a 
deteriorating security situation in Eurasia and a decline of American 
influence in Europe and the Middle East.
    With regards to renewed U.S. engagement with Russia and pressing 
the ``reset button,'' there is concern that there may be naivete about 
what can be accomplished or achieved with Russia. An improvement of 
United States-Russia relations is certainly desirable, but it should be 
calibrated with concrete Russian actions that support U.S. interests. 
If Russia, reconsiders its anti-American stance, the United States 
should be prepared to pursue matters of common interest, such as the 
recent agreement on military supplies to Afghanistan and the strategic-
weapons-limitations agreement.
    Lastly, the Obama administration should not forgo a core American 
foreign policy objective with regards to Russia: Promoting democracy, 
good governance, and the rule of law. As events have shown in recent 
years, the prospects for Russia becoming a law-governed society have in 
many ways receded. Yet, the United States has a strong interest in 
Russia's eventual transformation into a liberal, free-market, law-
governed democracy. Such a transformation will improve its relations 
with the United States, its neighbors and enable Russia to make a more 
substantial contribution to the international system.
    History has shown that the most dangerous times are the ones when 
new powers (or in this case, resurgent ones) attempt to overturn the 
status quo. The United States and its allies must remain vigilant and 
willing to defend freedom and prevent Russia from engendering shifts in 
the global power structure detrimental to U.S. national security 
interests.

------------------

    \1\ Ariel Cohen, ``The Russian-Georgian War: A Challenge for the 
U.S. and the World,'' Heritage Foundation WebMemo No. 2017, August 11, 
2008, at http://www.heritage.org; Ariel Cohen and Owen Graham, 
``European Security and Russia's Natural Gas Supply Disruption,'' 
Heritage Foundation WebMemo No. 2194, January 8, 2009, at http://
www.heritage.org; Ariel Cohen, ``U.S.-Russian Relations After Manas: Do 
Not Push the Reset Button Yet,'' Heritage Foundation WebMemo No. 2286, 
February 10, 2009, at http://www.heritage.org.
    \2\ Joseph R. Biden, ``Speech at the 45th Munich Security 
Conference,'' February 7, 2009, at http://www.securityconference.de 
(February 27, 2009).
    \3\ Ross Colvin, ``U.S. May Moderate Shield Plan if Russia Helps on 
Iran,'' Reuters, February 13, 2009, at http://uk.reuters.com(February 
27, 2009).
    \4\ Peter Baker, ``Obama Offered Deal to Russia in Secret Letter,'' 
The New York Times, March 2, 2009, at http://www.nytimes.com(March 3, 
2009), and ``Russian President to Face Questions Over U.S. Letter,'' 
International Herald Tribune, March 3, 2009, at http://www.iht.com 
(March 3, 2009).
    \5\ Peter Baker, ``Russian President Reacts to U.S. Offer on 
Iran,'' The New York Times, March 3, 2009, at http://www.nytimes.com 
(March 3, 2009).
    \6\ Sue Pleming, ``Clinton Plans Meeting With Russian Minister,'' 
Reuters, February 13, 2009, at http://www.reuters.com (February 27, 
2009).
    \7\ ``Obama, Medvedev Likely to Meet in London,'' United Press 
International, February 14, 2009, at http://www.upi.com (February 27, 
2009).
    \8\ Baker Spring, ``Concerns on Proposed Reduction of U.S. Nuclear 
Stockpile to 1,000 Weapons,'' Heritage Foundation WebMemo No. 2274, 
February 5, 2009, at http://www.heritage.org
    \9\ ``Russia: Missile Plans Depend on U.S.,'' International Herald 
Tribune, February 6, 2009, at http://www.iht.com (February 27, 2009).
    \10\ Ariel Cohen, ``Swords and Shields: Russia's Abkhaz Base 
Plan,'' Georgian Daily, February 4, 2009, at http://www.heritage.org; 
Ariel Cohen, ``Russia Regains Key Air Base to Project Power in 
Caucasus,'' United Press International, February 5, 2009, at http://
www.upi.com/Security (February 27, 2009).
    \11\ U.S. State Department, ``Russian Bases in Georgia,'' February 
6, 2009, at http://www.state.gov/ (February 27, 2009).
    \12\ Svante E. Cornell, ``Pipeline Power: The War in Georgia and 
the Future of the Caucasian Energy Corridor,'' Georgetown Journal of 
International Affairs, Vol. 10, No. 1 (Winter/Spring 2009), at http://
www.isdp.eu (February 27, 2009).
    \13\ Cohen, ``U.S-Russian Relations after Manas: Do Not Push the 
Reset Button Yet.''
    \14\ ``Russia, Belarus to Create Joint Air Defense System,'' 
International Herald Tribune, February 3, 2009, at http://www.iht.com 
(February 27, 2009); Vladimir Isachenkov, ``7 Ex-Soviet Nations to Form 
Rapid Reaction Force,'' Associated Press, February 4, 2009, at http://
www.google.com (February 27, 2009).
    \15\ Sergei Blagov, ``Russia Pledges to Rescue Post-Soviet 
Economies,'' Eurasia Daily Monitor, February 13, 2009, at http://
www.jamestown.org (February 27, 2009). EEC includes Russia, Belarus, 
and the five Central Asian republics.
    \16\ Leon Aron, ``Why Obama's First Outreach to Russia Is Bound to 
Fail,'' USA Today, March 10, 2009, at http://aei.org (March 16, 2009).
    \17\ David Kramer, ``No Grand Bargain,'' The Washington Post, March 
6, 2009, at http://www.washingtonpost.com (March 16, 2009); Stephen 
Blank, ``Russia and Iran's Missiles,'' World Politics Review, February 
9, 2009, at http://www.worldpoliticsreview.com (March 16, 2009).
    \18\ Catherine Belton, ``Russian Economy: The Putin Defense,'' The 
Financial Times, December 28, 2008, at http://www.ft.com (February 27, 
2009).
    \19\ ``Russian Strategic Bombers Land in Venezuela,'' Novosti, 
September 10, 2008, at http://en.rian.ru (February 28, 2009).
    \20\ Ellen Barry, ``Russia Is Weighing 2 Latin Bases, General 
Says,'' The New York Times, March 15, 2009, at http://www.nytimes.com 
(March 16, 2009).
    \21\ David Eshel, ``Russian Mediterranean Naval Build-Up Challenges 
NATO Sixth Fleet Domination,'' undated, http://defense-update.com 
(February 28, 2009).
    \22\ Guy Faulconbridge, ``Russia Hopes U.S. Congress Will Pass 
Nuclear Pact,'' Reuters, February 19, 2009, http://www.reuters.com 
(March 9, 2009)
    \23\ Steven Lee Myers and Brian Knowlton, ``U.S. Backs Off Civilian 
Nuclear Pact With Russia,'' The New York Times, September 9, 2008, at 
http://www.nytimes.com (March 9, 2009).
    \24\ Faulconbridge, ``Russia Hopes U.S. Congress Will Pass Nuclear 
Pact.''
    \25\ Jeffrey Mankoff, Eurasian Energy Security (Washington, D.C.: 
Council on Foreign Relations Press, 2009), p. 12, at http://www.cfr.org 
(February 18, 2009).
    \26\ Ariel Cohen, ``OPEC Redux: Responding to Russian-Iranian Gas 
Cartel,'' Heritage Foundation WebMemo No. 2118, October 27, 2008, at 
http://www.heritage.org.
    \27\ ``Medvedev Calls for Strengthened Fight Against Corruption in 
Russia,'' International Herald Tribune, January 22, 2008, at http://
www.iht.com.
    \28\ Alena Ledeneva, Telephone Justice in Russia, Journal of Post-
Soviet Affairs, Bellwether Publishing, Volume 24, Number 4 (October 
09December 2008), pp. 324 09350.
    \29\ Andrew E. Kramer, ``Former Russian Spies Are Now Prominent in 
Business,'' The New York Times, December 18, 2007, at http://
www.nytimes.com.
    \30\ Artyom Liss, ``Yukos Trial Raises New Questions,'' BBC News 
Service, June 1, 2005, at http://news.bbc.co.uk.
    \31\ ``New Trial of Jailed Oligarch Could Reveal Medvedev's True 
Intentions'' The Sunday Herald, March 15, 2009, at http://
www.sundayherald.com.
    \32\ ``Politkovskaya Suspects Acquitted,'' BBC News, February 19, 
2009, at http://news.bbc.co.uk (March 17, 2009).
    \33\ ``In the Center of Moscow, the Attorney Stanislav Markelov 
Murdered and A Colleague Severely Wounded,'' Novaya Gazeta, January 19, 
2009, at http://www.novayagazeta.ru (March 17, 2009).
    \34\ ``Interview--Russian Newspaper Fights on for Fallen 
Comrades,'' Reuters, March 10, 2009, at http://www.reuters.com (March 
17, 2009).
    \35\ Heidi Brown, ``Who Killed Paul Klebnikov?'' Forbes, June 5, 
2006, at http://www.forbes.com (March 17, 2009).
    \36\ ``Alexander Litvinenko Murder Suspect Bids for Control of 
Russian Olympic City of Sochi,'' Times Online, March 13, 2009, http://
www.timesonline.co.uk (March 18, 2009).
    \37\ Terry Miller and Kim R. Holmes, 2009 Index of Economic Freedom 
(Washington, D.C.: The Heritage Foundation and Dow Jones & Company, 
Inc., 2009), at http://www.heritage.org.
    \38\ Anastasia Kornia, ``They Arrest More and More,'' Vedomost, 
March 16, 2009, at http://www.vedomosti.ru (March 17, 2009).
    \39\ Janusz Bugajski, ``U.S.-Europe-Russia: The Uneasy Triangle,'' 
in Ariel Cohen, ed., ``Russian and Eurasia Policy Project: A Realistic 
Agenda for the Obama Presidency,'' Heritage Foundation Special Report, 
March 2009, Forthcoming.
    \40\ Jack Spencer, ``Russia 123 Agreement: Not Ready for 
Primetime'' Heritage Foundation WebMemo No. 1926, May 15, 2008, at 
http://www.heritage.org.
    \41\ Ibid.
    \42\ Ibid.
    \43\ Baker Spring, ``Concerns on Proposed Reduction of U.S. Nuclear 
Stockpile to 1,000 Weapons,'' Heritage Foundation WebMemo No. 2274, 
February 5, 2009, at http://www.heritage.org; Baker Spring, 
``Congressional Commission Should Recommend a Damage Limitation 
Strategy,'' Heritage Foundation Backgrounder No. 2172, August 14, 2008, 
at http://www.heritage.org/f.
    \44\ Paul Goble, ``Moscow Moves to Assert Russian Control of 
Northern Sea Route,'' Georgian Daily, February 17, 2009, at http://
georgiandaily.com (March 2, 2009).

    The Chairman. Thank you very much, sir.
    Mr. Kuchins.

STATEMENT OF ANDREW KUCHINS, DIRECTOR AND SENIOR FELLOW, RUSSIA 
  AND EURASIA PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL 
                    STUDIES, WASHINGTON, DC

    Mr. Kuchins. Mr. Chairman, Senator Lugar, members of the 
committee, thank you very much for the opportunity to share a 
few thoughts with you this morning about Russia and the 
prospects for engagement, or pressing this so-called ``reset 
button.''
    I suppose I'm somewhat a bit more optimistic than Ariel on 
this, but, you know, the analogy, certainly, of a reset button 
is not perfect. There is an awful lot of toxic waste under the 
bridge in the United States-Russian relationship. There's no 
way that we can simply clear this up by--overnight, and some of 
the legacies of the past are not going to go away immediately. 
But, if the sentiment simply implies that there is an 
opportunity for the Obama administration to improve relations 
with Russia, that's one which I heartily agree with, and I want 
to spend a few minutes arguing more broadly as to why I think 
that's the case, rather than focusing on specific issues. I've 
made lots of recommendations in a couple of recently published 
reports, one of which you referred to.
    Now, a good part of the rationale that there is an 
opportunity here is simply that relations had reached such a 
low point in the wake of the Georgia war in the fall that there 
was only virtually one direction to go in, and that was up, 
unless we wanted a new cold war, or perhaps something worse, 
with the Russians.
    I've also sensed, here in Washington over the course of the 
last 6 months, the emergence of a broadening consensus in the 
middle of our political spectrum about the need, the importance 
of having a more constructive relationship with the Russians, 
and I think the report that you referred to by your former 
colleagues, Senators Hart and Hagel, is an example of that.
    But, more fundamentally, the global situation has changed 
quite drastically in the last year, and, I think, in ways that 
have altered the calculations of friends in the Kremlin. Russia 
had been on an extraordinarily--extraordinary economic role, 
for the past decade, that saw its GDP grow by a factor of more 
than eight in less than 10 years. Simultaneously, they had 
perceived United States power in the world as ebbing, they saw 
us mired in difficult military engagements in Iraq and 
Afghanistan, and then, more recently, they saw our economy 
begin to flounder with the subprime mortgage crisis, which 
foreshadowed the global economic--global financial crisis.
    I think, for the last several years--the 5 years or so, 
particularly, which Steve mentioned, the worsening--the 
deterioration of United States-Russia relations--the Russians 
have overestimated their strength, and they have overestimated 
our weaknesses. But, their hubris, I think, has been rocked as 
the crisis has hit them extraordinarily hard, revealing their 
vulnerabilities, as well as deep integration into the global 
economy.
    Now, Russia is notoriously difficult to comprehend, as many 
famous observers far smarter than I have noted over the years. 
My favorite line about Russia comes from Will Rogers, ``Russia 
is the only country about which, no matter what you say about 
it, it's true.''
    My argument today is that maybe Russia's not so mysterious 
to understand and that's it's really its economic 
circumstances, as well as its articulated goals, that hold the 
answer about this question of ``Whither Russia?''
    Two thousand eight was the most contentious year in 
Russian-Western relations since the collapse of the Soviet 
Union; yet, while these political relations have continued to 
worsen, economic integration between Russia and the West 
continue to deepen and to widen as trade and investment volumes 
reached all-time highs.
    In the summer of 2008, the Russian Government published a 
long report detailing Russia's economic goals to the year 2020. 
The most striking finding, for me, in this report is that 
Europe especially, but the West more broadly, would be, far and 
away, the most important partners for Russia to achieve their 
best-case-growth scenarios in the coming 12 years. And it 
seemed that the current trends--and this goes back to before 
the Georgia war--the current trends of deepening economic 
integration, on the one hand, and worsening political 
relations, on the other hand, between Russia and the West, were 
contradictory and not sustainable.
    Now, Mr. Medvedev was inaugurated as Russian President back 
in May. A couple of weeks later, the Russian stock market hit 
its all-time high. A couple of months after that, oil price 
went up to $147 a barrel. The Russian Government had more money 
than it knew what to do with. And the report on Russia's 
strategic economic goals to 2020 called for similar growth 
levels that would ultimately make Russia the fifth largest 
economy in the world and the largest in Europe. Our friends in 
the Kremlin were talking about themselves as a safe haven or an 
island of stability in the widening economic crisis.
    But, how quickly things have changed. And both Senator 
Kerry and Lugar pointed to a number of these data points about 
the impact of the economic crisis on Russia. I would only add 
to that, that most prognoses for economic performance in 2009 
predict negative growth. And because of the expected--because 
of the ruble devaluation which has taken place, and possible 
ruble devaluation in the future, the nominal dollar GDP of 
Russia is likely to drop 20 to 25 percent after averaging more 
than 25 percent growth for the last 9 years. And the Moscow-
based investment bank, Troika Dialog, which actually is one of 
the most--one of the more optimistic prognostications about the 
Russian economy, have the numbers for the economy coming in, 
last year, 2008, at almost 1.7 trillion, and the prediction for 
next year is 1.25 trillion. Now, this is quite a reversal of 
fortune. The Russian Government is looking at deficits of 5 to 
10 percent in 2009, and possibly deficits in 2010 and 2011. And 
we've seen the growing impact of the crisis on the Russian real 
economy.
    Now, all national economies are struggling to adjust to the 
deepest global slump in several generations, but the drastic 
change in momentum for policymakers in Moscow is especially 
stark and challenging. Since so many millions of Russians have 
benefited from the economic prosperity of the last decade, the 
impact of the current crisis affects a far greater percentage 
of the population than the last economic crisis, back in 1998. 
And I think, in the coming year ahead, Mr. Putin's vaunted 
``vertical of power'' will be tested as never before.
    Now, it's important for us to think carefully about what 
are the foreign policy implications of this extraordinary 
economic whiplash?
    The crisis should have a major impact on Russia's external 
behavior and, therefore, U.S. interests. As of this moment, 
many analysts have concluded, as Dmitri Simes did back in 
December, that in Russia hard times normally produce hard 
lines. I don't think that the historical record actually 
supports that that's the case, and I think that history 
provides more evidence that economic downturns in Russia have 
often--corresponded with periods of greater cooperation. 
Economic stagnation in the late 1980s was associated with the 
end of the cold war. And the contraction of the 1990s 
correlated with an accommodating foreign policy under Boris 
Yeltsin. Since the first oil crisis back in the 1970s, there 
has been a powerful correlation, I would argue, between a high-
oil-price environment and a more assertive and aggressive 
Russian foreign policy, and this dynamic corresponds to the 
late Brezhnev years and to the Putin period, especially since 
2003-2004.
    Now, nothing is predetermined, but this historical 
perspective suggests that the current economic downturn could 
push Russia towards a more cooperative stance, vis-a-vis the 
West, including the United States, especially in terms of 
economic cooperation.
    Just 9 months ago, with the oil price so high, the Russians 
had very little incentive to cooperate and engage economically 
with us. Russia was such an attractive market that it did not 
need to make any effort to lure Western investors; money flowed 
into its markets, regardless of its policies; its economy grew 
at a rapid clip, despite the stagnation of the structural 
economic reform agenda; and it no longer needed financing from 
an international--international institutions to ensure fiscal 
health. In short, Russia's boom provided little incentive to 
reach out to the West. Today, that situation is quite 
different.
    I think there were also implications of this for Russia's 
domestic economic and political policies. I think evidence also 
supports that, since the first oil crisis, back in 1973, 
periods of low international oil prices and/or economic 
downturns in Russia correlate with greater incentives for 
structural economic reform, and those usually correspond with 
greater degrees of political pluralization.
    It was the crash of the oil price, back in 1986, that took 
place shortly after Mikhail Gorbachev assumed leadership, and 
this dramatic drop in hydrocarbon revenue starkly revealed all 
the structural deficiencies of the Soviet economy. The rapidly 
eroding balance sheet clearly made imperative the--reform much 
more urgent. It's hard to imagine that Mr. Gorbachev would have 
embarked on such a radical set of reforms, absent this 
impending sense of economic crisis.
    So, at least in the short term, or for however long this 
economic downturn lasts, the Russians are going to feel far 
more economically constrained than recently. And even when 
global demand begins to recover, the Russians are going to be 
competing for investment with all economies whose assets have 
dramatically declined in value, as opposed to 10 years ago, 
where Russia was more unique as a large emerging market with 
undervalued assets.
    There's another major difference that Russia faces today 
with its recovery than 11 years ago, and that is that, for the 
near and mid term, the prospects for production growth of both 
oil and gas resources are rather grim. And particularly in the 
oil sector, after the financial crash in 1998, Russian oil 
companies, led by YUKOS, Mr. Khodorkovsky at the time, achieved 
remarkably rapid growth in production with application of 
modern technologies to the old Soviet wells in western Siberia. 
That feat cannot be repeated again today, and future production 
will have to come from new green fields in geologically and 
climatically challenging conditions that could be the most 
expensive and complicated projects in history, and they can't 
do it alone.
    I think as commodity prices have fallen sharply, I think 
it's clear to the--our leaders in the Kremlin, that the status 
quo is not a viable option. Russia cannot continue to depend to 
such an extent on its resource of wealth, which is vulnerable 
to the cycles of booms and busts. They know it, but doing 
something about it is a bit more complicated.
    Now, in--to conclude, here, my view, since the Soviet Union 
collapse, has been, and remains, that, in the long term, 
Russia's strategic economic and security interests lie in 
closer partnership with the West, not necessarily to the 
exclusion of its partnerships and relations with other key 
countries, like China, India, and Iran and others. But, 
historically, culturally, economically, demographically, Russia 
has always leaned to the West, and its roots are as a European 
great power. And a particularly telling data point from the 
Russia 2020 strategy supports this conclusion. Even in the 
best-case scenario, what they call the ``innovation scenario of 
growth to 2020,'' which calls for an average of 7-percent 
growth to that year, Russia's share of global GDP would rise 
from only 2.5 percent today to a bit less than 4 percent in 
2020. My conclusion from this fact is that Russia will not have 
the financial or human resources to wage any kind of new cold 
war and contest United States power around the globe, as it did 
for most of the second half of the last century. And it was 
Russia's excessive--Soviet Union's excessive militarization of 
its economy and society to support its overarching global 
confrontation with the United States that was a major cause of 
its collapse, and this lesson is not lost on current Russian 
leaders.
    Why have we failed to establish a firmer partnership with 
Russia over the past generation? Well, there's lots of fault to 
go around, but I think one factor that we should keep in mind 
is that, while many observers have been quick to refer to Mr. 
Putin's Russia as neoimperial in its policies, I think 
fundamentally what the Russians are still dealing with is the 
collapse of empire in a post-imperial syndrome. The Soviet 
Union was the last empire to collapse. And, like many empires 
before them, it will take more than one generation for Russia 
to fully adapt to its post-imperial status. As then-Deputy 
Secretary of State Strobe Talbott said, back in the 1990s, ``We 
need to have strategic patience with Russia.''
    The other thing I would point to is that Russia's heavy 
dependence on energy exports also contributes to contradictory 
tendencies in its internal organization and its foreign policy. 
For the last near-decade, in fact, Russia has defied 
modernization theory, in that its democratic institutions have 
weakened as its people have become considerably more 
prosperous. Social scientists point to this $10,000 per-capita 
income level at the point, generally, at which most developing 
countries become more democratic. I think it is oil and gas 
dependency which has made Russia an outlier in this regard.
    In conclusion, while I'm reasonably confident about the 
broader framework of my argument, there are two important near-
term caveats I'd like to make.
    First, there is the danger that the Kremlin may not be able 
to react quickly or effectively enough to the growing social 
and political impact of an extended downturn, especially if 
there's a second wave of dramatic difficulties later this year 
or next year.
    Now, one may fault the Russian leadership for being in 
denial for too long or spending too much of its reserves on 
defending the ruble. Their response has been broadly in line 
with what other national governments are doing with stimulus 
packages and other measures, bailout packages, and some 
economic indicators, such as the value of the ruble, the 
Russian stock market, have stabilized. Still, there is 
considerable potential for greater hardship and social unrest 
that may invite a tougher crackdown in response, that could be 
accompanied by greater international isolation, and this would 
short-circuit any reset button.
    The second caveat concerns differences over our policies 
towards Russia's near neighbors, which I would expect would 
continue to be the most contentious point of our relationship. 
Now, while Russia has been harder hit than many developed and 
large emerging market economies, many of its neighbors have 
been hit harder, which may actually be increasing Russia's 
leverage with them. And, I think, already we see signs of this 
in ties with Ukraine and Kyrgyzstan earlier this year.
    Tougher economic conditions also may increase Moscow's 
incentives to control oil and gas production and transport 
infrastructure with its neighbors, and conflict between 
Washington and Moscow over the post-Soviet space will likely 
continue to be the most volatile set of issues in the bilateral 
relationship, as well as within Europe. I think we are unlikely 
to see consensus in Europe anytime soon.
    With that, let me conclude so we can leave more time for 
discussion and questions.
    Thank you.
    [The prepared statement of Mr. Kuchins follows:]

   Prepared Statement of Dr. Andrew C. Kuchins, Director and Senior 
     Fellow, Russia and Eurasia Program, Center for Strategic and 
     International Studies, The Heritage Foundation, Washington, DC

    Last month in Munich Vice President Biden talked about ``pressing 
the reset button in United States-Russia relations.'' While the State 
Department was challenged to find the correct translation of ``reset 
button,'' those of us in the Russia-watching community have been 
debating whether such a button exists, and if so, what ``pressing'' it 
might really mean. The analogy that Vice President Biden used a month 
ago at the Munich security conference is not perfect, since there is 
too much toxic waste under the bridge of United States-Russian 
relations to be cleaned up over night. But the sentiment implies that 
there is a real opportunity for the Obama administration to improve 
relations with Russia, and with this I very much agree.
    A good part of the rationale is simply that relations had reached 
such a low point, lower than any point in at least two decades, in the 
wake of the Georgia war last year, that there was virtually only one 
direction the relationship could go before igniting a new cold war or 
worse. I also sensed in the fall/winter the development of a solid 
consensus in the center of the U.S. political spectrum that it was 
imperative for the incoming Obama administration to develop a more 
constructive relationship with Moscow, in order to address more 
effectively a number of pressing security challenges including 
Afghanistan, the Iranian nuclear program, and nuclear security more 
broadly, among other issues.
    In addition, the global situation has drastically changed in ways 
that probably have altered the calculations in the Kremlin. Russia had 
been on an extraordinary economic roll for the past decade that saw 
their GDP grow by more than eight times. Simultaneously they perceived 
U.S. power to be ebbing as we became mired in the Iraq and Afghanistan 
wars and our economy began to flounder with the subprime problems, 
foreshadowing the global financial crisis. Most likely they 
overestimated their strength as well as our weakness, but Russian 
economic hubris has been rocked as the crisis has hit them extremely 
hard, revealing their vulnerabilities as well as deep integration with 
the global economy. For the first time in years I think there is a 
greater sense in Moscow that Russia needs better relations with the 
United States and the West more broadly.
         economic factors key to unraveling the russian riddle
    Russia is notoriously difficult to comprehend, as many famous 
observers far smarter than I have noted over the years. My personal 
favorite is from Will Rogers, ``Russia is a country that no matter what 
you say about it, it's true.'' My argument today is that understanding 
Russia's economic circumstances as well as its articulated goals hold 
the answer today to the eternal question ``Whither Russia?''
    Two thousand eight was the most contentious year in Russian-Western 
relations since the collapse of the Soviet Union. From differences over 
Kosovo, NATO enlargement, and missile defense in the spring to the 
Georgia war in August to concluding the year and opening the new one 
with another gas war between Russia and Ukraine, tensions and 
differences escalated. Yet while political relations continued to 
worsen, economic integration between Russia and the West continued to 
deepen and widen as trade and investment volumes reached all time 
highs. In the summer of 2008 the Russian Government published a long 
report detailing Russia's economic goals to the year 2020. The most 
striking finding in that report is that Europe especially, and the West 
more broadly, would be far and away the most important partners for 
Russia to achieve their best-case growth scenarios in the coming 12 
years. The current trends of deepening economic integration amidst 
worsening political relations did not seem sustainable in the summer of 
2008, and now after the war in Georgia and the impact of the economic 
crisis they seem even less so.
    Dmitri Medvedev was inaugurated as Russia's new President in May, 
later in the month the Russian stock market hit its all-time high, and 
in July the oil price peaked at $147/per barrel. The Russian Government 
had more money than it knew what to do with as foreign currency 
reserves peaked at nearly $600 billion with another $200 billion in two 
funds that were formally the Stabilization Fund. The Russian GDP (in 
nominal dollar terms) had increased by a factor of eight in less than a 
decade, and the report on Russia's strategic economic goals to 2020 
called for similar growth levels that would ultimately make Russia the 
fifth largest economy in the world and the largest in Europe. Our 
friends in the Kremlin talked about Russia possibly being a ``safe 
haven'' or ``island of stability'' as the impact of the U.S. mortgage 
crisis widened to the global economy.
    But how quickly things change. Russia's economic hubris has been 
smashed, as their economy in the last few months has been amongst the 
hardest hit of large emerging markets. The Russian stock market has 
lost about 70 percent of its value since its peak (worst performance of 
all large emerging market economies). It is estimated the Russian 
Central Bank spent about $200 billion--first defending the ruble, and 
then allowing gradual devaluation, until the ruble eventually dropped 
50 percent against the U.S. dollar. Most prognoses for economic 
performance in 2009 predict negative growth, and because of ruble 
devaluation, the nominal dollar GDP is likely to drop 20-25 percent 
after averaging more than 25 percent growth for nearly a decade. The 
Moscow-based investment bank Troika Dialog, for example, calls for a 
drop in nominal dollar GDP from nearly $1.67 trillion in 2008 to $1.25 
trillion in 2009--and Troika's prognostications are relatively more 
optimistic than most.
    After a decade of budget surpluses, the Russian Government is 
anticipating a deficit of 5-10 percent in 2009 and the possibility of 
deficit in 2010 and 2011. In the fall, Russian enterprises began major 
layoffs and the unemployment rate will likely exceed 10 percent this 
year. After a decade of dramatically reducing the poverty level, Russia 
will likely see it increase once more, from 12 percent to 15 percent 
according to the most recent World Bank projections. There is growing 
concern about the potential social impact in one-company towns with 
massive layoffs resulting from shutdowns of their major local 
enterprise.
    All national economies are struggling to adjust to the deepest 
global slump in several generations, but the drastic change in momentum 
for policymakers in Moscow is especially stark and challenging. Since 
so many millions of Russians have benefited from the economic 
prosperity of the past decade, the impact of the current crisis affects 
a far greater percentage of the population than the last economic 
crisis in 1998. Vladimir Putin's vaunted ``vertical of power'' will be 
tested like never before as the prospects for social unrest and even 
bankruptcy are ever more possible, if the slump endures for more than 
12-18 months.
          foreign policy implications of the economic downturn
    It is important that U.S. policymakers understand the implications 
of this unprecedented economic whiplash. The crisis could have a major 
impact on Russia's external behavior, and therefore U.S. interests. As 
of this writing, many analysts have already concluded that the crisis 
will spur a new period of aggressiveness in Moscow's external 
stance.\1\ Most agree with Dmitri Simes' maxim that ``In Russia, hard 
times normally produce hard lines.''\2\
    Thus far the crisis has indeed correlated with assertiveness in 
Russian foreign policy. For example, Russia has engaged in a highly 
destructive ``gas war'' with Ukraine, at one point going so far as to 
completely cut off deliveries to Europe, which caused rationing in some 
countries that are completely dependent on Russian gas, such as 
Bulgaria. The recent announcement that Kyrgyzstan would close the U.S. 
base at Manas under apparent Russian pressure would also indicate a 
more assertive line. Moscow seems at least in part motivated by a 
revanchist instinct to keep its ``near abroad'' under tighter political 
control.
    Despite these assertive moves, it is too early to draw definitive 
conclusions about the future trajectory of Russian policy. History 
provides evidence that economic downturns in Russia have corresponded 
with periods of greater cooperation. Economic stagnation in the late 
1980s was associated with the end of the cold war, and the contraction 
of the 1990s correlated with an accommodating foreign policy under 
Boris Yeltsin. Since the first oil crisis in the early 1970s, there has 
been a powerful correlation between a high oil price environment and a 
more assertive and aggressive Soviet or Russian foreign policy. This 
dynamic corresponds to the later Brezhnev years and the Putin period, 
especially since 2003.
    Although nothing is predetermined, this historical perspective 
suggests that the current economic downturn could push Russia toward a 
more cooperative stance vis-a-vis the West, especially in terms of 
economic cooperation. Just 9 months ago when oil was over $140 per 
barrel, Moscow had fewer incentives to engage with the West on economic 
issues. Russia was such an attractive market that it did not need to 
make an effort to lure Western investors; money flowed into its markets 
regardless of its policies. Its economy grew at a rapid clip despite 
the stagnation of the economic reform agenda and it no longer needed 
financing from international institutions to ensure fiscal health. In 
short, Russia's boom provided little incentive to reach out to the 
West.
    With its economy in deep trouble and oil under $50, this situation 
has significantly changed. Clearly economic troubles are not exclusive 
to Russia, but the whiplash factor has altered the incentive structure 
to perhaps a greater degree than in many other countries. Recovery from 
the crisis could require a considerably more economic engagement with 
the West than the boom did. In sharp contrast to the precrisis period, 
Russia may now need resources that only international, and particularly 
Western, investors, institutions and trading partners can provide. This 
is a potentially powerful incentive for pursuing greater cooperation. 
Three examples illustrate the point.
    First, since its budget appears likely to run a large deficit this 
year, Moscow may need to turn to international lenders to shore up its 
fiscal position, especially if its stabilization funds and foreign 
currency reserves continue to be depleted at such a rapid clip. After 
having paid off virtually all its debts to other states and 
international financial institutions ahead of schedule in the first few 
years of this decade--a move intended both to prevent incoming oil and 
gas revenues from spurring inflation and to increase geopolitical 
freedom of maneuver--Russia could now once again turn to international 
markets and lenders for credits. According to the World Bank, Russia 
will be forced to do so if oil prices average below $30 for the 
year.\3\
    Second, Russia's stock market can only recover if foreign, and 
particularly Western, investors return.\4\ The massive expansion of 
Russia's market over the course of the period from 1998 to mid-2008 was 
to a significant extent driven by Western investors. Many Russians 
firms held IPOs in London and New York, some listing directly on 
Western exchanges. After the ``ring fence'' that prevented foreigners 
from trading in its shares on the Russian market was lifted in December 
2005 and the government consolidated its 51 percent stake, leaving the 
remainder to be purchased by private investors, Gazprom rapidly became 
one of the most desirable stocks in emerging markets. In May 2008, its 
market capitalization peaked at $315 billion, making it the third 
largest company by market cap in the world. In this period, Russia was 
viewed as one of the most attractive emerging markets. Portfolio 
foreign investment stood at $4.2 billion in 2007, a 31.8-percent 
increase from the previous year.\5\
    The economic circumstances that allowed the Russian Government to 
interfere in the market with impunity are long gone. In the context of 
the current economic crisis and the bottoming out of the RTS at around 
500 points (compared to its high of approximately 2,500 points in May 
2008), Russia needs to attract foreign, and particularly Western, 
investors back to the market. Without a return of foreign capital, the 
Russian market is unlikely to recover in the medium term. Even if oil 
prices increase significantly, investors have little money to spend, 
and if Russia remains a risky investment they will be loath to spend it 
there.
    Third, Russian corporations and financial institutions need to 
refinance loans obtained from Western lenders. Russian firms obtained 
nearly $500 billion in private credits in the years of plenty leading 
up to the crisis.\6\ U.S. estimates that around 40 percent of that went 
to the energy sector, mostly to Gazprom and Rosneft.\7\ Western lenders 
competed fiercely with one another to finance Russian companies' rapid 
expansion, tempted by the impressive cash flows on their balance 
sheets.
    When the value of collateralized assets sank as investors fled the 
Russian stock market over the summer of 2008, Russian companies 
scrambled to make their (dollar-denominated) repayment schedules. 
Credit dried up fast and margin calls on 10 of the 25 wealthiest owners 
of large private companies forced even more asset sell-offs. As one 
brokerage house put it, ``Russia has a solvency problem. Simply put, in 
August Moscow was flooded with international bankers competing to 
provide funding to Russian entities. By October, the only financiers 
visiting were those trying to get their money back.''\8\ In addition to 
cash shortage problems, Russian corporations will face difficulties 
refinancing as a result of the global credit crunch. Russian firms have 
about $130 billion in debt coming due in 2009, more than double the 
total owed by the governments and companies of Brazil, India, and China 
combined.\9\
           domestic economic and political impact of downturn
    Evidence since the first oil crisis in 1973 also suggests that 
periods of low international oil prices and/or economic downturns in 
Russia correlate with greater incentives for structural economic reform 
and political pluralization. The crash of the oil price in 1986 took 
place shortly after Mikhail Gorbachev assumed leadership of the Soviet 
Union. The dramatic drop in hydrocarbon revenues starkly revealed all 
the structural deficiencies of the Soviet economy. The rapidly eroding 
balance sheet clearly made the imperative of reform far more urgent--it 
is hard to imagine that Gorbachev would have embarked on such a radical 
set of reforms absent impending sense of economic crisis.\10\
    At least in the short-term, or however long this global recession 
lasts, the Russians will feel far more economically constrained than in 
the recent halcyon years. Even when global demand begins to recover, 
Russia will be competing for investment with all economies whose assets 
have dramatically declined in value, as opposed to 10 years ago when 
Russia was more unique as a large emerging market with undervalued 
assets.
    The second major difference the Russians will face is that for the 
near and mid-term, prospects for production growth of oil and gas 
resources are grim. Particularly in the oil sector after the financial 
crash in 1998, Russian oil companies, led by Yukos at the time, 
achieved remarkably rapid growth in production with application of 
modern technologies to old Soviet wells. That feat cannot be repeated, 
and future production will have to come from new greenfields in 
geologically and climatically challenging conditions that could be the 
most expensive and complicated projects in history.
    Russia has reached the end of the road in resource-based 
development and catchup growth, but it remains only semimodernized and 
highly vulnerable to external circumstances beyond its control, 
primarily the oil price. About 85 percent of its exports are based on 
energy and commodities such as metals and chemicals. With the exception 
of the arms industry, Russia's manufacturing has largely failed to 
develop because of an adverse business climate (widespread corruption 
and onerous state intervention) and a lack of comparative advantages 
outside of the commodity sector.
    The global financial crisis has hit Russia hard. As commodity 
prices have fallen sharply, the status quo is not a viable option. 
Russia cannot continue to depend to such an extent on its resource 
wealth, which is vulnerable to cycles of booms and busts. No other 
large emerging market or developed economy is so dependent on a single 
volatile factor (the oil price) as is Russia.
    Sustaining economic growth for the country's increasingly 
prosperous population will have a direct influence on popular support 
for the government. A recent study by Daniel Treisman, a political 
scientist at UCLA, found that the popularity of Russian Presidents 
``closely followed perceptions of economic performance, which, in turn, 
reflected objective economic indicators.'' Thus the Presidential 
approval rating depends on the Russian people's sense of material well-
being; ``most other factors''--such as the war in Chechnya, in the case 
of Putin in 1999--``had only marginal, temporary effects.''\11\
    Russia faces two starkly different choices for its economy. One 
option is to continue the current course toward increased state control 
and renationalization, which would result in economic domination by 
large monopolistic state corporations. In that case, the country would 
have little need for the WTO and increasing isolationism would be the 
natural outcome. Russia's economic growth, however, would probably 
wither, because such a system breeds stagnation.
    The alternative would be to return to the liberal economic reform 
agenda that Putin abandoned in 2003. Indeed, then-Presidential 
candidate Dmitri Medvedev's February 15, 2008, speech in Krasnoyarsk 
called for the revival of such a program.\12\ In his speech in Davos on 
January 28, 2009, Putin further stated: ``The crisis has exposed the 
challenges we have. They are: An excessive orientation of exports 
towards natural resources and, of the economy as a whole, a weak 
financial market. There is a greater demand for the development of 
basic structures . . . ''\13\ Major elements of such a policy would be 
the control of corruption, deregulation of the domestic economy, and 
the reinforcement of private property rights. Such an economic choice 
would most likely accompany political liberalization and enhanced 
international integration.
                            whither russia?
    My view since the collapse of the Soviet Union has been and remains 
that in the long term, Russia's strategic economic and security 
interests lie in closer partnership with the West--not to the exclusion 
of its important interests in constructive relations with China, India, 
Iran, and many other countries to its East and South. Historically, 
culturally, economically, demographically, Russia has and continues to 
lean strongly to its roots as a European great power.
    Another telling data point from the Russia 2020 strategy supports 
this conclusion. Even in the best-case innovation scenario that calls 
for average 7 percent annual growth and a more diversified economy, 
Russia's share of global GDP would rise from only 2.5 percent of global 
GDP today to about 4 percent in 2020. Russia will not have the 
financial or human resources to wage any kind of new cold war and 
contest U.S. power around the globe as it did for most of the second 
half of the last century. The Soviet Union's excessive militarization 
of its economy and society to support its overreaching global 
confrontation with the United States was a major cause of its collapse, 
and this lesson is not lost on most of the current Russian elites.
    And it would also seem that Russia's genuine security challenges 
are principally to its South in the form radical Islamic groups 
supporting terrorist and oppositionist activities in its neighborhood 
as well as in the Northern Caucasus, the most vulnerable and unstable 
region of Russia. Longer term, there is tremendous insecurity about the 
rapid rise of China to its East. Russia may not have been thrilled with 
the notion of ``junior partnership'' with Washington, but a subordinate 
role to Beijing is far less palatable.
    So why have we failed to establish a firmer partnership with Russia 
over the past generation? There is lots of fault to go around, and 
certainly our own unipolar hubris in the wake of the great victory of 
the cold war played a considerable role. As for Russia, while many 
observers have been quick to label Putin's Russia as ``neo-imperial,'' 
fundamentally the Russians are still dealing with collapse of empire 
and post-imperial syndrome. The Soviet Union was the last empire to 
collapse, and like many empires before them, it will certainly take 
more than one generation for Russia to fully adapt to its post-imperial 
status. As then-Deputy Secretary of State Strobe Talbott wisely advised 
more than a decade ago, we need to have ``strategic patience'' with 
Russia.
    Russia's heavy dependence on energy exports also contributes to its 
contradictory tendencies. For the last near decade, Russia has defied 
modernization theory in that its democratic institutions have weakened 
as its people have become considerably more prosperous. Social 
scientists point to a $10,000/year income as the point at which most 
developing countries become more democratic. The oil and gas income 
dependency is probably the factor that makes Russia an outlier.
                                caveats
    While I am reasonably confident about the broader framework of my 
argument, there are two important near-term caveats. First, there is 
the danger that the Kremlin may not be able to react quickly or 
effectively enough to the growing social and political impact of an 
extended downturn, especially if there is a second wave of dramatic 
difficulties this year or next. While one may fault the Russian 
leadership for being in denial for too long or spending too much of its 
reserves on defending the ruble, their response has been broadly in 
line with what other national governments are doing with stimulus 
packages and other measures, and some economic indicators such as the 
value of the ruble and the Russian stock market have stabilized. Still, 
there is considerable potential for greater hardship and social unrest 
that may invite a tougher crackdown in response that could be 
accompanied by greater international isolation. This would short-
circuit any ``reset button'' in United States-Russian relations for a 
time.
    The second caveat concerns differences over our policies toward 
Russia's near neighbors. While Russia has been harder hit than many 
developed and large emerging market economies, many of its neighbors 
have been harder hit which may be increasing Russia's leverage with 
them. Already we see signs of this with Ukraine and Kyrgyzstan early 
this year. Tougher economic conditions may increase Moscow's incentives 
to control oil and gas production and transport infrastructure with its 
neighbors. Conflict between Washington and Moscow over the post-Soviet 
space will likely continue to be the most volatile set of issues in the 
bilateral relationship as well as with and within Europe. We are 
unlikely to see European consensus over Russia policy any time soon.
                               conclusion
    I believe we have an important opportunity to turn around United 
States-Russian relations. Despite lingering revanchist tendencies, 
Moscow harbors powerful motivations to improve its ties with the United 
States and the West to both enhance its security and facilitate its 
economic development. The Russian leaders wish to be seen in public on 
an equal footing with global leaders, especially the United States 
President. Furthermore, and more importantly, they understand that 
Russia cannot afford to fall back into another long-term confrontation 
with the West: Integration with the West remains Russia's best chance 
to develop and reach its ambitious target of becoming the fifth largest 
economy in the world by 2020.
    For the United States, the motivation for closer cooperation with 
Russia is grounded in the reality that the world's most pressing energy 
and security challenges cannot be addressed effectively without 
Moscow's cooperation and trust. This is most obvious in the realm of 
nuclear nonproliferation and European security.
    In conclusion, my final caveat is that rebuilding trust and 
reaching concrete agreements about cooperation will not be easy, and we 
must beware of overly high expectations lest we be disappointed as we 
were with two previous opportunities to improve ties with Russia: After 
the collapse of the Soviet Union in 1991-92 and after 9/11 in 2001. The 
powerful cold war legacies have now been overlaid with nearly two 
decades of mutual disappointment in Russia and the United States. Even 
in areas that we presumably share broadly common goals such as 
promoting nuclear security, stabilizing Afghanistan, restoring global 
economic growth and order, and expanding economic and trade ties, the 
going will be tough. Strong leadership and support in the Congress will 
be essential as well as firm Presidential leadership supported by a 
well-organized bureaucracy in the executive branch.

----------------

    Note: Much of this testimony derives from two recent reports which 
I coauthored: Samuel Charap and Andrew C. Kuchins, ``Economic Whiplash 
in Russia: An Opportunity for U.S.-Russian Commercial Relations?,'' 
(Washington DC: Center for Strategic and International Studies, 
February 2009) and Anders Aslund and Andrew C. Kuchins, ``Pressing the 
Reset Button in U.S.-Russia Relations,'' (Washington DC, Peterson 
Institute for International Economics, March 2009. See these reports 
for a comprehensive set of specific policy recommendations regarding 
U.S.-Russia relations.

    \1\ E.g., Clifford G. Gaddy and Barry W. Ickes, ``Putin's Third 
Way,'' The National Interest, January 21, 2009, http://
www.nationalinterest.org and Leon Aron, ``Russia's Woes Spell Trouble 
for the U.S.,'' Wall Street Journal, December 31, 2008.
    \2\ Dimitri K. Simes, ``Uncertainty in Moscow,'' The National 
Interest, December 24, 2008, http://www.nationalinterest.org.
    \3\ ``Vsemirnyi bank ponizhaet protsenty,'' Vzglyad, December 19, 
2008, http://vz.ru. Russian officials claim that their stabilization 
funds will be adequate to cover budgetary shortfalls for 2009-2011. 
Courtney Weaver, ``Oil Funds Will Cover Shortfalls for 3 Years,'' 
Moscow Times, February 4, 2009, http://www.moscowtimes.ru.
    \4\ If oil prices remain low, domestic investors alone will be too 
cash-poor to return the market to its previous levels. Gaddy and Ickes, 
``Putin's Third Way.''
    \5\ Interfax, February 2, 2008.
    \6\ Gaddy and Ickes, ``Putin's Third Way.''
    \7\ Ben Aris, ``RUSSIA 2009: Paused Before A Rally,'' Business New 
Europe, December 20, 2008, http://www.businessneweurope.eu.
    \8\ Renaissance Capital, ``2009 Outlook: What's Next,'' December 
16, 2008, p. 8.
    \9\ World Bank, ``Russia Economic Report,'' no. 17, November 2008, 
p. 15. http://www.bloomberg.com.
    \10\ Andrew C. Kuchins, ``Alternative Futures for Russia to 2017,'' 
(Washington DC: Center for Strategic and International Studies, 2007).
    \11\ Daniel Treisman, ``The Popularity of Russian Presidents,'' 
presentation at the Frontiers of Political Economics conference, New 
Economic School, Moscow, May 30-31, 2008.
    \12\ Transcript of the speech of the first deputy chairman of the 
Government of Russia, Dmitri Medvedev, at the 5th Krasnoyarsk economic 
forum ``Russia 2008-2020. Management of Growth,'' February 15, 2008. 
(Stenogramma vystupleniya Pervogo zamestitelia Predsedatelia 
Pravitelstva Rossiyi Dmitriya Medvedeva na V Krasnoyarskom 
economicheskom forume ``Rossiya 2008-2020. Upravleniye rostom'') 
Available at http://www.rost.ru (Accessed on February 9, 2009).
    \13\ ``Putin's Speech at Davos World Economic Forum,'' Russia 
Today, January 28, 2009, www.russiatoday.com (accessed on February 2, 
2009).

    The Chairman. Thank you very much, Mr. Kuchins.
    With that, actually, I'm not sure where we are with Russia. 
[Laughter.]
    Listening to you, in the back and forth of these last three 
testimonies, it kind of leaves a lot up in the air, which is 
what we're going to try to narrow down.
    Now, we have a problem that's developed. The Senate is 
going to have three votes at 11 o'clock. What I'd ask 
colleagues to do is, if we can stay until the back end of the 
first vote, and then we'll have a recess for the period of the 
second vote, and then we'll vote at the front end of the third 
vote and come right back, so we'll have a minor recess in order 
to try to accommodate the process. And I apologize to witnesses 
for that.
    Let me try to jump in very quickly here. You said, at the 
end of your testimony, Mr. Kuchins, that, you know, Russia's 
going to have, perhaps, little ability to contest American 
power around the world. Is that--isn't that old thinking? I 
mean, is it--is that really their objective, to contest our 
power? Or is it perhaps to assert their interests, as they see 
them, in certain places? Which may, on occasion, contest our 
power, but it seems to me that's not their fundamental 
organizing principle, or is it? I'd like to get a sense of 
that.
    You know, countries respond to other countries' actions, 
and countries make determinations about what their interests 
are, and make determinations about their perception of a threat 
to them. The fact is that the Bush administration did a number 
of things that Russia was pretty much dead-set against, and 
stated so before they happened, and we did 'em anyway. The 
independence of Kosovo is an example. I'm not saying it was the 
wrong thing to do, but, in terms of their perceived interests, 
it certainly clashed. The NATO expansion, we were pushing like 
crazy; in the last months, we were pushing like crazy to get a 
couple of countries in that they obviously saw as a major 
threat to their perceived interests. Abrogated the ABM Treaty, 
unilaterally, boom, gone. What does that say? Missile defense--
talked about putting it in, said it's about Iran, but people 
had questions. I mean, other countries are going to respond, it 
seems to me, to the things that we do unilaterally, and I 
wonder to what degree that is perceived by any or all of you as 
sort of a legitimate perception problem in these relationships, 
and something we need to think about as we go forward.
    Mr. Kuchins.
    Mr. Kuchins. Thank you very much, Mr. Chairman. It's an 
excellent question. And I didn't mean to imply, in my remarks, 
that I saw as a core organizing principle for Russian foreign 
policy to contest United States power around the world.
    I think, broadly speaking, for the last couple--the last 
nearly 20 years, since the collapse of the Soviet Union, we've 
had a--almost sort of very divergent, almost psychologies and 
narratives about our positions in the world, and the United 
States-Russian relationship, in particular, which have made it 
more complicated for us to have a meeting of the minds. And, 
you know, for the Russians, going into the 1990s, through a 
very difficult time, where their power was a low ebb, while, at 
that time, in the 1990s, we are experiencing the so-called 
``unipolar moment'' and a certainly amount of hubris on our 
part, I think it contributed to a lot of misunderstanding in 
the relationship.
    It's hard for us to----
    The Chairman. Is it not fair to say that our policy could 
have been perceived as being driven by a significant amount of 
ideological energy during that period?
    Mr. Kuchins. I understand that--how the--from the Russian 
standpoint, how they could--they could perceive that. Let me 
talk specifically about their views on NATO enlargement and 
missile defense, because, again, very fundamentally, I see that 
Russia's security interests, in the long term, would be best 
answered by closer ties with us, given their existing threats 
in the south of instability, Islamic--radical Islam and 
terrorism, et cetera, which we care about, as well as their 
deep concern about the rising power of China in the East. And I 
think, for the Russians, when they look at the issues of NATO 
enlargement and missile defense----
    The Chairman. Let me just say to you, timewise, we're not 
going to be able to chew up, so that everybody gets an 
opportunity here.
    Mr. Kuchins. The point I want to make is that the Russians 
view these policies, rightly or wrongly, as, to a considerable 
extent, as the expansion of a--sort of the unilateral expansion 
of a United States-led global security system, and they see 
themselves as excluded. I think, fundamentally, they want to be 
included in the development of a European, a Eurasian and 
broader global security system.
    The Chairman. Which speaks to our unilateralism, correct?
    Mr. Kuchins. Yes.
    The Chairman. Mr. Cohen.
    Mr. Cohen. I think, to answer your question adequately, you 
need to look at what happened after the collapse of the Soviet 
Union, in terms of the transformation of foreign policy elites. 
And if you compare it to other revolutions, the Russian foreign 
policy elite remained more or less the Soviet elite. Maybe a 
little bit younger, maybe with a little bit bigger bank 
accounts and better watches and clothes, but the outlook--I 
would call it a quasi-Soviet or neo-Soviet outlook with a good 
layer of Russian imperialism that views the former Soviet 
Union, as President Medvedev said on the 31st of August of last 
year in the nationally televised address, the exclusive sphere 
of influence of--the privilege--I'm sorry--the privileged 
sphere of influence of the Russian Federation.
    That includes the view of the United States, as they say 
openly, the leadership and the military and the security 
services, the ``principal adversary.'' Yes, this is old-think, 
but this is an old-think that informs the fundamental 
decisionmaking that goes into the questions such as how much 
money to spend on multiple warhead, heavy intercontinental 
ballistic missiles, what kind of navy they have to build, how 
they build the basing policy in the ``near abroad'' and beyond 
in the Mediterranean, as I mentioned, et cetera.
    So, before we examine our foreign policy mistakes--and I 
admit, everybody makes foreign policy mistakes--the Bush 
administration, and I'm afraid, in the future, maybe the Obama 
administration--we need to look at how much the Russian world 
view changed. And as the tutor to the heir--the future young 
tsar told the boy, Russia has--in the 19th century, ``Russia 
has only two allies, the army and the navy.'' And 
unfortunately, Mr. Chairman, I am afraid that that world view 
still informs a lot of decisionmaking in Russia.
    The Chairman. It may well. I'm not going to disagree--I 
mean, we all know where the leadership's roots are. I don't 
disagree that they're informed by that history and by those 
views and perceptions, and nobody is pretending that there's 
all of a sudden, just because the Soviet Union disappeared, a 
rosiness and a capacity to have a complete, easy relationship 
in all of these regards.
    The issue is, how do you find those places, notwithstanding 
that view, where you have a mutual interest and have the 
ability to be able to cooperate, rather than finding a way to 
just poke your finger in an eye and find the worst of the 
situation? And it seems to me that we did a good job of 
avoiding the ability to find the best, and found the worst, 
again and again.
    To that end, I want to--as you answer your question, 
because my time is up and I want Senator Lugar--as you answer 
that part of the question, I want you to involve in this--it 
seems to me we all have a singular most important unifying 
principle, at this point in time--or two, if not one. One is, I 
have heard every major country in the region in the Middle East 
and surrounding neighbor, from India to Russia, say that it is 
not in the interests of the world or them individually for Iran 
to have a nuclear weapon or capacity. That's No. 1. And No. 2, 
the rise of religious radical extremism, fundamental, or 
whatever you want to call it. Those are huge interests. And we 
seem to have left those on the sidelines of these other 
disputes.
    And I just want you, as you answer it--and then, Senator 
Lugar, you pick up. Does Russia indeed perceive that as a 
threat, this potential? And do we not have an ability to 
cooperate there, as a starting point to change this 
relationship?
    Ambassador Sestanovich. Senator, I think you're absolutely 
right, that the issue isn't whether we have disagreements, it's 
whether there is a kind of common purpose that allows the two 
sides to view those disagreements as less important and less 
mutually threatening.
    We should remember that a lot of the disagreements that you 
talk about--NATO enlargement and the abrogation of the ABM 
Treaty--took place at a time when, actually, relations were 
very good. The peak----
    The Chairman. Right.
    Ambassador Sestanovich [continuing]. The peak of Russian-
American relations, since the cold war, came in 2002 and 2003, 
when the Russians had a lot of things to complain about in our 
policy. Even so, relations were very positive, because there 
was a kind of strategic convergence between the two sides.
    We're certain to find that we won't be able to resolve all 
of our disagreements. But, can we, and do the Russians, in 
particular, see a common purpose that makes the remaining 
disagreements less grating and less disruptive of the overall 
relationship? One can identify a number of common purposes 
today. You've talked about Iran. The international economic 
crisis is something that is very much on the Russians' mind as 
a reason to expand cooperation. How those will play out, you 
know, depends a little bit on diplomacy, but I completely 
accept your premise that the way to restructure the 
relationship is through identifying some common interests that 
we can act on--not necessarily on backing away from our 
position on areas where we disagree. We may simply have to 
disagree.
    The Chairman. Senator Lugar.
    Senator Lugar. Just following on the Chairman's questions, 
given your points on domestic Russian governance, it would 
appear that the downturn in the economy has put some stresses 
on what we always saw as sort of an implicit bargain between 
President, now Prime Minister, Putin and the general public; 
namely, that a certain degree of civil rights suspension or 
difficulties with the lack of democracy and so forth were 
acceptable to the Russian public so long as there was security, 
prosperity, and a general good feeling that many people in 
Russia feel they had not had before. The dilemma for the 
current Russian leadership, the current president or prime 
minister--is that the downturn, not so much of the stock 
market, which affects some wealthy persons, but the ruble, 
which affects many Russians and reminds people of '98 and other 
crashes when the middle class was wiped out, gives a great deal 
of pause. And they've been going on national television in 
Russia to try to express the desire to hold things within a 25-
percent decline and maybe they'll succeed, or not.
    I mention this because this seems to me to make the thought 
of a strategic partnership, which is often expressed as our 
goal, extremely difficult. The current regime may have stress 
if the world crisis continues for a period of time, of simply 
hanging absent very tough measures to repress the public.
    Now, beyond that, there might be use by the regime of the 
so-called ``near abroad policy'' or the Russian sphere of 
influence--that is, the useof Russian nationalism as a way of 
trying to suppress domestic difficulty.
    I wouldn't say we could lose on both grounds, but those who 
are optimistic about the strategic partnership under these 
current circumstances, I'm not certain have much going for 
them. What is it that we might talk about? Prospects for arms 
control have arisen, simply because, as we expressed in our 
opening statement, the START regime ends December 5th. Our 
government is hardly prepared, at this point, and we hope to 
have, the nomination of Rose Gottemoeller coming over soon, 
someone who might form a negotiating team, because time is 
slipping away, and it may not be a lay down hand finding an 
agreement, even on a narrow START situation, quite apart from 
one that's more ambitious.
    But, that's sort of an existential problem in which 90 
percent of all the nuclear weapons are still with the Russians 
and ourselves. Russian Foreign Minister Lavrov and others have 
indicated that he'd like to work on this. But, beyond that, 
this is going to be pretty rough terrain. And the question for 
us will be: What happens, for example, ifthere are further 
problems in Georgia with the buildup of the bases in Abkhazia, 
for example? Or, what if a relatively dysfunctional government 
in Ukraine becomes weaker still and problems in Crimea begin to 
arise? And therefore, Russian aspirations really challenge our 
foreign policy in very strenuous and dangerous ways. Do any of 
you see any more optimistic scenario with regard to the 
domestic scene or the ``near abroad'' business that I've talked 
about?
    Ambassador Sestanovich. I do.
    The Chairman. Stephen.
    Ambassador Sestanovich. Senator, I wouldn't bet the 
mortgage on this hope, but I would note, first, there is 
political tension growing in Russia within the elite about how 
to deal with this crisis, and second, that so far the results 
are, broadly speaking, to empower liberals and Western-style 
policy solutions. Andy mentioned that the Russian response to 
the economic crisis has been like that within the developed 
world. This crisis emboldens some people to argue that Russia 
has lost time in not dealing with corruption. President 
Medvedev has been particularly active and vocal on that front, 
and his advisors have emphasized how much Russia is weakened by 
the rigidity of its system. One of them said, a couple of weeks 
ago, ``We need a new elite.'' So, there's ferment, and that is 
something we ought to keep our eye on. Now, is there anything 
that we can do to encourage greater integration and 
cooperation, greater acceptance by Russia of international 
norms?
    I mentioned the WTO accession of Russia and that would be 
helpful. Even before it occurs, I would urge that the Congress 
not continue to link WTO accession and the lifting of the 
Jackson-Vanik amendment. I would also note that Russian 
policymakers have said they don't expect energy prices to come 
back soon, and that means they've got to create a positive 
environment for foreign investment. They're talking about 
constructive adaptation to economic adversity.
    So, I think there is a narrow path through this crisis that 
could end up with positive political results.
    Senator Lugar. What if Russia just takes membership in the 
World Trade Organization and the Jackson-Vanik legislation off 
the table and says, ``Thank you very much,'' but--why is there 
any change in the predicament after the Russia's pocket those 
two situations?
    Mr. Kuchins.
    Mr. Kuchins. Let me--I think it gets--it gets to, What are 
the sources in the--of the credibility and legitimacy of the 
existing regime? Or, put it more simply, Why is Mr. Putin and 
Mr. Medvedev--why have they been very popular? And I think it 
fundamentally has to do with the fact that Mr. Putin's 
leadership of the Russian Federation has coincided with one of 
the most prosperous periods----
    Senator Lugar. Right.
    Mr. Kuchins [continuing]. In Russia's 1,000-year history. 
You take away that economic growth and prosperity that millions 
of Russians have been experiencing and he would not be nearly 
so popular.
    Now, the nationalistic elements, the--kind of the--the 
looking tough and all of that, well, that helps, to some 
degree, but it's fundamentally the economy which is driving the 
popularity. There are some interesting studies which bear that 
out. And I am absolutely convinced that the guys in the 
Kremlin, and in the White House--excuse me, the Russian White 
House--they are deeply aware of that. They do all kinds of 
polling and public-survey research, and they understand that 
the fundamental deal--it's not so much that the regime can 
restrict, you know, political rights and cut down the 
opposition, but as long as the economy is good, then the people 
will be more quiescent. And if those--and that fundamental 
situation is very, very different day, and I think that really 
affects the whole spectrum of domestic, economic, and political 
relationships, as well as the drivers behind Russian foreign 
policy.
    Senator Lugar. My time is expired and----
    The Chairman. Well, let me just ask one thing I want to 
ascertain for colleagues. Which colleagues are going to be able 
to come back? Because if people can't come back, I don't want 
to detain our witnesses. Are--is anybody--you're next, Ben, and 
you're going to be able to get your questions in. But, 
whether--you're going to come back----
    Senator Casey. I'm going to try.
    The Chairman. OK. Do you know? You can't come back. So, 
one--all right.
    Senator Cardin. And maybe you can answer in the course of 
Senator Cardin.
    Senator Cardin. Thank you, and I'll try to be brief. I just 
want to agree with our leaders on this committee about the 
importance of improving our relationship with the--with Russia. 
And effective relationship is very important for us on security 
issues, whether it's Iran or energy.
    There are many concerns. A lot of them have been brought 
out. We have human rights concerns, from how they treat their 
journalists to the right dissent. And we talk about the repeal 
of Jackson-Vanik and PNTR.
    Let me just point out, we still have lingering concerns. 
Let me just mention one, the Chabad-Lubavitch community has a 
legitimate concern about the return of the Schneerson 
collections. And when you see parts of the Schneerson 
collection show up on the black market, it has an impact on 
whether we're prepared to permanently repeal Jackson-Vanik.
    In regards to security issues, we've talked a little bit 
about Georgia and NATO. I want to bring up an issue I brought 
up, that's brought up in the OSCE. I chair the Helsinki 
Commission, and we have established direct relationships with 
Duma members. And I must tell you, there is skepticism by my 
colleagues in Russia as to the sincerity of our reaching out, 
at this point. Russia has brought forward a new security 
initiative for Europe which would--which has been supported, at 
least encouraged, by France. So, I guess my question to you is 
whether there is any hope in a security initiative that would 
include Russia and Europe, in which the United States would 
participate in, not as a substitute to NATO, but as a manner in 
which we're all at the same table, hopefully changing our focus 
from the interior threats within Europe to the concerns of the 
Middle East and other areas where we have, I think, a more 
direct interest of concern about security risk, whether these 
initiatives hold out promise.
    Mr. Cohen. To address the issue of Mr. Putin's popularity, 
absolutely he was the very popular because of the Russian 
prosperity, also because he brought the war--the second war in 
Chechnya to the ending, but he was also popular because of the 
increasing control of mass media and electronic media. If 
President Bush controlled ABC, CBS, NBC, and CNN, he would be 
more popular than his popularity used to be. So, you cannot 
decouple a leader's popularity from the control of the media, 
especially television.
    To the Senator's excellent question about European security 
initiatives, this is, in my view, in my reading of the Russian 
initiative, it's something to keep the United States out. As 
Lord Ismay said, the emergence of NATO was to keep Germany in--
U.S. in, Germany down, and Russia out. This initiative is to 
keep--get Russia in and United States out. And as such, I don't 
think we should support it.
    Ambassador Sestanovich. I have a slightly different take on 
this. I actually think that the concerns that Ariel mentions 
are entirely appropriate. And for some Russians, the goal of 
this initiative is openly to subordinate NATO. And we don't 
have any particular interest in that.
    But, do we have an interest, and can we manage a process, 
in which we put the Russian initiative on the table and talk 
about it in a Europeanwide setting, exploring all of the 
complexities, and insisting on the principles that the Russians 
will find very difficult to oppose, of national sovereignty, 
independence, respect for human rights, reaffirming the 
original Helsinki final act. I think this is a process that 
actually has some potential for us, and I'm not so afraid of 
the devilish Russian diplomatic cleverness that will, in the 
dead of night, lead us to sacrifice NATO for the sake of a new 
forum in Vienna. We've been through more than one Helsinki 
round in the past, and we've protected our alliance extremely 
successfully.
    Senator Cardin. Let me----
    Ambassador Sestanovich. If I could--the original Helsinki 
negotiations were intended by the Russians to subordinate NATO, 
and they ended up becoming a tool for human rights activists 
throughout the Soviet bloc.
    Senator Cardin. I think it's a very valid point. And no one 
here will weaken our involvement in NATO. And I understand what 
the Russians intents might be. But, when you look at the direct 
military threat against America from Europe, it's not in 
Europe, it's the Middle East. And if--we certainly have our 
concerns in Europe, and they're not going to be reduced. But, I 
do hope that we can engage, and not be worried about an 
engagement here. I do think it does give us the opportunity to 
work on an effective relationship with Russia, which we need to 
improve.
    And thank you, Mr. Chairman. I appreciate the opportunity.
    The Chairman. Thank you very much, Senator. And thank you 
for your workon the Helsinki Commission.
    Senator Kaufman. I just have a real short question, a 
followup on Senator Lugar's question.
    It all sounds very organized, ``We're going to have this 
economic downturn, we're doing the polling data, everything's 
going to be just fine,'' but what are the possibilities that--
you say that they're behaving like a developing country--but, 
that this turns bad for the United States? In other words, that 
Putin, because he's got the problems--Medvedev--if they turn on 
the United States, it's kind of the problem that's causing 
this, as opposed to us causing the problem. Is that a prospect, 
of that happening? And what do you think the probability of it 
is?
    Mr. Kuchins. It's certainly a possibility. The worst-case 
scenario, to me, in the near to medium term, were to be if, as 
I suggested, one of the caveats, if the Kremlin found itself 
really under siege, not able to respond quickly enough, growing 
social unrest, and there was the crackdown in response, greater 
centralization of power, greater oppression, et cetera, et 
cetera, and then, not too long after that, there might be a 
spike in the oil price and suddenly the Russian economy is on 
much firmer footing, not necessarily because of anything they 
do to promote, you know, diversification, more sustainable 
sources. That would be the worst-case scenario, which the 
justification for the crackdown would have greater credibility 
and legitimacy simply because of the flow of oil money. It's a 
possibility, and we have to be ready for it and consider it. 
But, you know, absent that, I think--I mean, just the--the 
constraints the Russians face today on longer-term economic 
growth, as opposed to 1998, they're far greater, and they 
really do, I think, push them more towards--more toward 
cooperation, even if it's kicking and screaming.
    The Chairman. Yes, quickly. We've got 3 minutes left on the 
vote. We have a little grace period. So, if you can wrap it up, 
that'd be helpful.
    Mr. Cohen. Yeah. We tend to give a lot of credit to 
President Medvedev, and duly so, because he is the president. 
However, when you look at who is really running Russia today, 
these are all Mr. Putin's allies, and there is a lot of anti-
Americanism and nationalism. How do I know? When I go to 
Russia, I'm a Russian speaker, I flip television channels, and, 
lo and behold, I find out from Russian state-run television, 
that the United States funded the Bolshevik Revolution when it 
is a consensus in the historic community that it was German 
general staff that provided money and the sealed carriage for 
Lenin.
    When I'm looking at who of the Russian allies emerge over 
the last 3 or 4 years, I'm looking at Chavez, I'm looking at 
Iran, we're looking at OPEC. Now Russia is in a very intense 
dialogue with OPEC and the world view of a multipolar world; 
translate, less and less American power. I am not saying that 
the economic crisis will bring it about, but the tendency was 
there when the prices were high. The question is, What is the 
perceived national interest? What we consider rational, do they 
consider the same thing rational? And I'll leave it at that.
    The Chairman. Well, it's very provocative and helpful and 
important, and it's an important dialogue. And we, 
unfortunately, have not been able to complete it, and I regret 
the schedule, because of the votes now, and the number of 
Senators coming back, what we're going to do is adjourn rather 
than recess, but we're going to leave the record open. A number 
of colleagues have said they want to submit questions for the 
record, which I'd like to do.
    This will not be our only hearing with respect to this 
question, so we will pursue further, and we might even engage 
you folks in a roundtable that we want to have on this topic at 
some point in the near term, because we've put a number of very 
important thoughts out there, which really need to be developed 
a little more.
    Nevertheless, we did cover a lot of territory, and I think 
we began to lay the predicate, so we're grateful to you for 
being here to help us do that today. And we'll stand adjourned, 
with the record staying open for a week.
    Thank you.
    [Whereupon, at 11:20 a.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


              Responses to Additional Questions Submitted 
               for the Record by Members of the Committee

  responses to questions submitted to andrew kuchins by senator kerry


    Question.  The closure of Manas Air Force Base was immediately 
followed by the offer to negotiate the transportation of equipment 
through Russia and on their terms. Obviously it was a power play, but 
what does it say about Russia's strategic goals in Central Asia and 
what sort of role are they seeking in Afghanistan?

    Answer. First, we should acknowledge that the Kyrgyz have their 
interests in this as well, and they principally entail getting as much 
money as possible. Russia's strategic goals in Central Asia are to 
strengthen their role as the hegemonic regional great power. Regarding 
Afghanistan, they would like to control/coordinate the transit 
cooperation with NATO, Russia, and Central Asian states. Ideally they 
would like to do this through the CSTO (Collective Security Treaty 
Organization).


    Question.  The Moscow Treaty limits only apply for a single day in 
December 2012, and allows each party to define for itself what counts 
as an operationally deployed warhead. Does that arrangement provide 
enough stability and predictability in our strategic relationship?

    Answer. In my view the Moscow Treaty is not adequate to provide 
sufficient stability and predictability in our strategic relationship 
with Russia. We need a treaty relationship that provides more 
verification and monitoring measures than the Moscow Treaty, but one 
that is simpler to negotiate and execute than START


    Question.  President Medvedev spoke last year about a new European 
security architecture. Russia has been suspicious of the OSCE and 
highly critical of NATO. Is there a positive vision for a new 
architecture? What kind of organization is the CSTO?

    Answer. I think President Medvedev has a ``positive vision,'' but 
it is hard to say how widely that is shared amongst his colleagues in 
the leadership, including Mr. Putin. But even in the case of Medvedev, 
it appears there is little specificity to what this architecture would 
entail. I have a hard time gleaning real content in the Russian 
proposals. They are right to the extent that existing security 
institutions have not been fully successful in maintaining peace and 
security in Europe, as the Georgia war last summer tragically 
illustrated. Russia could go a long way to strengthening European 
security by developing a stronger relationship with NATO and not trying 
to undercut the OSCE.
    Below is how I describe the CSTO in my forthcoming book, The Russia 
Balance Sheet  (co-authored with Anders Aslund, April 2009):


          The CSTO, originally established in 1992 as the CIS 
        Collective Security Treaty, was founded in 2002 by the 
        presidents of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, 
        and Tajikistan; Uzbekistan joined in 2006. It should certainly 
        not be compared with the Warsaw Pact as there is neither 
        political control exercised by Moscow nor an integrated 
        military structure. The CSTO is a consultative body where 
        Moscow is not challenged, but where national interests clearly 
        prevail over collective ones. Tellingly, no member of the CSTO 
        apart from Russia has recognized the independence of Abkhazia 
        and South Ossetia.


    The only addition I would make to this is that early this year the 
CSTO agreed to establish a 10-12,000 man rapid reaction force, so this 
would, if it does indeed happen, would provide some operational 
capability to the organization.


    Question.  To what extent does Russia perceive Iran's nuclear 
program as a threat to international peace? Do Russia's estimates of a 
timeline of Iran reaching nuclear weapons capability differ from our 
own? If so, do you think such an estimate changes the urgency of the 
situation in Russia's view?

    Answer. Russia does not view the Iranian nuclear program with the 
same degree of urgency as Washington, and they are far more inclined to 
view Iran as a regional geopolitical partner. They do not want to see 
Iran become a nuclear power, but I think they are more reconciled that 
this is an inevitability given that Tehran's efforts go back decades to 
the time of the Shah, and that military efforts to prevent it would be 
more destabilizing than stabilizing for the region and international 
security more broadly. Moscow regards a nuclear-armed Pakistan as more 
threatening to their interests as well as to the nuclear 
nonproliferation regime.
    Moscow also benefits from the rather unstable status quo with Iran 
being regarded as a ``rogue state'' by the West, and this leaves more 
room for Moscow to assert economic and political influence. But there 
is very little trust between Moscow and Tehran, and the Russians have 
been increasingly frustrated with Iranian intransigence on the nuclear 
issue with their refusals to take up Russian proposals for an 
international fuel bank for the processing of Iranian and other 
countries nuclear fuel.
                               __________


 responses to questions submitted to andrew kuchins by senator feingold

    Question. In recent testimony, the DNI noted that Moscow's 
engagement with both Iran and Syria, including advanced weapons sales, 
has implications for U.S. nonproliferation interests. Equally as 
relevant are press reports that Russian President Medvedev has 
announced his intention to strengthen Russia's conventional military 
force. How should the Obama administration interpret these signals and 
what actions might result in more effective cooperation with Russia on 
Iran?

    Answer. Regarding the Medvedev announcement about increasing budget 
for military modernization, this is being done in the context of a 
broader military reform that will reduce forces considerably and force 
retirement for many officers. The reform is a long overdue measure 
unpopular with most of the uniformed military, and the increase in 
spending is both to sweeten the pill and address some of the 
shortcomings of Russian military forces that have been starved of 
procurement since the Soviet collapse.
    Arms sales have been principal means of supporting what is left of 
Soviet military industrial complex for nearly two decades. A major 
piece of arms sales is its role as a jobs program. Some of the sales to 
Iran, Syria, and others are clearly problematic, but I think the 
decision of the Russians to deliver the A-300 anti-air system to Iran 
is the most important one to watch in terms of U.S. interests and 
Russian intentions. The Russians have held back this delivery perhaps 
waiting to see what Obama administration policy towards Russia will be 
like.


    Question. If Iran continues to move forward in the direction it is 
currently headed and does not cease uranium enrichment, do you think 
Russia would be supportive of more punitive actions if need be, 
including sanctions through the UN Security Council even though it has 
resisted harsher measures in the past?

    Answer. I can say with some degree of certainty that absent a 
broader improvement in U.S.-Russia relations, I think the Russians 
would be reluctant to support tougher sanctions without more clear 
proof of Iranian efforts to develop a weapons program. If the Obama 
administration does have some success in improving the relationship, 
then certainly the likelihood of the Russians being more open to 
tougher sanctions on Iran are increased--how much is impossible to say.


    Question. With the media reporting that Russia will now allow the 
United States to ship non-lethal supplies through its territory to 
Afghanistan--via Kazakhstan and Uzbekistan--what kind of support is 
feasible from Russia. Is it appropriate to see Russia as an equal 
partner with regard to Afghanistan and if so what steps should we take 
to ensure that's the case?
    The Russians have indicated they are prepared to discuss/negotiate 
shipment of lethal military goods through their territory, so I think 
this is a possibility. The Russians are also probably prepared to serve 
as contractors for reconstruction efforts in some areas. The Russians 
are probably most interested in stronger efforts to curtail narco-
trafficking out of Afghanistan. It is not clear what being an ``equal 
partner'' really means (effectively no country is operationally an 
```equal partner'' to the U.S.), but probably our benchmark for what 
can be done should start with the areas of cooperation in taking out 
the Taliban we did engage in with Russians in fall/winter of 2001/02.


    Question. Russian officials said earlier this year that they are 
scaling up their diplomatic involvement to solve conflicts in Africa, 
and they recently appointed a special envoy to Sudan. However, their 
record to date toward Sudan and specifically the situation in Darfur 
has been unhelpful to say the least. They have provided political cover 
for the regime in Khartoum at the UN Security Council and, according to 
the organization Human Rights First, they have continued to provide 
arms to the Government of Sudan used in Darfur in direct violation of 
the UN arms embargo. How can the Obama administration better press 
Russia on the Security Council and bilaterally to change their approach 
to Sudan? And just as with the Chinese, how can we engage and identify 
opportunities to partner with the Russians as they increase their 
involvement in African affairs?

    Answer. The most important drivers in growing Russian interest and 
influence in Africa are commercial and economic. Fully understanding 
their economic interests, where in some cases they are competing 
against the Chinese, can yield clues about partnership opportunities. 
The extent to which Moscow perceives us as taking their interests 
seriously and in some cases helping to advance them, the more likely 
they will be prepared to support us on regional issues we consider 
priorities.


    Question.  The State Department's yearly report on human rights 
noted for 2008 that ``the Russian Federation has an increasingly 
centralized political system. with a compliant State Duma, corruption 
and selectivity in enforcement of the law, media restrictions, and 
harassment of some NGOs [all of which have] eroded the government's 
accountability to its citizens.''
    The 2008 report also documents numerous reports of government and 
societal human rights problems and abuses during the year. The last 
administration pretty much gave Russia free pass but this is not 
expected to be the case with the new administration. How do you 
anticipate these restrictions will be addressed in any new U.S. policy 
towards Russia?

    Answer. Certainly the Russian leadership does not view itself as 
having received a ``free pass'' by the Bush administration on these 
issues. The previous administration did far more to hurt the 
advancement of American ideals by failing to live up to them in very 
public ways. This is a hard set of issues as we have so little leverage 
over them, and it is a real dilemma to ascertain to what extent our 
efforts to support more reform-oriented individuals and groups actually 
empower them or are counterproductive for their agendas. Our influence 
on domestic issues in Russia is further reduced when the bilateral 
relationship is overall so negative--it is too easy then for the 
Russian leadership to paint Washington in the ``enemy image'' that 
seeks to sabotage and weaken Russia.
    The new administration will have an advantage in this regard from 
the outset since the global financial crisis has hit Russia especially 
hard and will likely force the Kremlin to be more attentive to good 
policy decisions that improve the investment climate. The Kremlin does 
understand that their principal ``accountability'' to the Russian 
people is continued prosperity, and for the last five years of rising 
oil prices, until last summer, there has been far less incentive for 
the Russian government to make what we would regard as good policy 
decisions.


                               __________


    responses to questions submitted to ariel cohen by senator kerry


    Question. In your testimony, you state that the United States does 
not need to replace the START treaty because the 2002 Moscow Treaty 
will continue in force after START's expiration. However, the Moscow 
Treaty has no verification mechanism of its own; it relies entirely on 
START's verification provisions.

    Without START's verification provisions, or something similar to 
them, won't the U.S. lose valuable information about Russia's strategic 
forces?

    Answer. The recent upsurge in international calls for the total 
elimination of nuclear weapons has added to the administration's hope 
to be able to develop a new workable agreement with the Russian 
Federation by December 5, 2009, when START is set to expire according 
to its Article XVII, which is reflected in the U.S.-Russian joint 
statements of April 1st. A second treaty in existence limiting the 
strategic nuclear forces of the U.S. and Russia to levels below START--
the Strategic Offensive Reductions Treaty (SORT), frequently referred 
to as the Moscow Treaty for the city where it was signed, will remain 
in force until the end of 2012. However, SORT lacks verification and 
control measures foreseen in START. Since at least mid-2006, Moscow has 
been calling for maintaining START verification and transparency 
measures, albeit with modifications that will reduce the expense and 
cumbersome nature of some requirements.
    The most immediate issue for the U.S. and the Russian Federation 
(RF) regarding strategic nuclear arms reductions is that START, 
ratified in 1994, is set to expire in December. This is not an issue 
regarding the numbers of weapons deployed. Both sides are well below 
the START limits and working toward to the lower limits established by 
the Moscow Treaty. The problem is that the Moscow Treaty uses the 
verification and transparency provisions in START to inform each side 
of the reductions they are making. The issue is complicated by the fact 
that the START verification and transparency provisions do not reflect 
the Moscow Treaty's different definition of the weapons to be limited, 
which is referred to as operationally deployed warheads. While Article 
XXVII of START allows the parties to extend the treaty, a simple 
extension will not resolve the problem with verification and 
transparency mechanism. This is because the START verification and 
transparency provisions are not ideally suited to verifying the 
reductions required by the central provisions of the Moscow Treaty and 
simple extension of START will leave this mismatch in place. While 
START will expire in December, it would be best to let it lapse rather 
than negotiate a new agreement with Russia under a tight deadline, as 
rushed agreements on matters as technical as arms control almost always 
end up flawed.\1\
---------------------------------------------------------------------------
    \1\ Andrei Shoumikhin, Ph.D. and Baker Spring, ``Strategic Nuclear 
Arms Control for the Protect and Defend Strategy,'' forthcoming 
Backgrounder from The Heritage Foundation.
---------------------------------------------------------------------------
    Letting START expire will remove an unrealistic deadline for the 
conduct of negotiations with Russia regarding strategic nuclear arms 
limitations. Negotiating a new treaty under such a deadline will 
prohibit a careful review of the proper strategic force posture for the 
U.S., which will not be concluded until the completion of the required 
Nuclear Posture Review at the end of this year or early next year. As a 
result, hasty negotiations are much more likely to result in a treaty 
that contains significant flaws that make it inconsistent with U.S. 
security requirements. Finally, there is no compelling reason to keep 
START in place. Its expiration will not result in the abandonment of 
numerical limitations on U.S. and Russian operationally deployed 
strategic nuclear warheads because the Moscow Treaty will remain in 
force through the end of 2012.
    Instead, the Obama administration should negotiate a verification 
and transparency protocol (as a treaty document) to the Moscow Treaty. 
This treaty limits nuclear forces to levels below those allowed by 
START. Although it will remain in force until 2012, the Moscow Treaty 
uses verification and transparency provisions taken from START, which 
are not suited to verifying the reductions it requires. START limits 
warheads on the basis of the capacity of strategic delivery systems, 
whereas The Moscow Treaty limits all operationally deployed strategic 
nuclear warheads. Correcting this should be the first order of business 
for arms control talks with the Russians. Unless the Obama 
administration and Russia badly mishandle the negotiations, this Moscow 
Treaty protocol is likely to enjoy the necessary support in the Senate.


    Question. The Moscow Treaty limits only apply for a single day in 
December 2012, and allows each party define for itself what counts as 
an operationally deployed warhead.
    Does that provide enough stability and predictability in our 
strategic relationship?

    Answer. Under the Moscow Treaty, both the U.S. and Russia are on 
the path to reducing their respective operationally deployed strategic 
nuclear warheads to between 1,700 and 2,200. The Obama administration 
has declared its determination ``to stop the development of new nuclear 
weapons; work with Russia to take U.S. and Russian ballistic missiles 
off hair trigger alert; and seek dramatic reductions in U.S. and 
Russian stockpiles of nuclear weapons and material.''\2\ In line with 
these goals and the promise ``to extend a hand if others are willing to 
unclench their fist,'' the administration has rushed to renew strategic 
arms control negotiations with Russia on a follow-on agreement to the 
Strategic Arms Reduction Treaty (START) and broader areas of 
cooperation to reduce the number of nuclear weapons and prevent further 
proliferation in accordance with joint statements issued by President 
Obama and Russian President Dmitri Medvedev in London on April 1, 2009.
---------------------------------------------------------------------------
    \2\ The White House, ``The Agenda: Foreign Policy,'' at http://
www.whitehouse.gov (March 19, 2009).
---------------------------------------------------------------------------
    The administration needs to fashion an arms control policy 
specifically tailored to meeting the current and projected defense 
needs of the U.S. This policy should be based on the in-depth 
professional analysis of political, legal, economic and all other 
pertinent aspects and implications of the existing and future 
negotiations and agreements with the Russian Federation, and the 
Russian internal and foreign policies, including their motivations and 
goals in arms control. It should proceed on the basis of clearly 
defined U.S. security goals and requirements, in particular, to be 
established in the next Nuclear Posture Review. It also needs to have 
as comprehensive and accurate understanding of Russian interests, goals 
and methods in future negotiations as possible.
    Haste in redefining the parameters of the U.S.-RF strategic 
relationship, for the sake of political expediency, is inadvisable and 
potentially dangerous for the U.S. national security interests. The 
Obama administration seems to be on the cusp of defining its planned 
negotiations with Russia on strategic nuclear arms reductions as the 
barometer of its initiative of ``resetting'' U.S.-Russian relations. If 
these negotiations are defined in that broader context, process will 
come to dominate substance. The likely result will be a treaty that 
fails to serve either the central purposes of arms control or the 
interests of the U.S. The Obama administration needs to pursue the now-
established strategic nuclear arms control negotiations with Russia 
with both care and patience. The negotiations on the fate of the 
Strategic Arms Reduction Treaty should be driven not by chronological 
deadlines but by the clear understanding of how this process and its 
expected results would comply with the security interests and defense 
requirements of the United States and its allies.
    The Obama administration should defer negotiations on a treaty to 
reduce strategic nuclear weapons below those required by the Moscow 
Treaty. The administration, despite the implied goal of the April 1st 
joint statement on arms control, is not in a position to negotiate a 
new treaty with Russia that would effectively serve as a successor to 
the Moscow Treaty. It has yet to see the final report of the 
congressionally-appointed Strategic Posture Commission, which could 
include consensus-based recommendations regarding these matters. 
Further, it has yet to produce its own National Security Strategy and 
Nuclear Posture Review. All of these reviews are necessary parts of 
establishing a broader policy governing the strategic posture of the 
U.S. and defining the proper role for arms control in that context.\3\
---------------------------------------------------------------------------
    \3\ The Dmitrii Medvedev government seems to be deeply involved in 
some doctrinal drafting that may eventually change Russian approaches 
to arms control in a significant way. At the meeting of the RF Security 
Council on March 24, 2009, the Kremlin announced the preparation of the 
new ``National Security Strategy to 2020'' and the new ``Military 
Doctrine'' to be submitted to the President for signing before the end 
of 2009. Both documents are supposed to complement each other. As 
reported, ``Russia does not intend to get involved in burdensome 
confrontation or new the arms race,'' however it is supposed to respond 
adequately to the ``serious conflict potential in a number of world 
regions. international terrorism, and the unending attempts to expand 
NATO's military infrastructure in close proximity to Russian borders. 
See: ``Russia Refused to Renew the Arms Race,'' Lenta.ru, March 24, 
2009, available at: http://lenta.ru.
---------------------------------------------------------------------------
    Further, there is no need to rush this broader strategic arms 
control process. By allowing START to expire and concluding a narrow 
treaty regarding verification and transparency measures under the 
Moscow Treaty, no immediate deadline looms. This breathing space can be 
used to establish a new and carefully prepared policy for arms control 
with Russia and beyond. This is the opportunity the Obama 
administration can use to fashion an arms control policy that is based 
on the Constitution's requirement that the federal government provide 
for the common defense. It would be an arms control policy that would 
serve as an arm of a broader national security policy and strategic 
posture that is designed to protect and defend the people, territory, 
institutions and infrastructure of the U.S. and its allies against 
strategic attack. The arms control element of such a policy can also 
seek to encourage more defensive strategic postures by all other 
nuclear-armed states, starting with Russia.
    The Heritage Foundation believes that between now and the end of 
2012, that the SORT Treaty will provide for stability in the U.S.-
Russian bilateral relationship, assuming the conclusion of a 
verification and transparency protocol to SORT as we recommended 
earlier.


    Question. Has Russia demonstrated the successful use of an ``energy 
weapon'' in its recent disputes with Ukraine, Georgia, Estonia and 
Lithuania? Or has Russia awakened Europe to the danger of over-
dependence on Russian energy supplies? Has Russia over-played its hand?

    Answer. Yes, it certainly did. Since the late 1990s, the Kremlin 
has repeatedly demonstrated that it is willing to use energy as a 
weapon to accomplish its political objectives. In fact, the Kremlin has 
institutionalized this behavior. At the same time, Ukraine, the Baltic, 
Central and Western European states are not without fault as they have 
largely neglected the steps that would have reduced vulnerabilities.
    Anyone aware of Russia's past behavior and fervent opposition to 
U.S. missile defense plans in Europe could easily adduce it was no 
coincidence when Transneft, Russia's monopoly oil exporter, reduced oil 
deliveries to the Czech Republic by 40 percent the day after Prague 
signed a deal with the U.S. Furthermore, after Lithuania sold is oil 
facilities to a Polish company instead of a Russian company in 2006, it 
was no coincidence when the Kremlin cut off the flow of oil. The 
Kremlin had already cut off oil to Lithuania no less than nine times 
between 1998 and 2000 in an attempt to engender favorable conditions 
for Russia's companies to benefit from Lithuania's privatization. A 
similar incident happened earlier in 2004, which was barely noticed in 
Europe, when Russia cut oil deliveries to Latvia in 2004. Here, the 
Kremlin was trying to procure an oil port for a Russian company during 
Latvia's privatization.\4\
---------------------------------------------------------------------------
    \4\ Keith Smith, ``Russia and European Energy Security: Divide and 
Dominate,'' Center for Strategic and International Studies, October 27, 
2008, at http://www.csis.org (April 19, 2009).
---------------------------------------------------------------------------
    With regard to Georgia, the August 2008 war and President Dmitry 
Medvedev's August 31 statement on national television of Russia's new 
foreign policy principles were intended to send clear signals to 
multiple audiences. The message to the world was that Russia has a 
``zone of privileged influence'' and that it holds the veto over the 
aspirations of the people living in it. Second, initiating democratic 
reforms or pursuing a pro-Western policy in Russia's backyard is 
dangerous. Thirdly, that Moscow can disrupt the flow of energy and 
goods through the East-West energy and transportation corridor of oil 
and gas pipelines and railroads from the Caspian Sea to Turkey and 
Europe. Turkmenistan agreement to sell the majority of its gas to 
Moscow, and the recent Memorandum of Understanding between Azerbaijan 
and Russia on sale and export of gas demonstrate this important point. 
(More below on how this war has impacted energy policy and influenced 
investors and regional governments alike).
    Russia also sought to enhance its strategic position by shutting 
off the flow of natural gas to Ukraine and the European Union in 
January 2006 and January 2009. While legitimate commercial issues were 
involved in the January 2009 gas war, such as Ukrainian indebtedness, 
the siphoning of so-called ``technical gas'' and the price of transit 
fees, there is little doubt that powerful political considerations and 
concerns over huge sums of money featured largely in the Kremlin's 
calculus.\5\ On energy, the Russian leadership sought to show Europe 
that Ukraine is an unreliable transit state and that expensive Russian-
proposed gas pipe lines bypassing Ukraine are justified.
---------------------------------------------------------------------------
    \5\ Ariel Cohen and Owen Graham, ``European Security and Russia's 
Natural Gas Supply Disruption,'' Heritage Foundation WebMemo No. 2194, 
January 8, 2009, at http://www.heritage.org.
---------------------------------------------------------------------------
    While Russia has clearly been willing to use energy as a weapon, 
fault can still be distributed widely. For example, the Baltic States 
and most of the Central European states are dependent on Russia for 
virtually all of their gas imports. However, only the Czech Republic 
invested heavily during the 1990s to diversify their supply source. 
Prague invested in an oil pipeline from Germany and began buying gas 
from Norway long before it was in vogue to diversify away from Russia. 
This policy proved to be farsighted, especially after Transneft reduced 
its oil supplies to the country following the missile defense deal. 
Yet, Central European and Baltic states haven't pursued Liquified 
Natural Gas (LNG) solutions. So far, Prague is the outlier. Even 
following the 2006 gas cut-off, there was little investment in 
pipelines, especially interconnecter pipelines, or LNG; indeed, the 
Baltic States still remain on the old Soviet electric grid to this 
day.\6\
---------------------------------------------------------------------------
    \6\ Keynote Address by Czech Ambassador-at-Large for Energy 
Security Vaclav Bartuska, Conference on ``Energy Security Challenges to 
Europe and America in Eurasia,'' The Jamestown Foundation, National 
Press Club, Tuesday, February 17, 2009, at http://www.jamestown.org 
(April 22, 2009).
---------------------------------------------------------------------------
    In the case of Ukraine, the government is also at fault for having 
left the country vulnerable. There has been no fundamental reform in 
the Ukrainian energy sector since the Orange Revolution over four years 
ago. The Ukrainian state-owned energy sector remains corrupt, 
inefficient, overly politicized, and mismanaged, regardless of who's in 
power in Kyiv. Worse, Kiev has failed to develop a coherent policy 
toward its Russian supplier. One of the major reasons for this the 
ongoing influence of shady intermediary companies like Swiss-based 
RosUkrEnergo.
    Despite the supposed termination of this company in the Russian-
Ukrainian gas trade, stipulated in December 2008, it remained active in 
importation of Turkmenistani gas. It was also reported that 
RosUkrEnergo likely played a prominent role in the gas war. In fact, 
one prominent analyst stated that Putin cut off the gas to Ukraine 
because he became so furious with Dmitry Firtash, one of the 
RosUkrEnergo principals, because he could not control him any 
longer.\7\ While the facts and potential violations of the law by 
RosUkrEnergo's involvement in the gas war are murky and deserve a 
thorough international investigation through a combination of law 
enforcement and intelligence means, experts agree that Ukraine should 
have taken steps by now to fully eliminate the role of shady middlemen, 
in addition to modernizing the energy sector.
---------------------------------------------------------------------------
    \7\ Remarks by Anders Aslund, ``Energy Security Challenges to 
Europe and America in Eurasia,'' The Jamestown Foundation, National 
Press Club, Tuesday, February 17, 2009, at http://www.jamestown.org 
(April 22, 2009).
---------------------------------------------------------------------------
    Has Europe awakened? It has become cliche to say that the latest 
natural gas row between Russia and Ukraine should have been a wake-up 
call for the EU. However, the 2006 gas cut-off and the watershed 
Russian-Georgian war of August of 2008 should have also been wake up 
calls. They are not.
    Despite calls in 2006 and the prioritization for a unified EU 
energy strategy, including diversification of transit routes not under 
Russian control, the EU member states continue to take a largely go-it-
alone approaches to energy. Every capital is trying to cut its own deal 
with Gazprom, and energy policy is influenced by the level of 
dependence on Russian gas.
    During the January crisis, however, the EU did find a common voice 
for a short time. At the height of the crisis, Russia called for an 
Energy Summit to help resolve the crisis. EU member states declined to 
attend delegating the role to the Commission and the Presidency. While 
those advanced some positive measures, such as setting up gas meters 
and sending observers to the border where gas is crossing from Russia 
to Ukraine, comprehensive energy security solutions still elude 
Brussels.
    More recently, Brussels achieved an ephemeral ``unity'' by 
supporting funding for the proposed Nabucco pipeline, which will carry 
gas not under Russian control from the Caspian region to Europe. 
However, this measure, part of a four billion Euro plan to boost 
Europe's economy, was achieved only after overcoming strong German 
objections. In fact, German Chancellor Angela Merkel was lobbying 
actively for one month against Nabucco, and Germany is trying to 
undermine the project. Nabucco has been labeled as a strategic priority 
project by the EU Commission. In addition to lobbying against Nabucco, 
Merkel has been trying to get the proposed Nord Stream pipeline 
elevated to become a priority project. It should be noted that unlike 
Nabucco, Nord Stream would be an exclusive pipeline between two 
countries, with spurs to Germany's neighbors.
    Only after coming under pressure from EU Commissioners and other 
officials and receiving phone calls did Frau Merkel reverse course. In 
the end, the package for Nabucco went from $250 million to $200 
million. It should also be noted that Germany ironically objected to 
including Nabucco in the spending package on the basis that it would 
not immediately stimulate the economy.
    The reality is that some member states, namely Germany, Italy and 
France are growing increasingly dependent on Russian energy and this 
militates against common efforts on the energy front. Unfortunately, 
many Germans seemed to have concluded from the recent gas war that the 
solution is their capitulation on the ``Eastern Front.''
    Another reason the 2009 crisis has not interrupted business as 
usual is that blackmail occurs only occasionally. It appears that many 
governments prefer to weather a temporary storm rather than take the 
hard steps necessary to achieve greater energy independence, preferring 
to believe that they are drawing Moscow into a relationship of 
``interdependence'' which benefits Europe in the long term. It appears 
that it is going to have to take a crisis of much greater magnitude to 
shake some member states free from their slumber.
    Has Russia overplayed its hand? When asking this question, it is 
necessary to put it into context. Since 1999, Moscow has ridden an 
energy boom and mounted a proactive energy agenda throughout Eurasia, 
in which foreign policy priorities predominated. Indeed, the Kremlin 
has been working very effectively to advance their interests throughout 
Eurasia.
    Moscow's fortunes began to reverse, however, with Putin's shakedown 
of the Mechel Corporation, the fallout from the fight for control of 
TNK-BP oil joint venture, the August war with Georgia, the latest gas 
war, and the start of Mikhail Khodorkovsky's second trial. These 
events, taken cumulatively, have caused international investors to 
reel, the Russian stock market to plunge, and capital to flee, sending 
shock waves through the Russian leadership.
    After the gas war, the International Energy Agency observed that 
Russia is not a reliable supplier. Investors also took notice of 
Russia's behavior and state of corporate management and voted with 
their feet. Nevertheless, Russia will remain the primary supplier of 
gas to Europe for the foreseeable future. Moreover, demand for Russian 
gas will only grow as Europe seeks to meet its stringent carbon 
emissions reduction targets.
    Moscow's effective energy offensive, coupled with the West's low 
level of engagement on Eurasian energy diplomacy, continues to pay 
dividends to Russia. With the significant exception of Senator Lugar, 
there has been scant engagement from the U.S. Congress, and 
insufficient and inefficient involvement by the administration, as well 
as by European states, in Eurasian energy diplomacy, including Turkey. 
This lack of attention has given Moscow an added advantage. To 
contrast, high-level delegations from Russia, starting with Putin and 
other bosses of the Kremlin, as well as from Gazprom, Rosneft, 
Transneft, etc., have been making regular visits to the capitals of key 
energy producing states in Eurasia.
    Moreover, Moscow's demonstration of force in the Southern Caucuses 
last August is one more factor that is driving this trend: Turkey's 
recent efforts to tie progress on Nabucco to gaining EU membership.
    Currently, Ankara is stalling on signing an intergovernmental 
agreement on Nabucco myopically tying it with negotiating the Energy 
Chapter of Aquis Communitaire with the EU. Without such an agreement, 
Azerbaijan's access to Western markets outside of Russian controlled 
transit will be seriously compromised.\8\
---------------------------------------------------------------------------
    \8\ Steven Blank, ``Germany and Turkey Keep Nabucco on the Rocks,'' 
March 25, 2009, CACI Analyst, at http://www.cacianalyst.org (April 22, 
2009).
---------------------------------------------------------------------------
    This action coupled with the Georgia war may be pushing Baku closer 
towards Russia in Baku's ever delicate balancing policy. In a meeting 
on March 27 between Gazprom chief Alexei Miller and Socar chief Rovnag 
Abdullayev, Gazprom won an agreement from Azerbaijan to begin talks on 
buying Azeri gas.\9\ On April 18, Azerbaijani President Ilham Aliev 
flew to Moscow in a follow-up meeting and met with his Russian 
counterpart Dmitry Medvedev. At this meeting, President Aliev confirmed 
his interest in selling gas directly to Gazprom.\10\
---------------------------------------------------------------------------
    \9\ ``Azeris Agree To Consider Gazprom,'' The Moscow Times, March 
30, 2009, at http://www.themoscowtimes.com (April 3, 2009).
    \10\ Anatoly Medetsky, ``Aliyev Proposes Selling Gas to Europe,'' 
The Moscow Times, April 20, 2009, at http://www.moscowtimes.ru (April 
22, 2009).
---------------------------------------------------------------------------
    It should also be noted that the number one priority for Azerbaijan 
is resolving Nagorno-Karabakh. Unlike the West, Moscow has been moving 
very rapidly on this issue, promising Baku an acceptable outcome. This 
Russian-Azeri gas deal could potentially undercut Nabucco.\11\
---------------------------------------------------------------------------
    \11\ Alexandros Petersen, ``Nabucco Pipeline: Over Before It 
Started?,'' April 8, 2008, at http://www.acus.org (April 22, 2009).
---------------------------------------------------------------------------
    In addition to Azerbaijan, Turkmenistan is critical to filling 
Nabucco. On April 9, a segment of the Central Asia-Center pipeline 
exploded, halting Turkmen natural gas exports to Russia.\12\ Following 
the incident, the Turkmen Foreign Ministry remarkably blamed Russia for 
the explosion. The U.S. should have begun a much more active diplomacy 
with Ashgabat a long time ago. Not only there were no high level visits 
of U.S. officials to Turkmenistan, as the time of this writing, there 
is no full-time U.S. Ambassador to Turkmenistan.
---------------------------------------------------------------------------
    \12\ John C.K. Daly, ``Pipeline explosion reveals Turkmenistan-
Gazprom rift,'' April 13, 2009, UPI, at http://www.upi.com (April 22, 
2009).
---------------------------------------------------------------------------
    The West needs to step up its energy diplomacy in Eurasia. The 
appointment of Ambassador Richard Morningstar as Special Envoy for 
Eurasian Energy is a good start. The Obama administration should 
continue to encourage Europe to diversify their sources of energy, to 
add LNG and non-Russian-controlled gas from the Caspian, and nuclear 
energy and coal, as well as economically viable renewable energy 
sources. The administration should also encourage efforts to build 
interregional pipeline connections and storage facilities in Europe 
that will increase flexibility during future supply disruptions. 
Lastly, Washington and Europe should encourage Moscow to decouple 
access to Russia's natural resources sectors from the Kremlin's 
geopolitical agenda in compliance with this convention.


    Question. Given the poor state of the rule of law, democracy and 
human rights in Russia, how can or should the U.S. act to support those 
who would stand up for fundamental rights? What works and what doesn't?

    Answer. So far, the Obama administration has not publicly raised 
questions about human rights violations, tight state controls of 
national TV channels, political repression, or rule of law issues in 
any significant way. In fact, so far despite the rhetoric, under 
President Medvedev human rights activists were assassinated, murderers 
of others (Politkovskaya) were acquitted in what appears as 
deliberately botched prosecutions, while the Khodorkovsky-Lebedev trial 
is moving ahead full steam.
    The Obama administration appears to be meeker than the Bush 
administration in addressing these issues. I believe that in the 
``euphoric'' stage of bilateral relations, determined to press the 
``reset'' button and pursue arms control initiatives, the Obama 
administration may be all but mum in this area. This should not be the 
case though.
    An important question to ask is what priority should the U.S. place 
on democratization and protecting civil liberties in Russia. 
Additionally, there is an important corollary to this question: If the 
Obama administration focuses too much on these areas, do we risk 
alienating Russia on important security issues, like Iran's nuclear 
threat, arms control, or Russian policy towards its neighbors?Indeed, 
some argue, that if the Obama administration focuses ``too much'' on 
democratization and civil liberties in Russia, then the U.S. may risk 
alienating the Russian leadership on security, foreign policy, energy 
and business issues. All these priorities have to be taken into 
account, and with this in mind, the Obama administration should not 
forgo a core American foreign policy value and objective with regards 
to Russia: promoting democracy, good governance, transparency and the 
rule of law. The United States should seek to advance these principles 
when it can and in realistic and practical ways.\13\
---------------------------------------------------------------------------
    \13\ Donald N. Jensen, ``Russian Democracy in Crisis: The Outlook 
for Human Rights, Political Liberties, and Press Freedom,'' in ``Russia 
and Eurasia: A Realistic Policy Agenda for the Obama administration,'' 
The Heritage Foundation, Special Report #49, March 27, 2009, at http://
www.heritage.org (April 13, 2009).
---------------------------------------------------------------------------
    Bargaining away human and civil rights issues to secure Russia's 
cooperation in other areas may not only be immoral, but ineffective. It 
is necessary to ask two questions. Why does the internal political 
situation and rule of law within Russia matter? Why should the U.S. 
care if Russia is growing more authoritarian, retarding or undermining 
democratic institutions or ignoring the rule of law?
    First, the United States has a strong interest in Russia's eventual 
transformation into a more liberal, free-market, law-governed society. 
Such a transformation is likely to improve its relations with its 
neighbors, with the United States, and enable Russia to make a more 
substantial contribution to the international system. It is often 
argued, moreover, that democracies are more stable and responsible 
actors on the world stage. Second, internal developments within Russia, 
such as the critical lapses in the rule of law and extra-legal battles 
over property and wealth are important because they help shape the 
Russian foreign policy agenda and, thus, the state's behavior. They 
negatively affect Western investment activity and Russian economic 
development.
    In the West, there is a strong distinction between political power 
and private property. The two are separated by the rule of law and 
strong property rights. If there is a property dispute, the two parties 
go to court. In Russia, power and property are intertwined for 
centuries, as many of the elites running the country largely own it as 
well. This ancient patrimonial system has a profound affect on how 
Kremlin elites define their interests and, thus, the national 
interest.\14\
---------------------------------------------------------------------------
    \14\ Ibid.
---------------------------------------------------------------------------
    Kremlin elites define their interests in terms of wealth 
distribution and revenue flows--who gets the money? The control of 
energy production and transit then becomes a critical foreign policy 
question. This is crucial, for example, in Moscow's policies toward 
Ukraine. Thus, are geopolitical considerations for example, governing 
Moscow's policies toward Kyiv stemming from security concerns or are 
vested interests over revenue flows dominating? This phenomenon is most 
evident in the Russian-Ukrainian gas trade, where the use of opaque 
companies like RosUkrEnergo and its massive revenues streams becomes a 
key factor in foreign policy. This approach also affects Russia's 
pipeline policies in the Caucasus, where Georgia is a key oil and gas 
transit state, and in Central Asia.
    Thus, a Russia with a stronger rule of law, clear property rights 
and a vibrant media to check corruption, expose abuses and reflect 
political diversity becomes a critical interest for the United States. 
A more democratic Russia with strong, rule-governed institutions such 
as a pluralist media is also a prerequisite to Russia becoming a more 
reliable partner for the U.S. and a constructive actor on the world 
stage.
    With this in mind, the Obama administration faces the challenge of 
finding the right mix of policies that will advance these goals while 
not alienating the more liberal factions of the Russian leadership and 
elite. A good point of departure on this track is to begin addressing 
President Medvedev's own concerns and goals. Himself a lawyer, 
President Medvedev has spoken with concern about Russia's ``legal 
nihilism,'' law enforcement's ``nightmarish practices'' and rampant 
corruption.\15\ The Obama administration could emphasize that without 
fundamental legal reform, a fight against corruption, and a return to 
judiciary independence, Russia will keep lingering at the bottom of the 
measuring scales, such as Transparency International Corruption Index, 
The Heritage Foundation's Index of Economic Freedom and other 
international financial indices.
---------------------------------------------------------------------------
    \15\ Ariel Cohen, ``Reversing habit of `legal nihilism','' The 
Heritage Foundation, April 2, 2009, at http://www.heritage.org.
---------------------------------------------------------------------------
    It should also emphasize that if Russia does not return to 
internationally recognized legal practices, investments are likely to 
slow down, and capital will continue to flee. For example, the Obama 
administration could, first, explore behind closed doors, and if not 
proven effective, publicly call for vigorous investigations into the 
deaths of slain journalists, such as Anna Politkovskaya, Yuri 
Shchekochikhin, et. al, restoring property rights of defrauded 
investors, some of whom were barred from entering Russia, and releasing 
Mikhail Khodorkovsky from jail. These measures are, first and foremost, 
in Russia's national interest. They would send a strong signal to the 
U.S., to the Western business community, and to the Russian people, 
that a clean break with the lawless past is underway, and that Russia 
may be joining the community of civilized nations.
    Lastly, the Obama administration should not be deterred from 
advancing democracy and rule of law in the face of Russian objections. 
Democracy promotion and emphasizing the rule of law and good governance 
are a core element of U.S. bipartisan foreign policy over the last 
three decades, and Moscow must eventually come to accept to this fact. 
Russia needs to return to a vibrant, multiparty system it had for a 
short time in the 1990s, despite a dismal economic performance then. If 
Russia wishes to be treated as a true partner and enjoy a greater 
international status, it must be held to the same standards as other 
states.


    Question. A recent report on U.S.-Russia relations by the Belfer 
and Nixon centers advocated prompt congressional action on lifting 
Jackson-Vanik amendment sanctions against Russia in order to help re-
set the relationship.
    Would Russia simply welcome the concrete benefits provided by 
lifting Jackson-Vanik and provide little in return to the United 
States? What could be on the table in such a situation?

    Answer. Congress should act to lift Jackson-Vanik as it was 
promised a long time ago. Russia would certainly welcome this and the 
benefits it will provide. However, this measure should be part of a 
larger package and a quid pro quo should be negotiated. The larger 
package would be aimed at gaining Russian cooperation on Iran and other 
Middle East security.
    There are two approaches possible. One approach could be viewed as 
fulfillment of past promises and lifting of Jackson Vanik 
unconditionally. This would contribute to further improvement of 
bilateral relations and set the stage for future progress on a variety 
of important issues on the Washington-Moscow agenda.
    The second approach would include the lifting of Jackson-Vanik; 
U.S. support for Russia's entry into the World Trade Organization 
(WTO), provided Moscow meets the WTO criteria; and a revival of the 
bilateral 123 nuclear agreement with Russia and offer to resubmit it 
for congressional approval. However, this package should only be 
offered after Russia meets several conditions. Specifically, Moscow 
should:


   Support a robust U.S. sanctions and an intrusive inspections regime 
        at the IAEA. This inspections regime, which should include the 
        right to visit all areas and sites, including those not 
        officially declared to IAEA, would have to provide assurance 
        that there is no indigenous enrichment or covert nuclear 
        programs are taking place. Russia should work with the United 
        States and other nations to compel Iran to discontinue any fuel 
        enrichment or spent-fuel reprocessing, which would give Iran 
        access to bomb-grade material.\16\

    \16\ Jack Spencer, ``Russia 123 Agreement: Not Ready for 
Primetime'' Heritage Foundation WebMemo No. 1926, May 15, 2008, at 
http://www.heritage.org.
---------------------------------------------------------------------------
   Stop all arms and nuclear and other WMD technology sales to Iran 
        and Syria and provide full disclosure of past sales, as well as 
        what it knows about any third party assistance. In particular, 
        Russia must stop the delivery of the SAM-300 surface-to-air 
        missiles and other destabilizing systems to Iran.

   Stop any new anti-aircraft weapons systems sales to Syria.

   Cease diplomatic contacts with Hezbollah and Hamas.

   Russia provide adequate liability protection for U.S. companies 
        doing business in Russia. The U.S. should demand that Russia 
        provide two-way market access to American companies.


    The second approach, while more comprehensive and more risky, would 
demonstrate to Moscow that the U.S. can pursue policies that benefit 
Russia economically and help it to overcome the severe economic crisis 
which is negatively affecting its economy, employment, and even social 
stability. The administration should formulate clear and verifiable 
benchmarks to pursue such a course. Yet, to succeed in this approach, 
Moscow needs to put cards on the table and clearly commit to 
cooperation with the United States on Iran (Note: For more on the 
inherent risks to this approach as well the multi-faceted Russian-
Iranian relationship and the potential for cooperation, see my recently 
published article: ``The Russian Handicap to U.S. Iran Policy,'' 
Jerusalem Issue Briefs, Vol. 8, No.28, April 22, 2009, The Jerusalem 
Center for Public Affairs, at http://www.jcpa.org.


                               __________


  responses to questions submitted to ariel cohen by senator feingold

    Question. In recent testimony, the DNI noted that Moscow's 
engagement with both Iran and Syria, including advanced weapons sales, 
has implications for U.S. nonproliferation interests. Equally as 
relevant are press reports that Russian President Medvedev has 
announced his intention to strengthen Russia's conventional military 
force. How should the Obama administration interpret these signals and 
what actions might result in more effective cooperation with Russia on 
Iran?

    Answer. Following the commencement of the Iraq war and Putin's 
reelection in 2004, Moscow has pursued a much more active if not 
aggressive policy in the Middle East. Moscow policies since this time 
have extended to cultivating de facto alliances and relationships with 
a host of regimes and terrorist organizations (Iran, Syria, Hamas, and 
Hezbollah) hostile to the United States, its allies, and its interests. 
The warming of relations with these states did not endear Moscow to the 
major Sunni powers in the region, such as Saudi Arabia, Jordan, Egypt 
and the United Arab Emirates. To offset this, Moscow has sought to 
court these powers as well by offering them weapons, nuclear reactors, 
and energy cooperation. Broadly speaking, Moscow is taking advantage of 
the U.S. strategic overstretch and is seeking to restore its influence 
and prestige in the region.\1\
---------------------------------------------------------------------------
    \1\ Robert O. Freedman, ``Russia and the Middle East: A Possible 
U.S. Partner for Peace?,'' in Russia and Eurasia: A Realistic Policy 
Agenda for the Obama administration, The Heritage Foundation, Special 
Report #49, March 27, 2009, at http://www.heritage.org (April 13, 
2009).
---------------------------------------------------------------------------
    Moscow's engagement with Syria and Iran, in particular, bodes ill 
for the U.S. interests in general and U.S.-Russian cooperation in 
particular. After the Operation Iraqi Freedom, Putin's first move was 
to improve relations with Syria. Moscow forgave 90 percent of the 
country's $7 billion debt and sold Damascus anti-tank missiles and 
surface to air-missiles. Some of these weapons were transferred to 
Hezbollah and were used in the 2006 war against Israel--despite 
Russia's assurance to the contrary. Moscow has also protected Syria on 
the UN Security Council (UNSC) and obstructed sanctions against 
Damascus for its role in the assassination of former Lebanese President 
Rafiq Hariri.
    In Iran, Moscow has completed the Bushehr reactor and supplied the 
nuclear fuel. It has also provided cover for Tehran in the U.S. by 
obstructing or providing very limited support for weak sanctions 
regimes. Importantly, Moscow has also provided protection for Tehran by 
supplying sophisticated weapons to protect Iran's nuclear facilities. 
(Note: The multi-faceted Russian-Iranian relationship and the question 
over Russia's potential cooperation are addressed at greater length 
below).
    In light of Russia's behavior, the following concrete Russian 
actions should result in more effective cooperation with Moscow over 
Iran. Only by changing what it does, not what is says, can Russia 
become a significant partner with the U.S. on Iran. Specifically, 
Moscow should:


   Support a robust U.S. sanctions and an intrusive inspections regime 
        at the IAEA. This inspections regime, which should include the 
        right to visit all areas and sites, including those not 
        officially declared to IAEA, would have to provide assurance 
        that there is no enrichment or covert nuclear programs taking 
        place.

   Stop all arms and nuclear and other WMD technology sales to Iran 
        and Syria and disclose past sales. In particular, Russia must 
        stop the delivery of the SAM-300 surface-to-air missiles and 
        other destabilizing systems to Iran.

   Stop any new anti-aircraft weapons systems sales to Syria.

   Cease diplomatic contacts with Hezbollah and Hamas.


    Question. If Iran continues to move forward in the direction it is 
currently headed and does not cease uranium enrichment, do you think 
Russia would be supportive of more punitive actions if need be, 
including sanctions through the U.N. Security Council even though it 
has resisted harsher measures in the past?

    Answer. At best, judging by the past behavior, Russia will support 
very limited sanctions against Iran. Some in Washington, however, have 
interpreted recent Russian statements as signs that the Kremlin may be 
more willing to cooperate on Iran than in the past. According to the 
President of the Nixon Center Dimitry Simes, in a recent closed-door 
meeting at the Kremlin, Russian President Dmitri Medvedev purportedly 
expressed ``concern'' and ``alarm'' in ``very graphic language'' over 
Iran's satellite launch. He stated that this launch represents how 
``far-reaching Iran's nuclear ambitions are. . . . ''\2\ This 
statement, however, sounds like it was produced for the outside 
consumption and may have been aimed in enticing the Obama 
administration to offer concessions to the Kremlin in exchange for 
promises of Russia's engagement on Iran.
---------------------------------------------------------------------------
    \2\ Phillip P. Pan and Karen De Young, ``Russia Signaling Interest 
in Deal on Iran, Analysts Say,'' The Washington Post, March 17, 2009, 
at http://www.washingtonpost.com (March 30, 2009).
---------------------------------------------------------------------------
    Only a few days later Russia's Deputy Foreign Minister Sergei 
Ryabkov publicly stated that ``We still believe that at this point in 
time there are no signs that this [Iranian nuclear program] has 
switched to a military purpose. . . . ''\3\ This public statement is in 
accordance with previous Russian leaders' public statements and 
assessments of Iran's nuclear and ``civilian space'' program as 
peaceful.\4\ During a number of visits to Moscow in 2004-2009, I heard 
the highest levels of the Russian leadership explain that there is no 
Iranian threat; ``there is an Iranian problem.'' For years, top Russian 
officials tried to convince American visitors that Iran would ``never'' 
be able to develop long-range ballistic missiles. The recent Iranian 
satellite launch has proven them wrong--or deliberately misleading. 
Russia simply does not view the situation through the same lens as the 
U.S.
---------------------------------------------------------------------------
    \3\ ``No sign Iranian nuclear programme has military intent: 
Russia,'' AFP, March 20, 2009, at http://www.spacewar.com (March 30, 
2009).
    \4\ Stephen Blank, ``Russia and Iran's Missiles,'' World Politics 
Review, February 9, 2009, at http://www.worldpoliticsreview.com (March 
16, 2009).
---------------------------------------------------------------------------
    The Kremlin sees Iran not as threat but as a partner and an ad-hoc 
ally to challenge U.S. influence.\5\ It also sees Iran as a key 
platform to expand its regional and international influence and 
prestige. While the Iranian agenda is clearly separate from that of 
Russia, the Kremlin uses Iran as geopolitical battering ram against the 
U.S. and its allies in the Gulf region and the Middle East. Therefore, 
Russian support for Iran's nuclear program and arms sales are not only 
economic and defense exports issues, but reflect a geopolitical agenda 
which is at least 20 years old.
---------------------------------------------------------------------------
    \5\ Stephen Blank, ``Russia and Iran's Missiles'', World Politics 
Review, February 9, 2009, at http://www.worldpoliticsreview.com (March 
16, 2009).
---------------------------------------------------------------------------
    Moscow has yet another powerful motive for providing Iran with 
diplomatic, technological and military support (to defend their missile 
and nuclear programs from attack), and not to achieve concrete results 
on cooperation: In the era of expensive oil, more tension at and around 
the planet's ``gas station'' (the Persian Gulf) drive energy prices 
up--a boon to the energy export revenue-dependent Russia.
    An arms race in the Gulf may benefit Russia's weapons exports. 
After all, Moscow sold weapons to both sides during the 1980-1988 Iran-
Iraq War. The perceived geopolitical and economic benefit of an 
unstable Persian Gulf, in which American influence is on the wane, 
outweighs Russia's concerns about a nuclear armed Iran.
    The Obama administration should use extreme caution in negotiating 
Russian cooperation on Iran. Moscow's interests in Iran are commercial 
and geopolitical in nature. In addition to nuclear technology and arm 
sales and geopolitical objectives, the Kremlin has major plans 
cooperating with Tehran in the energy sector. The Kremlin is in the 
process of creating an OPEC-style gas cartel with Iran and other 
leading gas producers, to be headquartered in Moscow. By launching this 
cartel, Moscow hopes to enhance its energy superpower status.\6\ In 
addition to nuclear sales, Russia is also engaged in oil and gas 
``swap'' deals with Iran that are accruing Russia influence in Teheran, 
in the Caspian Basin and the Persian Gulf.\7\
---------------------------------------------------------------------------
    \6\ Ariel Cohen, ``Gas OPEC: A Stealthy Cartel Emerges,'' Heritage 
Foundation WebMemo, April 12, 2007 http://www.heritage.org (March 24, 
2009).
    \7\ ``Russia, Iran signed hydrocarbon memorandum allowing for swap 
operations,'' Itar-Tass, March 15, 2009, at http://www.itar-tass.com 
(April 1, 2009); ``Iran: Is Tehran Using Russia as Insurance Against 
Tougher Sanctions?'' Eurasia Insight, March 17, 2009, at http://
www.eurasianet.org (April 1, 2009).
---------------------------------------------------------------------------
    Moscow and Iran also are planning a massive energy and 
transportation corridor (The North-South Corridor) to connect the 
Indian Ocean, the Caspian, and Europe.\8\ The chances of Russia risking 
this ambitious agenda will depend on what the Obama administration 
offers in exchange--and whether Moscow can pocket the concessions and 
continue its multi-faceted relationship with Teheran.
---------------------------------------------------------------------------
    \8\ Ariel Cohen, Lisa Curtis and Owen Graham, ``The Proposed Iran-
Pakistan-India Gas Pipeline: An Unacceptable Risk to Regional 
Security,'' The Heritage Foundation, Backgrounder #2139, May 30, 2008, 
at http://www.heritage.org (April 14, 2009); For more information, see 
official International North-South Transport Corridor Web site at 
http://www.instc.org.
---------------------------------------------------------------------------
    It will be important to remember that Russia can pocket American 
concessions and continue its old strategy of obfuscation, cooperating 
only as much as is necessary to accomplish its objectives (e.g., 
convincing the U.S. to abandon the missile defense sites in Eastern 
Europe, roll back U.S. influence in Eurasia, get Washington to ignore 
Russia's domestic situation, including violation of civil liberties and 
human rights) but not enough to actually stop the nuclear program in 
Iran.\9\
---------------------------------------------------------------------------
    \9\ Kim R. Holmes, ``U.S. backtracks on missile shield,'' February 
20, 2009, The Heritage Foundation, at http://www.heritage.org (April 
14, 2009).


    Question. With the media reporting that Russia will now allow the 
United States to ship non-lethal supplies through its territory to 
Afghanistan--via Kazakhstan and Uzbekistan--what kind of support is 
feasible from Russia. Is it appropriate to see Russia as an equal 
partner with regard to Afghanistan and if so what steps should we take 
---------------------------------------------------------------------------
to ensure that's the case?

    Answer. When judging Russia's potential to support operations in 
Afghanistan or whether it can be an equal partner, it is important to 
examine Russia's actions vs. Russia's declarations and place these 
issues in the context of the U.S. 's violent history in the 1979-1989 
invasion of Afghanistan.
    Moscow does have good reasons to be alarmed at a possible U.S. 
defeat in Afghanistan, which could mean the destabilization of good 
parts of Central Asia and the export of the Taliban/Al Qaeda jihad to 
Central Asia and the Caucasus. The Kremlin is also concerned with the 
unimpeded flow of narcotics into Europe and Eurasia, which the Russians 
and local border guards along the Afghan border fail to control. Yet, 
while the Kremlin is allowing the transit of non-lethal war supplies 
and military materiel through its territory and has stated on multiple 
occasions its desire to cooperate more, its actions have evinced more 
of a negative tone, as well as conflicting priorities and overriding 
goals.
    For example, it is important to remember that at the same time the 
Kremlin was voicing support for cooperation in Afghanistan, it was also 
working hard behind the scenes in Kyrgyzstan to evict the U.S.--and 
NATO--from the key airbase in Manas.\10\ This action was consistent 
with Medvedev's August 31 statement of Russia's new foreign policy 
principles and policies in which he called for a ``zone of privileged 
interests.''
---------------------------------------------------------------------------
    \10\ Mikhail Sergeyev, ``West Makes the Most of Conflict,'' 
Nezavizimaya Gazeta August 24, 2008.
---------------------------------------------------------------------------
    With Russian President Dmitry Medvedev at his side, Kurmanbek 
Bakiyev, President of Kyrgyzstan, announced in Moscow that he wants the 
U.S. to leave Manas Air Base. With this move, the Kremlin signaled the 
West that in order to gain access to Central Asia, Western countries 
must first request permission from Moscow and pay the Kremlin for 
transit. For Moscow, this is a critical issue of status, prestige, and 
influence in the region. This move also signaled that Moscow has 
different priorities than the U.S. vis-a-vis Afghanistan.
    The creation of the sphere of influence (economically, politically, 
and militarily) in the former Soviet space is a major priority for 
Moscow. Incidentally, this territory is almost identical to that of the 
Russian Empire. President Dmitry Medvedev announced as much in his 
televised speech on August 31, 2008, calling for a ``privileged sphere 
of interests.''
    Russia is pursuing this path through multilateral integration with 
the former Soviet states (including those bordering Afghanistan) 
through Moscow-dominated international bodies, such as the Commonwealth 
of Independent States (CIS), the Eurasian Economic Community (EurAsEC) 
and the CIS Collective Security Treaty Organization (CSTO, a Moscow-
based military alliance, also known as the Tashkent Treaty.
    In Moscow's quest to regain its status in the region and become an 
equal partner with the U.S., it may cooperate on its own terms. This is 
what Moscow did after 9/11 attacks. Like then, today the demand to 
recognize its political supremacy in the former U.S. has not changed. 
Two of these conditions may involve the acceptance by NATO of the CSTO 
as the primary security provider in the entire former Soviet space, 
including denial of NATO membership to Ukraine and Georgia, and the 
carving up of Afghanistan into spheres of responsibility between NATO 
and the CSTO.\11\ Indeed, on the latter, Moscow may be seeking to 
extend its sphere of influence into the Tajik-dominated northern part 
of Afghanistan.
---------------------------------------------------------------------------
    \11\ Stephen Blank, ``What Does Moscow Want in Afghanistan?,'' 
Perspective, Boston University, April 2009, at http://www.bu.edu (April 
17, 2009).
---------------------------------------------------------------------------
    Influential Russian experts have discussed spheres of 
responsibility in Afghanistan and in Eurasia between Russia and NATO. 
On the former, the well connected Sergei Rogov, Director of the state-
run Institute for the Study of the USA and Canada, laid down his 
formula for what greater U.S.-Russian cooperation would look like in 
Afghanistan. He suggested including Russia in the NATO political-
decision making process or by giving additional functions to the NATO-
Russia Council. His prescription to achieve stability was to divide up 
Afghanistan into spheres of responsibility between Russia and NATO, 
with Russian reconstruction and security forces in the North.\12\ 
Another insight into Russian terms came from then-Defense Minister 
Sergei Ivanov in 2006 when speaking about security guarantees in 
Eurasia at large. He stated that,
---------------------------------------------------------------------------
    \12\ Ibid.


          The next logical step on the path of reinforcing 
        international security may be to develop a cooperation 
        mechanism between NATO and the CSTO, followed by a clear 
        division of spheres of responsibility. This approach offers the 
        prospect of enabling us to possess a sufficiently reliable and 
        effective leverage for taking joint action in crisis situations 
        in various regions of the world.\13\
---------------------------------------------------------------------------
    \13\ Ibid.


    These Russian visions of what greater Russian-NATO cooperation may 
look like bode ill to American global agenda and to U.S. allies in 
Central and Eastern Europe and the former Soviet Union. They point to 
vastly different views on the sovereignty of nation states and their 
right to choose politico-military relationships. One would hope that 
the Obama administration would reject such proposed divisions of the 
world, which remind one of the 19th century Count Otto von Bismark's 
Weltanschauung and the darker episodes of the early 20th century 
history.
    There, however, areas of potential cooperation which are feasible. 
The highest levels of the Russian leadership have voiced the need to 
stem the flow of narcotics and other illicit goods from Central Asia to 
Russia. Anti-narcotics are an area where the U.S. and Russia have 
shared interests and cooperation should be possible. The U.S. and NATO 
could engage in intelligence sharing initiatives on both of these 
fronts. Some have also suggested that it may be possible to work with 
Moscow on border security initiatives.\14\ For now, Moscow has been 
acting unilaterally to harden and strengthen border and defense ties 
with Central Asian states after having arrived at the conclusion that 
cooperation with NATO on this effort is does not benefit it.\15\
---------------------------------------------------------------------------
    \14\ Borut Grgic and Alexandros Petersen, ``A strategy for Central 
Asia,'' April 9, 2009, The Washington Times, at http://
www.washingtontimes.com (April 17, 2009).
    \15\ Stephen Blank, ``What Does Moscow Want in Afghanistan?,'' 
Perspective, Boston University, April 2009, at http://www.bu.edu (April 
17, 2009).
---------------------------------------------------------------------------
    Therefore, while cooperation is certainly desirable, Moscow's 
overriding goals, past behavior and conflicting priorities must be 
thoroughly examined, with understanding that today it can not be an 
equal partner in Afghanistan.


    Question. Russian officials said earlier this year that they are 
scaling up their diplomatic involvement to solve conflicts in Africa, 
and they recently appointed a special envoy to Sudan. However, their 
record to date toward Sudan and specifically the situation in Darfur 
has been unhelpful to say the least. They have provided political cover 
for the regime in Khartoum at the UN Security Council and, according to 
the organization Human Rights First, they have continued to provide 
arms to the Government of Sudan used in Darfur in direct violation of 
the UN arms embargo. How can the Obama administration better press 
Russia on the Security Council and bilaterally to change their approach 
to Sudan? And just as with the Chinese, how can we engage and identify 
opportunities to partner with the Russians as they increase their 
involvement in African affairs?

    Answer. Russia is indeed steeping up its activity in Africa in a 
bid to demonstrate its independence on the international stage and get 
Russian state-controlled companies involved in oil, gas, mineral and 
arms deals. As you state, Russia is also providing political support 
and cover to some problematic actors such as Zimbabwe and Sudan.
    First, Russia's energy agenda in Africa is of particular 
importance. Russia's strategy is to maintain its dominance as the 
single largest gas supplier to Europe. Russia leverages Europe's 
dependence as a foreign policy tool to pressure states that would adopt 
policies against Russia's national interests.\16\ The Kremlin uses this 
leverage to divide Europe on key issues, thus weakening Europe's 
bargaining power in economic and geopolitical relations with Russia. 
This dependence, most clearly demonstrated during the 2006 and 2009 
interruptions of Gazprom's gas supply to Ukraine, increases Europe's 
``continental drift'' away from the U.S. by limiting the foreign policy 
options available to America's European allies, and forcing them to 
choose between an affordable energy supply and siding with the U.S. and 
NATO on key strategic issues, such as missile defense or opposing 
Russia's treatment of Georgia.
---------------------------------------------------------------------------
    \16\ Ariel Cohen, ``Europe's Strategic Dependence on Russian 
Energy,'' Heritage Foundation Backgrounder No. 2083, November 5, 2007, 
athttp://www.heritage.org.
---------------------------------------------------------------------------
    In order to maintain this dominant position in the European gas 
market and prevent alternative gas transit solutions, the Kremlin is 
investing heavily in Africa. Russia is already controlling the transit 
of gas supplies to Europe from the East (Central Asia) and is deftly 
conducting what some analysts have called a ``pincer'' pipeline attack 
on Europe, moving to dominate the supply routes to Northern Europe via 
the proposed Nord Stream gas pipeline along the bottom of the Baltic 
Sea.
    In the southern vector, Gazprom is seeking to dominate the supply 
routes to Southern Europe via the proposed South Stream gas pipeline 
and a pipeline from Libya that travels under the Mediterranean to 
Sicily.\17\ In Libya, Gazprom originally offered to buy all of the 
country's gas. Thus far, it has successfully used debt forgiveness and 
arms sales to accelerate this effort and ``lock in'' supply.\18\ 
Gazprom has also inked a deal to help Nigeria fund a 2,700 mile trans-
Saharan pipeline to Europe. Russia has additional deals in Algeria, 
Angola, Egypt and the Ivory Coast. Already controlling most of Central 
Asia's export routes to Europe, if Moscow succeeds in North Africa, 
Europe will be geopolitically surrounded.
---------------------------------------------------------------------------
    \17\ Nord Stream is a proposed pipeline that would transport gas 
from Vyborg, Russia, along the Baltic seabed to Greifswald, Germany. 
South Stream is a proposed and expensive pipeline that will cross the 
Black Sea to Varna, Bulgaria, with one branch running south to Italy 
via Greece and the other running north to Austria via Serbia and 
Hungry.
    \18\ Ariel Cohen, ``The Real World: Putin in Libya,'' Middle East 
Times, April 18, 2008, http://www.metimes.com.
---------------------------------------------------------------------------
    In addition to Russia's strategic energy agenda, Moscow is 
providing political cover to the Sudanese government and is selling it 
arms. Russia has provided critical political support to Zimbabwe as 
well by vetoing Security Council sanctions against Robert Mugabe's 
dictatorship. While in many respects, Russian behavior does not appear 
amendable to substantial cooperation, it may, however, be worthwhile to 
attempt to engage the Russians on various anti-piracy initiatives.
    Beyond this, it will also be important to hold hearings on Russia's 
activities in Africa and expose the discrepancies between words and 
actions and shame certain behaviors.


    Question. The State Department's yearly report on human rights 
noted for 2008 that ``the Russian Federation has an increasingly 
centralized political system. with a compliant State Duma, corruption 
and selectivity in enforcement of the law, media restrictions, and 
harassment of some NGOs [all of which have] eroded the government's 
accountability to its citizens.''
    The 2008 report also documents numerous reports of government and 
societal human rights problems and abuses during the year. The last 
administration pretty much gave Russia free pass but this is not 
expected to be the case with the new administration. How do you 
anticipate these restrictions will be addressed in any new U.S. policy 
towards Russia?

    Answer. So far, the Obama administration has not raised questions 
about human rights violations, absence of pluralistic national TV 
channels, political repression or rule of law issues in any significant 
way. In fact, so far the Obama administration more meek than the Bush 
administration in addressing these issues. I think that in the 
``euphoric'' stage of relations, determined to press the ``reset'' 
button and pursue arms control initiatives, the Obama administration 
may be all but mum in this area. This should not be the case though.
    An important question to ask when formulating foreign policy is 
what priority should the U.S. place on democratization and protecting 
civil liberties in Russia. There is an important corollary to this 
question: If we focus too much on these areas, do we risk alienating 
Russia on important security issues, like Iran's nuclear threat?
    If the Obama administration focuses ``too much'' on democratization 
and civil liberties in Russia, some believe that the U.S. may risk 
alienating the Russian leadership on security issues. With this in 
mind, the Obama administration should not forgo a core American foreign 
policy values and objectives with regards to Russia: promoting 
democracy, good governance, transparency and the rule of law. The 
United States should seek to advance these principles when it can and 
in realistic and practical ways.
    Some may argue that Russia's domestic situation and deteriorating 
rule of law do not really matter and should not figure highly in U.S. 
policy toward Russia as these are Russia's ``internal affairs''. 
However, the 1975 Helsinki Agreements put human rights and civil 
liberties squarely into the ``third basket'' of East-West relations.
    To counter this philosophical position which makes its adherents 
more receptive towards a ``grand bargain'', it is necessary to ask two 
questions. Why does the internal political situation and rule of law 
within Russia matter? Why should the U.S. care if Russia is growing 
more authoritarian, retarding or undermining democratic institutions or 
ignoring the rule of law?
    First, the United States has a strong interest in Russia's eventual 
transformation into a liberal, free-market, law-governed society. Such 
a transformation will improve its relations with the United States, its 
neighbors and enable Russia to make a more substantial contribution to 
the international system. It is axiomatic, moreover, that democracies 
are more stable and responsible actors on the world stage.
    Second, internal developments within Russia, such as extra-legal 
battles over property and wealth are important because they help shape 
the Russian foreign policy agenda and, thus, the state's behavior.
    In the West, there is a strong distinction between political power 
and private property. It is separated by the rule of law and strong 
property rights. If there is a property dispute, the two parties go to 
court. In Russia, power and property are blended, as many of the elites 
running the country largely own it as well. This patrimonial system has 
a profound affect on how Kremlin elites define their interests and, 
thus, the national interest.
    Kremlin elites define their interests in terms of wealth 
distribution and revenue flows--who gets the money? The control of 
energy production and transit then becomes a critical foreign policy 
question. This is crucial, for example, in Moscow's policies toward 
Kyiv. Thus, are geopolitical considerations for example, governing 
Moscow's policies toward Kyiv stemming from security concerns or are 
vested interests over revenue flows dominating? This phenomenon is most 
evident in the Russian-Ukrainian gas trade, where the use of opaque 
companies like RosUkrEnergo and its massive revenues streams becomes a 
key factor in foreign policy.
    Thus, a Russia with a stronger rule of law, clear property rights 
and a vibrant media to check corruption, expose abuses and reflect 
political diversity becomes a critical interest for the United States. 
A more democratic Russia with strong, rule governed institutions such 
as a pluralist media is also a prerequisite to Russia becoming a more 
reliable partner for the U.S. and a constructive actor on the world 
stage.
    With this in mind, the Obama administration faces the challenge of 
finding the right mix of policies that will advance these goals while 
not alienating the more liberal factions of the Russian leadership and 
elite. A good point of departure on this track is to begin addressing 
President Medvedev's own concerns and goals. President Medvedev has 
spoken with concern about Russia's ``legal nihilism,'' law 
enforcement's ``nightmarish practices'' and rampant corruption. The 
Obama administration could emphasize that without fundamental legal 
reform, a fight against corruption, and a return to judiciary 
independence, Russia will keep lingering at the bottom of the 
Transparency International Corruption Index, The Heritage Foundation's 
Index of Economic Freedom and other international financial indices. It 
should also emphasize that if Russia does not return to internationally 
recognized legal practices, investments are likely to slow down, and 
capital will continue to flee. For example, the Obama administration 
could, first, explore behind closed doors, and if not proven effective, 
publicly call for vigorous investigations into the deaths of slain 
journalists, restoring property rights of defrauded investors, some of 
whom were barred from entering Russia, and releasing Mikhail 
Khodorkovsky from jail.
    These measures are in Russia's national interest. They would send a 
strong signal to the U.S., to the Western business community, and to 
the Russian people, that a clean break with the lawless past is 
underway, and that Russia may be joining the community of civilized 
nations.
    Lastly, the Obama administration should not be deterred from 
advancing democracy and rule of law amidst of Russian objections. 
Democracy promotion is a core element of U.S. bipartisan foreign policy 
over the last three decades, and Moscow must eventually come to accept 
to this fact. Russia needs to return to a vibrant, multiparty system it 
had for a short time in the 1990s, despite a dismal economic 
performance then. If Russia wishes to be treated as a true partner and 
enjoy a greater international status, it must be held to the same 
standards as other states.


                               __________


    responses to questions submitted to ariel cohen by senator casey
Iran


    Question. Russia has given mixed signals about the steps it is 
ready to take in order to contain Iran's nuclear ambitions. On one 
hand, Russia is building a nuclear reactor for Iran at Bushehr, and has 
obstructed efforts in the UN Security Council to impose tougher 
sanctions on Iran for continuing its nuclear enrichment program. On the 
other hand, after Iran's clandestine nuclear program came to light, 
Russia withheld the delivery of nuclear fuel for the Bushehr reactor 
and eventually agreed to limited UN Security Council sanctions, when 
Iran refused to accept a Russian proposal that would have allowed Iran 
to reprocess uranium at facilities on Russian territory. In recent 
weeks, senior Russian officials, including President Medvedev, have 
indicated that Russia is prepared to support additional sanctions on 
Iran if it does not stop enrichment of uranium.
    How do you interpret Moscow's vacillation on stopping Iran's 
enrichment program? Why has Moscow historically been unwilling to agree 
to tougher sanctions on Iran? Are Moscow's motivations for building a 
nuclear reactor for Iran strategic, financial, or both?

    Answer. Past Russian vacillations, such as delaying and temporarily 
withholding delivery of nuclear fuel to Iran, postponing the transfer 
of sophisticated S-300 anti-aircraft batteries to Iran and providing 
limited support for weak sanctions regimes, indicate that Russia is 
trying to have its cake and eat it to. It demonstrates responsiveness 
to the U.S. and occasionally, even Israeli, pressures and entreaties, 
while inexorably enabling Iran to get its wishes.
    The challenge in assessing Russia's willingness to cooperate with 
the West on Iran is to examine and interpret Russia's actions versus 
its rhetoric and to place both in the context of Russia's perceived 
interests and its strong and multifaceted relationship with Iran.
    Russia's ambitions in Iran go back to the czarist and Soviet eras, 
when in the eightieth century South Caucasus and the Caspian littoral--
until then under Persian hegemony--came under the sway of St. 
Petersburg. The Soviets occupied northern Iran during World War II. 
Later, Soviet intelligence predicted the victory of the Khomeini 
Revolution long before Washington realized the scope of the 
geopolitical disaster it faced after the abandonment of its ailing 
ally, the Shah. Moscow sold weapons to both Baghdad (its principal 
client) and to Teheran during the Iran-Iraq war of 1980-1988. Today, 
Russia's commercial interests in Iran span from billions in arms sales 
and transfer of nuclear and space technology to lucrative oil and gas 
contracts for state-controlled Russian companies. These ties, and the 
potential of bilateral trade, are greater than the US economic 
``carrots'' offered under the Bush administration, let alone the 
economic links with Israel.
    The Kremlin sees Iran not as threat but as a partner or as an ad-
hoc ally to challenge U.S. influence.\1\ It also sees Iran as a key 
platform to expand its regional and international influence or 
prestige. While the Iranian agenda is clearly separate from that of 
Russia, the Kremlin uses Iran as geopolitical battering ram against the 
U.S. and its allies in the Gulf region and the Middle East. Therefore, 
Russian support for Iran's nuclear program and arms sales are not only 
economic and export issues, but reflect a geopolitical agenda which is 
at least 20 years old.
---------------------------------------------------------------------------
    \1\ Stephen Blank, ``Russia and Iran's Missiles,'' World Politics 
Review, February 9, 2009, at http://www.worldpoliticsreview.com (March 
16, 2009)
---------------------------------------------------------------------------
    This agenda is part of a strategy aimed at creating a ``multi-polar 
world,'' a strategy which came about as a reaction to the decline of 
Soviet stature in the waning years of the Cold War, and was called by 
this author ``The Primakov Doctrine.'' Named after foreign minister 
Evgeny Primakov, this doctrine was a response to the emergence of 
independent states in Eastern Europe and Eurasia and the enlargement of 
NATO. In early 1997, Primakov and his Iranian counterpart, Ali Akbar 
Velayati, issued a joint statement calling the U.S. presence in the 
Persian Gulf ``totally unacceptable.''\2\
---------------------------------------------------------------------------
    \2\ Ariel Cohen and James Phillips, ``Russia's Dangerous Missile 
Game in Iran,'' The Heritage Foundation Executive Memorandum, November 
13, 1997, http://www.heritage.org (March 17, 2009)
---------------------------------------------------------------------------
    Today, both Russia and Iran favor a strategy of ``multipolarity,'' 
both in the Middle East and worldwide. This strategy seeks to dilute 
American power, revise current international financial institutions 
which comprise the post-Bretton Woods world order, shift away from the 
dollar as a reserve currency, weaken or neuter NATO and Organization 
for Security and Cooperation in Europe, while forging a counterbalance 
to the Euro-Atlantic alliance, with Russia, Iran, Venezuela, Syria and 
terrorist organizations, such as Hamas and Hezballah, while hoping to 
attract China, India, and other states to this anti-U.S. coalition.
    Russia is playing a sophisticated game of Star Trek's 
multidimensional chess. It combines a Realpolitik recognition of 
Moscow's relative weakness vis-a-vis Washington with a desire to push 
America out of its zone of military and political predominance--the 
Persian Gulf.
    Moscow has yet another powerful motive for providing Iran with 
diplomatic, technological and military support (to defend their missile 
and nuclear programs from attack), and to not provide concrete results 
on cooperation: In the era of expensive oil, more tension at and around 
the planet's ``gas station'' drive energy prices up--a boon to the 
energy export revenue-dependent Russia. And an arms race in the Gulf 
may benefit Russia's weapons exports. After all, Moscow sold weapons to 
both sides during the Iran-Iraq War. The perceived geopolitical and 
economic benefit of an unstable Persian Gulf, in which American 
influence is on the wane, outweighs Russia's concerns about a nuclear 
armed Iran. (Note: The Russian-Iranian relationship and the question 
over Russia's potential cooperation are addressed at greater length 
below).


    Question. President Medvedev recently suggested that Russia is open 
to cooperating with the United States on Iran. However, he also scoffed 
that the U.S. should not link cooperation on Iran to U.S. missile 
defense plans in Eastern Europe. In other words, the Russian leadership 
continues to maintain that U.S. missile defense sites do not counter 
the Iranian threat, but rather threaten Russia.
    In your view, did the Obama administration present the Kremlin a 
fair deal by offering to scrap U.S. missile defense plans in Eastern 
Europe for greater cooperation on combating the Iranian nuclear and 
ballistic missile threat?

    Answer. President Obama's letter to President Dmitry Medvedev and 
subsequent statements suggested that if Russia cooperated with the 
United States in preventing Iran from developing long-range nuclear-
missile capabilities, the need for a new missile defense system in 
Europe would be eliminated--a quid pro quo. This arrangement is ill-
advised for several reasons.
    First, Russia could pocket any delay or cancellation and continue 
its old strategy of obfuscation, cooperating only as much as is 
necessary to kill the missile sites in Eastern Europe, but not enough 
to actually stop the nuclear program in Iran.\3\
---------------------------------------------------------------------------
    \3\ Kim R. Holmes, ``U.S. backtracks on missile shield,'' February 
20, 2009, The Heritage Foundation, at http://www.heritage.org (April 
14, 2009).
---------------------------------------------------------------------------
    Second, this course would seriously damage bilateral and NATO 
relations with Poland and the Czech Republic, two important allies. 
Canceling the deployment would show that the United States is 
unreliable and that NATO is an alliance without a credible security 
guarantee. Moreover, accommodating Russia on this deployment would 
split NATO and show that it is a two-tiered alliance--one for members 
within Russia's sphere of influence and one for those outside of it.
    The question of Russian cooperation in exchange for missile defense 
plans in Europe will be fleshed out in greater detail in the next 
answer as it is critical to address the potential for any ``grand 
bargain.''


    Question. Do you take President Medvedev at his word when he 
indicates that Russia might agree to additional sanctions? Or is the 
Kremlin expecting a carrot from the Obama administration in exchange 
for its cooperation?

    Answer. Some in Washington have interpreted recent Russian 
statements as signs that the Kremlin may be more willing to cooperate 
on Iran than in the past. According to the President of the Nixon 
Center Dimitry Simes, in a recent closed-door meeting at the Kremlin, 
Russian President Dmitri Medvedev purportedly expressed ``concern'' and 
``alarm'' in ``very graphic language'' over Iran's satellite launch. He 
stated that this launch represents how ``far-reaching Iran's nuclear 
ambitions are. . . . ''\4\ This statement may have been aimed in 
enticing the Obama administration to offer concessions to the Kremlin 
in exchange for promises of Russia's engagement on Iran.
---------------------------------------------------------------------------
    \4\ Phillip P. Pan and Karen De Young, ``Russia Signaling Interest 
in Deal on Iran, Analysts Say,'' The Washington Post, March 17, 2009, 
at http://www.washingtonpost.com March 30, 2009).
---------------------------------------------------------------------------
    Only a few days later Russia's Deputy Foreign Minister Sergei 
Ryabkov publicly stated that ``We still believe that at this point in 
time there are no signs that this [Iranian nuclear program] has 
switched to a military purpose. . . . ''\5\ This announcement is in 
accordance with previous Russian leaders' public statements and 
assessments of Iran's nuclear and ``civilian space'' program as 
peaceful.\6\ Russia simply does not view the situation through the same 
lens as the U.S.
---------------------------------------------------------------------------
    \5\ ``No sign Iranian nuclear programme has military intent: 
Russia,'' AFP, March 20, 2009, at http://www.spacewar.com (March 30, 
2009).
    \6\ Stephen Blank, ``Russia and Iran's Missiles,'' World Politics 
Review, February 9, 2009, at http://www.worldpoliticsreview.com (March 
16, 2009)
---------------------------------------------------------------------------
    The Obama administration should use extreme caution in negotiating 
Russian cooperation on Iran. Moscow's interests in Iran are commercial 
and geopolitical in nature, and until now mostly militated against 
substantial cooperation or any potential ``grand bargain.'' This so-
called bargain would involve the U.S. delaying or canceling plans for 
European-based U.S. missile defense and barring NATO's doors to Ukraine 
and Georgia.
    Russia is also demanding that the West scale back relations with 
Russia's ``near-abroad'' countries and overlook Russia's domestic 
abysmal rule-of-law situation and the security services' human rights 
excesses--in exchange for Russian cooperation on preventing Iran from 
going nuclear. To the Realpolitik school, including octogenarians: the 
former Secretary of State Henry Kissinger, former President Jimmy 
Carter's National Security Advisor Zbigniew Brzezinski, and former 
President George H.W. Bush's National Security Advisor Brent Scowcroft, 
this looks like a plausible bargain--if Moscow delivers. And herein 
lies the rub.
    In addition to the previously mentioned nuclear and arm sales and 
geopolitical objectives, the Kremlin has major plans with Tehran in the 
energy sector. The Kremlin is in the process of creating an OPEC-style 
gas cartel with Iran and other leading gas producers, to be 
headquartered in Moscow. By launching this cartel, Moscow hopes to 
enhance its energy superpower status.\7\ In addition to nuclear sales, 
Russia is also engaged in oil and gas ``swap'' deals with Iran that are 
accruing Russia influence in Teheran, in the Caspian Basin and the 
Persian Gulf.\8\ Moscow and Iran also are planning a massive energy and 
transportation corridor (The North-South Corridor) to connect the 
Indian Ocean, the Caspian, and Europe.\9\ The chances of Russia risking 
this ambitious agenda will depend on what the Obama administration 
offers in exchange--and whether Moscow can pocket the concessions and 
continue its multi-faceted relationship with Teheran.
---------------------------------------------------------------------------
    \7\ Ariel Cohen, ``Gas OPEC: A Stealthy Cartel Emerges,''Heritage 
Foundation WebMemo, April 12, 2007 http://www.heritage.org (March 24, 
2009).
    \8\ ``Russia, Iran signed hydrocarbon memorandum allowing for swap 
operations,'' Itar-Tass, March 15, 2009, at http://www.itar-tass.com/
eng/ (April 1, 2009); ``Iran: Is Tehran Using Russia as Insurance 
Against Tougher Sanctions?'' Eurasia Insight, March 17, 2009, at http:/
/www.eurasianet.org (April 1, 2009).
    \9\ Ariel Cohen, Lisa Curtis and Owen Graham, ``The Proposed Iran-
Pakistan-India Gas Pipeline: An Unacceptable Risk to Regional 
Security,'' The Heritage Foundation, Backgrounder #2139, May 30, 2008, 
at http://www.heritage.org (April 14, 2009); For more information, see 
official International North-South Transport Corridor Web site at 
http://www.instc.org.
---------------------------------------------------------------------------
    This is not the time for navete. Given the substantial Russian 
interests and ambitions, a grand bargain may require an excessively 
high price paid by the United States to the detriment of its friends 
and allies. It will also open up the U.S. to extortion as Russia's 
price for cooperation is likely to continue to rise. For example, 
Russia is already demanding a fundamental revision of the European 
security architecture (see below).
    Today, some foreign policy experts tend to overemphasize Russia's 
ability to ``deliver'' Tehran and play a constructive role. Before 
bargaining away real U.S. interests and allies, it will be important to 
recall that there have been little concrete steps from Russia thus far 
to stem Iran's nuclear ambitions. What is more likely under any such 
bargain is that Russia's will achieve its desired status as 
international broker but cooperate only enough to accomplish its 
objectives but not enough stop the military nuclear program in Iran. In 
other words, Russia will continue to try and have its cake and eat it 
too.


    Question. What, if anything, should the Obama administration offer 
Russia for enhanced efforts to stop Iranian enrichment?

    Answer. In exchange for concrete Russian help on Iran, the U.S. 
could support Russia's entry into the World Trade Organization (WTO), 
provided Moscow meets the WTO criteria. Russia's entry into the WTO is 
currently on hold because of the invasion of Georgia.\10\ Given the 
economic challenges still facing Russia and the Kremlin's efforts to 
move Russia to a high-tech, non-resource-based economy, entry into the 
WTO would clearly be a boon for Russia.
---------------------------------------------------------------------------
    \10\ Mikhail Sergeyev, ``West Makes the Most of Conflict,'' 
Nezavizimaya Gazeta, August 24, 2008.
---------------------------------------------------------------------------
    In addition, the U.S. Congress could repeal the obsolete Jackson-
Vanik Amendment, which denies Russia a Permanent Normal Trade Relations 
status leaving the President to waive the amendment each year in the 
absence of a congressional vote. While such a move is currently off the 
table because of the invasion of Georgia, it could be restored if 
Russia demonstrates a genuine change in policy.
    The Obama administration could also revive the bilateral 123 
nuclear agreement with Russia and offer to resubmit it for 
congressional approval. However, this should only be done once Russia 
meets the following three conditions:


          1) Russia discontinues its support of Iran's military nuclear 
        energy program and provides full disclosure. Indeed, it is 
        Russian nuclear fuel that undermines Iran's claim that it needs 
        uranium enrichment. Russia must discontinue any efforts that 
        advance Iran's heavy-water-reactor program, enrichment 
        activities, spent-fuel reprocessing programs, missile 
        technology transfer, or engineer and scientist training for 
        nuclear and missile technology. Russia must disclose its past 
        activities in support of the Iranian program, as well as what 
        it knows about any third party assistance.\11\ Russia publicly 
        pledges to not deliver the sophisticated S-300 air defense 
        system to Iran.
---------------------------------------------------------------------------
    \11\ Jack Spencer, ``Russia 123 Agreement: Not Ready for 
Primetime'' Heritage Foundation WebMemo No. 1926, May 15, 2008, at 
http://www.heritage.org.

          2) The Obama administration should also request that Russia 
        provide adequate liability protection for U.S. companies doing 
        business in Russia. Even with a 123 agreement in place, U.S. 
        companies would likely forgo commercial activities in Russia 
        due to a lack of liability protection. Indeed, many countries 
        use the lack of liability protection for U.S. companies as a 
        means to protect their domestic nuclear industry from U.S. 
        competition.\12\
---------------------------------------------------------------------------
    \12\ Ibid.

          3) The U.S. should demand that Russia provide two-way market 
        access to American companies. This agreement should not be 
        simply an avenue to bring Russian goods and services to the 
        U.S. market; it is equally important that U.S. companies are 
        allowed to compete for business in Russia. While Russian 
        nuclear technology is second to none, foreign competition will 
        assure that the highest quality standards are maintained 
        throughout the country.\13\
---------------------------------------------------------------------------
    \13\ Ibid.


---------------------------------------------------------------------------
Priorities in the U.S.-Russian Relationship


    Question. Russia has also vocally expressed its displeasure with 
the United States' promotion of democracy, both in Russia and in 
Russia's near abroad. It is a common view in Moscow that the U.S. was 
responsible for facilitating the colored revolutions that removed 
authoritarian leaders in Ukraine, Georgia, and Kyrgyzstan, and some 
officials in the Kremlin, particularly inside Prime Minister Putin's 
inner circle, fear a similar revolt in Russia. I disagree with Russia's 
claims, but I cannot ignore Russia's less than remarkable record on 
democratic reform and civil liberties. Opposition leaders, even those 
who pose no threat to the entrenched political establishment, are 
routinely jailed and harassed. In addition, several Russian journalists 
have been murdered under murky circumstances suggesting government 
involvement.
    In your assessment, what priority should the U.S. place on 
democratization and protecting civil liberties in Russia? If we focus 
too much on these areas, do we risk alienating Russia on important 
security issues, like Iran's nuclear threat?

    Answer. If the Obama administration focuses ``too much'' on 
democratization and civil liberties in Russia, then the U.S. may risk 
alienating the Russian leadership on security issues. With this in 
mind, the Obama administration should not forgo a core American foreign 
policy value and objective with regards to Russia: promoting democracy, 
good governance, transparency and the rule of law. The United States 
should seek to advance these principles when it can and in realistic 
and practical ways.
    Some may argue that Russia's domestic situation and deteriorating 
rule of law do not really matter and should not figure highly in U.S. 
policy toward Russia. This philosophical position makes its adherents 
more receptive towards a ``grand bargain.''
    To counter this position, it is necessary to ask two questions. Why 
does the internal political situation and rule of law within Russia 
matter? Why should the U.S. care if Russia is growing more 
authoritarian, retarding or undermining democratic institutions or 
ignoring the rule of law? \14\
---------------------------------------------------------------------------
    \14\ Donald N. Jensen, ``Russian Democracy in Crisis: The Outlook 
for Human Rights, Political Liberties, and Press Freedom,'' in ``Russia 
and Eurasia: A Realistic Policy Agenda for the Obama administration,'' 
The Heritage Foundation, Special Report #49, March 27, 2009, at http://
www.heritage.org (April 13, 2009).
---------------------------------------------------------------------------
    First, the United States has a strong interest in Russia's eventual 
transformation into a liberal, free-market, law-governed society. Such 
a transformation will improve its relations with the United States, its 
neighbors and enable Russia to make a more substantial contribution to 
the international system. It is axiomatic, moreover, that democracies 
are more stable and responsible actors on the world stage.
    Second, internal developments within Russia, such as extra-legal 
battles over property and wealth are important because they help shape 
the Russian foreign policy agenda and, thus, the state's behavior.
    In the West, there is a strong distinction between political power 
and private property. It is separated by the rule of law and strong 
property rights. If there is a property dispute, the two parties go to 
court. In Russia, power and property are blended, as many of the elites 
running the country largely own it as well. This patrimonial system has 
a profound affect on how Kremlin elites define their interests and, 
thus, the national interest.\15\
---------------------------------------------------------------------------
    \15\ Ibid.
---------------------------------------------------------------------------
    Kremlin elites define their interests in terms of wealth 
distribution and revenue flows-who gets the money? The control of 
energy production and transit then becomes a critical foreign policy 
question. This is crucial, for example, in Moscow's policies toward 
Kyiv. Thus, are geopolitical considerations for example, governing 
Moscow's policies toward Kyiv stemming from security concerns or are 
vested interests over revenue flows dominating? This phenomenon is most 
evident in the Russian-Ukrainian gas trade, where the use of opaque 
companies like RosUkrEnergo and its massive revenues streams becomes a 
key factor in foreign policy.
    Thus, a Russia with a stronger rule of law, clear property rights 
and a vibrant media to check corruption, expose abuses and reflect 
political diversity becomes a critical interest for the United States. 
A more democratic Russia with strong, rule governed institutions such 
as a pluralist media is also a prerequisite to Russia becoming a more 
reliable partner for the U.S. and a constructive actor on the world 
stage.
    With this in mind, the Obama administration faces the challenge of 
finding the right mix of policies that will advance these goals while 
not alienating the more liberal factions of the Russian leadership and 
elite. A good point of departure on this track is to begin addressing 
President Medvedev's own concerns and goals.
    President Medvedev has spoken with concern about Russia's ``legal 
nihilism,'' law enforcement's ``nightmarish practices'' and rampant 
corruption.\16\ The Obama administration could emphasize that without 
fundamental legal reform, a fight against corruption, and a return to 
judiciary independence, Russia will keep lingering at the bottom of the 
Transparency International Corruption Index, The Heritage Foundation's 
Index of Economic Freedom and other international financial indices. It 
should also emphasize that if Russia does not return to internationally 
recognized legal practices, investments are likely to slow down, and 
capital will continue to flee. For example, the Obama administration 
could call for vigorous investigations into the deaths of slain 
journalists, restoring property rights of defrauded investors, some of 
whom were barred from entering Russia, or releasing Mikhail 
Khodorkovsky from jail.
---------------------------------------------------------------------------
    \16\ Ariel Cohen, ``Reversing habit of `legal nihilism','' The 
Heritage Foundation, April 2, 2009, at http://www.heritage.org
---------------------------------------------------------------------------
    These measures are in Russia's national interest. They would send a 
strong signal to the U.S., to the Western business community, and to 
the Russian people, that a clean break with the lawless past is 
underway, and that Russia may be joining the community of civilized 
nations.
    Lastly, the Obama administration should not be deterred from 
advancing democracy and rule of law amidst of Russian objections. 
Democracy promotion is a core element of U.S. bipartisan foreign policy 
and Moscow must eventually come to accept to this fact. Russia needs to 
return to a vibrant, multiparty system it was for a short time in the 
1990s, despite a dismal economic performance, if Russia wishes to be 
treated as a true partner and enjoy a greater international status, it 
must be held to the same standards as other states.
NATO-Russian Relations


    Question. On March 5, 2009, NATO Foreign Ministers agreed to resume 
formal meetings of the NATO-Russia Council, after suspending its 
activity following Russia's invasion of Georgia in August 2008. 
Ministers gave the signal that business would return to normal, even 
though serious disagreements with Moscow remain. I am interested in 
your assessment of ``business as usual.'' For example, it is promising 
that Russia agreed to allow NATO Allies to transport non-lethal 
military equipment to Afghanistan across Russian territory. Yet, Russia 
continues to demand that NATO abandon its plans to offer Ukraine and 
Georgia membership in the Alliance, in spite of the fact that at the 
2008 NATO Summit, Allied Heads of State made explicitly clear that both 
countries would one day join NATO. The possibility of enlargement 
always threatens to derail NATO's relationship with Russia.
    How do you assess the future of NATO's relationship with Russia, 
considering all that we know about Moscow's red lines? Will the NATO-
Russian relationship be complicated by President Medvedev's proposal 
for a European Security Treaty that would presumably seek to give 
Russia a veto over Alliance decisions on enlargement, missile defense, 
and other contentious issues?

    Answer. Yes, a revision of NATO-centered security architecture may 
create very serious problems as far as European defense in concerned. 
The existing international security architecture served the U.S. and 
Europe well for 60 years. It is already sufficient and does not need 
the revisions Moscow seeks. Russia is systematically obstructing 
activities within the Organization for Security and Cooperation in 
Europe (OSCE) and is seeking to undermine NATO and what it views as a 
U.S.-led international security and economic world order.
    Testifying before the U.S. Senate's armed services committee, U.S. 
Army General John Craddock, NATO's supreme allied commander Europe, 
said in written testimony that ``Russia seems determined [to] see Euro-
Atlantic security institutions weakened and has shown a readiness to 
use economic leverage and military force to achieve its aims.''\17\
---------------------------------------------------------------------------
    \17\ ``Russia-NATO Relations to Strain Further, Says General,'' 
Reuters, March 26, 2009, at http://www.moscowtimes.ru (March 26, 2009).
---------------------------------------------------------------------------
    He added that while Russian leaders, political and military signal 
a willingness to engage in closer cooperation, ``their actions in 
Georgia in August 2008 and with European natural gas supplies in 
January 2009 suggest that their overall intent may be to weaken 
European solidarity and systematically reduce U.S. influence.''
    Seen against this background, Moscow's calls for new pan-European 
security architecture should give the U.S. and NATO pause.\18\ The 
concept would marginalize NATO and weaken the human rights jurisdiction 
of the Organization for Security and Cooperation in Europe (OSCE). The 
concept seeks an absence of ``blocs'' in European security (i.e., 
abolition of NATO) and security that is not at the ``expense'' of some 
countries (i.e., Russia).\19\ It proposes national armed forces to be 
deployed on a ``common perimeter'' and a ``demilitarized zone'' inside 
the perimeter. To be sure, the Kremlin seeks to marginalize NATO and 
restrain America's influence. To paraphrase Lord Ismay, Russia's 
proposed security system would keep Germany up, the U.S. out and Russia 
in.
---------------------------------------------------------------------------
    \18\ ``Medvedev Urges EU to Create New Intl-legal Security 
Architecture,'' ITAR-TASS, February 6, 2009, at http://www.itar-
tass.com/eng/ (March 27, 2009).
    \19\ ``Rogozin Spells out New European Security Concept,'' ITAR-
TASS, November 11, 2008.
---------------------------------------------------------------------------
    Beyond Europe, Russia is doing its best to pursue a broad, global, 
revisionist foreign policy agenda in which Russia, China, Iran, Syria, 
and Venezuela will form a counter-weight to the United States. The 
Kremlin also continues to call--as it has since the St. Petersburg 
Economic Summit in 2007--for revising the global economic system, 
replacing the dollar as the world's reserve currency and creating a 
supranational currency run by the IMF, as regional currencies, with the 
ruble as one of them.


    Question. Should the U.S. have blocked consensus at NATO on 
restoring full relations with Russia, when Russia continues to base 
troops in South Ossetia and Abkhazia, both of which are still 
internationally recognized as Georgian sovereign territory?

    Answer. We were surprised by the speed with which NATO restored 
full relations with Moscow. America's Central European NATO allies view 
with concern the most recent moves to resume full NATO-Russia ties. The 
allies are justified in their concerns about Russia. The ``Guns of 
August'' in Georgia demonstrated that Russia tore apart the 1975 
Helsinki accords, which guaranteed inviolability of the borders in 
Europe. We also did not agree with the speed and decision of the 27 EU 
member countries to restart negotiations with Russia for a new 
partnership agreement after they had been halted due to the Russia-
Georgia war.
    By resuming formal NATO-Russia ties, NATO sends the wrong signal to 
Russia, who is still in violation of the terms of the ceasefire 
negotiated by French President Nicolas Sarkozy after the 2008 Russo-
Georgian war. Rather than withdraw to status quo, as envisaged in the 
Sarkozy-Medvedev agreement, the Russian military has announced the 
deployment of five bases: three in Abkhazia and two in South Ossetia. 
These bases violate the spirit and the letter of the ceasefire.
    This message has been reinforced by the Strasbourg-Kehl declaration 
of the most recent NATO summit. The declaration formally announced the 
immediate reconstitution of the NATO-Russia Council (NRC) and pledged 
to upgrade and expand relations between NATO and Russia through the 
Council. Despite some language in the Declaration inserted by Central 
and Eastern European nations criticizing Russia for its military build-
up in South Ossetia and Abkhazia, the tone could be characterized as 
conciliatory. An improvement of U.S.-Russia and NATO-Russia relations 
is certainly desirable, but it should not come at the expense of key 
allies, interests and existing rules of international diplomacy and 
European security.


                               __________


            responses to questions submitted to ambassador 
                  stephen sestanovich by senator kerry


    Question. How realistic is it to pursue a revival of Russia's 
implementation of the Treaty on Conventional Force in Europe given 
Russia's actions in Georgia?
          a. Are there specific actions the United States should take?
          b. Are there compromises we should be willing to accept?

    Answer. The Senator is right: it is completely incompatible with 
the CFE treaty for one signatory to have troops and military equipment 
on the territory of another without the latter's consent. That is why 
the United States sought Russia's commitment at the Istanbul Summit of 
the OSCE in November 1999 to withdraw such forces from both Georgia and 
Moldova. Unless those commitments are eventually fulfilled, it is hard 
to see how the CFE treaty can survive in its present form. But we can 
approach the problem one step at a time. The first step has to be for 
Russia to restore the military status quo antebellum of last year.


    Question. You called on the committee to support the U.S.-Russia 
agreement on civilian nuclear cooperation. What should we say to those 
who worry that Russia is still helping Iran, if not with direct 
assistance to Iran's nuclear program, than at least by offering air 
defense systems and rejecting effective sanctions?

    Answer. I favor Congressional approval of the 123 agreement on 
civil nuclear cooperation. Implementation of the agreement--and 
approval of individual cooperative projects--obviously has to take into 
account the broader framework of relations between Russia and the 
United States. These are not going to develop positively if Russia 
keeps increasing the technical sophistication and capabilities of the 
weapons it sells to Iran. From the hesitation that Russian officials 
have shown about going forward with the S-300 air-defense system, I 
think it's clear that they understand this problem.


    Question. It's been more than seven months since Russian forces 
went into Georgia. Was Russia trying to send its neighbors a message? 
Did the West's muted reaction to the events in Georgia also send a 
message to the region? What has been the impact?

    Answer. I think Russian leaders may actually have sent more of a 
message than they intended, both to their immediate neighbors and to 
others beyond the region. How Russia views the sovereignty of other 
states is, understandably, a more open question than it was even a year 
ago. What message other states end up receiving about American policy 
will depend on how we treat the problem of Georgia's security going 
forward. We have to make clear that we are not simply going to forget 
about this incident and accept its consequences.


                               __________


            responses to questions submitted to ambassador 
                stephen sestanovich by senator feingold


    Question. In recent testimony, the DNI noted that Moscow's 
engagement with both Iran and Syria, including advanced weapons sales, 
has implications for U.S. nonproliferation interests. Equally as 
relevant are press reports that Russian President Medvedev has 
announced his intention to strengthen Russia's conventional military 
force. How should the Obama administration interpret these signals and 
what actions might result in more effective cooperation with Russia on 
Iran?

    Answer. President Medvedev's military policies are confusing--and 
require continuing, careful watching to understand their real meaning. 
His statements continue to refer to a threat from NATO, but most 
serious Russian observers of his plans conclude that Russia is 
abandoning the idea of preparing for a war against it. The rhetoric 
aside, that's probably good news.


    Question. If Iran continues to move forward in the direction it is 
currently headed and does not cease uranium enrichment, do you think 
Russia would be supportive of more punitive actions if need be, 
including sanctions through the UN Security Council even though it has 
resisted harsher measures in the past?

    Answer. Russia has consistently watered down sanctions resolutions 
in the Security Council, while ultimately supporting them. That seems 
the most likely pattern for the future--support for measures that put 
little pressure on Iran. A dramatic action by Iran--expulsion of 
inspectors, say, or enrichment to higher, weapons-grade levels--might 
change Moscow's outlook in ways that we can't predict at this time.


    Question. With the media reporting that Russia will now allow the 
United States to ship non-lethal supplies through its territory to 
Afghanistan--via Kazakhstan and Uzbekistan--what kind of support is 
feasible from Russia. Is it appropriate to see Russia as an equal 
partner with regard to Afghanistan and if so what steps should we take 
to ensure that's the case?

    Answer. It's encouraging to see Russia starting to allow supplies--
non-lethal and perhaps at a later date lethal, too--to pass through its 
territory in support of NATO operations in Afghanistan. At the same 
time, it's discouraging to see Russia continuing to oppose the use of 
airfields in Central Asia for transporting the very same supplies. As 
long as it continues to have this split-screen view of the matter, it 
will be hard to think of Russia as a partner in the enterprise.


    Question. Russian officials said earlier this year that they are 
scaling up their diplomatic involvement to solve conflicts in Africa, 
and they recently appointed a special envoy to Sudan. However, their 
record to date toward Sudan and specifically the situation in Darfur 
has been unhelpful to say the least. They have provided political cover 
for the regime in Khartoum at the UN Security Council and, according to 
the organization Human Rights First, they have continued to provide 
arms to the Government of Sudan used in Darfur in direct violation of 
the UN arms embargo. How can the Obama administration better press 
Russia on the Security Council and bilaterally to change their approach 
to Sudan? And just as with the Chinese, how can we engage and identify 
opportunities to partner with the Russians as they increase their 
involvement in African affairs?

    Answer. Right now, the outlook isn't brilliant, and Russian 
resistance to Security Council pressures will continue. Finding a 
small, non-controversial peacekeeping operation in which Russian and 
other countries can participate side by side may be the most promising 
first step in whetting the Russian military's appetite for further 
cooperation. Remember, Russian forces served under an American command 
in both Bosnia and Kosovo: it can happen again.


    Question. The State Department's yearly report on human rights 
noted for 2008 that ``the Russian Federation has an increasingly 
centralized political system. with a compliant State Duma, corruption 
and selectivity in enforcement of the law, media restrictions, and 
harassment of some NGOs [all of which have] eroded the government's 
accountability to its citizens.''
    The 2008 report also documents numerous reports of government and 
societal human rights problems and abuses during the year. The last 
administration pretty much gave Russia free pass but this is not 
expected to be the case with the new administration. How do you 
anticipate these restrictions will be addressed in any new U.S. policy 
towards Russia?

    Answer. President Medvedev's regular--and seemingly sincere--
statements about the importance of strengthening the rule of law in 
Russia may be a good opening for a new policy. His use of this theme is 
so strong and so frequent that we should try to think ambitiously about 
how to build on it.


                               __________


            responses to questions submitted to ambassador 
                  stephen sestanovich by senator casey
Iran


    Question. Russia has given mixed signals about the steps it is 
ready to take in order to contain Iran's nuclear ambitions. On one 
hand, Russia is building a nuclear reactor for Iran at Bushehr, and has 
obstructed efforts in the UN Security Council to impose tougher 
sanctions on Iran for continuing its nuclear enrichment program. On the 
other hand, after Iran's clandestine nuclear program came to light, 
Russia withheld the delivery of nuclear fuel for the Bushehr reactor 
and eventually agreed to limited UN Security Council sanctions, when 
Iran refused to accept a Russian proposal that would have allowed Iran 
to reprocess uranium at facilities on Russian territory. In recent 
weeks, senior Russian officials, including President Medvedev, have 
indicated that Russia is prepared to support additional sanctions on 
Iran if it does not stop enrichment of uranium.
    How do you interpret Moscow's vacillation on stopping Iran's 
enrichment program? Why has Moscow historically been unwilling to agree 
to tougher sanctions on Iran? Are Moscow's motivations for building a 
nuclear reactor for Iran strategic, financial, or both?

    Answer. Russia has for years wanted to find a formula that brings 
Iran's nuclear activities under greater international control and 
inspection without worsening its own relations with Iran if this effort 
fails. It has not wanted to be seen by Teheran as an agent of American 
policy--that's why, it has always wanted the list of sanctions voted by 
the Security Council to be shorter and milder than those sought by the 
U.S. As for its motivations in building the Bushehr reactor, they are 
surely both commercial and strategic.


    Question. President Medvedev recently suggested that Russia is open 
to cooperating with the United States on Iran. However, he also scoffed 
that the U.S. should not link cooperation on Iran to U.S. missile 
defense plans in Eastern Europe. In other words, the Russian leadership 
continues to maintain that U.S. missile defense sites do not counter 
the Iranian threat, but rather threaten Russia.
    In your view, did the Obama administration present the Kremlin a 
fair deal by offering to scrap U.S. missile defense plans in Eastern 
Europe for greater cooperation on combating the Iranian nuclear and 
ballistic missile threat?

    Answer. What President Obama has said (and he repeated it in his 
Prague speech) is this: There would be no need for defensive systems 
against Iranian nuclear-armed missiles if Iran never acquired nuclear 
weapons nor long-range missiles in the first place. The U.S. has 
suggested to the Russians that this ought to be a reason for them to 
cooperate with us to constrain Iranian capabilities. This seems to me a 
good deal for everyone. An offer to scrap our missile defense plans 
just because the Russians offer ``help'' does not seem like such a good 
deal. Suppose we--and they--fail?


    Question. Do you take President Medvedev at his word when he 
indicates that Russia might agree to additional sanctions? Or is the 
Kremlin expecting a carrot from the Obama administration in exchange 
for its cooperation? What, if anything, should the Obama administration 
offer Russia for enhanced efforts to stop Iranian enrichment?

    Answer. I'm skeptical of quid pro quo deals of this kind. 
Successful diplomacy rarely involves trades of completely unrelated 
issues. I'm also unconvinced that Russia has a great deal of leverage 
over Iran. Most Russian officials and experts that I talk to dispute 
the idea.
Priorities in the U.S.-Russian Relationship


    Question. Russia has also vocally expressed its displeasure with 
the United States' promotion of democracy, both in Russia and in 
Russia's near abroad. It is a common view in Moscow that the U.S. was 
responsible for facilitating the colored revolutions that removed 
authoritarian leaders in Ukraine, Georgia, and Kyrgyzstan, and some 
officials in the Kremlin, particularly inside Prime Minister Putin's 
inner circle, fear a similar revolt in Russia. I disagree with Russia's 
claims, but I cannot ignore Russia's less than remarkable record on 
democratic reform and civil liberties. Opposition leaders, even those 
who pose no threat to the entrenched political establishment, are 
routinely jailed and harassed. In addition, several Russian journalists 
have been murdered under murky circumstances suggesting government 
involvement.
    In your assessment, what priority should the U.S. place on 
democratization and protecting civil liberties in Russia? If we focus 
too much on these areas, do we risk alienating Russia on important 
security issues, like Iran's nuclear threat?

    Answer. Russian internal political developments have definitely 
been going in the wrong direction for some time now. But the reason to 
think hard about what if anything we can do to support a more positive 
evolution is not that our efforts annoy Russia's leaders and make them 
less likely to help us with Iran. The real reason is that these efforts 
simply haven't been working very well. And in fact President Putin has 
been able to use Western sympathy and support to weaken those who are 
trying to move Russia in a more democratic direction. It's obviously 
impossible for Americans to be silent about these matters, but we need 
to think a lot harder about what we can say and do that will actually 
have the desired effect.
NATO-Russian Relations


    Question. On March 5, NATO Foreign Ministers agreed to resume 
formal meetings of the NATO-Russia Council, after suspending its 
activity following Russia's invasion of Georgia in August 2008. 
Ministers gave the signal that business would return to normal, even 
though serious disagreements with Moscow remain. I am interested in 
your assessment of ``business as usual.'' For example, it is promising 
that Russia agreed to allow NATO Allies to transport non-lethal 
military equipment to Afghanistan across Russian territory. Yet, Russia 
continues to demand that NATO abandon its plans to offer Ukraine and 
Georgia membership in the Alliance, in spite of the fact that at the 
2008 NATO Summit, Allied Heads of State made explicitly clear that both 
countries would one day join NATO. The possibility of enlargement 
always threatens to derail NATO's relationship with Russia.
    How do you assess the future of NATO's relationship with Russia, 
considering all that we know about Moscow's red lines? Will the NATO-
Russian relationship be complicated by President Medvedev's proposal 
for a European Security Treaty that would presumably seek to give 
Russia a veto over Alliance decisions on enlargement, missile defense, 
and other contentious issues?

    Answer. Russian policymakers are suspicious of NATO enlargement 
because they remain ambivalent--and more typically, hostile--to NATO 
itself. As long as they do, prospects for a productive relationship 
between Russia and NATO will be limited. But I wouldn't be too fearful 
that Russia will, merely by convening a conference on European 
security, be able to acquire a veto over NATO decisions. The other 
members of NATO have no more interest in such a result than we do, and 
they've all got diplomats just as smart as ours to make sure that it 
doesn't happen.
    Should the U.S. have blocked consensus at NATO on restoring full 
relations with Russia, when Russia continues to base troops in South 
Ossetia and Abkhazia, both of which are still internationally 
recognized as Georgian sovereign territory?

    Answer. What bothered me about this decision is not that NATO 
failed to use the resumption of ``normal'' relations with Russia as 
leverage to get Russian troops out of Georgia. It's that most NATO 
members seem to have stopped treating this as a problem issue in their 
relations with Moscow. Russian troops are not only occupying sovereign 
Georgian territory--they are occupying territory from which President 
Medvedev promised to withdraw last summer. Members of this committee 
may want to learn more about what our representatives at NATO have done 
to keep this issue on the agenda of the NATO-Russia Council.




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