[Congressional Record Volume 144, Number 147 (Thursday, October 15, 1998)]
[Extensions of Remarks]
[Pages E2199-E2202]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  ADDRESS BY SECRETARY OF STATE MADELEINE ALBRIGHT TO THE U.S.-RUSSIA 
                            BUSINESS COUNCIL

                                 ______
                                 

                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Thursday, October 15, 1998

  Mr. HAMILTON. Mr. Speaker, I commend to Members' attention an 
excellent speech on U.S. policy toward Russia given by Secretary 
Albright on October 2, 1998. Secretary Albright correctly stresses the 
importance of U.S-Russian relations and the fact that Russia's 
evolution will be a long-term process. The Secretary rightly argues 
that, while Russia must respect basic laws of economics, solutions to 
Russia's problems will not work unless they have popular support. I 
applaud Secretary Albright for a very insightful speech.

Secretary of State Madeleine K. Albright's Address to the U.S.-Russian 
                            Business Council

       Thank you Ambassador Strauss for that introduction. As our 
     nation's first Ambassador to a democratic Russia, the 
     experience, perspective and authority you bring to the 
     subject at hand are truly unmatched. I am glad to see Gene 
     Lawson here--he and I started our PhD's at Columbia on the 
     same day.
       And I'm very glad to see in this audience some of the old 
     Russia hands who treated me to a stimulating dinner seminar 
     two nights ago. Today they're going to hear me cribbing their 
     ideas--shamelessly.
       Ambassador Vorontsov, distinguished guests: I am happy to 
     be in Chicago and delighted to address a group that shared 
     President Clinton's conviction that what happens in Russia 
     matters profoundly to our security and prosperity. Let me now 
     invite you all to sit back, digest your lunch, and formulate 
     some polite, easy questions to ask me after my speech.
       When I think about the situation in Russia today, I can't 
     help thinking about a story I

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     first heard on one of my early visits to that country.
       A train is going through Siberia when it runs out of track. 
     In Lenin's day, the leadership says: ``Our workers are strong 
     and brave; they will keep building.'' Stalin says: ``No, 
     they're lazy; threaten to shoot them and then they will 
     build.'' Krushchev says: ``Russia is going forward, not 
     backward, so we can use the rails we've passed over to finish 
     the track ahead.'' Brezhnev says: ``It's too much work; let's 
     close the blinds and pretend we're moving.'' Gorbachev says: 
     ``Open the windows and let's see what happens.''
       Then President Yeltsin and the Russian people get the train 
     going again. Except it's moving fast and he keeps changing 
     engineers. And now there are two tracks ahead. One looks 
     tempting, for it goes downhill; but it leads to the abyss. 
     Only the perilous track through the mountains will get Russia 
     to its destination.
       As you can guess, that's an old story, but I made up the 
     ending. And the Russians keep writing new ones themselves.
       These are, to use the Russian expression, smutnoye vremya, 
     troubled times. The Russian economy is expected to shrink 
     significantly in the coming year. A hard winter lies ahead.
       To many Russians, it may seem as if the promise of a better 
     future has been betrayed once again. To many Americans, it 
     may seem that the greatest opportunity of the post-Cold War 
     era, building a genuine partnership with a stable, democratic 
     Russia is now a more distant possibility.
       Of course, this is not the first crisis of post-Soviet 
     Russia. Tomorrow will mark the fifth anniversary of the 
     tragic showdown between President Yeltsin and the Supreme 
     Soviet. And it was only two years ago that Russians were 
     expected to reject Yeltsin in Russia's presidential election.
       Each time, there were people eager to declare that Russia's 
     transition was over for good. Each time, some people were 
     ready to substitute soundbite for serious analysis, by asking 
     rhetorically: Who lost Russia?
       But that has always been the wrong question. The drama of 
     Russia's transformation from a dictatorship and an empire to 
     a modern democratic state is far, far from over. We can not 
     say that Russia has lost its ways when in fact it has just 
     begun its journey. Nor can we say that Russia is ours to 
     lose. We can help Russia make tough choices, but in the end 
     Russia must choose what kind of country it is going to be.
       The real question today is what will the new government of 
     Prime Minister Primakov choose? Will it take sensible steps 
     to stabilize the economy without triggering hyperinflation, a 
     currency meltdown, a collapse of the banking system, or 
     shortages of basic goods? Will it reconcile the political and 
     moral imperative of meeting human needs with the imperative 
     of economic revival? Will it recognize that, in fact, it 
     cannot fulfill either one of these imperatives without 
     fulfilling the other?
       On the day he was confirmed by the Duma, Prime Minister 
     Primakov told me that the answer to these questions was 
     ``yes.'' He also asked us to watch his actions and to wait 
     until his team assembled.
       I cannot yet say we are reassured. We have heard a lot of 
     talk in recent days about printing new money, indexing wages, 
     imposing price and capital controls, and restoring state 
     management of parts of the economy. We can only wonder if 
     some members of Primakov's team understand the basis 
     arithmetic of the global economy.
       So we cannot say with confidence that Russia will emerge 
     from its difficulties any time soon. Nor should we assume the 
     worst, for there are still plenty of people in Russia who 
     will fight against turning back the clock.
       A true and lasting transition to normalcy, democracy, and 
     free markets in Russia is neither inevitable nor impossible. 
     It is an open question, the subject of a continuing debate 
     and struggle. That has been true ever since this great but 
     wounded nation began to awake from its totalitarian nightmare 
     and it will be true for years to come. That is why our policy 
     must continue to be guided by patience, realism and 
     perspective.
       I want to talk today about the Administration's strategy 
     for responding to both the challenge and the opportunity that 
     Russia's transformation poses. I want to speak with you not 
     only as Secretary of State, but as someone who has spent much 
     of her life studying and teaching about the societies that 
     once fell on the far side of the Iron Curtain.
       Over the years, my bookshelves filled with the literature 
     of the Cold War, with books about the Soviet Communist party, 
     about US-Soviet relations, about nuclear strategy. Nothing 
     gives me greater pleasure than the knowledge that so many of 
     them are now obsolete.
       The books that still speak to us are those about Russian 
     history. They tell a story of countless efforts to transform 
     Russia, each leaving its mark, and yet each left unfinished.
       Four hundred years ago, Peter the Great sought to open 
     Russia to the West. Yet not till today has Russia had a 
     chance to complete the journey it began when St. Petersburg 
     first rose on the Neva. More than 80 years ago, the Russian 
     monarchy was replaced not by a communist revolution but by a 
     constitutional democracy, which collapsed before its hopes 
     could be realized. A few years later, Stalin tried to move 
     his country in a radically different direction. He failed, 
     too; even his ruthless precision did not turn Russia into a 
     permanent prison.
       Today's democratic reformers cannot afford to leave their 
     work half finished, because Russia cannot afford to be half 
     free. But to beat the odds, they must still beat the legacy 
     they inherited from the last failed effort to transform 
     Russia. And to understand their task, we need to understand 
     just how hard overcoming the legacy of communism has been and 
     will be.
       We need to remember that a short time ago, Russia was a 
     country where enterprises competed to produce the biggest 
     piles of junk; a country where the dollar was at once illegal 
     and supreme; a country that did not care for its poor because 
     it did not acknowledge their existence; a country where crime 
     and graft were jealously guarded state monopolies; a country 
     where school books derided the rule of law as ``bourgeois 
     legalism.''
       The task of rebuilding has been harder still because, 
     unlike the Czechs and Poles and Balts, Russians have no 
     living memory of political and economic freedom to guide 
     them; they are creating something new, not regaining 
     something they had before. What is more, precisely because 
     the collapse of the Soviet system was remarkably peaceful, 
     many responsible for the old order are now struggling over 
     the shape of the new one.
       Seen from this perspective, it is remarkable that Russia is 
     as open to the world as it is today. It is remarkable that 
     power is devolving from Moscow to the regions. It is 
     remarkable that people who want to know what is going on 
     inside Russia can call up today's online edition of the St. 
     Petersburg Times or the New Siberia weekly or the Vladivostok 
     News.
       It is remarkable that the leaders of American business can 
     gather here to discuss the stake in Russia's future that they 
     share with millions of workers and investors in Russia.
       And it is remarkable that Russia is becoming a functioning 
     democracy, that its new government came into being because 
     the President and the Parliament played by the rules of its 
     post-Soviet constitution. That is not, to put it mildly, the 
     way Russia's politics worked in the past, but it is the way 
     most of the experts I've talked to expect it to be played in 
     the future.
       I will not downplay Russia's present crisis or suggest 
     Russian reformers have made all the right choices. It's a 
     troubling fact that many Russians have come to equate reform 
     with theft. There is a danger many will come to see political 
     and economic freedom as just another Utopian promise that 
     never comes true.
       I am deeply concerned about what is happening in Russia, 
     but I also agree with the motto that hangs in the office of 
     our Ambassador to Russia, Jim Collins, which says, ``Concern 
     is not a policy.''
       My job as Secretary of State is not to describe the worst 
     possible outcome in Russia or anywhere else. It is to devise 
     policies that protect American interests and encourage the 
     best possible outcome. That has been our objective ever since 
     the Russian tricolor rose above the Kremlin in 1991. And 
     while none of our policies should be exempt from scrutiny or 
     criticism today, I believe it is a sound objective still.
       Our policies towards Russia will continue to be guided by 
     several fundamental principles.
       The first principle is that our most important priority in 
     dealing with Russia is to protect the safety of the American 
     people. That is an interest we pursue no matter who is up or 
     down in the Kremlin or which direction Russia is headed.
       Our efforts have paid enormous dividends.
       Today, there are no nuclear weapons in Belarus, Kazakstan 
     and Ukraine. Presidents Clinton and Yeltsin have agreed on 
     cuts to be made in the START III treaty that would reduce our 
     nuclear arsenals by 80 percent from their Cold War peak. 
     Russia has joined us in banning nuclear testing and in 
     ratifying the Chemical Weapons Convention. Our experts have 
     worked together to upgrade the security of nuclear weaponry 
     and materials.
       Today, 75 percent of our assistance dollars to Russia are 
     devoted to programs that diminish the threat of nuclear war 
     and the danger that weapons of mass destruction will fall 
     into the wrong hands. Just last Week, our President announced 
     a program to help scientists and workers in Russia close 
     nuclear sites, start commercial, non-military ventures, so 
     that they are not tempted to sell their expertise to those 
     who wish us harm.
       Today, there are no Russian troops in the Baltic states. 
     Instead, Russian troops are serving with ours in Bosnia. 
     Russian officers are working with our allies at NATO 
     headquarters. Our diplomats have been working together to 
     bring peace to the Caucuses and to Kosovo.
       Yevgeniy Primakov and I worked closely together when he was 
     foreign minister. We each came to see the other as a 
     forceful, straight-talking advocate of a major power's 
     national interests. We have been able to advance our 
     cooperation where our interests' converge and to manage our 
     differences honestly and constructively.
       The question now is whether that cooperation can continue. 
     There are many voices in Russia who want to shift the 
     emphasis in Russia's interaction with America and our allies 
     from one of partnership to one of assertiveness, opposition 
     and defiance for its own sake.
       If that happens, it would be a double disaster for Russia. 
     First, because our ability to

[[Page E2201]]

     help Russians help themselves will go from being merely very, 
     very difficult to being absolutely impossible. Second, 
     because a shift of that kind some are advocating in Russian 
     foreign policy would be contrary to Russia's own interests.
       After all Russia needs an effective non-proliferation 
     regime--and it does need to see that nations like Iran do not 
     acquire nuclear weapons or missiles that can hit its 
     territory. Russia needs strategic arms reduction and a treaty 
     limiting conventional arms in Europe. Russia needs peace in 
     the Balkans and an end to conflict on its borders. Russia 
     needs good relations with NATO. Russia needs neighbors in 
     central Europe and the New Independent States that are 
     secure, thriving models of market reform--for in a global 
     economy success and confidence are as contagious as failure 
     and panic.
       Above all, Russia needs to project a preference for 
     cooperation to its partners in trade and investment around 
     the world. The confrontational policies that did Russia no 
     lasting good even in the nuclear age are certainly not going 
     to advance its interests in the information age.
       Fortunately, in the last few weeks, we have welcomed signs 
     that the Russian leadership continues to see, as do we, that 
     there is a basis in mutual benefit for cooperative U.S.-
     Russians relations. Just last week, for example, Russia 
     joined us in the UN Security Council to support a resolution 
     under the peace enforcement provisions of the UN Charter 
     demanding an end to the Serbian offensive in Kosovo. We have 
     a lot of hard work to do in the coming days to see Milosevic 
     gets the message.
       I spoke to Foreign Minister Ivanov this morning about the 
     atrocities of recent days, about the need to see that 
     Milosevic understands our determination. We're continuing to 
     work with Russia throughout this crisis, but let me be clear: 
     if at the end of the day we disagree about whether force has 
     to be used, the United States and its allies must be prepared 
     to act.
       Russian ratification of the START II treaty would further 
     confirm this positive trend. Prime Minister Primakov has said 
     this will be a priority. His government has, by recent 
     standards, unprecedented support in the Duma and therefore an 
     unprecedented opportunity to get this done.
       At the same time, we need to recognize that the cash-
     strapped Russian government is already hard pressed to slice 
     apart missiles, destroy chemical weapons stocks, and meet the 
     costs of other obligations. Over the long haul, arms control 
     saves Russia money; but in the short run, it carries costs we 
     and our partners must be ready to help Russia bear--not out 
     of charity, but because our national interests demand it. 
     That's why it's so important that Congress voted to increase 
     this year's Nunn-Lugar funding to $440 million.
       The second principle guiding our policy is that we also 
     have an interest in standing by those Russians who are 
     struggling to build a more open and prosperous society. As 
     President Clinton made clear at the Moscow summit, we will 
     continue to do that in every way we can.
       At the same time, we should acknowledge that helping Russia 
     will probably be harder for some time. And the best way to 
     help Russia now is not necessarily to send more money.
       Much of the progress Russia has made in the last seven 
     years has come with the support of international institutions 
     such as the IMF and the World Bank. These institutions helped 
     Russia to conquer hyper-inflation, to liberalize prices and 
     to make the ruble convertible. They pressed policies designed 
     to encourage competition and discourage corruption.
       At the same time, more big bailouts are not by themselves 
     going to restore investor confidence in Russia. Nor will they 
     help the Russian economy unless the Russian government is 
     committed to sound fiscal and monetary policies.
       Foreign funds should continue to be used to help Russia 
     pursue credible reforms, but not to help delay them. They 
     should be used to support a policy of tax reform, not to make 
     up for tax revenues the government is unable or unwilling to 
     collect. They should be used to support a program that 
     strengthens banks lending money to entrepreneurs, not banks 
     set up to bet on current fluctuations. They should be used to 
     support policies that help the neediest Russians, not that 
     enrich off-shore bank accounts.
       In the long run, the gap between Russia's needs and its 
     resources must be met not by foreign bailouts but by foreign 
     investment. Furthermore, what will truly help Russia now is 
     not more people betting on its T-Bills, but more people 
     betting on its factories, oil fields, and people.
       We need to remember that Russia has tremendous inherent 
     wealth. Yet it has only attracted a trickle of outside 
     investment where there should have been a bonanza. Had the 
     conditions been right, it is estimated that investors could 
     have pumped more than $50 billion into Russia's oil and gas 
     sector alone. As it was, in 1997 energy investment didn't 
     even reach $2 billion.
       Just think how much could have been done if investment on 
     this scale had been coming into Russia from the very 
     beginning of the 90's. Those who blocked it have a lot of 
     explaining to do to their people.
       One of the obstacles has been Russia's inability to approve 
     adequate legislation on production sharing agreements, and to 
     create a stable, predictable tax system, which would create 
     an environment for attracting investment.
       A related obstacle has been the sense among many Russians 
     that accepting foreign investment means selling their 
     country. President Clinton and I have been making the case 
     that this is a dangerously short sighted views. We have 
     pointed out that foreign investment has fueled growth in 
     every thriving emerging economy from Latin America to central 
     Europe, that it helped build America in the 19th century, and 
     that attracting foreign capital to America is one of our 
     highest priorities today.
       By welcoming long-term, committed capital, Russia is not 
     giving away its national patrimony; it is gaining jobs, 
     growth and tax revenues. It is gaining advances in technology 
     that will allow it to market its resources at competitive 
     prices. It is gaining a corporate culture that will help it 
     to replace robber barons with responsible stewards of its 
     national treasure. It is gaining investors who will not fly 
     home or move their money to Switzerland at the first sign 
     of trouble. I gather that some of those who are beginning 
     to understand all this include Russia's governors--who 
     see, like our own governors, how much foreign investment 
     can do for them.
       Let me acknowledge the many members of the US business 
     community who have had the guts to hang in there despite all 
     the difficulties you have suffered and uncertainty you have 
     faced. I thank you all for that.
       As long as the Russian government is willing to play by 
     global rules, foreign governments and institutions will help 
     it to weather tough times. And whatever the policies of the 
     government, we will try to support programs that help the 
     Russian people and advance our shared interest in democracy.
       In response to the current crisis in Russia, we have been 
     re-examining all our assistance programs, retargeting money 
     where it can be used effectively to support economic and 
     democratic reform. We will increase our support for small 
     business and the independent media, and try to bring a much 
     larger number of Russian students, politicians, and 
     professionals to live and learn in America.
       And we intend to launch a lifeline to non-governmental 
     organizations whose funds have been frozen in Russia's 
     banking crisis.
       Precisely because there are troubled times in Russia, these 
     programs are needed today more then ever. They are in our 
     nation's interest and they support the interest of the 
     business community. We asked the Congress to increase our 
     funding for 1999, and we need your support now, before this 
     year's session ends, to make that happen. This is no time to 
     cut programs that have had such an important payoff for us.
       A third principle we need to keep in mind is that the 
     solutions to Russia's problems will not stick unless they 
     have popular legitimacy within Russia.
       I do not want to suggest that there is any uniquely Russian 
     way to prosperity. If the Russian government prints too many 
     rubles, there is nothing inherent in Russian culture, nothing 
     imprinted in the Russian character, that will prevent 
     inflation from crushing its people's dreams. The laws of 
     economics may work in mysterious ways, but they do not vary 
     from culture to culture any more than the laws of physics.
       But I do believe that even as we urge what is right, we 
     must not treat Russia as a ward of the international 
     community. Russia is too big, and too proud, for that. The 
     policies we would like the Russian government to pursue have 
     to be worked out democratically, with the support and 
     understanding of the Russian people, or they are going to 
     fail.
       This means we need to be patient with the workings of the 
     democratic process in Russia. Under the best circumstances, 
     there will be compromises between economic orthoxody and 
     political reality. After all, democracy is not rule by 
     economist-kings. It is a system that allows pragmatic 
     politicians to build a consensus for policies that cause 
     short-term pain.
       It also means we should not start each day by taking a 
     census of reformers in the Kremlin or hold our breath every 
     time there is a leadership change. We should be interested in 
     policies, not personalities.
       In this respect, it is a good thing that Russia now has a 
     government with a mandate from both the Parliament and the 
     President. It is a good thing that Communists and Agrarians 
     in official positions have to face voters with the results of 
     what they do. They'll learn they have to do more than just 
     complain and denounce. It is a good thing that Russia will 
     hold parliamentary elections next year and presidential 
     elections in the year 2000. Far from fearing the outcome, we 
     should look forward to what should be the first peaceful, 
     democratic transfer of power in Russia's history.
       The historian James Billington has written that many times 
     in their history, ``Russians have sought to acquire the end 
     products of other civilizations without the intervening 
     process of slow growth and inner understanding.'' Today's 
     reformers do not have much time to go through that process. 
     For in today's global marketplace, Russia will be vulnerable 
     to external shocks as long as basic market reforms remain 
     incomplete.
       Russia's transition to true freedom, stability and 
     prosperity will take time, indeed it must to be lasting and 
     genuine. Meanwhile, we need to defend our interests and speak 
     clearly about the choices we hope Russia will make. And we 
     must be ready to stick with this effort for the long haul.
       From the beginning of Russia's incredible journey toward 
     freedom, I've tried not to be too euphoric when things are 
     going well, or

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     too discouraged when things are going badly. Everything I 
     know about transition from communism to democracy teaches me 
     to be a short-term realist when it comes to Russia. But it 
     also teaches me to be a long-term optimist.
       This period is different from all the other periods of 
     change and reform in Russia's history in one important way. 
     Unlike the Peter the Great's time, Russia is not seeking to 
     enter a Europe of absolute monarchies in perpetual conflict. 
     Unlike in 1917, it does not need to escape from a Europe 
     engulfed in the senseless slaughter of a total war.
       Yesterday, Europe was organized around alliances of 
     countries that knew what they were against. Today, the rest 
     of Europe and much of the world is coming together around a 
     consensus for open markets, for cleaner government, for 
     greater tolerance and peace. In the last 20th century, the 
     forces that pull Russia toward integration, and that 
     counteract the autarkic, self-isolating forces within Russian 
     itself--are more powerful than at any time in history.
       It is our job--because it is in our interest--to manage the 
     aftermath of the Soviet Empire's disintegration, to help 
     Russia integrate into the community of which we are a part, 
     and eventually to help Russia thrive, not just muddle along. 
     And that means remaining steady in defense of our principles, 
     interests, and objectives. And it means standing with Russia 
     as it moves forward--as long as it is moving on the right 
     track.
       I will continue to dedicate my best efforts to this hard-
     headed, principled enterprise, and I solicit yours as well.
       Thank you very much.

       

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