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'[T]he new domestic political situation in Russia does raise questions about how much further our relationship will progress', US Ambassador to Russia Alexander Vershbow, January 8

'Vershbow: U.S. Watching Russia's Course in Wake of Elections', January 8, 2004.

Carnegie Endowment for International Peace
Washington, D.C.
January 8, 2004

U.S.-RUSSIAN RELATIONS AFTER THE DUMA ELECTION: WHERE DO WE GO FROM HERE?

ALEXANDER VERSHBOW, U.S. AMBASSADOR TO RUSSIA

Thank you for the opportunity to speak once again at the Carnegie Endowment. I enjoy meeting with your colleagues at the Carnegie Center in Moscow. It's fair to say that, both in Washington and in Moscow, Carnegie enriches and enlivens the debate on issues that I have followed all of my professional life. I will try to keep my remarks today relatively brief, both to permit time for a lively question and answer period, and to be sure I will have something left to talk about if you decide to invite me back again next year.

I last appeared here a year ago to give my reflections on the state of the U.S.-Russian partnership. Then, I remarked on the significant internal changes that had taken place in Russia, and the even more remarkable transformation in the U.S.-Russian relationship following September 11.

Since then, there's been further progress, but also some discordant notes: we successfully navigated the crisis in our relationship over Iraq, our Presidents held a productive summit at Camp David, we held a second Commercial Energy Summit, and continue to cooperate on a wide range of political and strategic issues. On the other hand, the last independent national television network in Russia has disappeared, the war in Chechnya continues, Yukos founder Mikhail Khodorkovskiy was arrested under controversial circumstances, and the recent Duma elections fell short of OSCE [Organization for Security and Cooperation in Europe] standards. While all of these developments are important, I would like to focus particularly on Russia's political landscape and the future of the U.S.-Russian relationship in the wake of the recent elections.

As you all know, December's Duma elections represented a triumph for the political forces allied with President Putin, as well as nationalists, such as Vladimir Zhirinovskiy's (inappropriately named) Liberal Democratic Party, and the leftist/nationalist Rodina (Homeland) bloc that the Kremlin sponsored to siphon votes off from the Communists. In fact, the election dealt a serious blow to the Communists, whose support dropped by roughly half, much of it lost to Rodina. Support for the two main reformist parties, Yabloko and the Union of Right Forces, dropped by roughly one-third and one-half respectively, leaving scant reformist presence in the incoming Duma. The elections changed Russia's political landscape dramatically, leaving President Putin and his supporters with unassailable control of the Duma.

While most headlines focused on United Russia's big win, that was not the only story. Personally, I think a longer perspective is needed before anyone can judge whether any particular party has "completed its historical mission," as one Kremlin official asserted. However, what does seem certain is that the reformist parties and the Communists were unable, for a number of reasons, to deliver a message that resonated with many voters. In the case of the reformists, an atmosphere of hostility to and distrust of business fomented during the run-up to the election played a role. In the case of the Communist Party, it appears that the Homeland bloc provided a more appealing option for disaffected voters who previously had voted Communist.

What did connect with voters -- and surprised many analysts -- were redistributionist and nationalist themes. Both Russian and Western observers speculate that voters angry about poor living standards and crumbling social services were attracted to messages that blamed the rich for their problems. Others may have been attracted by candidates who tapped into the sense that Russia is not being accorded the respect due a great nation.

As you know, the OSCE and Parliamentary Assembly of the Council of Europe conducted an extensive election observer mission, in which the United States participated. Election Day itself took place with relatively few observable irregularities. However, the observer mission judged in its preliminary statement that the elections failed to meet many OSCE and Council of Europe standards. In particular, the observer mission highlighted a flawed pre-election process, a charge the Kremlin brusquely rejected. The OSCE found extensive use of administrative resources, and media favoritism to the benefit of pro-Kremlin parties. The pro-United Russia and anti-Communist media bias was overwhelming. One reputable firm that measured the quantity and tone of references to parties during the campaign on a +300 (positive) to -300 (negative) scale had United Russia at +226 and the Communists at -262. The two reformist parties attracted about a third as much coverage, and it was only modestly positive. It is impossible to know what the result would have been without these influences, but they surely made for an uneven playing field.

I must say that when I began my Foreign Service career some 25 years ago, I never expected to hear myself lament anti-communist bias in the Russian media! Indeed the party of Lenin, Stalin and Beria seems to have been the victim of some outrageous "active measures" -- now known as "black P.R." -- including phony pamphlets depicting its leader Gennadiy Zyuganov addressing an S.S. reunion.

Despite concern over the process by which the campaign was conducted, the election results were not surprising. United Russia's sweeping victory was clearly a vote for President Putin and for a continuation of the politics of stability. The party stayed relentlessly on message, and that message -- "We are with Putin, and Putin is for us" -- had enormous resonance with a public still weary of the tumult of the Yeltsin era. Putin remains incredibly popular, with approval ratings hovering around 75 percent, even if some of his specific policies and the performance of his government are less popular. So what will the next session of the Duma bring? Assuming President Putin is re-elected, he will be able to count on a United Russia that holds an outright majority in the Duma. With the help of like-minded parties, it appears the President will be able to count on a constitutional majority of 300 seats or more. No previous leader in Russia's short history as a constitutional democracy has held such a strong mandate.

In broad terms, observers tend to foresee two possible scenarios as to how this unprecedented mandate will be used, one optimistic and one pessimistic. An optimist would expect a newly reelected President Putin to use his commanding majority to accelerate the pace of reform, completing the economic, banking and administrative reforms that ran aground in the outgoing Duma. According to this view, a second Putin Administration might close tax loopholes, while reducing the fiscal burden on average Russians. A reorganized banking system could make money available for smaller enterprises and help increase access to mortgages. Reforms aimed at increasing investment in the housing stock and improving educational opportunities are obvious possibilities and would address two key public concerns. Public dissatisfaction over the bloated bureaucracy, opaque judicial system and widespread corruption could also prompt reforms.

An acquiescent legislature would obviously ease passage of even the most ambitious and controversial reform program. At the same time, the absence of opposition has hidden costs. The mere presence of a principled opposition can force a majority to justify its legislative program in ways that help identify its flaws. The absence of a strong opposition may lead to even more opaque decisionmaking than we see now. In any event, even among those who are most optimistic about a new reformist push on the economic side, there is little hope for a reversal of recent trends toward limiting civil society and media independence, or for an end to the conflict in Chechnya, where serious human rights violations continue.

If that's the best case, what would a pessimist argue? The pessimistic view is that, as a result of President Putin's commanding mandate, reform itself is in danger. Although the United Russia Party has been defined more as a "party of power" than as an ideological movement, the center of gravity of the incoming Duma has shifted to the left -- or perhaps more precisely, toward those with a more nationalistic and statist outlook. This has been accompanied by the obviously growing influence of the so-called siloviki -- those associated with the security services and law enforcement agencies -- who also seek to elevate the state's role in Russia's economic and political life. To the extent that nationalist and statist thinking becomes more acceptable, liberal reforms could be subject to delay or dilution. Free debate and democratic values could wither in this environment.

A pessimist also would argue that many members of the new Duma -- and their likeminded allies in the Kremlin -- favor state control of the economy, even at the expense of economic growth. Although some incoming Duma members may accept that trade-off, such policies would make it far more difficult to achieve the President's goal of doubling GDP in ten years. If some of the more extreme campaign rhetoric were translated into legislation, the progress of the past decade would be threatened. In particular, such steps could threaten the security of private property, which now provides a stake in the system for many and has given rise to a new generation of entrepreneurs.

Personally, I prefer to hedge my bets. My view falls somewhere between the optimistic and pessimistic scenarios I have just described. I believe that Putin will use his broad authority to pursue some of the economic and administrative reforms he has long advocated. He has been making reassuring statements about pursuing a reformist agenda, encouraging international investment and continued U.S.-Russian cooperation. However, recent events reinforce the impression that he favors the values of order and control over freedom and growth -- or at least that he does not perceive a trade-off between them, as do many in the West. He now will face fewer constraints in pursuing increased control, should he so desire.

Having examined the current political landscape in Russia, I would like to turn to the state of U.S.-Russian relations and how the new political landscape may affect our relations. Although the 1993 Constitution places the primary responsibility for conducting foreign affairs with the President -- and President Putin himself appears to favor closer, if not unlimited cooperation with the United States -- the composition of the incoming Duma could have a significant impact on our relationship. The actions of the Duma and Putin's second-term administration, particularly in the area of economic and administrative reforms, will shape the environment for foreign investment and integration with the West and as well as other aspects of our relationship.

Unlike 20 years ago, when security issues defined our relationship almost entirely, today the United States and Russia cooperate on many issues on which both sides see their interests as clearly coinciding. At the Camp David summit, President Bush and President Putin reaffirmed their commitment to a new strategic relationship and to broadening even further the agenda of our cooperation. The Presidents stressed first and foremost that they would continue our joint efforts in the fight against terrorism, they agreed to move ahead with implementation of the Moscow Treaty's radical cuts in nuclear warheads, and they committed to step up work on the new security agenda -- non-proliferation, missile defense, military-to-military cooperation -- and on global challenges such as HIV/AIDS.

The strains that the Iraq crisis put on our relationship have largely been overcome. President Putin has made clear that Russia wants to see stability and democratic change in Iraq, as well as in the wider Middle East. We are working to engage Russia in Iraq's economic reconstruction and in the transition to a new Iraqi government. After the visit of former Secretary Baker last month, Russia has come out in favor of providing debt relief for Iraq through the Paris Club. We consult closely on Afghanistan and are working together with other countries to deal with the two main challengers to the global nuclear nonproliferation regime, Iran and North Korea.

Our expanding commercial ties are an increasingly important dimension of our relationship. Russia's potential to become a major supplier of oil and liquefied natural gas to the U.S. market is of particular interest, but our economic links transcend the energy sector. We have a strong interest in seeing Russia develop a balanced and diversified economy, fully integrated into the global trading system. This will make Russia a stronger and more stable partner on the international stage, and will benefit U.S. businesses as well.

Expanding trade and investment, and cooperating on such issues as terrorism and proliferation, should be relatively straightforward, as our common interests in these areas are readily apparent. The more difficult challenge we now face is to move beyond these areas of cooperation to other, more sensitive and complex issues, where cooperation can benefit both countries, but also requires a less rigid worldview and the expenditure of more political capital. A good example of such an issue can be found in our efforts to cooperate to resolve crises in several former Soviet republics, where cooperative efforts easily fall prey to distrust over U.S. motives.

The United States believes that working together, our two countries could contribute to stability along Russia's periphery, such as in Moldova, the Caucasus and Central Asia. We recognize that Russia has significant interests in the region and that good relations between Russia and her neighbors serve everyone's interests. The United States has significant interests in the region, too, and they come not at Russia's expense but to the benefit, we hope, of all parties. However, many in Russia appear to continue to believe that increased contacts and cooperation between the U.S. and Russia's neighbors are a zero-sum game, that American influence comes at Russia's expense and is even a threat to Russia's security.

Moreover, we recently have seen Russia adopt a more assertive stance toward its neighbors. This new policy is reflected in Russia's unilateral diplomacy in Moldova, where a cooperative framework to help resolve the Transnistrian dispute already exists, in Russia's highly visible meetings with the leaders of Georgia's three separatist regions, and in Russia's dispute with Ukraine over Tuzla island. Many in Russia clearly remain unhappy with NATO's expansion eastwards, even as Moscow voices satisfaction with its cooperation with NATO through the NATO-Russia Council. And a more strident tone in foreign policy debates in the new Duma could cast doubt on Russia's openness to integration with the West and chill Russia's relations with its neighbors. So our efforts to cooperate on the resolution of long-simmering conflicts around Russia's periphery may provide an early test of the likelihood of deeper bilateral ties.

From the U.S. viewpoint, there are several priority areas where we believe we should seek to deepen cooperation and overcome lingering Cold War thinking. Broader military-to-military relations, joint industrial projects on missile defense, moving from information exchange to operational cooperation against terrorism, and shoring up the increasingly leaky nonproliferation regimes -- progress on all of these fronts will contribute to both nations' security. Both countries need to see more tangible benefits from the relationship before we can speak of a long-term and enduring strategic partnership. Expanding trade and investment will help generate such benefits and give average Russians and Americans a direct stake in the success of our relationship, thereby creating more domestic political support for the relationship.

Investor confidence would be bolstered by further Russian progress in such areas as administrative, legal and judicial reforms. In particular, the concerns raised by the Yukos affair about the independence of the procuracy and the selective application of the law for political purposes need to be laid to rest. We hope to see Russia continue to progress toward accession to the World Trade Organization -- with all of the reforms that implies -- and we would like to capitalize on opportunities for further U.S. investments in the oil and gas sectors, including the construction of new export pipelines. There are many potential areas for economic cooperation in high-tech fields -- from aerospace and telecoms to biotechnology -- as well as vast opportunities in the burgeoning consumer and retail sector, if Russia continues to foster a favorable and predictable investment climate.

Finally, if U.S.-Russian cooperation is to develop to its fullest, Russia must demonstrate a deepening commitment to democratic values and human rights. In cold economic terms, the acceleration of anti-democratic trends could threaten Russia's continued economic growth. Multinational corporations and investors avoid risking their capital in countries where the rules of the game are constantly being rewritten and where property rights are not fully secure. Moreover, Russian entrepreneurs and foreign companies will hesitate to invest as long as they must contend with a corrupt and intrusive bureaucracy, as well as a rising sense that law enforcement agencies and prosecutors can act arbitrarily or selectively, without any effective check. While economic growth and political control are not incompatible, the full modernization and integration that Russia seeks are only achievable in a free and open society -- a society based on the rule of law and governed by truly independent branches of government with independent media that together hold political and business leaders accountable for their actions.

These are some of the economic reasons why democracy matters. On the political level, I always tell my Russian interlocutors that support in the United States for cooperation with Russia will decline if there is a sense that democratic values are at risk in Russia, or that political debate is too heavily influenced by those whose worldviews are narrow and exclusive, instead of open and inclusive. The Duma election results and the widespread perception that the state is tightening its control over civil society have heightened these concerns.

Although we are eager to develop a true partnership with Russia, to do so, both sides will need to work hard to develop a stronger sense that we are acting on the basis of shared values. America's relations with such traditional allies as Britain, Germany and Japan are anchored by common civic values that enable the relationship to weather the occasional sharp difference of opinion. Many observers believe that the U.S.-Russian relationship still lacks such an anchor. It would be unfortunate for both countries if our relationship evolved from one once defined by the "missile gap" to one constrained by a "values gap."

In order to develop these common values, the United States is supporting the development of Russia's civil society at the grass-roots level, even if we have fewer resources at our disposal than in the past. I and members of my staff frequently meet with human rights activists, religious leaders, members of think tanks, independent journalists and others. We support effective NGOs, train promising young jurists on issues relating to the rule of law, and speak out on issues of concern, from corruption to the persistent problem of ethnic discrimination. We continue to support a range of exchange programs to expose a the post-Soviet generation of Russians -- high-school and college students, young professionals from the public and private sector -- to how our country works, and how it confronts problems that arise in any democratic society. Sadly, funding for exchanges has been seriously cut just at the moment we need them more.

Of course, we recognize that, at the end of the day, the Russians themselves must choose their own future and will decide whether they wish to develop their society on the basis of the same civic values we cherish. But our engagement can make a difference.

To sum up, following the Duma elections and President Putin's likely re-election, I do not foresee the United States and Russia veering sharply from the path of cooperation and partnership they found themselves on after September 11, based on the many common interests that we share in the post-Cold War, post-9/11 world. The United States, for its part, will continue to pursue the same open and collaborative policy toward Russia, and there continue to be many issues on which we will surely need to work together. However, the new domestic political situation in Russia does raise questions about how much further our relationship will progress, and whether it can advance to a higher level and evolve into the kind of relationship we enjoy with our traditional allies. We will be watching closely for clues during the early months of Russia's new administration.

Source: US State Department, Washington File, http://usinfo.state.gov.

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