UNDERSTANDING PUTIN'S RUSSIA

Ten years after the end of the Cold War, Russia is still searching for a place in the community of nations that lies somewhere between the East and the West. President Vladimir Putin recognizes Russia's need to attract foreign investment to rebuild the decaying Soviet-era infrastructure and boost the people's standard of living.⁴ He understands that the only consistent sources for new technology and finance are the United States, Western Europe, and Japan. Putin views Russia as geopolitically a Eurasian power and culturally a European power. He is cultivating closer relations with British Prime Minister Tony Blair and German Chancellor Gerhardt Schroeder, and aims to be accepted by the exclusive club of G-8 leaders.

President Putin acts on his perception of national interest, which is rather narrowly defined. Hence, he will sell arms even though it angers the United States. He will sell arms to China's military to raise revenue and satisfy his supporters who want to counterbalance U.S. global power. He may be open to cooperating with the United States to counter terrorism, particularly by radical Islamic groups. Thus, Putin hopes to re-create Russia's national strength after years of stagnation and decay, and he sees a direct connection between creating domestic order while strengthening the state and increasing international respect for his country.

In short, there are four pillars to Putin's foreign policy:

• Expanding Russia's sphere of influence in the Commonwealth of Independent States (CIS)--its so-called near abroad--and creating a common market in the countries of the former Soviet Union;

• Strengthening economic ties with the West, particularly the European Union, and turning it into a major consumer of Russia's energy and natural resources;

• Developing an arms market to finance military modernization, provide revenue, and maximize his international leverage; and

• Establishing a pragmatic relationship with the United States to maximize the perception of Russia's great-power status.

Many of the foreign policy and security elite in Moscow, nevertheless, still view the United States through the Cold War lenses of envy and competition. They desire the creation of a Eurasian coalition with such countries as China, India, and Iran to keep America's global power in check.⁵

Russia is taking a step toward building such a coalition by signing a Friendship and Cooperation Treaty with China in July. This will be the first such comprehensive agreement between these two countries since Joseph Stalin and Chairman Mao Zedong forged Sino-Soviet cooperation in the late 1940s. China is now Russia's leading customer for advanced military technology, which includes nuclear warhead miniaturization, uranium enrichment, space weapons, and other high-tech systems. However, China historically has considered Russia a foe, and its media and political elite harbor little affection for their northern neighbor, even though they view Russia as a potential source of raw materials and empty land for Chinese settlers.⁶

Russia is also expanding its influence in the Middle East. It recently signed military cooperation agreements with Iran, which include extensive ballistic missile and dual-use nuclear technology transfers.⁷ The emergence of a ballistic missile-capable and nuclear-armed Iran would pose threats to U.S. allies in the Middle East and could destabilize oil supplies from the Persian Gulf. The Kremlin diplomatically supports Saddam Hussein and is increasing arms sales to Syria and Libya. Even as Russia proclaims its opposition to radical Islam, it continues to develop relations with the most extremist Islamic regimes. It is little wonder that U.S. policymakers question Moscow's intentions in the Middle East.

Moscow is expanding Russia's influence over its "near abroad" as well. It has brought Russia's relative economic power to bear on its neighbors in order to pull them back into its political sphere, and its influence is becoming more evident. Moscow convinced President Leonid Kuchma of Ukraine, for example, to fire two pro-Western politicians: Foreign Minister Borys Tarasyuk in November 2000 and Prime Minister Victor Yushchenko in May. Putin has appointed former Prime Minister Victor Chernomyrdin as Ambassador to Ukraine and his Special Envoy for their economic cooperation. Chernomyrdin was the founder of the state-controlled energy monopoly Gazprom, to which Ukraine owes over $1 billion.⁸ Moscow also forced Georgia to abandon its aspirations to join the North Atlantic Treaty Organization (NATO) by intermittently cutting natural gas supplies and introducing entry visas for Georgians who wish to travel in Russia.

Moscow sees Western Europe as a principal market for Russian energy and raw materials and a key source of investment. It increasingly supports criticism of the United States by the European Union, which serves to drive a wedge even further between America and its European allies. Russia also has moderated its opposition to NATO enlargement and signaled, during a recent visit of Lithuanian President Valdas Adamkus to Moscow, that it may accept Lithuania's accession to NATO.9

Domestic Consolidation of Power.
On the domestic front, the Kremlin is consolidating its political control of Russian society and marginalizing opposition to Putin. For example, the administration is attempting to merge the Unity Party and other pro-Putin parliamentary factions with the moderate Fatherland Party led by Putin's former opponents, former Prime Minister Evgeny Primakov and Moscow Mayor Yurii Luzhkov.¹⁰ The majority of the center-right Union of Right Forces in the Duma also supports President Putin. The Communist Party has become less militant than it was during the Yeltsin era, while regional power has been re-centralized by Putin's appointment of seven super-governors, most of whom are retired generals. Since his rise to power, in fact, many former KGB officers have been given unprecedented influence within the executive branch. Furthermore, Putin has nominated Alexei Miller, an associate from his days as St. Petersburg Deputy Mayor, as the new CEO of Gazprom, the largest natural gas company in the world.¹¹ Control of Gazprom will give Putin access to almost unlimited funds for his 2004 reelection campaign.

The Kremlin recently presided over the consolidation of the three national television channels under state control. It supported state-controlled Gazprom-Media in its takeover of MOST-Media, the parent company of the private NTV channel, as well as Itogi weekly magazine, Segodnya daily newspaper, and the Echo Moskvy radio station.¹² The opposition parties and independent media are now much weaker, and Moscow is more authoritarian than at any time since Boris Yeltsin was elected president in 1991.

Economic Policies.
The Russian economy grew in 2000-2001 from between 4 percent and 8 percent. Prices for its oil remain high, market mechanisms set in motion during the 1990s are beginning to work, and economic reforms continue. For example, Moscow recently introduced a 13 percent flat income tax, and in 2000 balanced the budget for the first time in history. The combination of better economic performance and a more efficiently run state may provide Putin with the resources he needs to pursue a more assertive foreign policy.

ISSUES FOR THE LJUBLJANA SUMMIT

As Russia is changing, so too should U.S. foreign policy. The Clinton Administration treated Russia as a "strategic partner," which was largely a fiction. In reality, Russia was selling arms to China and various rogue states while benefiting from enormous U.S.-backed aid packages and cheap International Monetary Fund credits.

Over the years, the flaws in the Clinton policy toward Russia began to show. For example, various media and policy experts repeatedly excoriated Washington's aid programs as unfocused and wasteful. They pointed out that after the collapse of the Soviet Union, despite U.S. counterproliferation efforts, many of the 3,000 ex-Soviet nuclear scientists emigrated to rogue states for employment. Many of the Soviet Union's nuclear facilities remain insufficiently secure and would be easy to breach by terrorists or smugglers.¹³ The proliferation of Russian WMD and technology continues despite existing non-proliferation programs, such as the Cooperative Threat Reduction Initiative, the Nuclear Cities Initiative, and others.¹⁴ New U.S.-Russian policies are needed to correct these consequences of flawed policies under the previous Administration.

At the Ljubljana summit, President Bush should persuade President Putin that a new relationship based on cooperation, not Cold War-style hostility, is needed to assure Russia's acceptance into the community of democratic states and its position in the international community. There are many areas in which the policies they develop can benefit both nations. These include making deep reductions in strategic arms, developing and deploying a global missile defense system, broadening economic cooperation, and coordinating efforts to combat the spread of radical Islam and international terrorism.

Specifically, at the summit, President Bush should:

• Offer parallel reductions of strategic nuclear arsenals to less than 2,500 warheads. Currently, Russia and the United States have more than 6,000 warheads each in their respective arsenals. Reducing them further to these recommended levels could save billions of dollars for both countries. The United States is entering a critical stage of development for ballistic missile defense (BMD) as well as military modernization, while Russia is building up its conventional forces to counter Islamic threats in Central Asia and elsewhere. The parallel cuts can be achieved independently or by negotiating and signing a new treaty. President Bush and President Putin should agree on a new ceiling for both nuclear arsenals that is less than the 2,500-warhead ceiling sought for START III and then delegate the discussion of verification regimes to the technical experts, intervening directly only to break any logjams that may occur in the process.

• Stress the need to limit the proliferation of Russian WMD technology to China, Iran, Iraq, and North Korea. President Bush should take this opportunity to discuss with President Putin the very serious security threats Russia could face from neighbors whose nuclear potential increases as a result of the proliferation of Russian weapons and technology. The lack of popular support and political legitimacy among some of the proliferating regimes could also result in increased regional instability in the Middle East and the Indian subcontinent. To encourage Russia to limit proliferation, the United States should ease limitations on business cooperation with Russia's high-tech civilian sectors, such as aerospace and software, utilizing their technical expertise and low labor costs for such projects as civilian satellite launches.

President Putin should realize that the U.S. government holds several key economic levers that it could use should Russia remain unresponsive to U.S. concerns about proliferation. It could, for example, limit access to U.S. capital markets for Russian companies that supply WMD technology or develop the economic resources of rogue states; eliminate U.S. government and commercial credits, as well as project insurance; and impose company-specific sanctions.

• Invite Russia's participation in developing and deploying global missile defense. Despite stern warnings from Defense Minister Sergei Ivanov that Russia will refuse to modernize the 1972 ABM Treaty,¹⁵ there is a sense in Moscow that President Bush's efforts to deploy missile defense are inevitable. However, President Bush should expect the Russians to try to link as many issues as possible to missile defense in order to forestall the deployment decision, including better terms on foreign debt relief and greater involvement in G-8 activities. President Bush should make it clear that serious negotiations on missile defense will occur only after the decision to select a system design has been made, the specific systems that need accelerating are funded, a timetable has been determined, and the United States formally gives Russia advance notice that it will no longer observe the Anti-Ballistic Missile (ABM) Treaty's restrictions.

The United States and Russia could begin cooperating on missile defense by revisiting some of the U.S. proposals offered in 1992 but withdrawn by the Clinton Administration in 1993. These proposals were extended in the Ross-Mamedov talks (named for diplomatic envoys Dennis Ross and Georgy Mamedov) following the release of President Yeltsin's Global Protection System missile defense plan. The areas of cooperation discussed in 1992 included joint assessments of the missile threat, transparency measures, confidence-building measures, and the parallel deployment of missile defense systems. Shared early warning capabilities could also be discussed.

The United States and Russia also should develop research frameworks for the participation of Russian scientists in the joint development of missile defense technologies and the deployment of global missile defense. Russia is second only to the United States in the development of ballistics, rocketry, particle physics, and materials.

• Discuss the consequences of establishing formal regional alliances with China, Iran, or other states hostile to the United States. Russia and China are scheduled to sign a Treaty of Friendship and Cooperation in July. Russia's experts on China are already expressing concerns about the quick pace of Sino-Russian rapprochement and the negative attitudes that the Chinese still harbor toward Russia. China could revive its territorial claims regarding areas it ceded to Russia in the 17th century and could still demand compensation for past injustices or the freedom of immigration from China into Russia's Far East.¹⁶ In addition, Iran could support anti-Russian Islamic forces in Russia, the Caucasus, and Central Asia. China, Iran, and Iraq will never be sources of investment and technology for the Russian economy. Russia should be encouraged to negotiate with the United States to reach agreement on mutually acceptable policies that limit the sales of Russian weapons and transfer of military technology to those countries and the emergence of anti-American regional alliances.

• Express support for the sovereignty and territorial integrity of the New Independent States (NIS), especially Ukraine and Georgia. Russia claims an exclusive sphere of influence in its "near abroad"--all the former Soviet Union with the exception of the Baltic States. President Bush should make it clear that while the United States recognizes Russia has security challenges and economic interests in the NIS, such as debts past due for energy supplied, the United States and other Western states cannot recognize a 19th century style hegemony. It will continue to oppose Moscow's heavy-handed tactics, such as firing leaders who are seen as too pro-American or intimidating small countries by cutting off their energy supplies. Instead, President Bush should propose that U.S. and Russian companies initiate joint economic development projects, such as ownership and operation of oil and gas pipelines, to help struggling NIS states become strong neighbors.

• Expand economic ties, support economic reforms, and support Russia's membership in the WTO. Russia stands to benefit greatly from opening its markets to U.S. businesses. However, it needs to behave as a responsible member of the global economic and political community before U.S. businesses will invest in Russia. This includes adopting the policies described above as well as economic reforms that improve the tax code, protect investors and assure shareholder rights, protect intellectual property rights, adopt international accounting standards, and implement land and banking reforms, to name a few. The U.S. business community is ready to extend technical assistance if Russia requests it.¹⁷ President Bush should promise President Putin that he will make Russia's accession to the WTO a priority of his Administration's trade agenda.

• Voice concerns over recent developments limiting freedom of the press in Russia and human rights in Chechnya, and suggest concrete paths for improvement. The Kremlin is continuing its push to consolidate control over the electronic media through a state-dominated Gazprom-Media takover of privately owned MOST-Media holding company, which includes the NTV television channel. Echo Moskvy, an independent radio station, and TV-6, an opposition-oriented channel that absorbed MOST-Media's journalists, are now threatened with takeover or politically initiated bankruptcy. President Bush should express his concern regarding limiting the freedom of the media and suggest that NTV be sold to private, politically independent owners; that the state-dominated ORT channel be turned into a public broadcasting entity like the Corporation for Public Broadcasting or BBC; and that politically oriented attacks on Echo Moskvy and TV-6 cease.

Regarding Chechnya, President Bush should recognize Russia's territorial integrity and strongly denounce terrorism against Russia, but he should also express concerns about the continuing and excessive violence in Chechnya. He should recommend that Moscow initiate talks with President Maskhadov's administration, and offer to secure mediation by the Organization for Security and Cooperation in Europe (OSCE). President Bush also should express support for expanded cooperation countering terrorism within the framework of the Trubnikov-Armitage consultations (named for the Russian First Deputy Foreign Minister Vyacheslav Trubnikov and U.S. Deputy Secretary of State Richard Armitage).

CONCLUSION

President Bush's agenda for the Ljubljana summit with President Putin must be based on a clear grasp of prior policy failures as well as a clear understanding of U.S. national security interests. The United States would benefit from Russia's cooperation on a number of important policy issues, and Russia could further its economic development by integrating fully into the global market.

However, Vladimir Putin's reaction to the President's policy initiatives is difficult to gauge. Mutual concerns include simultaneous strategic arms reductions; missile defense; proliferation of WMD; and regional security, especially regarding China, North Korea, Iran, and Iraq.The United States should place significant weight on Russia's observance of internationally accepted economic, political, and human rights standards and welcome its cooperation in these areas. If Putin sees financial or national security gains for Russia, as well as an increase in his own prestige by doing so, he is likely to cooperate with the United States. If not, the frictions in current U.S.-Russian relations are likely to continue.

Dr. Ariel Cohen, is Research Fellow in Russian and Eurasian Studies in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.