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RECOMMENDATIONS

The Advisory Group's recommendations for U.S.-Russia policy proceed from ten principles:

* Russia's immense economic potential as a trading partner, its ability to influence Europe, the Middle East, South and Central Asia, and the Far East, its military importance as a friend rather than a foe, and the fundamental commonality of Russian and American interests make the U.S.-Russia relationship of continued central importance in U.S. foreign policy. Russia's importance in the world is multidimensional, and is not confined to its current or potential military power.

* The United States, our friends and allies, and the world are more threatened today by Russian economic, political, and social weaknesses than by Russian strength. Virtually every major problem in U.S.-Russia relations is directly or indirectly traceable to Russia's failure to complete a successful transition from Communism to free enterprise, and from a Soviet police state to a stable, securely democratic, and free society. U.S. policy should never seek to prolong or exploit Russia's weakness, but should seek to empower Russia to build upon her strengths.

* The unprecedented, across-the-board deterioration in Russian perceptions of the United States and of democracy and free enterprise during the past eight years represents a United States foreign policy disaster of the first magnitude. Unmitigated, the implications could be comparable to the collapse of democratic values in interwar Germany, or the early and mid-20th century triumph of Communist dictatorships in Russia, China, and Central Europe.

* It is a vital interest of the United States to revive the strong relationship with the newly-independent Russian Federation that existed in 1992. Despite the extent of the damage U.S.-Russia relations have suffered during the intervening years, the United States must not perceive this damage as irreversible, nor that the current impasse in relations with Russia is intractable, nor that Russia's negative perceptions of the United States, democracy, and free enterprise are immutable.

* A stable, secure, democratic, and prosperous Russia is a vital American interest. Therefore, essential elements of rebuilding the U.S. relationship with Russia are an immediate focus upon the creation of the legal foundation for a free enterprise economy premised upon private economic decision making and the creation of intermediary financial institutions that serve the people of Russia rather than a corrupt elite. The counterproductive nature of American economic advice and aid in the past--in particular, support for massive, virtually unconditional subsidies to the Russian central government--should cause the United States to rethink the economic strategies it has promoted, not to abandon efforts to help Russia build a strong and free economy. These efforts must, however, be pursued in a different spirit. The Clinton administration's attempts to macromanage Russia's economy have harmed Russia and U.S.-Russia relations, just as Russian maintenance of Soviet-era controls on the economy have done. American policy must proceed from the premise that individual Russians--not the Russian government, or the U.S. government--must create their own economic future.

* U.S. friendship with Russia requires a clear articulation of American interests, values, and policies. It requires that the U.S. government speak frankly when and if Russia engages in activities harmful to America's national interests. This does not require hectoring or seeking unilateral advantage, and does not preclude acceptable compromises of honest differences. It does preclude the Clinton administration's lack of directness concerning such serious bilateral disputes as weapons proliferation to Iran, a U.S. defense against ballistic missiles, the war in Kosovo, the war in Chechnya, or NATO enlargement. By protracting negotiations over such fundamental issues and by failing to proceed with the execution of American priorities (as, for example, in its dragging out of NATO enlargement over more than the entirety of two presidential terms), the Clinton administration raised false hopes in Moscow, damaged American credibility, and significantly strengthened Russian hostility. An honest acceptance of such differences would have been healthier for U.S.-Russian relations. Honesty and forthrightness are far better long-term guarantees of friendship than disingenuous temporizing.

* It is vital that the U.S. government avoid exaggeration of success and concealment of failure in U.S.-Russia relations. Such practices have been a hallmark of U.S. Russia policy during the 1990s. Misleading the American people--for example, about the empty "detargeting" agreement that President Clinton and Vice President Gore trumpeted to the public--ultimately engenders cynicism and undermines the necessary base of American public support for stronger U.S.-Russian relations.

* Building a successful Russia policy requires the full attention and active direction of the President of the United States. President Clinton failed to make the reconstruction of Russia at the end of the Cold War his priority. He failed to devote sufficient time and sustained attention to formulating a Russia policy. He failed to promote the Russia policy of his subordinates to the Congress, to the American people, and to others within his own executive branch. Each failure made the U.S. policy-making process less disciplined and less focused. These failures contributed directly to economic and foreign policy debacles in Russia. The President must lead.

* The United States must build a broad base for its policy in Russia, extending beyond relationships among a handful of executive branch officials to a broad spectrum of government officials, factions of the State Duma, regional governors, legislators and political leaders, and, most importantly, Russian private citizens and private-sector organizations interested in developing not oligarchy but free enterprise.

* The United States and Russia share equal responsibility for our future relations. The Russian government should be expected to forthrightly advance the Russian national interest. But as we seek close relations with Russia we must do so on the basis of American values and international norms such as respect for sovereignty and the inviolability of national borders. A willingness to accept America's legitimate interests as a basis for a bilateral relationship based on mutual advantage remains an essential ingredient of successful U.S.-Russian relations.

With these principles in mind, the Advisory Group recommends:

 

1. Engage Russians across the political spectrum.

During the Clinton administration, a small group of American and Russian executive branch officials dominated the U.S.-Russia relationship. The Advisory Group recommends that the next administration undertake a much broader engagement across the Russian political spectrum and institutions of government. This engagement would extend to the full range of relevant executive branch decision makers and the main factions in the Duma, and also include the regional governors, regional legislatures, mayors, and other local government officials. The range of American interlocutors for Russia should also be expanded beyond the U.S. executive branch. The Advisory Group recommends the creation of institutional relationships and opportunities for increased communication and cooperation at all levels of government. The existing Duma-Congress Study Group is a model for creating institutional relationships between American and Russian governors, mayors, and legislators.

Of even greater importance, however, is an expansion of the U.S. government's engagement beyond the political sphere to the private sector, including the business community, non-governmental organizations, the academy, think tanks, the clergy, and rural and agricultural sectors in all regions of the Russian Federation.

The broader and deeper engagement these initiatives would promote is a prerequisite for U.S. policy makers to maintain perspective on events in Russia, and will give a wider range of Russians a direct account of U.S. policy and motivations.

 

2. Give priority to private, not government, solutions.

The most basic failing of U.S. policy during the Clinton and Yeltsin administrations was the emphasis on strengthening the Russian central government, instead of focusing on the essential task of limiting the role of the state in Russia and constructing the basis for a free enterprise system in which private individuals order economic affairs. The United States should redirect its efforts into assisting Russia to identify laws and regulations that continue to place the state in a central economic role in Russia, and to replace them with laws to fully legalize: private property; limited-liability private partnerships and corporations for the pursuit of commercial and agricultural enterprises of all types; private insurance; private intellectual property; private commercial, investment, and merchant banks; and private capital markets. This project should be undertaken in cooperation with the Duma, the executive branch, and regional executive and legislative branches--and should be pursued with more urgency than has thus far been the case.

Russia's private sector will not flourish, and foreign money will not be invested in sufficient quantity, until a world-class banking system, which pays and charges free-market interest rates and otherwise conforms to international norms of commercial behavior, is established, and until domestic and foreign investors enjoy reliable legal protections. The United States should stand ready to assist in the creation of such banking legislation to the extent requested by Russia or Russians.

The United States should assist in the further development of a uniform commercial code in the Russian parliament and each of Russia's 89 regional legislatures. Such a code remains necessary to provide a basic set of rules that can be relied upon by any person who wishes to participate in the Russian marketplace.

 

3. Engage the Russian people, not just the Russian government.

U.S. relations with Russia should be more broadly based than institutional relations among governmental bodies. The Advisory Group endorses expansion of existing people-to-people exchange programs such as the Library of Congress' Russian Leadership Program and the Center for Citizen Initiatives program, as well as programs run by the State Department such as the Fulbright Program, the Internet Access and Training Program, the Russian-U.S. Young Leadership Program, and the International Visitors Program. Such programs give individual Russians the opportunity to observe American democracy and the market economy, while helping Americans better understand the opportunities and challenges in Russia, and allowing both host and guest to share experience and expertise. Such programs are particularly valuable to the extent that they promote contacts with Russians living outside of the capital. The Advisory Group particularly endorses an expansion of the number of Russian exchange students at American universities, especially where the exchange programs assist students studying economics, business, marketing, and agriculture.

 

4. Enlist the support of the U.S. private sector for the establishment of a cooperative surveying and titling project in each of Russia's 89 regions on a far more urgent basis than has thus far been undertaken.

The enactment of sturdy legal protections for private property, privately-made contracts, and commercial transactions is a fundamental prerequisite to the development of free enterprise in Russia. Entrepreneurial activity and the growth of competitors to the "privatized" monopolies will be severely stunted without the capital that private property rights will make available to the Russian economy.

The availability of marketable title to privately-owned real estate is an essential--and still missing--ingredient of the free enterprise system that Russia seeks to develop. Russia's land is a source of enormous potential wealth, both as security for commercial lending and as a valuable asset in its own right for the development of Russian housing, agriculture, commerce, and recreation. To permit Russia's citizenry to tap this existing source of wealth, a nationwide effort must be undertaken to precisely describe the boundaries and ownership history of all potentially marketable state-owned and privately-owned land in Russia--and to do so on a far more accelerated basis than has been considered feasible in recent years.

The legal descriptions of surveyed property and the complete record of its ownership, including all legally valid claims, liens, and rights of others besides the recorded landowner, should be published on the Internet, as well as stored in publicly-accessible land title registries within each region. The project should draw upon the expertise of American surveyors, cartographers, abstracters, title insurers, and other real estate, civil engineering, and land title professionals, and should have as its objective the establishment of the basis for a flourishing competitive market in private title insurance and real estate services throughout Russia by 2005.

 

5. Make U.S.-Russia relations a presidential responsibility of first importance.

The Advisory Group recommends that the next president and secretary of state take direct responsibility for U.S. relations with Russia, instead of diminishing their importance by delegating plenary responsibility to subordinates. The Advisory Group further recommends that the focus on summits be replaced with regular and frequent interactions similar to the relationships the U.S. maintains with its G-7 partners. This will broaden the scope of U.S.-Russia relations beyond the obvious issues where the two countries have diverging views, as well as promoting reasonable compromises that serve American interests on such issues.

 

6. Place greater reliance on available sources of U.S. intelligence and analytic capability regarding Russia.

During the Clinton administration, information developed by the U.S. government, either by the intelligence community or by the American Embassy in Moscow, was routinely disregarded if it clashed with the administration's policy views or political interests. The Advisory Group recommends that the next administration not only give more attention to reporting on the effects of its policies, but also strengthen intelligence and analytic capabilities. The deconstruction of a large part of the intelligence community's analysis and collection capability on Russia has proven to be a serious mistake. Russia's enormous strategic importance requires that it receive the most thorough attention and analysis. Congress should direct, through the intelligence oversight committees of the House and Senate, additional resources to rebuild our Russia-related intelligence capabilities--not to Cold War levels, but to levels reflecting Russia's relative importance.

The United States government should also give appropriate weight to the observations of Americans in Russia--including U.S. Embassy personnel, members of the intelligence community, U.S. correspondents writing from Russia, and private individuals--to provide for more thoughtful analysis of facts, trends, political developments, and financial, academic, and social information concerning Russia.

 

7. Consolidate U.S. assistance programs.

The Advisory Group, recognizing that the Clinton administration's macroeconomic assistance for Russia has failed, recommends the consolidation of U.S. assistance into a few core projects that will accelerate Russia's transition to free enterprise, including exchanges, training and compensation for judicial branch officials, enactment of legislation to establish enforceable property rights and a commercial code, and privately-owned housing, and building on regional initiatives started under the Freedom Support Act. Such aid should be properly directed whenever possible toward the regions, rather than Moscow, and should be focused on the creation of a broad-based Russian middle class.

 

8. Improve humanitarian assistance for Russia's health problems.

In light of the deepening health challenges following Russia's 1998 economic collapse, the Advisory Group recommends that the United States consider ways to improve the effectiveness of the pharmaceutical, medical, and health-care assistance provided to Russia, taking particular care to do no further harm to the only long-term solution to such challenges--the inclusion of these sectors in a growing market economy.

 

9. Protect the Russian people from further governmental abuse of IMF lending.

The Russian government's dangerous accumulation of debt via the International Monetary Fund and other international lenders, and the misapplication of that money through corruption within and without the Russian government, contributed to the total collapse of Russia's economy in 1998. It has also created a heavy burden of debt. The Advisory Group notes that for these reasons many reform-minded Russian officials have strongly advocated an end to further borrowing from the IMF.

The Advisory Group recommends that the United States condition any further support in the IMF of new Russian sovereign borrowing, and through its participation in the IMF Board of Governors work to condition any such lending to Russia (whether for refinancing of existing Russian debt or the extension of any new credit), on the enactment of legal reforms needed to establish a free enterprise economy in Russia, and to stem capital flight and money laundering. Among the other conditions that should be sought are an end to Russian barriers to international trade and cooperation with U.S. and other law enforcement authorities in combatting money laundering.

In addition, in evaluating its support for lending by the IMF and other international financial institutions, the U.S. should insist on Russian cooperation in efforts to curtail the use of off-shore havens for "hot-money" transfers, and to identify and prosecute money laundering schemes. Such cooperation in rooting out money laundering would do much to reduce capital flight and instill foreign and domestic confidence in Russian financial institutions.

Any such lending agreement should itemize with specificity the proposed use of any loan proceeds, which should not include the financing of operating deficits of the Russian central government, subsidization of state-owned or private industry, or investment in state-owned or commercial projects. It should also include effective accounting and monitoring controls.

Finally, in considering whether to support such further lending the United States should assess Russia's progress towards seeking a political solution to the war in Chechnya, an end to Russian subsidies and loans to Serbia, Belarus, and Cuba, and the cessation of exports of potentially destabilizing weapons to countries of concern.

 

10. Consider only conditional rescheduling of Russia's inherited Soviet-era debt.

The Advisory Group recommends, in light of Russia's existing foreign reserves, that the United States oppose outright debt forgiveness for Russia, but offer support for conditionally rescheduling that portion of Russia's external debt incurred by the Soviet Union before 1992. Because the bulk of Russia's debt is owed to governments other than the United States, the Advisory Group specifically recommends that the United States not exert pressure upon other allied governments to agree to debt rescheduling, and further recommends that to the extent rescheduling is considered, the United States suggest meaningful and enforceable conditions, which should include a political solution to the war in Chechnya; an end to Russian subsidies and loans to Serbia, Belarus, and Cuba; the cessation of exports of potentially destabilizing weapons to countries of concern; an end to Russian barriers to international trade; and cooperation with U.S. and other law enforcement authorities in combatting money laundering.

 

11. Work to combat the spread of Russian crime abroad, and its influx into the United States.

The Clinton administration has failed to adequately respond to requests for assistance from international prosecutions of money laundering activities connected to Russia. The Advisory Group recommends that to combat the spread of crime from Russia the U.S. government improve cooperation with honest foreign law enforcement.

 

12. Repeal Cold War-era laws that impede relations with Russia.

The Advisory Group recommends that the committees of jurisdiction in the U.S. Congress carefully examine all aspects of the current statutory framework governing U.S. relations with Russia with the intention of removing outdated Cold War-era restrictions on full and normal U.S.-Russian relations. Much work in this area was accomplished by the 1993 Friendship Act, which sought to remove many of the legal impediments to normal relations with Russia. Congress should complete the process by re-examining remaining provisions imposed during the Cold War.

 

13. Promote Russia's integration into the world economy.

The Advisory Group recommends that the United States promote Russia's integration into the world economy. Today, many Russian policies directly or indirectly discourage foreign investment and international trade. The United States should encourage Russia to adopt and enforce laws and policies that will allow Russia to enjoy the benefits of participation in the international marketplace. The United States should work with Russia for the adoption and enforcement of laws and policies that would enable Russia to accede to the World Trade Organization under appropriate commercial terms.

 

14. Review the status of human rights in Russia.

The Advisory Group recommends in light of developments in Chechnya, as well as questions concerning the state of press, political, and religious freedoms in Russia, that Congress and the executive branch conduct a comprehensive review of the status of human rights and democracy in Russia (including in particular the treatment of minorities and religious freedom), building on the work of the U.S. Commission on International Religious Freedom, the Advisory Committee on Religious Freedom Abroad, the Annual Report on International Religious Freedom called for by the International Religious Freedom Act of 1998, and the State Department's annual country report on human rights.

 

15. Forthrightly defend America's interests.

The Clinton administration has delayed and undercut vital national security initiatives, including a U.S. national missile defense, in a failed attempt to palliate the Russian government's opposition. These efforts have damaged America's national interest without diminishing--indeed, while actually increasing--Russian opposition. The next President should seek to negotiate a new security framework with Russia that allows the United States to defend itself effectively against the threat of ballistic missile attack. Previous agreements with the Soviet Union during the Cold War were negotiated in a bipolar strategic environment that no longer exists. The global proliferation of ballistic missiles and weapons of mass destruction necessitates a rethinking of this Cold War security paradigm. The United States should take all necessary actions to ensure that Americans and our allies and friends around the world are defended against this real and growing ballistic missile threat. To the maximum extent possible, this should be done cooperatively with Russia, in a way that makes clear that such defenses are not intended to secure unilateral advantage or to threaten Russia. However, U.S. policy should be clear and clearly articulated: the United States will not allow its people to be held hostage to the threat of ballistic missile attack.

The United States should forthrightly support continued enlargement of NATO, and should not mislead the Russian government through repetition of the Clinton administration's disingenuous promises of either an explicit or tacit veto over any nation's accession to the alliance, or of alliance activities. NATO and NATO enlargement promote stability and democracy, strengthen international peace, and do not threaten the legitimate interests of Russia or any other country. The United States should also strongly support the independence of the Baltic states, Ukraine, and the other nations that became independent at the fall of the Soviet Union. Their continued full independence and sovereignty are vital to international peace and security and a key goal of the United States.



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