1998 Congressional Hearings
Special Weapons
Nuclear, Chemical, Biological and Missile


U.S. POLICY TOWARD RUSSIA

Stephen Sestanovich
Ambassador-at-Large
State Department

Senate Foreign Relations
Subcommittee on European Affairs

20 May 1998




1. Introduction



Thank you, Mr. Chairman, for the invitation to appear before you today
to discuss U.S. policy toward Russia. This is my first meeting with
your committee since I joined the State Department last fall, and it
could hardly come at a more opportune moment. In Moscow, President
Yeltsin has put together a new government -- one of youth, talent, and
reformist conviction, and he has charged it with restoring momentum to
his policies across the board. The direction that his new team takes,
and its ability to address the major challenges Russia faces, will
have important implications for Russian-American relations. It will
have a major impact on questions that have been, and will remain, of
particular concern both to this administration and to members of
Congress -- whether it's Russia's ability to implement a tough and
effective non-proliferation policy, the economic strategies necessary
to attract foreign investment and encourage growth, the protection of
religious liberty, or Russia's relations with its neighbors and the
world.


How these questions are addressed will to a very large extent
determine what kind of country Russia will be and what kind of role it
will play in the world. On this, America's stand is clear. As
President Clinton declared in his Berlin speech last week, "the
secure, free and prosperous Atlantic community we envision must
include a democratic Russia. For most of this century, fear, tyranny
and isolation kept Russia from the European mainstream. Now Russians
are building a democratic future. We have an enormous stake in their
success.... We must support this Russian revolution."


Americans of both parties have agreed that Russia's revolution
deserves our support. They have seen that doing so serves American
interests in the most palpable way. The administration and Congress
have worked together to give concrete support to this revolution. As
Secretary Albright told the Senate Budget Committee: "Our highest
priority is to ensure that NIS [the New Independent States of the
former Soviet Union] countries build peaceful ties with the West
through free-market engagement and reliable democratic institutions."


To advance these interests in our relations with Russia, this
administration pursues a four-part agenda:


First, we seek to reduce the threat to the United States and to
international peace posed by weapons of mass destruction. Russia
itself no longer threatens America the way it did for so many decades.
Ensuring that the remnants of the Soviet military-industrial complex
do not threaten us or our allies remains a principal goal of U.S.
policy.


Second, we support democracy and respect for human rights, including
religious freedom. Just as Americans supported those who yearned to be
free of communism throughout the Cold War, so now we must stand up for
Russia's new generation of democrats as they build a civil society. A
democratic Russia at peace with itself is more likely to be at peace
with us and with the world.


Third, we strongly support Russia's continuing transition into a
modern, market-based economy, coupled with Russia's integration into
the world economy. A market economy is the essential complement to
democracy and respect for fundamental human rights. It creates
opportunities for those Russians who have put behind them the habits
and outlook of the past. It provides opportunities for U.S. business
to participate in Russia's revolution, as well.


Fourth, we seek a Russia cooperatively engaged with its neighbors and
integrated into Euro-Atlantic and global communities. This is key to
building a world based on equality among states rather than on
confrontation and domination.


Mr. Chairman, these are extremely ambitious goals. Reaching them
requires several things. One of them is bipartisan support. Since
1991, that support has by and large held firm. But I would be less
than candid if I did not acknowledge that this bipartisan consensus is
under very severe stress. In the face of these challenges there are
plenty of people, possibly some members of this committee, who have
begun to question whether these are in fact realistic aims for
American foreign policy in 1998.


This administration's answer to that question is, emphatically, yes.
The key to restoring a measure of bipartisanship to our Russia policy
is for us together to tackle the problems we face head on. The more
thoroughly we talk through the difficulties that we encounter in our
relations with the Russians, the stronger, I believe, will be the case
for the policy that we are pursuing.


Another prerequisite for achieving our goals is understanding what
Russians are thinking. Russians are themselves divided about their
policy goals.


There are, for example, those in Russia who understand that ratifying
the START II treaty will enhance Russia's security and serve the
urgent need of military reform; others prefer to block
Russian-American agreements of any kind. There are those who see
perfectly clearly that the flow of dangerous missile and nuclear
technologies to Iran directly threatens Russia; but others believe
they can make money from it and, to keep doing so, may try to subvert
any strengthening of export controls. Many are committed to protecting
the free exercise of religious faith in accordance with the Russian
constitution and Russia's international obligations; others fear
religious freedom and diversity. There are Russians who know that the
long-term revival of their energy industry cannot succeed without
foreign partnerships; others would rather let production slide than
allow outsiders in. There are Russians who accept the independence of
their neighbors and regard it as essential to Russia's security and
democratic success; others want to reconstitute the Soviet Union, no
matter the price.


Mr. Chairman, what makes these differences serious isn't that we don't
know where those who set Russian policy stand. We do. It was, after
all, President Yeltsin who on Sunday emphasized to President Clinton
his personal determination to use all the powers of his office to stop
sensitive technology transfers to the Iranian missile program. It is
the defense minister and foreign minister who are pushing START II
ratification in the Duma. And it was Sergey Kiriyenko who, as energy
minister, committed himself to resolve problems faced by
Russian-American joint ventures in the energy sector.


What makes the policy divisions I have described important, and what
we must bear in mind as we deal with a Russia in transition, is their
impact on the way policy is carried out. No matter the issue, the
Russian system produces results -- good, bad, or indifferent -- only
very slowly. The system itself is still undergoing profound change:
the jurisdiction of government agencies is often poorly defined; their
decisions are subject to constant challenge by the special interests
affected; bureaucrats who want to ignore a particular decree or law
can sometimes take cover under another one with a diametrically
opposite meaning.


I have dwelled on the difficulties that we face in pursuing our
ambitious agenda toward Russia because some people conclude from these
difficulties that we have had to give up, and that we are now pursuing
second-best results. We are not, and it would be unacceptable to do
so.


The stakes are too high for us to accept second-best results. That was
not this administration's approach when it worked for the withdrawal
of Russian troops from the Baltic states; when it concluded a
trilateral U.S.-Russia-Ukraine agreement to remove nuclear weapons
from Ukraine; when it completed the NATO-Russia Founding Act; when it
stood behind the Russian reformers in their successful battle against
inflation or frankly when it stood with them against a communist
resurgence.


It was said of every single one of these efforts that it could not
succeed. And they definitely could not have succeeded without
persistence, patience and steady nerves. They could not have succeeded
without continued bipartisan support for our Russia policy and for the
resources that the Congress made available to advance our interests.


2. Security/Non-proliferation



Developing a post-Cold War security relationship with Russia that
enhances mutual security through arms control treaties and engagement
on non- proliferation remains one of America's top foreign policy
priorities.


The Duma's delay in ratifying START II remains a source of frustration
for us, and we hope that its action to postpone debate on ratification
until September will be reconsidered. START II is manifestly in the
interests of both the United States and Russia and should be approved.


Once START II is ratified, we are poised to begin talks on a follow-on
accord that will cut both arsenals still further. We have already
agreed that START Ill would cap strategic nuclear warheads at
2000-2500. We have also agreed to address transparency in nuclear
warheads, fissile materials and tactical nuclear weapons in the next
treaty.


Destroying the world's stockpiles of chemical weapons is another
challenge that we're tackling jointly with Russia, which acceded to
the Chemical Weapons Convention in December. Under the Cooperative
Threat Reduction (CTR) program we are developing projects to eliminate
Russia's chemical weapons production capacity and 14 percent of
Russia's CW stockpile. Overall, the CTR program has provided
approximately $1.3 billion to disarmament activities in Russia,
including the destruction of over 360 strategic nuclear delivery
vehicles, the safe dismantling of weapons of mass destruction
infrastructure, and the secure storage of nuclear weapons and fissile
materials.


In Birmingham last weekend, President Yeltsin joined in a G-8
condemnation of India's reckless nuclear weapons tests. The G-8
reaffirmed its shared commitment to prevent the proliferation of
weapons of mass destruction and missile-related technology. This has
been an area of great concern to Congress and to this administration.


We have been engaged almost constantly with the Russian government to
find ways of stopping leakage of sensitive technology. We have
discussed at length instances of involvement by Russian entities with
Iran's ballistic program and pressed for immediate steps to halt it.
The Russians have responded seriously, and our activities have
intensified accordingly: between the President's envoy, Ambassador
Gallucci, and Yuriy Koptev, the director of the Russian Space Agency
(who recently held a sixth round in a series of consultations started
with Ambassador Wisner last August); between Deputy Secretary of State
Talbott and Deputy Foreign Minister Mamedov; between National Security
Advisor Berger and his Russian counterpart, Andrei Kokoshin; between
Secretary Albright and Foreign Minister Primakov; and between
Presidents Clinton and Yeltsin.


Has there been progress?  Yes.



First, Moscow has accepted the gravity of the problem and clearly
stated its policy. President Yeltsin's May 4 public statement and his
speech of May 12, along with strong statements by Prime Minister
Kiriyenko, are important reiterations of Russia's commitment to stop
the spread of missile technology. To be frank, we'd had some concern
that the message from the top had not been clear enough. This is no
longer the case.


Second, Russia is putting in place a regulatory structure to control
the flow of sensitive technology. On January 22, Prime Minister
Chernomyrdin signed an executive order strengthening Russia's export
control system, giving the Russian government broad powers (known as
"catch-all" authority) to stop transfers of goods and services to
foreign missile programs or programs for weapons of mass destruction.
Last week, implementing regulations were issued. These guidelines:


-- establish supervisory bodies in all enterprises dealing with
missile or nuclear technologies;


-- establish a range of measures for licensing military exports; and



-- specify a list of end-users for which exports are prohibited.



A separate order assigns the Russian Space Agency responsibility for
oversight of the entire space rocket industry.


Third, we have set up a bilateral group where Russia's export control
officials and experts work with ours to strengthen Moscow's export
control system. We have sought for Russia to develop a system of
export control legislation and regulation that is as tough and
effective as the best in the world. We will work hand in glove with
Russia to ensure this gets done.


Do we consider this major progress? Yes. Are we fully satisfied? Of
course not. Implementation is the crucial test. We will carefully
monitor execution of this range of export control mechanisms, assist
the Russians in every appropriate way, and continue to press Moscow to
use this new authority to end all missile cooperation with Iran.


As you know, on May 18 Secretary Albright waived sanctions against
Gazprom under the Iran and Libya Sanctions Act (ILSA). This waiver was
based, in large part, on the progress I have outlined here toward
accomplishing ILSA's primary objective of inhibiting Iran's ability to
develop weapons of mass destruction and support terrorism. This
administration believes the waiver will encourage further progress in
this direction and will be accompanied on our part by continued close
monitoring.


Members of Congress have been active partners with the administration
in our dialogue with Russian officials about the problem of Russian
cooperation with Iran. The Senate is now considering a bill, the "Iran
Missile Proliferation Sanctions Act," that risks inadvertently
undermining our efforts to stop Russia's support of Iran's missile
program and is unnecessary in light of existing legislation. We
believe this measure will be profoundly counterproductive to U.S.
national interests with respect to Russia -- on strategic arms, on
democracy, on market economic reform, in terms of working with the new
government in Moscow, and in other areas.


The proposed legislation would in fact be counterproductive to the
very goal of stopping the transfer of missile-related technology to
Iran. For example:


-- The lack of a sufficiently flexible waiver provision works against
the most important purpose of sanctions legislation -- its usefulness
as leverage to encourage foreign governments to crack down on their
companies.


-- The proposed standard of evidence is too low given the national
security, foreign policy and economic repercussions of imposing
sanctions.


-- Similarly, sanctions appear to be required even if an entity is not
aware that the item is going to Iran or will be used in missiles. Such
a provision is fundamentally unfair and will undermine U.S.
credibility and the willingness of foreign entities to cooperate with
us.


Given the shortcomings of the bill, the Secretary of State and the
President's National Security Advisor have stated that they would
recommend the President veto it. Our goal is a Russian export control
regime that is rigorous and meets Western standards. The actions the
Russian government has taken put it firmly on the right track. This
legislation could cause a reversal in the hard-fought gains that the
administration and the Congress have achieved on these issues.


Mr. Chairman, this administration strongly opposes any form of nuclear
cooperation between Russia and Iran. Given Tehran's demonstrated
interest in acquiring a nuclear weapons capability, this is the only
responsible position we can take. We have expressed this view
repeatedly and at the highest levels within the Russian government.


Moscow has given us assurances regarding Russia's nuclear cooperation
with Iran, including President Yeltsin's assurance that Russia would
not provide Iran with any militarily useful nuclear technologies,
including a gas centrifuge facility and a heavy-water moderated
reactor given the inherent proliferation risks of such reactors. We
are, of course, aware that a senior Iranian official was recently in
Moscow and, according to press accounts, Russian Atomic Energy
Minister Adamov talked about expanded cooperation with Iran's nuclear
program. We will continue to press Russia to ensure that cooperation
does not go beyond the Bushehr reactor.


3. Democracy, Human Rights and Religious Freedom



Religious freedom is a foundation stone of a free society and occupies
an important place in the obligations that states assume as members in
good standing of the international community. In October 1997, Russia
enacted a restrictive and potentially discriminatory law on religion
that includes troubling provisions establishing a hierarchy of
religious communities and according preferential treatment to
religions that have been present in Russia for an extended period of
time. Some new religious organizations are required by the law to wait
up to 15 years before acquiring basic legal rights.


This is a bad law. It was pushed through by those who do not share the
principles of tolerance that are embodied in Russia's own constitution
and its international commitments. Others in Russia, including
millions of members of minority religious congregations, feel
differently and value the freedoms that they have won during the past
ten years.


Enactment of the law and growing discrimination against minority
religions and foreign missionaries in Russia's regions have been the
subject of great concern. The President, Vice President, Secretary
Albright, Ambassador Collins and I have been active during the past
year engaging with Russia to ensure that it upholds its commitments to
protect religious freedom.


In seeking full Russian respect for its international obligations, we
have been immeasurably helped by others who have articulated America's
commitment to religion freedom. I want to thank you, Mr. Chairman, and
Senator Hatch and Senator Bennett for traveling to Russia to discuss
church-state relations with Russian authorities and to underscore U.S.
concerns about the new law. Non-governmental organizations, such as
Law and Liberty Trust, the Union of Councils, the National Conference
on Soviet Jewry, the U.S. Catholic Conference, as well as church
groups, have been actively and effectively engaged, as well.


Let me mention some of what has been accomplished.



-- Russian government officials, including President Yeltsin and
then-Prime Minister Chernomyrdin, pledged to the Vice President that
the new law would not result in any erosion of religious freedom in
Russia.


-- In applying the law, the Russian Ministry of Justice has adopted a
permissive approach to registering religious organizations with full
legal rights, effectively bypassing elements of the 15-year rule. Last
Thursday, the Ministry registered the Mormon church with full legal
rights.


-- Presidential administration officials have established two
consultative mechanisms to engage with religious communities and to
monitor application of the new law.


-- The Presidential administration and the Ministry of Justice have
also promised to support efforts now under way by non-governmental
organizations to challenge the constitutionality of the law's
retroactive provisions before the constitutional court.


The implementation of this law has provided encouraging evidence of
the federal government's determination to respect its international
obligations and to make sure that law enforcement conforms to
constitutional standards. We are disappointed that the implementing
regulations failed to clarify the law's ambiguities. Since enactment
of the law, 25 cases of harassment by local officials have come to our
attention. We and Ambassador Collins in Moscow have vigorously
complained about these incidents. The federal government needs to be
more active in reversing discriminatory actions taken at the local
level and, when necessary, reprimanding the officials at fault. The
State Department will continue to monitor this issue closely.


As required by the FY-98 Foreign Operations Appropriations Act, the
President will provide to Congress his conclusions about religious
freedom in Russia during the coming days.


Religious liberty is only one of the measures of the creation of a
modern democratic order. The collapse of communism has permitted us to
work with governments and with private groups across Eastern Europe
and Eurasia to foster the institutions essential for building a civil
society.


In Russia, we have since 1991 initiated programs to support free and
fair elections, the development of independent media, the promotion of
accountable and responsive municipal government institutions and the
growth of a vibrant non-governmental sector. U.S.-sponsored programs
have provided over 1500 small grants that have nurtured environmental
and human rights watch-dog groups, women's organizations, public
policy groups and other non-governmental organizations. We have
supported over 10,000 high-school exchange students. We are now
exploring programs that will help foster religious tolerance. We have
also worked to strengthen institutions that sustain the rule of law by
training judges and reforming law school curricula to develop the next
generation of legal professionals. Cooperation and training involving
the FBI, Secret Service, DEA, Customs and other U.S. agencies have
helped us to identify allies among Russian law-enforcement officers
who can help tackle the scourges of corruption and international
organized crime. These kinds of programs are a long-term investment in
our security and an expression of Americans' deep-rooted sense of
responsibility to support those who have survived tyranny and now want
to build an open society.


4. The U.S.-Russia Economic Relationship



Completing the transition from a centrally planned to a market economy
is essential to Russia's prosperity, democracy and long-term role as a
constructive player in world affairs. The success of this transition
is in our interest, and we will remain engaged in moving the process
ahead.


Russia has made remarkable progress. The private sector produces
seventy percent of Russia's GDP, and tens of millions of Russians in
start-up businesses are building the new Russian economy. After a
decade of decline, Russia's economy may now be growing again. The
Russian government killed off the very high inflation that followed
the collapse of the Soviet Union, dramatically reduced Russia's budget
deficit, and built a strong ruble.


There are plenty of problems. Export revenues are being hit by falling
world oil prices, the Asian flu has put the Russian and other emerging
market economies under increased scrutiny and, in the past few days,
Russian financial markets have been buffeted anew by developments in
Asia and questions about the government's ability to manage economic
policy. In particular, current market jitters underline the urgent
need for tax reform and greater transparency in government
decision-making.


U.S. and Russian leaders have placed a priority on investment and
integration into the world economy as key building blocks of a
dynamic, wealth generating economy. At the 1997 Helsinki Summit,
Presidents Clinton and Yeltsin called for improvements in Russia's
investment climate and greater Russian participation in global
institutions. Russia joined the Paris Club as a creditor member last
year, has been invited to join APEC later this year, and has started
serious efforts towards WTO accession.


The "U.S.-Russia Binational Commission on Economic and Technological
Cooperation" -- formerly also known as the Gore-Chernomyrdin
Commission -- has been a key instrument of our policy. This
Commission, which will continue with Prime Minister Kiriyenko, has
successfully addressed diverse issues such as securing American
participation in multi-billion dollar energy projects, simplifying
customs procedures, and forging links between our industries and
Russia's potentially vibrant high-technology sector.


Programs funded under the FREEDOM Support Act have been another
instrument for helping Russia work through critical market reforms. We
have funded a number of short -- and long-term technical advisors to
work with the Russian government on creating new laws and institutions
for a modern market economy. Our advisors have provided assistance to
the government on monetary and fiscal policy, revamping the tax code,
drafting commercial law, and preparing Russia's WTO accession
commitments. These programs advance important U.S. interests, help
improve conditions for U.S. traders and investors, and have been a
sound investment in Russia and America's future. Congress has been
wise to fund them.


Economic reform has had a certain ebb and flow over the past several
years. There are those who favor open markets, those who favor
oligopoly or insider capitalism, and still others who would defend a
long-since defunct status quo. The last kind of thinking is the
primary reason that progress has been so slow on reforming the tax
code, normalizing land ownership, passing broader production-sharing
legislation, and making progress on other investment climate
priorities. Prime Minister Kiriyenko and his government appear
determined to push ahead and address these issues. Together with the
IMF, the World Bank and our friends and allies, we will continue to
work closely with reform-minded Russian officials to promote an open
entrepreneurial Russian economy, to the benefit of the Russian people
and U.S. economic interests.


5. Russia and Its Neighbors



Our goal since the end of the Cold War has been a democratic undivided
Europe that includes Russia and all of the New Independent States. To
achieve this, we have promoted the independence, sovereignty and
territorial integrity of these new states; encouraged their
development as democratic, market-oriented countries adhering to the
norms of responsible international behavior; and facilitated their
integration into the Euro-Atlantic and global community of nations.


It is critical for Russia to be integrated into broader world
structures. Let me elaborate this point by discussing two examples.


First, NATO. It is no secret to say that the United States and Russia
have disagreed profoundly over NATO enlargement. To make sure that the
expansion of NATO occurred in a Europe that is whole and free, we
worked to forge a cooperative NATO relationship with Russia codified
in the NATO-Russia Founding Act signed one year ago in Paris. The
NATO-Russia Permanent Joint Council is an essential element of
integrating Russia. Its success will be important in completing the
transition of European security from a kind of adversarial, zero-sum
relationship we had with the Soviet Union to a cooperative one in
which we work together.


Second, Russia's relations with its neighbors. We absolutely reject
the idea of a Russia sphere of influence. But, while some in the
Russian political spectrum accuse us of trying to dominate the region
-- and some neighbors claim that Russia is out to dominate them, the
reality is that the region will benefit from a cooperative,
constructive Russia that trades with its neighbors and that helps to
resolve differences with and among countries.


In this spirit we are working with Russia on problems that just a few
years ago would have divided us. We are active co-chairs with France
in the OSCE Minsk Group process trying to resolve the conflict in
Nagorno-Karabakh. Russian and American soldiers are serving together
under U.S. command to keep the peace in Bosnia. In energy, we regard
the Caspian Pipeline Consortium route through Russia an essential
element of a multiple pipeline strategy for moving Caspian Basin
energy to international markets.


These efforts draw Russia into more cooperative relationships with its
immediate neighbors and with the world as a whole. We believe
inclusion is a sounder policy than isolation, but inclusion does not
mean forgetting our interests or ignoring our differences. Secretary
Albright put it well when she described the mandate for the
NATO-Russia Permanent Joint Council. She said it was a forum where "we
are not always going to agree... We are not here to pretend, or to
paper over differences. We are here to work through them."


6. Conclusion



The common thread of our policy toward Russia is to address all four
parts of the agenda I described together, comprehensively, and in a
way that advances international peace and stability. We seek to
demonstrate in practical ways the benefits for Russia of being part of
the international community and to ensure against the isolation that,
for 70 years, produced such terrible consequences for Russia and the
world.


The new government in Moscow understands the importance of
integration. The top echelon of this new team represents something we
have never seen before in any Russian government. It is comprised
exclusively of young governors and former regional administrators who
made their mark in the country's most politically progressive
provinces. They carry no Soviet-era baggage. They have, instead,
first-hand knowledge of how markets function and an awareness that the
average Russian cares more about his own government's ability to
collect taxes fairly and provide services effectively than about NATO
enlargement. They understand that in a democracy voters reward
bottom-line results, not empty promises. This modern progressive
outlook should serve Russia well, and we look forward to working
closely with this new team.


We cannot guarantee that democracy will triumph in Russia -- that is
for the Russian people to determine. But we owe it to ourselves to
take full advantage of the opportunity to advance our broad agenda
with Russia to secure a safer future for all Americans.


(End text)