Stephen Sestanovich, Ambassador-at-Large and Special Adviser to the Secretary of State for the New Independent States, Address at Board of Governors meeting of the National Conference on Soviet Jewry, "Russia in Search of Realism," New York City,October 26, 1998

Russia in Search of Realism

Thank you, Howard.  The National Conference on Soviet Jewry is an organization that I have known and admired over many years, both inside the government and out, and it's a pleasure to speak to you today.

I have always believed that those who, like the NCSJ, made human rights a central issue of the Cold War played an enormous role in bringing it to a successful conclusion.  The principles that inspired you during those years -- religious liberty, the rights of national minorities, the importance of democratic institutions to protect these rights -- still guide American policy.

And of course they still guide the NCSJ.  Looking around this room, I see many people who were in Moscow in September at the time of the Clinton-Yeltsin summit, for the dedication of the memorial synagogue at Poklonnaya Gora.

As Dennis said, this was, for all who took part, an extraordinary, moving event.  It rewarded years of effort -- and of cooperation between people in this room and in Russia.  It was a symbol of how much Russia has changed, of how much it has broken with the Soviet past.

Like the summit itself, this ceremony was all the more dramatic because of the atmosphere of acute economic, political, social, even psychological uncertainty in which it took place.  I'm sure that those of you were there remember this atmosphere well.

On September 1, the ruble was collapsing and with it Russia's banking system.  There was a widespread fear of complete economic meltdown. President Yeltsin had just fired one prime minister, and his new candidate for the job (or his old candidate, since it was Viktor Chernomyrdin again) had just been voted down by the Duma.

Moscow was full of rumors about what would happen next -- about the kind of government that would be formed, about the policies that it would follow, about whether it would be able to restore economic confidence and preserve social stability.

No one knew the answers to these questions, but there was one theme that united every rumor I heard, every conversation I had with Russian officials: Decisions about Russia's future had to be based on "realism."  There was no room for wishful thinking, for ideology, for pretending that Russia could easily shake its historical and cultural legacies.  The only way to be realistic, everyone kept saying, was to seek "Russian" solutions to Russian problems.

I've just returned from another trip to Moscow, and I want to talk today about the choices that Russia faces and their implications -- for Russia, for its neighbors, and, of course, for us.  The word that one hears most often in Moscow is still "realism," and yet along with it there is a more sober discussion about how to define the term.  Does it mean Russia should give warmed-over, semi-Soviet policies another try or that it must not?  Does it mean Russia should seek to disengage from the world or that it can't?  Does it mean there is a "third way," a "Russian way," or that there isn't?

This debate continues because Russia's problems continue, and they continue to be dreadful.  The passage of time and the approach of winter make them worse.  But if there's a change in the way these problems are viewed, I'd put it this way: Where "realism" was just a few weeks ago the slogan of those who'd like to dodge global realities, now it's the tool of those who know it can't be done and shouldn't be tried.

How Russia chooses between different kinds of  "realism" will affect the choices it makes on many issues that matter greatly to us.  If what I think of as a higher realism emerges, we will need to engage it, test it, push it, strengthen it.  Since the collapse of the Soviet Union, our challenge has been to encourage Russia to make the right choices -- to see that openness and engagement are in Russia's own interest and that the costs of turning from this path are too high.

The clash between "realisms" is most vivid on economic issues, so let me start with these, before turning to foreign policy and other questions.

Since August 17, when the Russian Government accepted devaluation of the ruble and defaulted on some of its debts, all the economic policies of the past 7 years have been held up for critical review.  The crisis, some said, showed that these policies were fundamentally flawed. Clearly the state had to run most sectors of the economy again; it should pay wages, pensions, and other arrears by printing money and could do so with no risk of inflation; it had to curtail foreign investment, reject foreign borrowing, and build Russia's economic recovery on the country's own resources; it should protect the value of the ruble by simply making the dollar illegal; and it should resume big subsidies to industrial enterprises to get the fabled Soviet economic machine whirring again.

This was what passed for realism in early September.  To judge by what my colleagues and I heard in Moscow 10 days ago, October's realism has to meet a higher standard, not least because all this loose talk was beginning to have predictable Soviet-style results: hoarding, bare shelves, bank runs, black markets.

On many of the issues I just mentioned, Russian officials now take a different tack.  They say they recognize that inflation would have devastating social and economic consequences; they stress their interest in negotiating with the IMF and World Bank to work out new loans; they reiterate that Russia will meet its sovereign debt obligations; they float trial balloons about how to get Western banks to come in and revive Russian banks; and they acknowledge that the energy sector, which ought to be the strong suit of any recovery strategy, desperately needs foreign investment.

Now, what should we make of this sober new talk?  In September, when we asked Russian officials whether they intended to act on the strange, pseudo-realistic things they were saying, their (sometimes sheepish) answer was: Watch what we do, not what we say.  Now that a higher realism is in vogue, we should follow the same advice.

After all, recognizing that hyper-inflation would be a calamity for Russia is not the same thing as putting in place the fiscal and monetary policies that will prevent it.  And recognizing how much foreign investment can contribute to Russian growth is not the same thing as creating the climate in which it actually takes place.

Today the Russian Government faces a daunting set of tasks: cutting its budget deficit, stabilizing the ruble, devising a non-inflationary monetary policy, rehabilitating the banking system, reaching agreement with private creditors on state and commercial debt, and laying the foundations for growth.

If the government approaches these choices seriously, if its arithmetic makes sense, we'll be able to help.  If the numbers don't add up, our help won't do any good.  This is the position that President Clinton laid out in Moscow in both his private meetings and his public statements.  It was also the bottom line of  Secretary Albright's speech in Chicago earlier this month.  And I think it's fair to say that international financial institutions and international investors will take the same approach.

The next couple of months are the time to show -- through practical choices -- that the higher realism will in fact shape Russian policy. Let me note two areas where there are opportunities to make this realism a reality.

Prime Minister Primakov has got the attention of Western bankers with what he has said about opening up the Russian market to them.  But the interest they show will depend on how his government reorganizes current banks, deals with their discredited management, and handles the restructuring of existing debt, a matter that has been up in the air since the middle of August.

Similarly, Western energy companies have been encouraged by signs that the Duma is ready to pass enabling legislation on production sharing agreements.  But there won't be any new investment if the legislation passes with provisions which are now in it that increase the risk of nationalization and eliminate a Western company's right to international arbitration.

In looking at Russia's economic choices, I have sketched a clash between different kinds of self-proclaimed "realism" -- between one realism that isolates Russia from the world economy and another that reaps the benefits of integration.

Russia faces parallel choices in its foreign policy as well.  On the one hand, there is the "realism" of going it alone, of asserting a fundamental mismatch between Russian and American interests, of backing anyone who has a beef against the United States -- the better to promote what some Russians call a "multi-polar" world.

On the other hand, there is the "realism" that sees a series of challenges to Russian security that can most effectively -- perhaps only -- be addressed through broad-based cooperative international efforts, especially with the United States.

As Secretary Albright pointed out in her Chicago speech, no one can seriously think that Russia's need for a successful non-proliferation regime is less acute than our own, or that Russia can more easily afford to maintain strategic nuclear arsenals at today's levels than we can,  or that war in the Balkans poses less danger for Russia than for us.

Over the long run, we can expect this "higher realism" to be the basis of Russian foreign policy only if it convincingly serves Russian interests.  Our judgment is that it does, but it won't be our judgment that counts.  Russians themselves have to be satisfied with the choice, and on many issues they are divided.

Take the case of Kosovo.  In the last 2 months, we have worked extremely closely with the Russian Government on this problem and succeeded in bringing Milosevic to accept terms that he would never have agreed to had we not been united.

Yet there is no denying that in much of Russian domestic debate -- and even in some official statements -- this cooperation is considered a success only because NATO has not used force.  The fact that we have gotten Milosevic to change course is actually resented.  So far, the higher realism has guided Russian policy, and the result has been real Russian-American cooperation.  But it has not guided Russian opinion, and this means that Russian-American cooperation will remain a target of criticism.     [to top of page]

A similar duality has shadowed the ratification of START II.  I know of no Russian official who questions the importance of this treaty for Russian security policy.  The military support it -- not reluctantly, but with powerful arguments about its advantages for Russia.

What blocks ratification, I have concluded, is not an alternative strategic judgment, but a gut-level resistance among some parliamentary deputies to anything that the United States has promoted as actively as we have promoted START II.  We have done what we can on this subject; we can't do more until Russia makes its choice.

Perhaps the toughest issue we have worked on with the Russians, where we see the mix of motives at its most frustratingly complex, is Iran. It is official Russian policy to seek good relations with Iran -- if only to blunt the threat that so many Russians see in Islamic fundamentalism.  In Western diplomatic parlance, this strategy of cozying up to potential enemies has a name --  it's called appeasement.

Needless to say, this strategy also provides excellent cover for anyone who views Iran as a lucrative market for sensitive military technologies.  And it provides a cover for a very aggressive Iranian effort to acquire such technologies.

We have been completely candid with the Russians about our view of Iran, but we have not expected to be able to persuade them to adopt our policy on Iran in every particular.  We have not really tried to do so.

We have tried, instead, to build on a higher realism -- on a recognition of the threat that the flow of technology to Iran's nuclear and ballistic missile programs poses to Russia itself -- and to Russian-American cooperation.   We have pushed hard for action against specific entities that we had reason to believe were engaged in such transfers.  We have pushed hard for a broad upgrading of Russia's export controls.  We have stopped American contact with and access to American markets by Russian companies that we -- and the Russian Government -- have identified as part of the problem.  And we have made clear that an expansion of Russian-American peaceful space-launch cooperation hangs in the balance.

The result has been progress but far from enough to solve the problem. That's why we have put this issue front and center in our discussions with the Russian Government.  Whether it's in Bob Gallucci's meetings in Moscow this week, in the Vice President's  communications with Prime Minister Primakov, or the President's own meetings, we want to be sure that on the Russian side this problem gets the direction from the top that it urgently needs.

When we examine Russian foreign policy, we can't, of course, look only at Russian-American relations.  I leave tomorrow for a trip that will take me to Ukraine, Georgia, and central Asia, and at every stop I know I'll hear expressions of worry about how Russia's crisis will affect its neighbors.

The crisis has already been particularly hard on those countries that count on Russia as an export market -- and there are some former Soviet states that sell more than half of their exports to Russia.  The impact doesn't stop there.  Anyone who is no longer making money by exporting to Russia will also find it harder to pay for energy imports from Russia -- and some former Soviet states depend on Russia for all the energy they use.

These hard facts are leading many of  Russia's neighbors to try to accelerate their integration into the international economy.  Moldova is already working hard to diversify its export markets.  Ukraine is working to diversify its sources of energy.

Those countries such as Azerbaijan and Turkmenistan that are themselves important energy exporters are still less interested in relying only on Russia to move their oil and gas to world markets.  This fall, Kyrgyzstan becomes the first state of the former U.S.S.R. to join the World Trade Organization; Georgia and Armenia are going to be even more determined to be second.

The policy of the United States toward all these efforts is clear: We support them.  But what will Russian policy be?  Let me express a hope: Nothing would better serve long-term Russian interests in this area than a dose of the higher realism.  The principle is a simple one: Stable, confident neighbors with growing economies can contribute to growth in Russia itself.

Let me close my remarks by looking at choices that Russia is making in one more area -- the policies and protections that determine the growth (and health) of civil society.  Free speech and free media, freedom of assembly and religion -- these are really the ultimate barometer of the kind of country that Russia will be in the next century.

Right now the barometric reading is a good one.  Russia in the 1990s is freer than ever before in its history, and its freedoms rest on better constitutional foundations.  They will, of course, be challenged from time to time, as they are in any country.  The real question is how the challenges are met.

Last year's law on religion was one such challenge.  Yet the Russian Government's implementation of the law has so far largely vindicated its claim that it would not allow religious liberty to be abridged. Right now we are seeing a comparable test of free speech in the trial of Aleksandr Nikitin.

I think it's right to consider recent episodes of anti-Semitism in Russia to be a similar challenge: the bombing of the Marina Roshcha synagogue in Moscow, the vandalizing of the Jewish cemetery in Irkutsk, the appalling public statements of Governor Kondratenko.  These have called for a rapid response by Russia's leaders, and by and large they have provided it.  President Yeltsin in particular led the moral opprobrium when he said, "Those who are raving about national superiority and anti-Semitism should ask themselves: Do they understand what they are doing, is it possible that Russians will allow the most terrible ideology ever known by mankind to strike root in our land?"

Public statements of this kind are vital if Jewish life is to continue to flourish in Russia.

But they are vital for another reason as well.  In my job at the State Department, I often have occasion to discuss questions of democratization and human rights with senior figures in all the states of the former Soviet Union.  I express our commitment to these goals and observe that over the long-term our relations with these countries will be crucially affected by how much progress they make in reaching them.  And I often hear a response very much like this: Yes, these things are important, but don't think they are important because the United States has asked us to be concerned about them.  They are important because our future depends on them.

Those who don't mean this answer seriously  -- and there are altogether too many of them -- are, of course,  simply getting me off their back. But those who do mean it -- and they are not as rare as you might think -- express what I have called a higher realism.  More than they know, their future does depend on it.  As we look at Russia and the post-Soviet world, the strength of this kind of realism is our best reason for hope.

Thank you.

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