The U.S. and Russia After Iraq

Though presidents george w. bush and Vladimir V. Putin continue to express their desire to work together after sharp differences over Iraq, their governments have not yet managed to do so in a meaningful way. The two leaders seem likely to try to overcome their differences at their first meeting since the war on June 1 in St. Petersburg. Yet, even after that meeting, the future of the U.S.-Russian relationship will be somewhat uncertain. Before the flare up over Iraq, the United States and Russia enjoyed what some have described as their best relationship since Russian independence. Despite disagreements over the American withdrawal from the Anti-Ballistic Missile Treaty and the second round of nato enlargement, the strong personal connection between the two presidents and new cooperation in the war on terrorism had contributed to a sense of optimism that Washington and Moscow were finally on track to becoming real partners. As a result, Russia’s assertive opposition to the U.S.-British war against Saddam Hussein came as a particular shock to many in the United States (and confirmed the suspicions of those who were not shocked) — and the impact has only been worsened by Moscow’s thus-far obstructionist postwar conduct.

Yet the relationship remains one of considerable importance to American national interests. The Kremlin’s cooperation in the war in Afghanistan — in sharing intelligence, stepping up its preexisting effort to arm the Northern Alliance, and setting aside earlier objections to a major U.S. military presence in the region — significantly aided U.S. forces in the field. And a strong and sustainable relationship with Moscow can serve important and even vital American interests in many other areas, ranging from the war on terrorism to non-proliferation and international trade and investment. Conversely, a weak relationship with Russia could embolden “rogue states” hostile to the United States, return the United Nations Security Council to its Cold War uselessness, and expose Americans to additional danger from terrorism and weapons of mass destruction.

This raises two questions. What can be done to strengthen the U.S.-Russian relationship and put it on a more solid foundation? And, taking into account obvious and substantial differences with Moscow on some major international issues, how far can the relationship really go?

What went wrong?

Any discussion of improving the U.S.-Russian relationship should begin with an understanding of the status of the relationship today and analysis of “what went wrong” in American efforts to win Russian support for, or at least acquiescence to, the war in Iraq.

Unfortunately, even before Iraq, neither Washington nor Moscow was satisfied with the progress in the relationship. American officials frequently complained that in the absence of Kremlin involvement, Russian government departments routinely obstructed effective collaboration. Russian officials similarly grumbled that only the White House could force action from Cold War-era bureaucrats in the Pentagon and the Central Intelligence Agency. Analysts and commentators in both countries lamented excessive reliance on the personal relationship between the two presidents.

Nevertheless, American and Russian officials continued to declare their commitment to building a strong U.S.-Russian relationship, and — despite reservations about the American use of force and concerns that Russia could face more terrorism after a war — Moscow initially seemed inclined to accommodate the United States on Iraq, where Russian economic and other interests were significant but not first-order concerns. After their meeting in St. Petersburg in November, Presidents Bush and Putin issued a joint statement essentially reiterating the message of U.N. Security Council Resolution 1441 by calling on Iraq “to completely and immediately comply” with all relevant U.N. Security Council resolutions or “face serious consequences.” Speaking to reporters, Putin expressed confidence that Russia and the United States could “achieve a positive result” so long as the process remained within the U.N. framework. As late as January 2003, senior officials suggested privately that Russia would be prepared to abstain in U.N. Security Council voting if a resolution were prepared that was sufficiently vague to allow for appropriate explanation to the Russian people, who were overwhelmingly opposed to an American use of force.

By February, however, the Russian position appeared to have hardened substantially. Russian Foreign Minister Igor Ivanov repeatedly pronounced that Moscow would use its veto in the U.N. Security Council to block measures that “would open up the way, directly or indirectly, to settlement of the Iraqi problem through the use of force.” Ultimately, of course, the Bush administration decided not to seek approval of yet another Security Council resolution on Iraq.

Both international and domestic forces drove the shift in the Russian position. Internationally, France (with help from Germany) made a very determined effort to seduce Moscow into opposing the United States, including intense communication with Russian leaders in advance of key Security Council deliberations. For example, in the 10 days prior to the February 14 report by chief weapons inspector Hans Blix, French Foreign Minister Dominique de Villepin met with his Russian counterpart Igor Ivanov on February 5, French President Jacques Chirac spoke to President Putin on the telephone on February 6, and Putin and Ivanov traveled to Paris for talks on February 10. President Bush spoke to Putin on the telephone on February 4, before the French diplomatic blitz, and on February 14, by which time Ivanov was already in New York for the Security Council session.

Similarly, in the crucial 10 days before the March 7 Blix report, de Villepin and Ivanov spoke by telephone at least every other day and met in Paris on March 5. German Foreign Minister Joschka Fischer also spoke to Ivanov twice and participated in the Paris meeting. President Bush spoke to Putin on February 27 and late on March 6, but appeared to make little progress. Secretary of State Colin Powell met Ivanov only on the morning of March 7 and delivered a tough message that appeared to generate irritation and resentment on the Russian side rather than encourage support.

The French effort to court Moscow was especially successful because Paris made clear that it was prepared to take the lead role in opposing the United States. This strong position by an American nato ally considerably eased Russian concerns about alienating Washington. The fact that Germany — which also currently holds a rotating Security Council seat and, despite tension with the Schröder government, had historically been a closer U.S. ally than France — was similarly firm in resistance contributed to Moscow’s sense that it could stand up to the United States without rupturing the bilateral relationship and isolating itself from the West.

These developments occurred at a time when Russians had begun to look toward parliamentary elections, to take place in December, and to a presidential ballot in March 2004. Though President Putin does not currently appear to have any viable challengers for reelection, his domestic agenda depends heavily upon maintaining control of the Russian parliament, particularly its more significant lower house, the State Duma. According to a poll conducted by the respected All-Russian Public Opinion Research Center (vciom) in late February and early March, 91 percent of the Russian public opposed the war and a considerable proportion expressed suspicion of U.S. intentions, while the Russian elite tended to dismiss the benefits of close relations with the United States. Putin could have paid a substantial political price for even tacit support of the American position, especially given the French and German positions. A defeat of the pro-presidential United Russia bloc by the Communist Party, which remains the largest parliamentary faction, could have sorely wounded Putin just three months before his own election day. Interestingly, a top Kremlin official visiting the United States in late February told a small group, including this author, that Moscow would have liked to support Washington on Iraq, but that the state of the bilateral relationship did not persuade Russian leaders that the U.S. would stand by them in dealing with the problems that war would create.

Finally, the Kremlin — like many governments and observers around the world — might have made a fundamental miscalculation of the likely course of the war in Iraq. Writing in the Wall Street Journal (April 15, 2003), Pavel Felgenhauer, perhaps the country’s most respected media defense analyst, described Russia’s lead intelligence agency, the Federal Security Service (fsb), as “a leading party of the pro-Saddam lobby,” and Russian military officials routinely predicted a long, difficult, and bloody war in Iraq. Under the circumstances, top leaders could have believed that even if the United States launched military operations, it might still be persuaded to accept a diplomatic solution in the face of expected high casualties and increased domestic opposition to the war. In fact, prominent foreign policy commentators now admit that Moscow had very different expectations of the war; for example, leading Russian foreign affairs analyst Sergei Karaganov of the Council on Foreign and Defense Policy wrote in Moscow News (April 23-29, 2003) that “our intelligence services misled us — or we deluded ourselves — about the Iraqis’ ability and readiness to resist” U.S. forces. Notwithstanding his well-known pragmatism, President Putin may have been especially vulnerable to such self-deception as a result of his personal ties to the fsb and his close relationship to Defense Minister Sergei Ivanov.

What now?

As u.s. forces drew closer to Baghdad, President Putin made two widely publicized statements that appeared to demonstrate Russian interest in beginning to repair the damage to the U.S.-Russian relationship. Though he said that “nothing has changed in our position on Iraq,” Putin stressed that a U.S. defeat was not in Russia’s interest and gave a detailed list of reasons. He also said Moscow and Washington had to continue to work together on terrorism, non-proliferation, and other important issues. Domestically, the statements were a signal that, while the Russian president understood “the people who are unable to contain” their “emotions,” the Russian media should scale back their vitriolic criticism of America and the war (something which in fact happened).

Nevertheless, the degree to which the Kremlin is prepared to work with the Bush administration remains uncertain. After initially rejecting the idea of writing off or rescheduling Iraqi debt, Russian Deputy Prime Minister and Finance Minister Aleksei Kudrin said that Russia could be willing to consider such moves in discussions in the Paris Club. (Aleksandr Shokhin, a Yeltsin-era economic official and former chairman of the State Duma’s Finance and Credit Committee, was even more forthcoming, proposing that Iraq’s debt to Moscow be reduced by 80 percent.) Yet Putin rejected lifting U.N. sanctions on Iraq in favor of a temporary suspension until U.N. inspectors confirm that the country does not possess weapons of mass destruction. And he lashed out at British Prime Minister Tony Blair after a meeting in Moscow that was supposed to patch up their relationship: “The question is, where is Saddam Hussein? Where are those weapons of mass destruction, if they were ever in existence? Is Saddam Hussein in a bunker sitting on cases containing weapons of mass destruction, preparing to blow the whole place up?” Though Russian officials seem increasingly inclined to work with Washington to end the sanctions, this statement, which could be interpreted as a gratuitous attempt to embarrass America’s closest ally, was not reassuring.

Before the U.S.-Russian dispute over Iraq, many in Washington and Moscow had come to believe that Putin had made a strategic choice to pursue a closer relationship with the United States. Though Russian officials continue to express interest in strengthening ties with the U.S., neither Americans nor even Russians yet have a clear view of the Russian government’s current intentions. For example, in an assessment of the lessons of Iraq for Russia, Sergei Karaganov complained that his country “lacked a coherent strategic objective” in its approach to the war:

Did we want to preserve international legitimacy or save the U.N. Security Council or make friends with the Europeans and play them off against the United States or remain on good terms with the Americans? All of these objectives are justifiable if they are based on an underlying strategic line. There was no such line, however. This is not so much the problem of a particular crisis as of the entire foreign policy.

Karaganov is probably accurate to credit the personal bond between the two presidents with preserving the relationship through the Iraq crisis — but both sides had already recognized before Iraq that the Bush-Putin relationship per se was not a sufficient foundation for a close and lasting partnership. Moreover, it is hard to imagine that the personal relationship between the two leaders did not suffer as a result of Iraq. This raises the question of what other basis there is for the U.S.-Russian relationship both today and in the future.

Both before and after September 11, the Russian elite has generally derided the benefits of the U.S.-Russian relationship to their country. Today, even some analysts who have been generally well-disposed to the United States in the past see little value in President Putin’s effort to strengthen ties with Washington; prominent television personality and commentator Alexei Pushkov — who earlier tended to support better relations with the U.S. — said recently in an interview that Russians should not be concerned about the consequences of the war in Iraq because Russia “didn’t have anything to lose in its relations with the usa.” Some American observers have also suggested that Russia has gained nothing.

This is wholly untrue. First and foremost, Russia gained considerably from the destruction of Afghanistan’s Taliban regime. This also happened to be in the American interest, but it was a significant plus for Moscow, which had been unsuccessfully seeking U.S. cooperation against the Taliban for over three years. Russian officials were deeply concerned by the possible spread of Afghanistan’s form of radical Islam into neighboring Central Asian republics — and by al Qaeda’s direct support of Chechen rebel groups — and the Moscow-backed Northern Alliance had been losing ground in Afghanistan’s ongoing civil war. American military action made a major contribution to addressing these problems and did so in a time frame that could not otherwise have been achieved. President Putin has publicly acknowledged the benefits to Russia of the U.S. war in Afghanistan.

Relatedly, the United States has come substantially closer to the Russian position on the war in Chechnya by acknowledging al Qaeda support for some of the Chechen rebels, officially designating three Chechen groups as terrorist organizations, and significantly muting criticism of Russian conduct in the region. On that last point, the American delegation to the United Nations Commission on Human Rights did not co-sponsor a critical resolution on Chechnya in the commission’s March session in Geneva, as it has done in previous years with similar resolutions.¹ The Bush administration has also made a real and genuinely effective effort (in cooperation with U.S. allies in the Middle East) to cut off the flow of money to Chechen terrorists — something to which the Clinton administration more or less turned a blind eye despite numerous Russian requests. Taking into account that stabilizing Chechnya is Russia’s No. 1 security interest, this is not a minor step. The U.S. has also pressed Georgia firmly to drive Chechen rebels from de facto sanctuary in its Pankisi Gorge region and to seal its border with Chechnya. Finally, the U.S. has generally supported Russia’s controversial March referendum to approve a new constitution for the renegade province.

Third, the Bush administration has taken a much more relaxed view of Russian involvement in the former Soviet republics of Central Asia than the Clinton administration. This has included both an end to aggressive official efforts to find energy export routes to bypass Russia and an end to attempts to discourage regional governments from hosting Russian military bases. Again, considering that the region is high on Russia’s list of strategic priorities, this is a meaningful acknowledgement of legitimate Russian interests.

This is not to say that there have not been disappointments. For example, Russian officials feel that their government has repeatedly been promised by the Clinton and Bush administrations (including in the immediate aftermath of September 11) that the Cold War-era Jackson-Vanik amendment would be repealed. For a variety of reasons, the U.S. Senate has not yet acted, though Senate Foreign Relations Committee Chairman Richard Lugar submitted draft legislation to this end in March. This has been a continuing source of irritation, though Russia’s ambassador to the United States, Yuri V. Ushakov, wrote in the Washington Post (April 3, 2003) that he considers the issue to be America’s problem rather than his country’s, as it is more a symbol of lingering Cold War sentiment in the United States than an obstacle to trade. Perhaps more seriously, Russian leaders were disturbed by the U.S. withdrawal from the abm Treaty and the second round of nato enlargement, which included the three Baltic states. Neither issue would necessarily have been a significant problem in the context of an improving relationship, but both are added to the list of grievances in times of tension.

From the U.S. perspective, Russia’s insistence on completing United Nations weapons inspections in Iraq prior to removing sanctions on the country seems illogical, opportunistic, and possibly unfriendly. Taking into account Moscow’s frequent past efforts to ease or lift the sanctions on Iraq — and its persistent assertions that the presence of weapons of mass destruction in Iraq was unproven — one would expect that Russia does not believe Baghdad had weapons of mass destruction. This would eliminate the need for sanctions, especially when the United States controls most of Iraq and when tens of thousands of American soldiers, rather than tens of inspectors, are looking everywhere for the weapons. The charitable interpretation of the Russian view is that it was an opening bargaining position in an effort to extract concessions; the less charitable interpretation is that it was intended to embarrass the United States. That would be a dangerous course for the Kremlin, which has much more to be embarrassed about, from Chechnya to its elections, its media, and its oligarchs (and oil-garchs).

The St. Petersburg summit meeting between Presidents Bush and Putin scheduled for June 1 will be an important indicator of Russian intentions. Russian officials are entitled to have different perspectives from their American counterparts and to express their views, but subjecting President Bush to the same treatment enjoyed by Prime Minister Blair will not improve the U.S.-Russian relationship. Conversely, meaningful manifestations of a desire to work constructively with Washington in Iraq and elsewhere would obviously be encouraging. Russian official reaction to Secretary Powell’s May 14 meetings with President Putin and Foreign Minister Ivanov in Moscow provides grounds for cautious optimism about the summit.

What next?

Nevertheless, whatever the outcome of the June 1 meeting, it is difficult to see how the U.S.-Russian relationship can return entirely to pre-war business as usual — if for no other reason than the fact that the still overly important personal ties between Presidents Bush and Putin (and, for that matter, between Colin Powell and Igor Ivanov) must have a new element of tension that could emerge in future crises. Still, Russia’s potential influence on important American interests necessitates an effort to move the relationship forward.

But because the advancement of U.S. interests — not friendly relations — is the paramount objective of this endeavor, it is essential to ensure that the relationship will indeed serve those interests. This is not self-evident in the wake of Russian conduct with respect to Iraq, and the Bush administration should make every effort to ensure that Russian officials understand that their active opposition to the war was a serious disappointment that could have real consequences.

President Bush and other American officials should explain to their counterparts during the summit, or in other appropriate venues, that the United States has been making a special effort to promote closer U.S.-Russian relations and that if Moscow is not prepared to reciprocate that effort, the U.S. will not continue it. This would mean being more outspoken about Russia’s various failings to demonstrate that the Kremlin is hardly in a position to take the moral high ground. It could also include concrete steps, such as closer scrutiny of the conduct of Russian oligarchs eager to have their stocks listed on the New York Stock Exchange. Taking into account Russian business practices in recent years, virtually any large Russian firm could be subjected — quite legitimately — to attention from appropriate U.S. government agencies that would not help either the company in question or broader Russian efforts to reassure skittish foreign investors. Similarly, many of Russia’s former government officials have commercial interests in the United States that could likely be complicated by a thorough look at their activities.

If Russian leaders appear committed to strengthening ties, Washington should be prepared to renew efforts to expand relations with Moscow. An urgent goal in any such efforts must be to build a solid foundation for a constructive and sustainable relationship with Russia. At the same time, the United States must establish its own priorities vis-à-vis Russia. As Iraq demonstrates, the foundation of the current U.S.-Russian relationship can sustain only a certain load. Washington should therefore work most aggressively to advance vital or very important interests in the relationship while seeking to avoid disputes over secondary or peripheral matters.

The key to deriving the maximum value from the U.S.-Russian relationship on a sustainable basis lies in structuring Russian choices by providing sufficient benefits through cooperation to outweigh the costs imposed by necessary and inevitable U.S. actions at variance with Russian preferences. This is not an abstract principle: Senior Russian officials made clear privately before the war that Moscow could have been less troublesome over Iraq in the context of a better relationship with Washington. Generating these benefits for Russia requires identifying areas of important convergent interests and pursuing them energetically while seeking creative solutions in areas where our interests are not inherently contradictory. Success should allow the United States to act independently (including in the face of Russian objections) when necessary without sacrificing the long-term advantages of a constructive relationship with Russia.

Three central issues — the war on terrorism, non-proliferation, and Russia’s integration into the international economy — have the potential to offer significant mutual rewards to the United States and Russia and to serve as the foundation of a lasting relationship. Though there are many other areas of potential collaboration, these three offer immediately apparent and tangible benefits to both countries. Other issues, such as space cooperation, may be desirable but are insufficiently important to Washington or Moscow to serve as a basis for the U.S.-Russian relationship or to justify meaningful sacrifices by either government.

Terrorism

Establishing genuine counter-terrorism cooperation with Russia could make a significant contribution to U.S. interests. Pro forma discussions and lip service to intelligence-sharing will do little to save American lives — but establishing a real relationship with Russian intelligence agencies could. The Kremlin was interested in counter-terrorism cooperation, particularly with respect to extremist Islamic groups, long before September 11, and the unprecedented level of U.S.-Russian intelligence cooperation after September 11 did prove important to American operations in Afghanistan. Moreover, unlike America, Russia never turned away from the unpleasant business of recruiting human agents in favor of high-tech intelligence gathering. And Russian intelligence agencies have considerably greater access to expertise on some key regions and — because of the Russian Federation’s ethnic diversity — to individuals able to move freely in Middle Eastern and Central Asian societies. These capabilities could powerfully complement U.S. intelligence resources. For its part, Russia would likely welcome access to selected American satellite imagery and signals intelligence. According to some reports, Moscow relied on just one or two spy satellites for much of 2002 and had none in orbit during most of the war in Afghanistan.

It is also conceivable that Russia could be an important U.S. partner in undertaking particular counter-terrorist operations. Unlike some of America’s “old Europe” allies, Russian officials are not squeamish about military action. In many cases, Moscow will probably understand U.S. efforts to disrupt the operations of terrorist groups targeting American citizens and might even provide assistance under certain circumstances. The Kremlin has already essentially accepted the U.S. need to detain and interrogate al Qaeda terrorists; again in contrast to some West European governments, Moscow has been largely quiet about Guantanamo Bay.

Of course, U.S. and Russian concerns about terrorism are quite different. While Americans are troubled primarily by the danger of individual terrorist attacks targeting them at home and abroad, Russians worry that radical Islam could weaken neighboring states or even endanger their country’s territorial integrity, which has already been threatened by Islamist terrorists in Chechnya. According to Maksim Yusin, writing in Izvestia (October 17, 2001), some 12 million Muslims reside in the Russian Federation; they are a majority of the population in seven regions (including Chechnya).

Terrorism, Islamic extremism, and drug trafficking (also of considerable concern to Russia) are particular problems in the region along Russia’s southern frontier, Central Asia, the Caucasus, and South and Southwest Asia. Despite their differences over Iraq, the United States and Russia may be able to collaborate effectively in this region. Intelligence, financial, and other cooperation directed against drug trafficking, which often not only funds terrorist activity but also contributes to the lawless environment in which terrorist organizations thrive, could be especially productive. The two countries could also provide technical and economic assistance to regional governments to improve their border controls. Such joint projects would contribute directly to both American and Russian security by at least partially restricting the movements of terrorists; they would also likely be more palatable to some governments — particularly in Central Asia and the Caucasus — than strictly Russian assistance. Real U.S.-Russian partnership in the region could help to mitigate Russian concerns about American intentions there as well by demonstrably recognizing Russian interests in the region.

Proliferation

Meaningful collaboration with Russia to combat proliferation could substantially ease American efforts to keep weapons of mass destruction out of the hands of hostile states and groups. This goes far beyond securing Russia’s “loose nukes” (and “loose brains”); many so-called rogue states and other would-be proliferators are former Soviet client states where Russia has experience, established contacts, unique sources of information, and political leverage. Effective U.S.-Russian cooperation in this area also denies hostile governments the option of working with or seeking protection from a disaffected Kremlin.

While joint efforts to account for and secure Russian nuclear materials must remain a focus of cooperative activity, Russia’s increasing internal stability (and capability) should permit a much greater emphasis on worldwide U.S.-Russian non-proliferation work. The United States and Russia should first approach the other three states recognized as nuclear weapons states under the Non-Proliferation Treaty — Britain, France, and China — to launch a new dialogue on proliferation prevention and to share their joint experiences in securing Russia’s nuclear materials. Then, as a group, the five states could approach others known to have nuclear weapons as well as those states that have developed or are developing nuclear reactors. Where appropriate, the group could delegate one or more to approach particular governments sensitive to the involvement of others among the five. An initial emphasis on dialogue and on accounting for and securing nuclear materials, which are relatively uncontroversial and of general interest, should also facilitate cooperation. The joint U.S.-Russian mission to remove some 45 kilograms of highly enriched uranium from Yugoslavia’s Vinca Institute of Nuclear Sciences could also serve as a model for the group. Another possibility would be to attempt to establish an institutionalized mechanism for intelligence-sharing on non-proliferation matters. This could help substantially in coping with future proliferators by reducing disagreements about the facts, which have complicated discussions of North Korea and Iran with Russia, China, and others. If successful, this could reinvigorate the Nuclear Suppliers Group and enhance its effectiveness.

In time, this approach could be an important complement to the existing non-proliferation regime, which is in danger of collapsing due to thus-far ineffective responses to North Korea and Iran. By virtue of their parallel status as the five permanent members of the United Nations Security Council, the nuclear five would have a considerable array of tools to deal with problem governments. Organizing an “n-5” would also create a format in which the U.S. and others could discuss and coordinate their legitimate nuclear assistance to other states. Given that the nuclear states’ commercial interests sometimes contribute to others’ concerns (e.g., in Iran) or complicate solutions (as in dealing with North Korea, where Moscow resents having been excluded from the commercial opportunities of the 1994 Framework Agreement), this could make a real difference.

A strictly U.S.-Russian dialogue on nuclear-weapons modernization — something each government is now evaluating — could serve both countries’ interests while contributing importantly to transparency and trust. Expanded joint training for U.S. and Russian military forces and emergency workers in managing the disastrous consequences of an attack using weapons of mass destruction could also be useful.

The international economy

The united states has an important interest in Russia’s integration into the international economy, as it will likely contribute to political stability and moderate foreign policy conduct by improving economic conditions in the country and creating a Russian domestic lobby favoring peaceful cooperation with the country’s neighbors and partners. America has obvious commercial interests in Russia’s large marketplace as well, in addition to a long-term strategic interest in access to Russia’s energy resources.

Though many Russians remain concerned about possible foreign control of key firms and the threat of foreign competition to struggling sectors of their economy, most have come to realize the essential importance of competing in the international economy. The major debate is now over whether Russia should immediately seek membership in the World Trade Organization or, alternatively, delay its entry to give Russian enterprises more time to prepare for global competition.

Putin, in his April 18, 2002 state of the nation address, sought to persuade the uncertain plurality of Russians with the pragmatic argument that “the wto is a tool. Those who know how to use it become stronger. Those who don’t know how, or don’t want to use it or learn how to, those who prefer to sit behind the palisade of protectionist quotas and tariffs, they are doomed.” The Bush administration has appropriately offered to work with Russia to accelerate its wto accession, as well as in taking legal and administrative steps in the United States to facilitate trade with Russia, such as classifying Russia as a market economy, which has been done, and repealing the Jackson-Vanik amendment to the Trade Act of 1974, which still requires congressional action. The two countries have also established a Russian-American Business Dialogue to make recommendations to the two governments to promote the development of economic ties.

Yet the U.S. could do considerably more. Little creativity is required here; institutions such as the Export-Import Bank and the Overseas Private Investment Corporation exist for precisely this purpose and could expand their activities. Of course, access for U.S. firms remains a key concern as well; economic cooperation will be limited until the Kremlin forces open Russian markets in key industries, which could require standing up to Russia’s powerful oligarchs. Washington should be prepared to be tough in ensuring a level playing field for American firms and should not hesitate to use the leverage provided by the Export-Import Bank and other relevant agencies when appropriate. If the Russian government is successful in limiting protectionist impulses, several sectors of the Russian economy seem promising for American investment, including (in addition to energy) software design and development and telecommunications. Now that a land code has been passed allowing foreign firms to hold long-term leases on farmland, Russia’s agricultural sector also may be of interest.

Russian oil and gas

Energy cooperation could be especially important to the economic relationship between Russia and the United States. First and foremost, Russia’s considerable energy resources could provide an important new source of oil and gas both to the U.S. as a country and to American energy companies, which must constantly acquire new oil and gas fields to replace those depleted. At the same time, Russia could become an important market for energy-related goods and services, such as specialized equipment, construction, and engineering.

Despite initial enthusiasm about investment opportunities in the energy sector in Russia and Central Asia, the past decade has, with a few exceptions, been disappointing for interested U.S. firms. The lack of legislation on production-sharing agreements (psas, strongly resisted by Russian firms) significantly limited or delayed American participation in many projects, as did general legal concerns and other problems. Foreign investors also faced considerable suspicion from Russian officials and a skeptical public, both leery of ceding control of Russia’s patrimony to outsiders.

However, recent developments suggest that attitudes may be changing. The Russian government is reportedly formulating a new energy strategy that will allow foreign companies to have “complete economic control” in certain areas. bp’s $6.75 billion purchase of a substantial share of the Russian oil firm tnk earlier this year — which includes management control of the firm for bp — is a sign of new willingness to deal on the part of both foreign investors and Russian regulators and firms (though not long after the deal, the State Duma gave preliminary approval to a bill that may effectively kill psas). At the same time, the Kremlin has largely dropped its opposition to the Baku-Ceyhan export route for oil from the Caspian Basin, and major Russian firms have expressed interest in participating in the project.

In parallel, American interest in Russia’s energy sector has rebounded since September 11, which encouraged U.S. officials and executives alike to seek alternative sources of oil beyond the volatile Middle East. Though some commentators have even suggested that America should seek an energy security alliance with Moscow in order to replace Saudi Arabia with Russia as the top supplier and to encourage Russia to act as a “swing producer” to stabilize prices, Russia today cannot fulfill such a role. Unlike Saudi Arabia’s, a considerable share of Russia’s output is used domestically or cannot be exported due to limited infrastructure. Also, high transport costs discourage sales of Russian oil in distant markets like America. And Russia faces significant environmental constraints in responding to rapidly changing market conditions; many Russian oil wells cannot be turned off in hard times because of harsh weather conditions.

Yet Russia does have both a demonstrated ability to undercut opec’s power over the world oil market and, unlike many opec countries, a sufficiently diversified economy that important sectors suffer when domestic oil prices are too high. Furthermore, at least for the time being, major Russian oil companies seem increasingly interested in doing business with the United States. Russia’s largest producer, Lukoil, purchased Getty Petroleum Marketing in 2000 for $71 million to obtain its 1,300 U.S. gas stations; Yukos, the second largest producer, has gone to extraordinary lengths to sell its oil in America, including complex arrangements to load and unload a supertanker at sea using numerous smaller vessels. Both firms are now members of a consortium seeking to build a $4 billion pipeline to Russia’s northern port of Murmansk specifically to facilitate oil shipments to the U.S. east coast. Finally, while Russia’s oil sector usually receives more attention, the country’s natural gas reserves are also quite important, accounting for some 40 percent of global reserves. With its own gas supplies dwindling, the United States could become a major consumer of Russian gas in 10 to 20 years, according to some analyses.

What are the limits?

There are, of course, very real limits to the development of U.S.-Russian relations. The dispute over Iraq has demonstrated clearly that Washington and Moscow have different perspectives on major problems in the international system and the appropriate means for resolving them and that these different perspectives can preclude effective cooperation that advances American interests. North Korea and Iran — which raise similar but far from identical issues — may well draw further attention to the limits of the relationship. The fact that the stakes could be higher in these two cases than in Iraq (which was further from possessing nuclear weapons than either Tehran or particularly Pyongyang) only increases the urgency of expanding the horizons of U.S.-Russian ties.

The United States needs less from Russia vis-à-vis North Korea than it does from China, which has a considerably longer border with the North (and probably more leverage over it), or from South Korea and Japan, which Pyongyang most threatens. Yet Russian efforts to persuade North Korea to give up its nuclear weapons and weapons programs — and active cooperation in isolating Pyongyang until it does so — would be constructive. At a minimum, Moscow’s denial of political and other support would limit North Korea’s options.

U.S.-Russian differences on North Korea are primarily over facts and tactics rather than objectives. Russian leaders have made clear that they view a nuclear-armed North Korea as a dangerous strategic problem; however, they generally dismiss American assertions that Pyongyang already has one or two nuclear weapons. Even in private meetings, senior officials have argued that North Korea could at worst be a source of nuclear material for “dirty bombs” — though they also admit that Moscow has little information on Pyongyang’s nuclear programs. This relatively low assessment of the threat drives Russia’s strongly held position that the problem should be resolved strictly through diplomacy.

Though it has little at stake in North Korea today, Moscow is unlikely to support either military action or economic sanctions against Pyongyang in the absence of clear evidence that the North possesses nuclear weapons. Russian officials see North Korean claims about the weapons as bravado but worry (like China, Japan, and South Korea) that backing the weak regime into a corner could have unpredictable and dangerous consequences for the region. Moscow’s principal diplomatic initiative has essentially been to propose renewed North Korean adherence to the 1994 Framework Agreement in return for economic assistance and a non-aggression pact with the United States. Russia has also suggested six-way talks involving North and South Korea, the United States, Russia, China, and Japan. The talks were rejected by the North (which wanted direct talks with the United States) and by the U.S. (which was not prepared to talk at the time).

Washington could attempt to engage the Kremlin more actively in dealing with North Korea’s top leadership. President Putin has met Kim Jong-Il several times and seems to have some (admittedly limited) influence with Pyongyang, though Russia’s real leverage will probably remain unknown until tested. At a minimum, Putin may be sufficiently trusted by Kim to be credible in explaining the potential consequences of continued recalcitrance by the North. Other forms of cooperation could also be effective: According to some reports, Moscow permitted the United States to install nuclear detection equipment in its embassy in North Korea during the 1990s.² Needless to say, substantially engaging the Russian government would require sharing both the burdens and the benefits of any potential resolution. Russia is likely to remain vigorously opposed to military action, particularly in the aftermath of the war in Iraq.

On Iran, a certain end to Russian-Iranian cooperation that could contribute to Iran’s acquisition of nuclear weapons technologies would be highly desirable to the United States, as would Russian pressure on Iran to cease attempts to develop the weapons and access to Russian intelligence about Iran’s nuclear efforts.

Although the United States has less ambitious objectives with respect to Iran than it had in Iraq — focused more squarely on proliferation and less complicated by thoughts of forcibly removing Tehran’s government — Russia’s interests there are more significant and harder to reconcile with American goals. Unlike Iraq or North Korea, Iran is viewed in Moscow as both a responsible neighbor and a reliable partner. As a neighbor, Iran has made little or no effort to promote either its theocratic governance or its brand of Islam in Central Asia. In fact, Tehran was an important ally of Moscow in supporting the Northern Alliance against the Taliban and aided Russian efforts to end the civil war in Tajikistan. Most important, Iran did not offer or permit its citizens to offer meaningful support to Chechnya’s Islamist rebels.

Iran is also important to Russia as a commercial partner. Bilateral trade has reached approximately $1 billion per year, with an additional $300 million to $400 million per year in arms sales expected during the next few years.³ Iran is also increasingly purchasing Russian oil through oil-swap arrangements that supply refineries in northern Iran and free oil from southern fields for export. Moreover, unlike Iraq, Iran has paid its obligations promptly.

Russian leaders profess to understand U.S. concerns in Iran and even admit privately that Tehran may be attempting to develop nuclear weapons. But the Russian government denies providing assistance to this effort, asserting that its cooperation with Iran has focused strictly on the nuclear reactor at Bushehr, which is subject to monitoring by the iaea. Russian officials also insist that all spent fuel from the reactor will be returned to their country to prevent Iran from using it to develop a fuel-cycle capability and point out that the United States agreed in 1994 to provide similar technology to North Korea. With respect to Iran’s missile development, Russian officials insist that they have generally reined in the scientific institutes and private firms that have helped Tehran and that enforcement will continue to improve.

Though President Putin was reportedly more open to discussions on Iran during Colin Powell’s May trip, Russia is unlikely to terminate its assistance to the Bushehr project. Aside from being a source of obvious economic benefits, the project is also viewed as a means through which Moscow can both monitor Iran’s technological progress and exert modest leverage in other areas of interest. Still, the Kremlin may be willing to further tighten its arrangement with Tehran and to crack down more firmly on unofficial assistance to Iran’s missile programs. This latter effort is unlikely to be wholly successful in the absence of considerably greater work on the “supply side,” that is, in finding alternatives for the Russian organizations and individuals that could be tempted to help Iran.⁴

Washington could consider pressing for greater intelligence cooperation with respect to Iran’s nuclear work. The Kremlin should be more forthcoming with its own intelligence on Iran if Russian leaders want to reassure Americans with respect to Moscow’s role. Nevertheless, Iran will likely remain a problem in the U.S.-Russian relationship until its behavior changes. Washington should expect Russia to resist U.S. attempts to pressure Tehran or limit the Russian-Iranian relationship.

Working together

Russian elite and public suspicion of U.S. motives and resentment of U.S. conduct are also a brake on progress in the relationship. For example, when asked in a May 2002 vciom poll to identify those factors that “[push] Russia and the United States apart,” Russians surveyed gave the following as their top four responses: “high-handed attitude of Americans to other countries and people” (38 percent); “striving by American authorities to widen power and control over the world” (36 percent); “refusal by American authorities to consider the interests of other countries” (32 percent); and “U.S. tries to defend its interests with a ‘big stick,’ i.e. troops, bombing, etc.” (26 percent). After the war in Iraq, these views are likely even more widely held.

However, Washington can reassure Russians by showing greater sensitivity to Russian concerns and by avoiding peripheral actions that antagonize Russia without advancing important U.S. interests. A November 2002 meeting between Under Secretary of State for Political Affairs Marc Grossman and the foreign ministers of the guuam states (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova — a group of former Soviet republics that have banded together in part against Russia) in New York and a U.S. announcement of $50 million in aid to the organization served no end that could not have been easily achieved in bilateral talks with the five states without irritating the Russian government in an area of much greater significance to Moscow than Washington.

More frequent and more comprehensive consultations with Moscow in advance of important American policy initiatives would also be constructive. Such an effort would give Russian officials — and the Russian public — a sense that the Bush administration considers Moscow to be a player in international affairs, even a partner, and views Russian perspectives as significant. For example, notwithstanding the failure of talks on modifying the abm Treaty, the administration was successful in preparing the Kremlin for President Bush’s announcement of the U.S. intent to withdraw from the treaty. This helped the Russian government to manage domestic concerns.

The United States does have the options of ignoring Russia or giving it much less priority among a multitude of foreign policy goals. But such an approach would have its own costs and could undermine important American objectives, most notably in fighting terrorism and proliferation, but also in rebuilding Afghanistan and Iraq, pursuing peace in the Middle East, and using the U.N. Security Council to advance U.S. interests.

Genuine partnership with Moscow will not be easy in the face of differing perspectives, priorities, and cultures. The legacy of the Cold War — nostalgia in Russia and a sense of rectitude and invincibility in the United States — also complicates the relationship, as does Russia’s still-imperfect democracy. But the rewards of success could be considerable.

What is essential for the United States is to develop a strategy for the U.S.-Russian relationship that maximizes Russia’s contributions as an American partner while managing inevitable disagreements — in part by ensuring that they do not exceed Moscow’s gains from partnership with Washington. Though there is considerable asymmetry between American and Russian capabilities, Russia has made and can make a real difference in many circumstances, especially if U.S. ties with some traditional allies are further strained. In a complex and dangerous world, Russia can be an important friend. Pursuing such a partnership is worth the effort.