U.S. - Russian Business Council

Anthony Lake
Assistant to the President for National Security Affairs

Remarks to U.S.-Russia Business Council

Washington, DC
April 1, 1996

"The Challenge of Change in Russia"

Thank you very much Gene Lawson, an old friend, and Bob Strauss, also an old friend. And I want to thank him for everything that he has done for our nation over the years, over many years not just on this issue but on many issues. And I want to thank all of you for coming. As Bob said, you are an extraordinary gathering. And I find, very encouraging that there are so many of you here. And the quality of the people who are here gives us real hope, I think, for the future in our relationship with Russia. In a somewhat different context, I also am pleased after the last few years to be alive and ambulatory after three years at this job. (Laughter.)

Mark Twain once said that today, April 1st, is the day that reminds us of what we are on the other 364 days of the year, and I hope after my remarks that you won't find his view to be accurate. (Laughter.)

I wanted to join you today, asked to join you today, because few issues on America's foreign policy agenda are as critical or as challenging as our relations with Russia. And few groups understand as clearly as you do what is at stake here. With President Clinton going to Moscow in just a few weeks and with the Russian people going to the polls in June, this is an important time to remember why staying engaged with Russia is in America's national interests.

Consider first the world that we live in today. Halfway between the end of the Cold War and the dawn of a new century, our nation is at peace. Our economy is strong. The tide of market democracy is rising around the world bringing freedom and the hope of prosperity to more people than ever before in human history. And all of this provides new opportunities for us.

But this promising new era is not by any means risk-free. Old threats like aggression by rogue states have taken on new and dangerous forms. And a host of modern threats from nuclear proliferation, to terrorism, to the growth of international crime, ignore national borders, and they undermine our national security. So, in this new age of possibility, but also of peril, American leadership is more important than ever before. The world may have radically changed, but our basic mission in the world has not.

In many regions, the roots of the democratic society -- pluralism, tolerance, liberty -- are not yet firm. Now, as before, our special role in the world is to safeguard and strengthen the community of democracies and of open markets, and nowhere is that mission more vital than in Russia.

After more than four decades of nuclear peril, of communist repression that trampled the rights and shackled the potential of people throughout the Soviet empire, or Superpower rivalry from Angola to Vietnam, the state that was once our fiercest opponent is now moving toward market democracy.

Helping Russia succeed in this is deeply, profoundly in our national interest. A stable, democratic-oriented, market-oriented Russia would be far less likely to threaten America's security and far more likely to work with us to solve global problems. It can be an important partner in prosperity, with 150 million new consumers for American products. It can be a strong ally against the forces of destruction, whether they take the form of rogue nations or ethnic hatreds or terrorists trafficking in nuclear materials. And it could be a force for stability on a continent long wracked by division.

The situation in Russia today does pose some very real concerns. Senior officials who stood for reform have been fired. Projectionist pressures have jolted our trade. We continue to differ with Russia over its nuclear cooperation with Iran. And just last month, the Communist- dominated Duma voted for reconstituting the Soviet Union.

Let me emphasize here: We support the millions of former Soviet citizens in all those nations who broke the chains of tyranny in 1991. They have chosen freedom, and their will must be respected. President Yeltsin believes that and so do the vast majority of the Russian people.

There is also the tragedy of Chechnya, a tragedy for the Chechens, for the Russians and for all friends of Russian democracy. We support the territorial integrity of Russia, and we oppose attempts to change international borders through the use of force.

We oppose terrorism in all its forms. But we also oppose strongly the means the Russians have been using. Widespread and indiscriminate use of force has spilled far too much innocent blood and eroded support for Russia. The cycle of violence must end.

We welcome President Yeltsin's decision announced yesterday to begin withdrawing army units and to intensify the search for a settlement there. We call on the Chechens to respond in a similar spirit.

Just before I came over here, I got a report of a new attack on a Russian army column, and heavy losses resulted. We hope very much that this was the last shot in the last phase, rather than the opening shot in a new round of fighting.

So, we mustn't let our vision of Russia's future blur our view of its current problems. It doesn't serve us or the Russian people to pretend that real challenges don't exist or don't matter, but neither should we yield to the prophets of pessimism who insist that Russia is doomed to repeat its past. If we shrug our shoulders, if we turn our backs, we risk creating a self-fulfilling prophecy, and we will miss a unique opportunity before us.

We always expected Russia's journey to reform to be uneven and difficult. We do not know, and indeed, we cannot know, what the outcome of that search will be. That is precisely why our strategy is designed for the long-haul. Only by staying engaged, steadily, patiently, intensively, can we help Russia seize the promise of a democratic future instead of reverting to its past. Only by keeping our eyes on the horizon, steering by the stars of our interests and our ideals, can we move toward the goal that will benefit our people, a stable, democratic, market- oriented Russia, secure within its borders and at peace with itself and with its neighbors.

Since taking office, President Clinton has worked closely with the Congress and our friends around the world to strengthen support for Russia's progress. And these efforts have paid real dividends, for America, for Russia and for the whole world. v So let's step back for a moment from the immediate problems that we can see all too clearly and try to understand the historic nature of the gains that have been made in the past few years. Over the last three years, our assistance has helped Russia to lay democracy's foundations: Political parties, free elections and an increasingly independent media. The Russian people now have a voice in governing their country. And the whole world will hear them express their views when they go to the polls in mid-June.

We have also seen major changes in Russia's economy. It wasn't long ago that the state's heavy hand gripped every enterprise and guided every decision. This was not the Invisible Hand.

Resources were wasted while basic needs went unmet. Long lines of shoppers stood in the cold for products that never arrived in the stores. Private property was an alien concept. The state managed everything, and it managed them badly.

The legacy of that period is still visible. But today, with America's strong support, more than 20,000 large enterprises and 100,000 small ones have been transferred to private hands. Now the private sector produces more than 60 percent of Russia's GDP. Inflation, as Gene Lawson said, has dropped from about 18 percent a month one year ago to around 3 percent today. Average monthly wages have grown.

All of this is good, of course, for the Russian people, and behind these statistics are the lives of the Russian people who are benefiting from reform, but it's also good, as you well know, for America as well. You know better than anyone that an open, stable, prosperous Russia will expand the frontiers of American business, creating jobs and opportunities back home here.

Many of you may be wondering -- I'm sure you're wondering -- what impact the June elections will have on Russia's commitment to continue its reforms. I won't speculate on the outcome of the elections, but there is one central fact. And that is any Russian government will face the same opportunity. And that is that Russia is pointed toward economic recovery if it stays the course of reform. Attempting to halt or reverse the process would impose a huge cost not just in resulting capital flight, inflation and shortages, but in the public support and confidence on which elected leaders depend. Sooner or later -- and in democracies it's usually sooner -- political leaders act on interest. And it is deeply in the interest of Russia and its leaders to stick with economic reform.

Most nations also act on interest in their foreign affairs. And, today, I believe that most Russians know that the best way to build security and prosperity at home is to press for integration with the rest of the world and not to isolate themselves behind walls of their own making.

With our backing, Russia has deepened its engagement with regional and global institutions. It has stepped up its responsibilities on the international stage from co-sponsoring the Middle East peace process to helping form the Contact Group on Bosnia. The Russian government has acted to improve relations with Russia's closest neighbors -- from withdrawing Russian troops in the Baltics to resolving key differences with Ukraine. It's got a ways to go, but it has been making progress.

Russia also has begun to build bridges of security across the Cold War dividing lines of Europe. This is in Russia's interest -- profoundly so -- and in ours as well. Twice in this century, instability in Central Europe led to violent, global conflict that cost American and Russian lives -- millions and millions of them. The best way to prevent that ever from happening again is to build an undivided Europe and to build it together.

For our part, we are working closely with our allies to create an integrated, secure Europe where Russia can play an important role. Our strategy is paying off. Russia is now a full member of the Partnership for Peace. The NATO-Russia relationship is expanding. And after 50 years of hostile confrontation, today, Russian and American troops are exercising together on land and at sea, working together at NATO headquarters and standing together to safeguard the peace in Bosnia.

The process of NATO enlargement is moving forward, and it will happen as new members are ready to add to NATO's strength and as the allies reach consensus. It will keep to its open, inclusive course and hold to its steady pace. Getting off-track in either direction would damage our long-term goal of enlargement. Delaying enlargement would destroy the momentum that we have built and the spirit that the new democracies have worked so hard to reform in preparation for membership. Calls to move more quickly could only challenge the consensus that we've developed in NATO and risk setting back -- rather than accelerating -- the process that the United States has done so much to create.

As we have stressed to our Russian colleagues, NATO enlargement is not directed at anyone. And the process will neither determine nor depend on events in Russia. NATO can do for Europe's East what it did 50 years ago for Europe's West: Prevent a return to local rivalries, strengthen democracy against future threats and provide the conditions in which fragile market economies can flourish. And as enlargement proceeds, we hope the NATO-Russian relationship will become a full-fledged partnership -- an alliance with the alliance to tackle common problems together.

Nowhere will America's partnership with Russia do more to strengthen our mutual security, and nowhere has it been more effective than in reducing the nuclear threat.

Today, because of our steady engagement, America's cities and America's families are no longer targeted by Russian missiles. Kazakhstan has given up the nuclear weapons left on its soil, and Ukraine and Belarus are removing theirs as well. Together, START I and START II, which we hope the Duma will soon ratify, will slash by two-thirds the nuclear arsenals that we in the former Soviet Union held at the height of the Cold War.

We want to build on this record of progress by enhancing the security of nuclear materials and by improving our ability to fight nuclear smuggling. These are among the issues that will top the agenda when President Clinton goes to Moscow later this month to help lead the Summit on Nuclear Safety and Security.

So the distance that Russia has traveled toward deepening democratic and market reform, conducting a measured foreign policy, and reducing the nuclear threat makes Russia's reversing course extremely difficult at best. It's not impossible, perhaps, but it would be hard for them to do and not at all in their interest.

That said, everyone here knows that the current economic and political situation in Russia is far from perfect. Trying to do business in Russia can be very trying indeed. The Red Army may be gone, but the red tape lingers on. Commercial success still depends too much on who you know and what favors you can get.

I want all of you to know that the hardship you confront in doing business in Russia is our business in the government as well, because ultimately it is the private sector that will lead Russia into the global economy and promote prosperity for both of our peoples.

You, here, were among the first on the ground -- pioneers for American enterprise and ambassadors for American know-how. You make the investments and forge the relationships that will pay off down the line. And you recognize, as do we in government, that it makes good sense to hang in there today, because what millions of Russians are so determined to build will yield enormous dividends tomorrow.

We know that for Russia's economy to work, and for you to have the confidence you need to invest, the business climate has to be predictable and open. Contracts must be honored. The banking system must be strengthened. Taxes and their enforcement must be fair. Laws and regulations must be observed throughout the lands, and corruption must be rooted out.

Only the people of Russia can overcome these enormous challenges. Our interest -- the American interest -- is to help them succeed. It would be easy to resort to knee-jerk reactions whenever we disagree with Russia's politics or its policies. It would be easy to walk away. But we have worked too hard and accomplished too much. And it would be foolish and irresponsible to back out now. We have a responsibility to future generations to lock in our gains and to build on them.

First, we must and will stand firm behind Russia's new democratic institutions -- an independent judiciary, free media, accountable government. Strengthening democracy is also crucial for Russia's marketplace. For the rule of law that protects human rights will also help guarantee that contracts are respected, just as the searchlight of a free press can help expose corruption.

Second, we must continue our support for reform through international financial institutions such as the IMF. The new extended fund facility will help Russia keeps its economy on track. It sets tough performance requirements, monitors them monthly, and if performance falters, the money stops. The agreement is based on good policy and performance, not parties or personalities.

Third, we will continue to work with Russia on structural reforms and good business practices. This is a top priority with the Gore-Chernomyrdin Commission. And, as long as the Russians work constructively with us, we will help them establish a tax code that is fair, a capital market that functions, and a legal framework that business needs to do business.

Together, these steps will help Russia create the economic security that its people so deeply desire. And finally, we will continue our efforts to reduce the nuclear threat and to advance common foreign policy interests. Our partnership with Russia can help shape the world we seek, where our interests are more likely to be protected and where our ideals of democracy and open markets can flourish.

I don't need to tell all of you in this room that the next few months will be vitally important ones for Russia. The eyes of the world will be watching as the Russian campaign gathers steam. The United States does not support any one candidate or party. We are, however, unequivocal in our support for reform and reformers. And all friends of Russian democracy want to see that the elections are free, fair and regular.

The Russian people face a critical choice now about the destiny of their nation, whether they will go into the new future that the reformers have laid out, or revert to the terrible past of Soviet communism. The greater Russia's commitment to political and market reform, the more effective America's support and that of the world will be.

We have worked hard to open the door to a stronger partnership with the West, to global markets, to international institutions, to a more peaceful and stable world. But only Russia can make the decision to cross that threshold for good. Only Russia can take responsibility for not closing that door on itself.

The Russian people want the same basic things that we do, security, prosperity and the chance to pass on to their children bolder opportunities, brighter hopes and a safer, better world. They have it within their power to make those dreams come true. But in the end, it is up to the Russians. We expect Russia to stay on the road of reform. And as it does America will keep its commitment to be with them every step of the way.

Thank you very much. (Applause.)

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