Russia and the United States: New Challenges, New Strategies

"Russia and the United States: New Challenges, New Strategies"
Grigory Yavlinsky, Member, Russian State Duma; Co-founder and Chairman, Yabloko Party and Duma Faction

February 6, 2002

Moderated by:
Graham Allison, Director, Belfer Center for Science and International Affairs
Sponsored by the Institute of Politics and the Strengthening Democratic Institutions Project

GRAHAM ALLISON: Good evening. I am Graham Allison, director of the Belfer Center for Science and International Affairs. It is my great honor and pleasure to welcome back to Harvard Grigory Yavlinsky, the leader of the Russian Democratic Party, Yabloko, a Russian presidential candidate, and one of the great political leaders in the Russian democratization process over the past decade. Indeed, if you look at the political scene of democratic leaders who have been active parts of Russian politics since the late 1980s, and beginning with the disappearance of the Soviet Union, and the emergence of Russia just ten years ago, Grigory is the last one left standing. Gorby has gone off to his just desserts. Yeltsin has gone back to his bottle or whatever. But, Yavlinsky is still in the front line, and the best of Yavlinsky is yet to come.

Ten years ago, literally last spring, Grigory Yavlinsky, who was a young Russian political leader, came here to Harvard, bringing with him seven or eight members of his EPICenter, which was a research group in Moscow, to work with a group that I organized, that he and I co-chaired. It included Stan Fischer, Jeff Sachs, Bob Blackwill and others - to develop a program that was called "The Grand Bargain." It called for Western Marshall Plan-like assistance to Russia for an orderly transition to democracy and a market economy. Grigory and I went and presented this to Mr. Gorbachev in Moscow on several occasions, and ultimately to President Bush here in the U.S.

I can say that we were equally successful with both audiences. Each said "nyet." But, nonetheless, the framework that it provided has actually informed lots that has followed. Grigory will have something to say about that tonight.

Our speaker tonight is a man of many terrific facets and distinctions. If he were just a professor here at the Kennedy School, we would be fortunate, because he is a professional economist, who thinks of things as a political economist in the way that the Kennedy School tries to train people. And he just two years ago published at Princeton University Press a very good economics book called Incentives and Institutions, which is the first analysis of the transformations of a former Soviet or command-style economy, and an understanding of the process for that. It is a book that is used as a textbook. So, in academic terms, you could think of him.

As an institution-builder, he created the first independent research institute on economic affairs in Russia: EPICenter. The group of young people whom he recruited and who came with him ten years ago to the school to spend seven or eight weeks struggling about what this plan should be, are actually all now very distinguished Russian political leaders themselves. Mikhail Zadornov went on to become finance minister, the two Mikhails are both heads of committees. All of them are at least members of the Duma. Some of the people of our group went onto distinction as well. So it was an interesting mixture. But Grigory started the first independent research institute.

Then he founded a political party: first Yabloko, and now it is called the Russian Democratic Party Yabloko. He has been the only person actively involved in the Duma elections and the presidential elections in each of the elections that have brought Russia to this point.

We are very fortunate to have Grigory here tonight. He is going to talk to us about Russia and about the challenges in Russian-American relations. Let us welcome Grigory Yavlinsky.GRIGORY YAVLINSKY: Ladies and Gentlemen, I am really very privileged to be a guest here at the Forum. It is very important for me to listen to your questions, know your reactions, and to discuss with you the most important problems of the current developments. Russia is such a country that whether Russia is weak or strong, it is always related to everything that is going on in the world - or almost everything. And I had a chance to be here and to present several very important issues about my country. First it was in 1991 when we were developing a special plan to avoid the deep suffering and unsuccessful developments in our economic reforms. But unfortunately, Mr. Gorbachev went to the G7 meeting in London with a different plan. And, in August 1991, the coup occurred.

The second time I was here at this podium was after the 1996 [election], and I was speaking about Russian economic reform. I was trying to explain that if the reforms after the presidential election of 1996 continued in the same way, then only a blind person couldn''t see that the debt crisis would be something we would have very soon. In August of 1998, that happened.

Now I am here, I think, to share with you an important issue. A lot of things changed in Russia after the eleventh of September. A lot of things changed in the world. A lot of things changed in Russian politics. I am going to speak to you about the new stage and the new possibilities in Russian-American relations, and about developments in Russia itself both this year and in the next one or two years -- maybe even less, because time is going so quickly.

I will start with some explanations about the Russian economy and then about Russian democracy. Then, I will go to Russia-U.S. relations. I want to share with you first of all, my vision of what is going on in Russia -- of what Russia represents today. Then we will go to the relations with the United States. I am not going to analyze what is going on with the United States itself, because you are just here. And you know that even better than I.

In every newspaper, you can now see very positive analyses about the Russian economy since 1998. This is true. The figures are much better than in any year after 1991. But I want to say that I think that the economic growth this year will be visibly slowed because of three major reasons. First of all, as you know, the main reasons for economic growth in Russia are the devaluation of the Russian currency and the very high price of oil. I want to report to you that these major factors of economic growth in Russia are almost exhausted. And the only possibility for expanding sales now is better quality, new technologies, and lower costs.

Further growth would require more investments and radical change in the quality of management in the Russian economy and also in the political environment. I don''t think that the Russian government -- if you take into consideration the statements of the Russian government in the economic forum -- understands that clearly. But I think that is the key issue the government should understand as soon as possible.

The second reason is that lower prices and the uncertain prospects of international oil markets made at least some of the larger Russian companies revise and downscale their investment programs.

And the third reason is the political and personal concerns about the Russian business elite: fears of new attacks on the business people who had acquired large assets through connections with the Yeltsin family. This is an unavoidable problem; it is almost an institutional problem in Russia. The way that we made reforms and the way that we undertook privatization now creates the problem of this very high level of instability. And the agreement, which appeared up to the 2000 elections about peaceful coexistence between all the new elite, is now very much under threat.

For all of these reasons, I do not expect economic growth in the first quarter and maybe even in the second quarter. And I also want to underline that we already have inflation of 1.2% a week. So that means that we can expect at the end of the year -- even if that will be on this level again -- about 30-35%.

The second point, or section or paragraph about the Russian economy that I want to touch upon is that which I want to congratulate the Russian government about. The Russian government has just done maybe the most interesting and most promising, at least part of the tax system among all of the countries I know. The Russian government did what I have been advocating for ten years, including at this place. I was fighting with the IMF, with the honorable Stan Fischer, and the other man who is now retired from the IMF, Mr. Camdessus, saying that low taxes are always better than high. They did not want to listen. They were saying that they needed a balance and for that balance, as bureaucrats they were saying, "we need these figures."

I was advocating a tax of about 10%. And a flat rate. Immediately after the elections, [at] a first meeting with President Putin— I came third, he came first [in the election]--and he said, "What would I do first if you were in my office?" I said, "If I were in your office, first of all, I would create a flat income tax rate of 10%." He said, "I promise that I am going to think about that." In the same year it was adopted by the parliament because he pushed it through, the 13% tax and flat rate. What we have just now.

You remember the stories that Russians are not able to collect taxes and all that and all this. The IMF delegation comes to Russia and says that Russia is not able to collect taxes. I was trying to explain that no normal government would be able to collect a 45% income tax, and in Russia, never. Russians would not pay this tax. Never. Not now. Not afterwards. Simply they don''t want to do this. They were asking me, "How do you know?" I said, "Because I am Russian. I know this." This is my explanation. For sure they wouldn''t pay that.

They said, "What will they pay?" I answered, "About 10%, not more. We are a poor country. The people have been very poor for a very long time, and they are not going to pay 45%. And, only a flat rate. That is the only thing which would be possible in Russia."

Now we have not a 50% collection of revenues; we have more than 90%. We have better levels of revenue than we had before 1998, before all the crises. And together, with the cutting of the expenditures of the budget, which I also want to praise the government for, the proportion to GDP, the corresponding expenditures stands at approximately 2.5% in 2000-2001. This is a very good number. And this is much better than 1998. Before the crisis it was 5.4%.

The main advantage the government has, together with the president, is that the president -- in contrast to the previous president -- has enough authority to collect the necessary taxes from the large companies. The question is if he chooses to do so. This is a different question. But he has the authority. And that certainly supports the budget very much. Especially if the price of oil would be higher than $20 per barrel, we would be on the safe side.

So, as a conclusion of that part, I want to say that Russia has no problem with debt burden at all. We can easily manage our debt, foreign and internal, and we can be in a good position.

That is why in the policy of the future external borrowing, there are two major positions. One of them is the position, certainly, of the government. They are happy, and they want to take money from abroad. The other position, which I share, is the position that Russia must stop all kind of borrowing, including IMF borrowing. This is not acceptable anymore.

The capital flight from the country is still very big, $20 billion per year. Twenty billion dollars a year from a country with a budget of $60 billion is pretty big capital flight. But I want to say that the criminal part of that, I think, is much smaller than some people want to think. Mainly, this is the money left abroad for business considerations, and mainly for safety reasons. There is a clear case of political [in]stability in the country. And very often Russia is accused of corruption, and the money is explained as corruption. Even the chairman of the Central Bank from time to time makes a very special announcement that it is not simply $20 billion per year, it is a more than $4 billion per month. Things like that. But in my judgment it is not real. And I would not believe in that.

What about corruption? I want to say that I made a special investigation on this issue. I want to report some results to you. The result of this investigation is that the Russian bureaucracy and the Russian corrupt— whoever it is, businessmen or bureaucracy or politicians— are not keeping their money in North Korea. Maybe it sounds strange to you. And they are also not keeping their money in Saddam Hussein''s banks. I can tell you in which banks they are keeping this money. Some of them are not far from here; some of them are in Switzerland, and some of them are in Britain or in other famous countries. So when you are criticizing Russia for corruption, it is fair to say that at least it is a joint venture. (Laughter.) We would never achieve such a level of corruption if you were not prepared to be of such a big help to us. That was the only way to do this.

So, I want to ask everybody discussing Russian corruption and Russian laundering, that they understand that it is always a joint venture. It cannot be done only by Russians themselves.

Now, the banking sector is a very painful thing for us. It certainly is not in very good shape. We still have no banking system. But those small banks we already had up until 1998 are trying to work without taking money from the government.

Regarding economic policy, I want to say that there is one major correction. We should go as far as possible and as fast as possible with the institutional changes in the country. It is a tax system, it is a labor code, it is land legislation, and it is foreign currency control. These must be absolutely different from what we have at the moment.

Generally speaking, Russia is moving slowly -- but moving forward with its economic reform. It is much less than I want to see, but much more than I often read in the Western newspapers.

Another issue I think is crucial to explaining what is happening in Russia is domestic politics and the state of democracy. Here I want to say that I have a very negative view about what is going on in, first of all, the press, secondly, elections, and thirdly, the judiciary.

About the press I want to say that the censorship, the control of access to the press, the manipulation by the press, the establishment of the press as a means of propaganda, and the full control over the major state channel of television are very serious. It is incomparable to 1992, 1993, 1994 and 1995. It is a completely different situation. Television in Russia [can be described as]: 80% entertainment -- very low quality; 10% of the ideas which are coming from the two or three policy makers from the Kremlin; and then sports and weather. That is it. No television at all. Finished.

It is almost the same situation with the newspapers. Certainly you can have a newspaper when you come as a tourist. When you come as a tourist to Moscow, you would be told that, "We have a lot of different nice things in Moscow. We have the Kremlin, museums, Tsar Cannon, nice shops, a zoo. We have democrats in the parliament. We can show them to you. Also, we have some newspaper which can openly criticize everybody. Our democrats are writing their articles, and so on." So this is for such purposes.

[There is] no possibility to express the views on a constant base. There is no possibility to make a political line to your voters. I have millions of voters; I have a right to express my political views there. But there is no access. There is a stop list with names, and there is a stop list with topics, which are completely not allowed. It is a very tough situation there.

Elections. All the regional elections, almost all of them -- are manipulated. Look at the elections in the Far East. Look at the elections in the middle. Russia and Rostov, everywhere. Manipulated. Almost openly. Almost openly.

And the judicial system. This is the situation. It is used like a political tool, like a political weapon. Simply, if you want to do something, you are immediately using this tool as a knife or as a gun if you want to kill your political opponent.

To summarize all that, I would say that I want to repeat what I was saying two years ago. This is the attempt to create managed democracy or controlled democracy. It is a very special system. It is a system of quasi-democracy, or whatever you would call it. But the idea is that you have all the democratic procedures, you have a democratic facade. But you have no substance. This is a very well known Russian policy of creating Potemkin villages. Now we need this Potemkin village to be accepted at the different lunches and dinners everywhere abroad. So we have everything. But I want to remind you that the most democratic constitution in the world in the 1930s was the Stalin constitution. So we are experienced in organizing such things.

But I want to explain some small differences you can find between the totalitarian system and the current system. The totalitarian system was simply destroying democratic institutions. Simply destroying them. This system, the system of the managed democracy or the controlled democracy, is not destroying democratic institutions. It is adjusting democratic institutions to its own needs and goals. It is a different nature.

In case they are not able to adjust them, they replace them with something different. "You don''t like the Journalists Union? No problem. We will create a Media Union, and we will simply push you away from the scene." The same is true with the political parties and the television stations. No, they are not destroying private television. "No problem, you can have private television." But if they don''t like this television, they will change the owner. They will simply change the owner, and put in an owner who will do what they want him to do. This is all really serious because it is a small group of people who in this way manipulates the whole thing. They came to this, step-by-step, based on experience from 1996-1999.

The last observation -- I am certainly doing this quickly in order to be clearer in the main part of my presentation about Russia-U.S. relations -- is about Chechnya. The war in Chechnya is a terrible, very complicated and very difficult thing. First of all, it certainly is a massive suppression of human rights. Massive. Every day. In all directions. In terrible forms.

But now the situation in Chechnya is certainly very different from what it was in 1994-1995-1996. It is a completely different scene, and completely different situation. It is a result of federal policy as well, not as something that simply happened. Because the policies which were taken by federal power; they are completely wrong. We have come now to the situation where we have in Chechnya a very big bird which I can call terrorism in the plain substance of this word. There are some people who I call separatists, and there are the large number of people who are normal. The question is, who is able to know who is who, and what is what? This is completely impossible. A hundred thousand people/military troops are staying there. And so all of that is such a complete mess. Sooner or later -- I would prefer to have it sooner -- a political solution is needed. And, there is only one political solution: in Moscow under President Putin there must be a round table among all of the forces who are interested in a political solution, not excluding anybody from Chechnya itself. This is the only way forward.

I have said this to the president several times, and I am insisting on it. Sooner or later that will happen, only in this way. All the other solutions are simply impossible, because the situation there is too complicated now.

Now I am coming to the most important part of my speech; I will try to explain what is going on in Russia. After September 11, things happened which we never expected. President Putin made such a dramatic U-turn after his meeting with the leaders of North Korea who were traveling for months and months through Russia in a bulletproof train, which was very strange. It was like a dream. Something like a nightmare. Then, he was inviting somebody from Libya-Qadhafi— to come first to Belarus, then to Russia. Then he was visiting Fidel Castro and saying that "this is the best place in the world." Then we had frequent visits from Iran, Iraq. So that was developing in a very strange direction. Almost the adequate direction to what we have in our democratization process.

After the eleventh of September, suddenly everything changed. Immediately. In one day. As soon as President Putin was able to find President Bush, he called him. And thirteen days later, on the twenty-fourth of September, he invited leading Russian politicians from the Duma, and the State Council -- that means the Russian senators -- to a meeting. There were about 21 people in this meeting. He said, "What do you think about our future? What should we do in this situation?"

The discussion was very long. And the political forces present at this meeting were speaking in such a way: one of the people there said it was necessary to support the Taliban; eighteen people said that Russia must be neutral-eighteen; only two people said that it was necessary to give unconditional and immediate support to the United States and the anti-terrorist coalition.

Then President Putin said, "Now I want to make my own statement." His statement was about, as you know, unconditional and immediate support. So that was his personal decision. And that was very interesting because this decision was contrary to all members of the team that President Putin had been collecting around himself for two years. So it really was a personal decision. Certainly he had very strong tactical reasons for that decision. It was great that he understood them.

Two years before, even one year before, in the summer of 2000, maybe you noticed, maybe not, the Russian Security Council made a statement that "we are going to bomb the camps in Afghanistan, which are preparing the fighters for Chechnya." For tactical reasons, it was absolutely clear that maybe for the first time in the history of Russia, using someone''s help and someone''s force, we could solve our problem. And it was really a very difficult problem for us. And then suddenly, unexpectedly this help came.

It was not a gift for us; and we were not giving a gift. It was not a gift for us. We were just cooperating. From the very beginning it was really, seriously, coinciding interests for us. And I am praising the president for understanding this issue. Maybe now everybody can see it is not so difficult to understand, but at that time, it was rather surprising.

But there is also a strategic side to the issue. Not only tactical. We have had alliances with the United States before. We had an alliance in the First World War; we had an alliance in the Second World War. Now we have an alliance at the beginning of the 21st Century. But those were tactical alliances, and now we can speak about strategic alliances.

Both presidents are talking about a "strategic partnership." The question is, what does "strategic partnership" mean? I want to say that I think that strategic partnership means an absolutely new quality of partnership -- a new quality of relations between Russia and the United States. In most general terms, "strategic partnership" for Russia means to understand and to introduce into everyday life the most important key values which are the basis for Western society and the United States. That is what "strategic partnership" means for us.

For our economy it means that we finally have to separate business from power. All the major business in Russia is conducted through the authorities and through being engaged with the authorities and with power.

Democracy must be expressed very clearly through the free press and independent judicial system— I want to underline that independent judicial system is one more precondition for a strategic partnership. And certainly human rights is the main value and the main goal for the political development of the country. For Russia, that is what strategic partnership means in general terms.

For the United States, it is not an easy task either, by the way. First of all, it is necessary for the United States for the first time not to place stakes on a group of people or on an individual -- not to repeat the experience with Mr. Gorbachev and then with Mr. Yeltsin. When the group or the individual collapsed, the United States'' and the West''s foreign policy towards Russia collapsed with them.

No republican administration, no democratic administration, has ever believed in the country, not in an individual in the Kremlin. It is necessary to see the country, not simply the leader. It is very good that Russian and American leaders have good relations; it is a good precondition. But it is only a precondition. It is a demand that in this strategic partnership, the U.S. must see as its partner Russia as a country, not simply the leader of that country, who would sit in the Kremlin with a strong hand. And that strong hand would control all Russians because "they don''t understand something like democracy or economy." That would not work in this way.

Secondly, it is very important for the United States to understand the situation with the Russian borders. Russia has the longest borders with the most unstable regions in the world. The ultimate goal for Russia is to keep those borders in order. Meaning that we want to survive in the current borders. We want to become a European country within the current borders. And, we have a very dangerous situation in the south and the southeast: the borders with China, Iran, Iraq, Afghanistan, and the Caucasus. This is a real challenge for Russia. It is a real threat to us. So that is one thing that it is very important that the United States understands.

Thirdly, for the United States, if we speak in general terms, it is extremely important to answer the question of how the United States wants to see Russia from a strategic point of view. If the United States sees Russia from the strategic point of view as a European country within the current borders as a strong democracy, and understand its role which it is playing in this Eurasia part, then that means that Russia and the United States can be strategic partners.

But that also has substance in practical terms. What does the strategic partnership mean for the United States in practical terms? First, de-monopolization of OPEC in the world market of oil. Secondly, stabilization, I think, forever, of the situation with China -- let me put it in such a diplomatic way. Thirdly, non-proliferation. Fourth, the stabilization of the borders with Belarus, Ukraine, and in Europe in general. And fifth, which is one of the most important things at the moment— I want to give you the formula: weaker Russia, more terrorism in the world; stronger Russia, less terrorism in the world. This is plain.

But also, there are a number of issues in the world, which from my point of view, need strong and deep serious strategic cooperation between Russia and the United States. The Balkans, the Middle East, Pakistan/India, the Taiwan situation, ecology, international crime and drugs, European security, and finally North Korea, Iran and Iraq. All of these problems can be much better understood and pushed forward more easily with strategic cooperation between these two countries. I am not saying that these problems cannot be solved without Russia. Maybe it is possible to solve all of these problems without Russia. But I think it would be much more effective and much more stable to find the answers to these questions with Russia.

So the first step for this kind of cooperation was made from the Russian side on the eleventh of September. Now for the second step. The second step is a proposal about the new quality of the strategic partnership. I want to underline that it is not NATO. It is not Russian membership in NATO. Personally, I think if Russia was in NATO, NATO would collapse the next day. And by the way, we have nothing against NATO at all, because the more people in NATO, the more [NATO is a ] mess, and we view ourselves as safer.

Secondly, it is not just about the negotiations about warheads as it was during the Soviet times. No. It is creating a new institutional framework for the 21st Century: political and military. Is Russia ready for that? Look at the signals Russia is giving. Putin shut down the bases in Cuba and Vietnam, simply on his own, simply to give the signal. Then he was very shy, I would say very limited and very modest on Bush''s ABM decision, and then that next week, Bush said "we are going with NATO to Latvia." Once again, there was no hysteria from Russia. No noise. "That is okay." It is not okay, but "do what you want."

Thirdly, even when the United States said such a strange thing, strange thing, that first of all "no treaties" - very civilized point. Secondly, "we are not going to destroy the nuclear warheads, but to store them." But "to store" the warheads, about 4,000 warheads, means in plain Russian language that "Russia is an enemy," because you don''t need so many warheads against any other country in the world. Only against us. Because you have only 2,000 objects to attack in Russia by a nuclear means. We are saying 1,500 warheads; you are saying 1,700, but not only that. "We are going to store the others." Even after that, the president of Russia was very limited and was very reserved about that, and stopped negotiating and explaining that this is not a very smart intellectual decision.

In March of last year, Russia made one more step. It has already been a year. President Putin proposed to Robertson, the secretary general of NATO, the creation of a Russia-European or Russia-NATO anti-ballistic tactical defense system. He offered Russian territory, the Russian industrial-military complex, and Russian military possibilities for that. There has been no response for a year. So I think that it is the right time to put it all together, these things, and to say, "Look at this. This is a real signal." Why does the West always, whenever Russia is extending a hand to shake, say that it means that Russia is weak? Yes. Russia is weak. But we are not just about that. We are speaking about the possibility of cooperation in the most important areas.

So we are talking, I am talking just now, about the possibility of creating a political/military alliance. Russia is not looking at the moment for any gifts or free lunches. We don''t need free lunches. We do not need anything -- the loans, the credits, the debt. It is not a bargain. We were making the Grand Bargain here at the beginning of the 1990s. That was the time for bargains. Now it is time for a joint venture. It is a completely different thing. It is a time for a joint venture for solutions for the major world problems which I named. And a joint venture for the 21st Century.

My lecture was titled, "Challenges and Strategies." I am coming to the end. So, what are the challenges? I would start with a challenge to the United States. The United States is now the strongest country in the world. It is the country which is the first, second, third, fourth, fifth, sixth, seventh, eighth, ninth and, tenth places -- in everything and everywhere. So all the other countries start after ten. Okay?

The challenge. What policy will the United States undertake in these conditions? It is a very difficult thing. What is clear is that previous policies are not working. The competition is over. You win. So what are you going to do? How are you going to communicate with the other parts of the world, and with the world in general? What positive approaches to the war on terrorism are you going to use? How are you going to fight the terrorists in a positive way? Not only with weapons. That is clear. Now what will the positive response be? What will there be about education in the world? What about starvation in world? What will there be about that?

It is necessary to understand that the traditional understanding of military force used in the 20th Century is almost finished. It is not finished yet, but it is coming to the end. As I said just an hour ago, the United States is prepared to fight elephants, bears, lions, and other giants. But now the enemy is mosquitoes. These weapons are not adjusted to mosquitoes. You know? It is very hard to fight with mosquitoes using a very big gun or an aircraft carrier. And the eleventh of September showed that this is a new quality of threat. It is coming from a different direction, and that means that it is not appropriate for such things. It is a new reality. It is the question and the challenge: how is the United States going to behave itself? It is hard to say for the Russian politician, as a senior partner.

It is a fact already. So what is the U.S. going to do? It is not only Russia with internal problems. The United States has them as well. It has serious internal problems, like the influence of the military-industrial complex, which would be rising more and more after the decisions. Arrogance of power. Balancing the society. Economic problems, which you know very well. So there will be a lot of different changes in the world. But from history you know that the United States has responded to serious challenges in very wise ways. The challenges were serious. It was slavery. It was poverty during the crisis of 1928-1933 and the Depression. It was segregation. And every time, there was a wise answer to those challenges. So now what will the response be?

For Russia the challenge is a real democracy and market. And, a special challenge to the Russian political elite -- to teach ourselves to be a junior partner. It is very difficult. It is very difficult. It is necessary to forget all imperial dreams forever, and to learn to be a junior partner.

These are the challenges. And now, in short, what are the strategies? Strategic partnership in the new framework of political and military alliance is a strategy for security for overcoming terrorism and for beginning to create something new for the world for the 21st Century. That will change a lot in internal politics of the United States and the internal politics of Russia.

I tell you that I see a lot of very difficult, very painful, almost unexplainable problems in our internal policies, but if we find a common language for our strategic partnership, that would demand in Russia a new people for that policy, new criteria, and new people which would be able to realize new goals.

This is the crossroad for the United States and for Russia. This is the crossroad for many countries, but first of all for the United States. And it is an intellectual challenge. In politics, which can be the answer to this challenge, [it] can predominate the 21st Century. I hope that the United States and Russia will make a wise choice.

Graham Allison: We have just a little more than 15 minutes for questions and answers. We are going to have short questions and short answers. Grigory has already covered many questions that people might otherwise have asked, and he has raised so many issues that if we ask all the questions, we would be here all night. Let me start with Ken Heebner. What you should do is say your name, pose your question, and then Grigory will give a short answer.

Ken Heebner: My question is: what role will Russia play with OPEC in the world oil scene? Will they cooperate with OPEC, or will they pursue an independent course? And what is the outlook for Russian oil production?

Yavlinsky: I will give the short answer. First of all I think Russia must be taken into the International Energy Agency. Then for the very beginning, the prices of oil must be balanced inside the members of International Energy Agency and balanced and subsidized, especially for Russia, in order to give incentives to be there.

Secondly, I think that it is absolutely necessary to greatly increase the investments in Northeast Asia, meaning in Siberia. And Russia, I think, must be ready to give control over some pipelines to Western partners in exchange for having a stable and endless, in this case, markets in the West. And that would very quickly solve a lot of Russian economic problems and also demonopolize OPEC completely.

Russian Student: Good evening, Grigory Alekseevich. First of all, as one of the Russian students here, I would like to welcome you. It is very nice to see one more Russian face here. And I wanted to congratulate you because your rating just increased by 1%; I just read this on the Internet. Now the question. You are well known in Russia as probably the second largest critic of the present Russian policy. The first is Zuganov, the leader of the Communists. My question is: as you probably have the best connections with American politicians and business leaders, what do you do both in Russia, on the question of those joint ventures, and in the United States, to create and promote those investment projects and those projects for gaining new technologies? What do you do in America with your friends and partners to gain some new investments to Russia? And what do you do in Russia in the legislative sphere to create a good climate for joint ventures in Russia?

Yavlinsky: Regarding the United States, I have no partners here. It is a sad story, but I have no business here. So I am absolutely hopeless in the United States. As far as I understand, the only person who has serious business here is our president, who has business with the president of the United States, who had a chance to "look in his eyes and see his soul." So they both said that they are going to make business with each other. So this is maybe, as I said, the main precondition.

What are we doing in Russia? In Russia we are trying to put Russia back on track with the free press. We want to establish an independent judicial system and courts. We also want to have, as you maybe know, fair elections, in which we are taking part in all the time. And we have about 7.5% in the polls in Russia, Communists have 32%, Putin''s party of power has 30%, and third, we have about 10%. But that is a very good result if you don''t have any television for two years already. So everybody has to guess [about] you. But now that people will have that in mind. That is what we are doing there.

Student: You mentioned the need for Russia to accept its role as a junior partner internationally. I was wondering if you think most members of the Russian political and military elite share that view, or if you think they are likely to any time soon?

Yavlinsky: They don''t.

Student: Do you think there is anything the United States can do to make that a more appealing role for Russia and to engage Russian cooperation in that role?

Yavlinsky: I have a view, maybe I am not right, but I have a view that the level of education of the American political elite, especially military, is a little bit higher than Russian. So they should understand the realities, which they created themselves. So I don''t see any alternative to what I said. Sooner or later they will come to that. Maybe with this government, maybe with the next government. But I don''t think we have a lot of time. I am not just inventing something which is completely unreal.

Look. If you would make your own analysis on all your own press, you would see that more or less, every other newspaper is coming to that idea. Simply I am very happy. I came to the United States to Washington, meeting the officials in the government talking to them about different things. It was a week ago. The climate was different. Now the climate has changed after the State of the Union speech and things like that. These are the developments. I am very happy today that Colin Powell said in Congress that the decision was made that there will be signed treaties on nuclear issues. That is okay. So I was not talking about the rejection of making treaties at all, which was very strange for me. And I have only heard such ideas when I was a student. The boys and girls were discussing whether they needed treaties between each other or not. Since that time I have not had a chance to hear in politics something about people saying, "We don''t need any treaties any more at all. We are simply friends." So what means "friends." And by the way it was a strange argument, that, "We are friends with Britain. We have no treaties." Sorry, and NATO? NATO is a big treaty. Different thing - it is not working. But you have a treaty.

Mike Weissman: I wondered if you can speak to what you think the U.S. and Russia must do in the joint venture, as you put it, preventing the theft of Russian nuclear material by the potential terrorists?

Allison: What would be the nature and the content of a joint venture as it relates to preventing theft of nuclear materials, especially from Russia?

Yavlinsky: As I said to you, we are in a very strange situation. Theoretically, first we undergo internal changes, and then external. Theoretically, we should finish our reforms then give you a call saying, "Hello Washington? It is Moscow. We have finished our reforms. We are ready for a partnership." I was waiting for such a situation for ten years. It is not working. So I am just now looking at the vice versa situation.

It happens so that the strategic partnership may be so important for domestic life in Russia through changing the people in the Russian government, in the Russian official, for reaching the goal of the strategic partnership, which would be one of the most important elements in stopping the proliferation of some nuclear things, or whatever. Because the official position is non-proliferation is absolutely 100% accepted by Russia, by all means. So the way is changing people, creating new goals, implementing new principles in accordance with a strategic partnership. And that can have positive impact.

Konstantin Rosanov: Good evening. You mentioned the economic/business elite problem created by the privatization reform and the Yeltsin ties, which causes economic inefficiency and general instability. What solutions do you see for that problem?

Yavlinsky: I see only one solution. It must be an accord between the president and the major business groups which has a special substance. What happened before, I am not interested. But from tomorrow, there needs to be new rules of the game. That would give stability to all those people. And that would give the president the right to operate in a new manner. That is what I am going to do when and if I am president.

Student: I want to ask a question about the junior partnership, and what does it imply for Central Asia? I know that America is expanding its military bases in Central Asia. What is the reaction of Russia?

Yavlinsky: First of all, I heard, here is one more example. Very serious. I heard two points from the United States. One was that "we will stay there almost forever." The other is that, "No, no. We are not crazy. We are going to stay there for some time, and then we will leave."

I think it will be a very difficult enterprise for the United States to stay there for a long time. But if the United States will protect those states, that means Russia, from Islamic fundamentalism, if the United States, by being there can stop the drug traffic, and if the United States is ready to stop the different criminal routes and black money which is coming from that region, it will be a very positive outcome for Russia. For us to stop the drug traffic is a vital thing. It is vital. If the United States would be able to do that— it would be not easy.

And I think we want to say that what happened just now in Afghanistan is not the end of the end. It is only the end of the beginning. I think one can say this for sure. It is only the end of the beginning. And the euphoria that everything is done is a very, I would say, it is too early to say that everything is done. It is only the beginning of the story. And the stronger Russia is, the less opportunity there is for terrorism in the world. The weaker Russia is, the more opportunities there would be for terrorists.

Rachel Cherry: I wanted to ask you a question about economic development within Russia. I know there have been some land reforms passed in the spring, and I wondered if there were any more land reforms up for reading in the Duma. And, if you feel that the reforms that have been passed have already yielded positive results in the economy and given people more confidence, and if you think further land reforms are necessary to boost the economy further and give people more confidence.

Yavlinsky: To have more confidence in economic reforms, it is necessary to have a very stable political infrastructure, and to have a very clear feeling about the future. If you ask me, for example, what is the main problem in Russia, in general, one word, I would say, "unpredictability." That is the point. This is the problem everywhere on all levels. Political, economic, whatever.

I would say honestly we already have no special economic problems. We have problems, but we know how to solve them. Everybody knows. The problem now is in the other dimensions. The dimension is: no independent judicial system, no free press, and no political protection in this sense. Political instability creates an unfriendly environment for investments. So it is not a case of the laws; it is not the case of the machinery which you can implement in the Duma or somewhere else. It is the case of the political environment in general. And that is what makes people more confident.

Question: I am a historian and a journalist and a previous scholar at Harvard. I was lucky enough to be in this same audience ten years ago listening to Mr. Yavlinsky. I remember that it was a very interesting talk, and Mr. Yavlinsky criticized Mr. Gorbachev, and I remember at the end of the talk it was put a question if Mr. Yavlinsky knows such a person who can replace Mr. Gorbachev. "Yes," said Mr. Yavlinsky. "And who is this person. I cannot say yet." And now I have heard a lot of critics of Mr. Putin. Now can you now name the person who can replace Mr. Putin?

Yavlinsky: I will repeat my answer. (Laughter)

Allison: We look forward to asking and answering that question again when the answer becomes clear.

Question: What do you think about Gorbachev''s newly created Social Democratic Party that is growing in popularity? Do you think it has a chance of growing into a major party in Russia? (Laughter.) I will take that as a "no."

Yavlinsky: No.

Questioner: (continues) But do you think it may have a connection with the European Social Democracy which is the ruling party there?

Yavlinsky: No. It has no connection to anything.

Questioner (continues) Then why is its popularity growing?

Yavlinsky: That is what I don''t know. But I don''t know, not why the popularity is growing; I don''t know that the popularity is growing.

Questioner: (continues) It is. The numbers say so.

Yavlinsky: You know?

Questioner: Yes. I do.

Yavlinsky: I have never heard about that. I think that only two persons in the world have these numbers: you and Mr. Gorbachev. (Laughter).

Questioner: I think you are wrong.

Yavlinsky: No, that is true. By the way, I don''t want to comment on that, because I respect Mr. Gorbachev very much. I don''t want to disrespect him. But I have been party building for ten years. So I know what is what. And just this is this thing. This is not the way of making parties in this way. Gorbachev is an outstanding figure, and I have very high respect for him. But party building, especially socialist party building, social-democratic party building in Russia, would have a very difficult fate.

Questioner: (adds) But don''t you think it is a good substitute to the communist party?

Yavlinsky: They don''t think so. The communists don''t think so. That is why there is no chance.

Questioner: The question is what the people of Russia think.

Yavlinsky: They are not…once again, the problem of this party is that the people are not thinking about this party at all. At all.

Allison: Other than that it is doing great. Next question, the gentleman on the left.

Question: Mr. Yavlinsky, I have a question about the free press and democratization process in Russia. When in the Czech Republic, in Prague, the state tried to impose their own program of director in the news— 50,000 Czechs took to the streets. I never heard of such protests in Russia. If Russians want to democratize and have a free press, why not?

Yavlinsky: First of all, I don''t want to be impolite, but I want to say that you need to check your ears a little bit. When NTV was closed, there were demonstrations in Moscow twice, each with more than 20,000 people. There were demonstrations in 60 cities in Russia. So it was a kind of a protest. Not in the way it was in Prague, but it was in a different way.

With the TV6, it didn''t happen. It didn''t happen for many reasons, but the major reason with the press is…I will tell you why. The people are deeply dissatisfied in general with what one can call the Russian press. We have prominent and very respected journalists. I can name them. Some of them are even in this audience. But, as for the press in general, the people don''t feel that the press in the last ten years was really interested in their problems. The people don''t feel that the press was protecting them from anything which was coming towards them -- like the 1998 crisis for example.

The people had no chance to have the evidence that the press investigated crimes or criminal issues. So the people are much more interested in entertainment. It was a problem of the quality of the press.

What happens with the press? When political power first ruled the professional press, it disqualified the professional press; it made it yellow by creating different scandals and things like that. And afterwards, nobody came to support or to protect it. NTV was supported because NTV was a highly professional channel. Very highly professional. It was some of the best television, maybe in Europe. It was European-class television. It was the only thing created in Russia on the European level -- technically and thoughtfully and so on.

Secondly, NTV was television which touched very sensitive issues in a serious way like the Chechen War and nuclear waste. For example now there is a decision to take all the nuclear waster from all over the world to Russia. That was the only channel which fought with it. And although it was manipulated as a private channel, certainly, it was really professional political television where every more or less meaningful politician of Russia could have the floor. Everyone. Whether it be Zuganov or Zhironovsky or whoever it was; everybody had a chance to speak there. And very often. And you can compare one with the other. That was the substance of political television. It was the only one channel of this type.

TV6 was not such a channel. They were not working in the same style. So for all of those reasons, this is a drama, and people lost their interest in that. And that is why they are not publicly protected.

Yabloko, my party, was making meetings. I can tell you honestly, that in that meeting in the middle of Moscow, there were more journalists and correspondents than people in the media.

Allison: Unfortunately, it is my responsibility to tell us that the witching hour has come. There are a number of other people who have good questions. I apologize to you. If you come down quickly, it is possible you might be able to ask Grigory your question at the end. But for now, and in the hopes that we get him to come back, the local workmen say that we need to stop. So please join me in thanking Grigory Yavlinsky for coming, and hope that he will come back.