ANDREW KUCHINS: Good morning and welcome to the Carnegie Endowment. My name is Andrew Kuchins and I director of the Russian and Eurasian Program here at the Carnegie Endowment. I want to welcome first of all Grigory Alexeyevich Yavlinsky to Washington. By way of an introduction, in December 1993 Grigory Alexeyevich was elected deputy to the Duma of the Russian Federation, and has served as Yabloko's head for the past eight years. I think we all know that Grigory Alexeyevich has been at the forefront of the barricades in Russian politics, consistently, intelligently and passionately defending Russian democracy, promoting economic reform, fighting for Russia's nascent civil society and free media, criticizing human rights abuses and incompetence in two wars in Chechnya, and a myriad of other issues which I don't have time to enumerate this morning since we've come here to listen to Mr. Yavlinsky and not myself. And while Mr. Yavlinsky strongly endorses Russia's improved relationship with the United States, he has certainly not been shy about criticizing deficiencies in US policy towards Russia over the past 10 years.

Please join me in welcoming one of Russia's leading political figures, and certainly its leading democrat, with a small "d," Grigory Alexeyevich Yavlinsky.

(Applause.)

YAVLINSKY: Thank you very much for these wonderful words. I really feel very privileged to be here to have a chance to speak to the audience live -- the audience of Carnegie. It is not the first time, but it is always very important for me and my friends in Russia to have a chance to express our views on the most important issues of Russian and world politics.

Today I am going to share with you some ideas which are in my opinion on the list of the most important problems and challenges for Russia and the United States in current developments and at the beginning of the 21st century.

I would like to start by referring to the feeling we had not so long ago, about six months ago, last summer, when Russian democratic forces and Russian democratic movement perceived that they would have to prepare for a very difficult and protracted fight to protect basic principles. There was no window of hope six months ago. You know about developments in the media in Russia at the time - it was a very painful situation in the Northern Caucasus. In foreign policy, there were the visits of the leader of North Korea, visits to Fidel Castro, discussions with Iraqi and Iranian leaders on a constant basis. So we felt at that time that we must be prepared, and that there is no hope that, after 10 years of attempts to support Russian reform, the Western countries would be deeply committed to our democratic processes.

However, everything changed after 11 September. I want to say openly that this was certainly a tragedy, and I want once again to express my own sincere condolences and those of my colleagues to the American people, and to say that this was a tragedy that was totally unjustifiable. But in Russia we were very surprised by the reaction of our president to this event.

The choice made by Putin in September went against the views and position of most of Russia's political elite. I was present at a special meeting, when the president invited leading politicians of the country to discuss the position of Russia in this dramatic situation: 21 people were present - leaders of the Duma factions and also representatives from the Upper Chamber. The president raised the following question: in your opinion what position should Russia take in this situation? And I want to say that of the 21 people seated around the table, one individual recommended support for the Taliban, while only two advocated unconditional support for the anti-terrorist coalition. All the other individuals present argued that Russia should maintain its neutrality.

At the end of this meeting, the president declared his own point of view: unconditional support for the anti-terrorist operation. So it should be stressed that Putin took this decision on his own, with the very good understanding that at that moment he would not receive support from most of the political forces. The situation subsequently changed, as most of our political forces always choose to back the president. In a sense this was a good sign, but at that moment, this was a very special step.

Why was the Russian president prepared to take such a decision? Certainly there were tactical reasons. We had serious problems with the terrorist forces in Afghanistan who were linked with the same kind of forces in Russia, especially in the Northern Caucasus. You may not remember, but last year the Russian Security Council even issued a statement, declaring Russia's readiness for military operations in Afghanistan: to bomb the terrorist training bases.

So Putin had tactical reasons for making this decision. It may be the first time in our history when Russia was able diplomatically, thanks to the great steps of our president, to exploit the potential of other countries to resolve some of our important and very painful problems. But I think that this was not only a tactical choice. Subsequent developments and positions of the Russian president indicated that there was and is a strategic approach to this cooperation. What does strategy mean in this sense? Strategy in relations between Russia and the West implies a new quality to those relations.

First of all, I want to explain, if we are talking about the new quality, how we in Russia feel about the West's perception of Russia today and over the past 5-10 years. The West does indeed see Russia as a country which can be an ally in security issues: however, we also clearly perceive that the West sees Russia as an ally that must be contained and controlled This is the view on Russia created in the 18th century when Russian forces and the Russian military potential were used to consolidate the security of European countries: at the same time, everybody was keen to contain and control the country.

In the United States, both administrations - Democrats or Republicans - regard Russia as a country from a different world. It is very apparent that they think that Russia can be an amicable country, but also an enemy, depending on the situation. One of the most important lessons from the past 10 years concerned the approach, which was never certainly explicitly stated, that leading politicians of Western countries, including the United States, never held any hopes for the country. They staked their hopes only on groups in power. This is very important, as everything is based on personal relations under such an approach. If the group is collapsing, then the relations with Russia, political relations, are unfounded. This is disappointing and provides a signal for criticizing and pressurising Russia.

This is a very important point as the current approach - where Western leaders consider the man in the Kremlin to be the man that they can establish friends with, on the basis that the individual is strong enough to control all the Russian people and it is necessary to maintain extremely good personal relations and support this individual in the hope that he and his team are the only ones to keep Russia on track with democratic reforms - was very well known even before then. The same relations were established with Gorbachev, with Yeltsin, even with the previous leaders that also represented a very important component of the relations. And Western leaders often interpret such circumstances - from time to time, when Russia is trying to give a hand and express its will for cooperation - as a sign of Russia's weakness.

Between our two big countries inertia, distrust and even fear are the underlying features over the past centuries. This can be stated differently, but almost all major policy-makers tend to perceive the relations between our two countries in this way.

What does this mean in the circumstances for possibilities for strategic co-operation? I would put it as follows: how can Russia understand the role that it needs to play to achieve a new quality of relations with the West - with Europe and the United States? Certainly, when talking about this approach for Russia, a key role is played by its domestic politics. Stable relations with the West is possible if, and only if Russia has an ongoing process on - I would put it this way - sharing common values which are non-negotiable. I am not going to repeat all those things. This is about freedom, free speech, democracy and other extremely important basic issues for such a time.

If you speak about the current political situation in Russia, I can draw up a list of the issues on which my party and are very critical and what we see as the most important direction: what Russia should do but is not doing. First of all, there is the problem of the media and freedom of speech. Secondly, the dependence of Russia's legal system; exploiting this legal system for political purposes. Thirdly, electoral manipulation at all levels. If you speak about the economy - and to put it briefly, this is a system where the only possibility of doing serious business or even unserious business, is related to the authorities. This is the oligarchic system where business is only possible if you have special relations with the authorities, irrespective of whether this is a cottage industry or national business.

In all these directions, Russia in terms of internal policy has serious problems, and we are ready to criticize domestic policy very strongly, as one of the final goals of such policies is to create a so-called manageable democracy in Russia, or quasi-democracy similar to the Potemkin village. Russia is very experienced in making Potemkin villages.

And this is certainly a new threat, as the previous democratic procedures formally exist, but public opinion is controlled and manipulated, and a small group of people around the administration are attempting for their own economic and political interests to manipulate the whole country, in particular by exploiting the potential of electronic media. This represents a new challenge. This challenge is an attempt to manipulate the people's choice.

So these are the tasks facing Russia: we clearly see and understand them. But there are some important issues for Western countries as well: recognition by the West of the new quality of the relations between Russia and the West implies, first of all, an acceptance and recognition of Russian geostrategic interests, an acceptance and comprehension of the fact that Russia has the longest borders with the most unstable regions in the world. Consequently Russia considers the security of its borders as a priority today in the future.

Secondly, it is crystal clear that Russia is part of Europe. There should be a clear message that the West expects Russia to become a fully-fledged member of all major world and European political, economic and security institutions in 20-25 years from today and will include Russia in the system of balances in relations between the United States and Europe.

It is also very important to create a new quality of relations from the point of view of the problems that we perceive in the West at present. For example, regarding the vital interests of the United States, cooperation with Russia would certainly have an impact on such sensitive issues as OPEC's current monopoly on the problem of oil. The real serious cooperation with Russia is a way of de-monopolizing OPEC's influence in this area.

Secondly, I think that this new quality of relation could be beneficial in stabilising the situation with China and foster stability in China in terms of international and Russian security. I want to remind you that Russia has one of the longest borders with China, and that Russian-Chinese are subject to special analysis in this context.

Thirdly, after OPEC and China, I will speak about non-proliferation, which is in my opinion one of the key security issues for both the United States and the world in general. Instability in Europe may be the fourth point: the stability of Europe's borders.

Of these four issues clear benefits from strategic cooperation with Russia must represent priorities in moving towards a new quality of relations.

Also, it is very important to say just now that in my opinion the successful operations in Afghanistan represent only the end of the beginning. I think that this is a much broader and longer undertaking than developments over the past four or five months. And I think that there are at least 10 problems or 10 issues in the world, which cannot be resolved without close cooperation between Europe, Russia and the United States.

So I want to underline that success in the anti-terrorist operation in Afghanistan must not create the feeling that everything has been done, and that the key issue is to continue the war against terror alone. There are other problems which are no less sensitive and important.

First of all, I would cite the Balkans,the Israeli-Palestinian situation, Pakistan and India, the possible collapse of Indonesia, tensions around Taiwan, the war in Africa, environmental problems, the traditional international crime and drugs issues, European security, North Korea, Iraq and Iran. I cannot imagine any positive resolution of these problems without Russia's involvement.

So I think that the events of 11 September clearly demonstrate that it is better to start thinking and take real steps, try to find solutions in advance to prevent the emergence of problems such as the terrible incident in September. And the myth of the possibility of creating security in a separate country is simply a myth; the same myth as Russia's attempts to create the paradise of communism in one separate country. So there is a clear for us to face these and maybe some other problems today.

So we need to react in advance in order to be prepared. What was the first step? From the Russian side, the first step was Russia's reaction to the events of 11 September. What should be the second step? The second step involves in my view preparations for a new international political framework between Russia and the United States. It would subsequently be necessary to decide on the format of this framework - as a document, agreement, memorandum or even treaty. But what is most substantial? Clearly it is the new framework.

And I want to stress here that this is not NATO. NATO is a completely different story. Russia would have its own relations with NATO, but this is not our goal, to simply be number 20 or 21 or 25 or 126 in NATO. And it is not military treaties or agreements, as was the case during the Soviet era, on nuclear warheads, on disarmament that are also very important, it is not a new quality, not in NATO or such military agreements. It is the creation of a qualitative new level of mutual understanding including in its framework the agreements to be signed.

Is Russia prepared for what I have described? I understand all the contradictions in my statements saying, but I want to answer the question as to whether Russia is prepared. What I can tell you for sure - as you know, as leader of the democratic opposition, I was Putin's opponent in the elections. I was the man causing all the fuss over the country and in Moscow when more than 20,000 people demonstrated in the clash over the independent television station NTV. I want to confirm everything I said at the time about my attitude to manageable democracy, to Moscow's actions in the Northern Caucasus and in Chechnya.

But now I want to say something new. Is Russia prepared? I feel, and I can cite arguments to back up this feeling, that the President of Russia, Mr Putin, is seeking such an opportunity and is giving some very serious signals. For example, Cuba, the military base in Cuba and the military base in Vietnam. Secondly he demonstrated a very patient and very balanced reaction to the decision of the United States on ABM. Thirdly, a balanced reaction to the statement from Washington about expanding NATO to the Baltic countries. Finally, March, last year, even before the events on 11 September, the president of Russia delivered the country's proposals to the secretary-general of NATO about the establishment of a Russian-European anti-ballistic defense system. By the way to date we have not received any response to these steps.

These are the signals indicating that the Russian president is looking for new people around him, because new people are required to implement the new strategy and new quality of relations. I want to say that this is amazing, as two years he created a team that I would like to described through an analogy. Two years ago he created a team to publish, for example, a Soviet newspaper which we can call Sovetyetskaya Rossiya. This was a special team that was prepared specially for this purpose for two years. Suddenly and unexpectedly for the whole team, one day he published instead of Sovetyetskaya Rossiya the New York Times with the same team. The team was very surprised. But how long can such a situation continue?

There is another issue. All the signals on such sensitive and important political issues in Russia, and not only international matters - everybody who knows Russia understands there are also domestic issues - indicate that there is a chance; a very serious chance. You can also see that this is not solely the position of the president. You can see the letter signed by most prominent Russian military scientists who refer directly to the need to create a new framework in relations between Russia and United States in military and strategic areas. And this is not a special letter to the president; this is an article or letter which is published publicly, and you can find people such as Messrs Velikhov, Rogov and others. I am referring to these two famous Russian scientists and very respected people, as in my opinion they would not sign such a letter if this did not represent a chance and if they didn't feel that there was some link to about a Russian Kremlin bureaucracy.

I also want to point out that this is not the only issue. The public opinion polls in Russia disclosed some information that you couldn't have expected half a year ago. The most recent poll made by the FOM agency stated that 55% of Russians are very familiar with the new relations between Putin and the United States and support them. The alliance between Russia and United States in the war against terrorism is supported by 70% of the total. Maybe one of the most important signs is that in May 2001 approximately 30% of the population considered the United States as a friendly country and not an enemy. This figure had risen to 48% by January 2002. This represents a serious move in Russian public opinion.

By way of summary, I was trying to say that I feel that it is the right time to back statements about strategic partnerships with some actual substance. I am referring here to a possible agreement between Russia and the United States on military and political based primarily on mutual guarantees on security and borders in the 21st century. And this could be much broader.

When I refer to the process of creating such a framework - this may involve several agreements - I am not simply talking about the bureaucratic aspects of the issue. The actual process is extremely important for positive domestic changes in Russia. Such a process implies new people in the government. Such a process implies a different focus for the people who remain. This process involves qualitatively new prospects on internal changes and not only international. From this viewpoint, I want to say that the good personal relations between President Putin and President Bush are absolutely necessary here, but we also have this prerequisite. It is certainly not enough, but the prerequisite is there. This is also giving us a chance to think about this issue.

I have spoken at Carnegie twice over the past 20 years. As far as I remember on the first occasion I talked about important issues and did not simply talk about Russian problems, but also referred to something substantial. First of all in 1991 I discussed in the United States something similar to the country's "Big Deal"." In Russia it was termed the "Window of Opportunity". This project was based on Russia's profound economic transformation with the cooperation of the West and bargaining over Russia's nuclear threat and similar issues.

It was rejected first of all by Mr. Gorbachev at that time. He went to London on his first G-7 meeting with a different plan. In August 1991 the coup happened. I made my second presentation at Carnegie after the presidential elections in 1996. At that time, everybody was very happy about the elections and the electoral results and it proved very difficult to explain that Russia was clearly about to face an enormous economic crisis, debt crisis, and that only The blind couldn't see this happening. It was autumn 1996. In August 1998 this crisis happened.

The year 2002 represents the third opportunity. It is coming from unexpected sides. It is coming from international situations -- not so much from domestic but international. And I think that main challenge of the 20th century was the challenge of how to stop communism, and the main challenge of the 21st century is cooperation with Russia. Given all the problems that we face, there is no magician who can change everything in a day. Your strategy of initially solving all your problems and only then calling us to say that everything had been done would never work. Things are far more complicated. It goes all together.

Russia certainly faces a number of problems, but close cooperation with the West and substantial cooperation on the issues I listed represents a possible solution to our internal problems as well. The values we teach ourselves to share and realize must be supported by cooperation. So the main message is to make the changes after 11 September irreversible. Let us not go back to the times before 11 September. It was a very nervous and unpromising period. Let us go forward: I am sure that it is better for the world, for Russia and for the vital interests of the United States to go forward together.

Thank you.

(Applause.)

MODERATOR: Thank you, Grigory Alexeyevich. You have presented a very, very thoughtful challenge, I think, to all of us to think hard about the steps to move forward this bilateral relationship, and more broadly Russia's relationship with the West.

We have about a half an hour now for questions, discussions, comments. I would like to take the prerogative of chairman and ask the first question. I think that everyone in this room would agree that the United States and Russia share a large number of common interests, and you enumerated many of them in your presentation, and that many of these problems - virtually all these problems - cannot be resolved without Russia's cooperation. I would agree with this statement. To some extent work is proceeding on all these issues.

But you have really proposed a much more fundamental challenge, I think, for Washington and Moscow: to come up with a more far-reaching strategic framework; some kind of agreement between the United States, that is separate from NATO and separate from arms control agreements. And I was wondering if you could try to elaborate and be more precise on your view of the contents of such an agreement. You mentioned as a starting point a guarantee for mutual security and borders. This is a major step. However, I was wondering if you could talk a little bit more about your vision of the signed agreement and its contents?

YAVLINSKY: Thank you. I wouldn't dare to explain this issue. I play chess with a partner, but not with myself. This is the issue, the main substance and key to such a possible agreement. I can also see there non-proliferation issues, energy issues, de-monopolization, arms control, ways of creating a joint anti-ballistic missile system for Europe as an umbrella. So the agreement could include such components and also the war against terrorism. In a broader context, there is a region that I would call North-East Asia. This region is the area of strategic economic cooperation for the future. And this is the place in the world which can act as a support; which can play a major role in de-monopolization and the whole issue concerning OPEC.

So at least these economic, military and security issues can be parts of these negotiations at the very outset. Certainly all this would as a process - and let me reiterate this fact - have a positive impact on changes inside Russia.

MODERATOR: Okay, let me open up the discussion to the floor. And the first person I have is John Evans.

Q: Mr. Yavlinsky, you asked whether Russia is prepared for such an over-reaching strategic agreement? Why do you think that the United States is in any way prepared for such a big step? We have Canada and Mexico as neighbors and don't need anyone to help us secure our borders. As you said yourself, you face a far more complicated situation with your borders in that part of the world.

Your proposal would seem to be in line with the long tradition of Russian searches for guaranteed mutual security, which has not been the approach of the United States over the years. We have much other defense arrangements that we prefer. Do you have any indication that the United States will be receptive to your new initiative? Thank you.

YAVLINSKY: First of all, I want to underline that this is not simply my initiative. It is not my initiative; it is the political line that is derived more from realpolitik over the last half year. This represents a logical development of this line and is not simply the initiative of one man or one institution or one intellectual.

Secondly, I want to point out that the events on 11 September indicated that word borders is symbolic now, as the threats are very special and very different from the threats in the previous century or in the 19th or 18th century. So I'm using this simply to ensure better understanding. In our case, there is an element of the borders themselves, but the issue is much broader for Europe and the United States. It consists of many issues. A biological threat is also a kind of border. The terrorist attack related to all these ideas about the possible launch of some missiles in 5-10 years by terrorists, or other nations. So it is a much broader issue.

Let me cite one example. For example, if it really involves a decision to create a non-strategic anti-missile defense system for Europe, this is virtually impossible to do physically, without Russian territory and without exploiting Russian potential. Now the issue concerns our technological possibilities. As you know, we still have them. So, that is one of the key components indicating that this is a qualitatively new situation.

Now, threats are so imminent that it is impossible to create a secure Russia, without a secure United States and vice-versa. This is simply a fact. We can agree or disagree on this move; we can go different ways; the administration can say: no, we don't want it, we simply want to look you in the eyes: we don't want to give any signs whatsoever. But in my opinion soon it will become clearer whether we want this or not. Is this a difficult problem? Yes. Is it controversial? Yes. Would it be easy? No. But there is simply no other solution. Look at the 10 problems I named. We can't resolve them or at least render them more secure, without cooperation.

Now let me turn to your views on the American approach to the signing of security treaties with allies or with anybody. Here I would like to say that I heard not so long ago that, as we are friends, we are not going to sign any treaties with Britain or France or Germany or whatever. Sorry, but I don't understand it, but you have a treaty about NATO. So you have everything. You have the so-called Article 5, which was strange after 11 September, as it was referred to in hushed tones. I believe in my approach owing to what I actually saw: how the US received immediate and unconditional support from two countries, Great Britain and Russia, to the utmost of our potential. I simply want to remind you that we were actually allies in World War I, World War II and now at the beginning of the 21st century. Maybe that means something.

So my answer is that the United States has a tradition of making special agreements and this is not very new.

Q: Yes, Charles Gati. My question refers to both the first and second half of your talk.

At the beginning you spoke about values and the importance of these values and proponents of democracy and human rights, rather than about military bases, which are appreciated. When you spoke about the new big deal, the rapprochement, you spoke about initial Russian steps which are greatly appreciated: Cuba, Vietnam, and support against Afghanistan.

On the other hand, you made no mention of the kind of Russia with which we would seek rapprochement. So I would like you to speculate, the United States is to reach some kinds of new arrangements with what kind of Russia? Is it going to be an electoral liberal democracy? Is it going to be a semi-authoritarian Russia? Is it going to be an authoritarian, China-like Russia? Because I think we ought to know before we sign this deal.

YAVLINSKY: Thank you very much. That is a very interesting question. I don't think that I can tell you in advance all the conditions of this business, as I'm not sure what would happen. I would confine myself to one statement: this is not a deal: this is a proposal similar to the deal at the start of the 1990s. And this involves a joint undertaking, not because we like each other, are brothers and sisters and not because we are one civilization. All that is written down, but there is another reason. Quite simply all the problems in the world can't be resolved without this joint undertaking. Even more damagingly, if one of the partners were to move in the opposite direction, there would not be any solutions in 20, 50 years at all for any of these 10 problems in the world. So this is a different quality.

What I like in this situation is that this does not involve any favor or politeness or love or - I don't know what, friendship. In Soviet times we like to make treaties about friendship, okay? No, no, no, this is a different story. This is a very pragmatic matter: from my point of view, Mr Putin is a very pragmatic man and he took his steps, as he this pragmatism and these solutions.

Now, what can I say? I want to repeat again that until Russia is able to sincerely share the key values of the modern Western society, life in our country will undergo a very unstable, contradictory and difficult phase. But it can't happen in one day. Even if the president of Russia embodied all these values, this wouldn't mean that the country was bound to move in that direction, especially given Russian bureaucracy. What do the signals our president gave Cuba and Vietnam mean? It was unexpected by everybody inside the country, including all the bureaucrats.

So this is something new - he is giving signals. Now, it is possible to move this way. I believe, that step by step, day by day we will see positive changes in these absolutely crucial issues because of this cooperation. You can see how sensitive public opinion is and how it is working. However, this would bring changes over time.

I read a quote in an American newspaper stating positive relations between the United States and Turkey: even though the United States perceives a number of problems in Turkey, it recognises that Turkey is a very important country and that there is a basis for applying different strategic joint steps. So this is certainly a new approach which is very complex. This approach does not concern the politicians, but rather the statesmen who are thinking about the future of the world and country and not simply considering the next elections.

This represents a challenge to diplomats and to diplomacy. It is difficult to create such a framework with a country in Russia's current state. But this needs to be done and will lead Russia to implement serious changes, in terms of new people in government, new potential within the country and a new orientation, as in Russia the question of Russia's status as a Western country or some kind of Eastern country or somewhere in the middle is the key issue for all Russian literature, all Russian intelligentsia, Russian thinkers, etc. The question is: are we prepared to answer this question at the beginning of the 21st century? And we have taken the first steps in this direction. If this answer were placed on the table, a lot of issues would change much more rapidly.

MODERATOR: Angela Stent.

Q: Thank you. I have a two-part, but related question. You yourself said that President Putin had taken this decision on his own, and against the advice of many people around him. The question we ask here now is, five, six months later, has he been able to build a consensus among the elite on these issues? As you said, the Russian people support him. Who is advising him on this? Is he taking most of these decisions on his own? And if he is, does that create a problem for him in the long run?

This leads to a related issue: if this was taken as a pragmatic decision, when does he need to show the Russian people some definite results? He did go out on a limb; he took decisions that weren't necessarily popular. The agreement that you're proposing is obviously further down the road, but is there - what's the timetable? Is there an interim period when it is very important for President Putin to show that there have been concrete results, if you like, quid pro quos, from the United States for his support?

YAVLINSKY: First of all, it is not very difficult for Mr. Putin to achieve a consensus. He simply says: this is the consensus. (Laughter.) Is anyone against? And this is the consensus. The same was true of Gorbachev and Yeltsin. This is a Russian tradition, but it doesn't mean that there is really a consensus. But visibly it is a consensus. Even the proponents of neutrality or supporters of the Taliban now say that we are the best friends of the United States. And now we have publications advising Mr. Putin: these people are very, very anti-Western right now whispering to his ear - everybody knows that this is not true, simply, but everybody wants to present themselves as the main advisor in this important manner.

So although I am from Byzantia, I have no answer as to who is whispering in his ear. I simply don't know, really, because I was very surprised - I remember how he listened to everybody and then said: "Now I will disclose the decision. And everybody says, okay, now we want to hear, and everybody was surprised? I was very happy because I was advocating this decision. I was trying to argue that it was impossible to sit in the middle. There was only one choice: to offer unconditional support.

Now, I want to say that this is not an issue of a price list. A significant proportion of the Russian political elite are saying that we should ask the Americans to pay for our support. They had a long, long price list. And they were even ready to fight with each other over which price list is more attractive, and were trying to bring this price list to him. On one occasion he said: "I am not striking a deal. I am doing this, because it is of vital interest to Russia. And I'm not going to ask the US to help us with the economy, to give us money, or to do this or to do that." No, no, it's not about this issue. It concerns the future: the future of Europe and the world. So there is no such timetable. It is not the Gorbachev era, where he needs to obtain a loan to show the people the shops will contain some cheese, as well as bread for a while. No, this is different. Sorry. He is not even looking for that. And he is not asking for that. And we, as a country, are not exploiting the tragedy of the United States as a way to make us slightly richer, or something similar. These are not normal relations. And I'm happy that Russia is not doing such things.

So, and this is a very good sign, he even refused requests for debt restructuring, IMF assistance, investments, etc.

MODERATOR: Except that it might be easier for us to do those other things.

YAVLINSKY: Simply want to add that Mr. Bush will visit Russia. This is due to such a schedule and such a framework. And this may represent a way of doing something.

MODERATOR: Okay. I have a fairly lengthy list, so let us move on, please. Next up is Marc Zlotnik.

Q: Well, actually, my question is very similar to Angela's. Let me just follow up a little bit. And that is, you know, if reality turns out to be something short of this grand bargain you're talking about and the US isn't ready to go as far as John suggested, but if Russia continues to be oriented towards the West in the policies pursued by Putin, there will be some slow movement. But I guess my question is really: what is enough? You raised the spectre of August 1991, August 1998, if this third opportunity is lost. How sustainable is this move towards the West, if the West and the US end up being less willing to act than the steps you outlined - and clearly there have been some frustrations since September from Moscow. But can it continue moving forward, and how strong is the opposition, and at some point will Mr. Putin or those around him have to give up and try out a different policy if it ends up being somewhat frustrating?

YAVLINSKY: I lay things out as they are and I am no Alfred Hitchcock. I'm not telling you scare stories that something terrible may happen. There is a Russian expression: what will happen? What will happen? Nothing will happen. It would be the same as today. That is all. I'm talking about improvements. But we can leave things as they are. So simply things will continue as they do today, with all the possible implications. This is very understandable if you see the list of problems and problems of the United States. I call them "world problems." What would happen? Nothing would happen. I would fight for democracy. I would challenge the President. I am going to continue my work. I have a party. We have just 75 departments in almost all regions of Russia. We are preparing for the next elections. We are going along the same route. So we are doing our job. We would continue doing this, as this is our vital interest and we are not doing any favours for the US. We're doing this in Russia's best interests. That is the only thing I can say. But look at developments in the Balkans. What can happen in Israeli-Palestinian relations? What can happen in India-Pakistan, etc.? Take a look and you will be able to see what can happen.

I am sorry, but I have no special solutions. Simply, I have told you what happened on two occasions. As you know, when a leader advances too quickly and the political elite is lagging behind, this creates some problems. It is very hard to say how they would be developed in Russia.

Secondly, I want to say that politics is an area where there is no vacuum. If you are not doing anything positive, you are negative. If we are going to compile an old list of issues which are very disturbing for the United States over the past year, this would be a very impressive number. Simply I am not a guest and I am not going to issue you this list. You know that. But this is a protracted issue. Finally, we are not going to destroy the nuclear warheads; we are going to store them. In Russian this means one thing. Russia is an enemy. This idea is only interpreted in one way. There is a difference, as all these warheads are needed if Russia is perceived as the enemy and not for any other country, because other countries possess a different potential. This may be a different idea, but it needs to be negotiated. There is a long list of such problems.

So if we are not moving in a positive direction, then we must be moving in a negative direction. I do not plan to explain all these issues. Simply, I have a number of concerns about these issues.

MODERATOR: Toby Gati

Q: Grigory, the benefits to foreign policy provided by 11 September can also be removed. And I wanted to ask you, after listening to the references by the President last night to "an axis of evil," did it sound to you as if the US planned to take Russia into account, when deciding, for example, whether to attack Iraq or take any other steps? And do you see, or have you talked to people here for whom Russia is part of the problem, even though it is not a terrorist state. It isn't and hasn't been. However, it supports countries which the President outlined as proponents of terrorism: therefore the image of Russia is not always on our side, as it can be seen as a supporter of countries with whom we have a real problem and possibly a military problem?

YAVLINSKY: What is your question?

Q: The question is: how did you interpret that speech, for example, on Iraq, and do you see any possibility that Russian views will be considered and how would that work out? There are deadlines, for example the UN Security Council action on sanctions. So do you think that these issues will be resolved in this new spirit?

YAVLINSKY: This is one of the problems related to the previous question. I'm just saying that there's a momentum in Russia that can be very cooperative. I don't know what would happen if this had gone the other way. Just before leaving Russia, Mr. Putin stated very explicitly and clearly that one of our priorities is and would be non-proliferation. Russia is certainly a very complicated country. But if you want to have real results, this involves real technology. I mean the technology for relations and knowing how to do this. Russia is a vast country. Thousands, maybe millions of people are engaged in this area. And it would be too much to say that the President has every singly unit under his control. For this reason, there is a need for dialogue. It is necessary to establish this kind of framework, as I think that this is not only a threat to Europe or the United States, it also poses a threat to us. It is a very serious issue. But I don't want to stress the problem in the same way as before 11 September, where both of us sought to create problems for each other, both big and small. This is too dangerous, as the world is very fragile, and it is too dangerous to try and have such competition. It's too dangerous to make some of the Russian elite feel that they can only gain the attention of the US if they do something disturbing.

It would be better to normalize these relations, as this would be much more secure.

So this is officially our priority. The President is saying that non-proliferation and all similar issues are a priority. But if we want to make this practical, this is one of the important part of these discussions. I don't want to state that this should be on paper or not. These are different issues.

MODERATOR: Okay. We have time for one more question. I apologize to everybody who did not manage to ask a question this morning. Here is the last question.

Q: You said that freedom of speech is problem number one. In your opinion, is the situation with the media changing for the better in Russia? Essentially Putin is consolidating the media, forcing out any dissident voices under the guise of business irregularities or bankruptcies. It looks as if he is winning the power struggle against Gusinsky and Berezovsky. How is media consolidation and government monopoly going to play in the efforts to make Russia a more open and flexible country and change the internal situation in Russia?

YAVLINSKY: At the moment, the situation in the Russian media is very, very bad, the worse since '90, '91. We have only one thing. We have a state television and state propaganda, and whatever. So this is a good story. This is one of our very serious problems. But that's why I started, because this is absolutely clear. And this is a serious problem. And certainly there are some business issues, but this is not about business. This is a political issue.

But these are simply problems that we have to resolve. These are our internal matters and this is also in our vital interest. Certainly you are welcome to invest. But it is our task to establish an independent media. Nobody can resolve this issue for us. Nobody can create an independent media for Russia. We are able to see CNN, so that is the only thing you can do for us. You can translate it into Russian. That will be interesting. But that is the only thing that you can do. All the other media We have established all the other media on our own.

One more point. This was one special example. While the meeting between our president and President Bush, as far as I know, involved a talk about one event, which was in Pakistan. At some point of this anti-terrorist war before, I think at the very beginning, a group of Taliban representatives came to the Russian Embassy in Pakistan requesting weapons. And they were under control of the Pakistani security. Putin asked President Bush whether he knew about that. He said that he didn't. Russia certainly rejected the request. But look at how difficult it was, even in that situation. This provided evidence of a really new quality in relations. They came to ask. The Pakistani security were not giving information to your secret services.

Okay.

MODERATOR: Grigory Alexeyevich, we are very grateful for a very thoughtful, stimulating, and, indeed, provocative presentation and discussion this morning. You have outlined a very large challenge for us all over the months and years ahead. I know you are going to outline this challenge to leaders in the Bush administration and on the Hill later on today and tomorrow. I hope that those discussions go well and that we see some positive results.

Let me just conclude by saying that we don't want to wait another five years to see you again here in Washington. So please come soon and a little more frequently. Thank you.

YAVLINKSY: Thank you very much.

Domestic and Foreign Policy Challenges in Russia
Speech by Grigory Yavlinsky