Another Hurdle to Cross, A Tough Mountain to Climb: Blazing New Trails in U.S.-Russian Relations

[Deb Palmieri on Russia Table of Contents]

The following article was published in the Russian Commerce News, March-April 1999. The Russian Commerce News is the official publication of The Russian-American Chamber of Commerce®.

Another Hurdle to Cross, A Tough Mountain to Climb: Blazing New Trails in U.S.-Russian Relations

Nobody ever said it was going to be easy. Really getting to know each other; making it work; living with and genuinely understanding differences; learning to trust; coping with obstinateness and occasional self-righteousness. And there's the challenge of developing patterns of cooperation, tolerance and deep respect.

No, I'm not talking about relations between you and your spouse or significant other. I'm talking about the challenges inherent in the U.S.-Russian relationship following the honeymoon period of the early nineties, and moving from the Cold War ethos of the 20th century into new and improved forms of interaction and side-by-side existence into the coming 21st century.

Just when we thought the roller coaster of crises and upheavals of the last year would subside (the March '98 government shake-up; the May financial shocks; the August 17 economic disaster; the Chernomyrdin firing and the Primakov appointment), now all of a sudden we're hit with the Kosovo crisis and widely divergent thinking on the U.S. administration-led NATO cruise missile campaign in Yugoslavia against Slobodan Milosevic and the ethnic cleansing campaign he's waging against the Albanians in Kosovo.

As if everything else wasn't enough, now through the smoke and flames and smoldering wreckage of burned-out buildings in Belgrade and civilian casualties mounting and the carnage of Serbian killing fields, with stories of senseless murders of Albanian men, women, children and the tragedy of the human suffering of fleeing refugees into neighboring Montenegro, Macedonia and Albania - you have two very different policies, philosophies and mindsets coming from Washington and Moscow and policymakers on both sides are trying to come to grips with it all.

These circumstances should be of concern, as the bombing campaign intensifies, to the U.S. business community, who is now the largest foreign investor in Russia, because there's no question as to the truth of the dictum that good political relations open doors and foster strong commercial ties; and conversely poor political relations close doors and diminish commercial opportunities. Corporate investors need to follow the situation closely and urge decision makers on both sides to reach a swift end to hostilities with a settlement and outcome both sides can live with.

Remarkably, the woes of Kosovo fall at a time when several very positive developments are occurring and when Russia's domestic policy is scoring some important gains that should make Washington feel good, if not stand up and cheer.

The first of these is that despite the fact that Mr. Primakov turned his plane around mid-Atlantic and canceled out on the Gore-Primakov Commission talks planned for late March, numerous commission meetings went forward as planned and a host of significant agreements were signed. While the media sensationalized the "failed visit", Mr. Primakov quietly behind-the-scenes mandated that normalcy and continuity would successfully carry through to conclusion works and proposals that had been in the works for months. Washington felt the same way and both sides cooperated nicely despite the absence of the prime minister. And while Mr. Primakov was widely condemned by his own Russian press for squandering his big moment with the IMF (his meeting with Mr. Camdessus was much anticipated) and selling out Russian national interests for former communist ally Yugoslavia, that objection fizzled when Mr. Camdessus instead flew to Moscow that weekend and the talks proceeded as planned, and progress towards final terms was made.

Secondly, is that economists agreed that the Russian economy began to show signs of stabilization in first quarter '99. There were some hopeful signs. The decline of industrial production slowed. Rates of consumer price inflation fell from nearly 12% in December to 4% in February. The Moscow Stock Exchange experienced a modest comeback - the RTS index rose from 37.4 in early October to 90 in mid-March. First Deputy Prime Minister Maslyukov not only projected a positive trend towards a reduction of the inflation rate, but projected that the growth of Russian GDP would reach 1% this year. He observed that GDP decline has slowed, and there was even slight growth in oil, chemical, petro-chemical, light and food industries.

Finally, the Primakov government has taken a decisive stand against organized crime and corruption. Mr. Primakov's actions suggest he is not only paying lip service to going after the criminal elements which pervade Russian society, but he is using the full force of the authority of his government to do so. And he is starting at the top, not the bottom to signal his determination.

The Russian Prosecutor General's office (which is enmeshed in its own political controversy) has now issued controversial arrest warrants for Boris Berezovsky (oil-media magnate and former CIS secretary), Nikolai Glushkov (former Aeroflot executive) and Alexander Smolensky (Agro Bank founder). The oligarchs are now on Russia's most wanted list for alleged money laundering, alleged theft of State funds, alleged bank fraud, alleged financial embezzlement and alleged illegal business action. Putting to one side these particular controversial targets, the actions are sending the message that a massive law and order campaign is one of Primakov's top priorities.

It's important that the Kosovo crisis not allow us to lose the ground both countries have gained together for most of this decade. Kosovo presents us with the challenge of coping with serious differences in the global agenda, even though we have made a lot of progress in closing the gap over domestic issues. We have before us now the opportunity to use the Kosovo experience as a landmark case, not only to learn how not to repeat such human tragedies in the future and to learn lessons on how to cope with and manage ethnic conflict worldwide, but also in the sense of learning how better to reconcile and manage U.S.-Russian foreign policy differences.

We need more sensitive thinking and better strategies that enable us to respond to foreign policy crises, short of calamitous political, diplomatic and economic fallout. The Russians are clearly concerned about what they perceive are unilateralist U.S. policies and unwillingness to abide by the U.N. framework. So, if, for example, the U.S. administration prefers not to abide by the United Nations framework with its standards, procedures and norms, which was set up to maintain peace with the participants of all nations, then what alternative is it proposing? How will we take into consideration input from other major powers, including Russia on key global issues in the future? Will we just disregard them and go our own way, no matter what? Surely, the U.S. State Department cannot believe that massive bombing campaigns and "cruise missile diplomacy" against countries whose policies we disagree with is any kind of viable strategy to strengthen U.S. national interests and promote global stability in the long-run.

As far as the Russian side goes, more sensitivity is needed to understand how strongly Americans feel about weapons proliferation and concerns Washington has, in the Senate and House, and from both Democrats and Republicans about providing scientific know-how and nuclear or missile technology to nations it considers a potential threat to its national security. Also, the irregular nature of the START II ratification process is another area of contention and one which needs to be resolved once and for all.

All of these issues and their equitable resolution as perceived by both parties are extremely important backdrops to significantly expanding foreign investment in Russia, and keeping foreign policy relations on an even keel.

Their successful resolution will provide an important stimulus for retaining foreign investment dollars already committed in Russia and for those dollars which will flow into Russia in the future.

So, we have another hurdle to cross, and another mountain to climb. I believe both sides will rise to the occasion.

Deborah Anne Palmieri
Russian Commerce News, March-April 1999