#10
Washington Post
November 9, 2001
A Long Road West for Russia
Despite Warming Relations, Integration Is a Distant Prospect
By Susan B. Glasser and Peter Baker
Washington Post Foreign Service
MOSCOW, Nov. 8 -- For all the ambitious talk about Russia's historic opportunity to integrate into the West, the effort to open a small NATO information office in Moscow illustrates how difficult it will be to achieve that goal.
To set up an outpost of the North Atlantic Treaty Organization here took years of wrangling over matters of protocol large and small. After the ribbon had been cut in February, it took another six months to actually open the office. Even today, a long-promised military liaison mission has yet to open.
The delays, caused by mutual distrust, bureaucratic inertia and a failure of the two sides to communicate with each other, suggest that Russia has a long way to go before it can claim a seat in Western institutions and integrate into the global economy.
"Our standards are totally different," said Viktor Kuvaldin, a political analyst at the Gorbachev Foundation, a research center founded by the former Soviet leader who struggled to westernize his country. In any practical sense, Kuvaldin said, the hope of melding Russia into the West "is not an issue of today or tomorrow."
As Russian President Vladimir Putin prepares to fly to the United States next week for a summit with President Bush in the aftermath of the Sept. 11 terrorist attacks, the relationship between the two countries has undergone a profound shift, rekindling hopes that Russia could become a partner of the West.
Bush and Putin appear likely to seal a landmark deal that would deeply cut strategic nuclear arsenals while allowing the United States to pursue testing of a missile defense system without abandoning the Anti-Ballistic Missile Treaty of 1972.
Putin has expressed a desire for deeper ties to the West in other spheres as well. "It is also in our best interest to integrate Russia in the contemporary international community in every sense of the word, in defense, political, security," he told ABC's "20/20" this week.
But that desire may be frustrated by hurdles to joining international organizations -- including the World Trade Organization, NATO and the European Union -- any time soon. At the moment, policymakers do not expect Russia to become a member of the WTO until 2004 at the earliest; membership in NATO and the EU could be a decade away, even if both Russia and the organizations pursue it.
Even something as straightforward as granting Russia permanent normal trading status with the United States has proved beyond Bush's ability to deliver by next week's summit in Washington and Crawford, Tex. Under the Jackson-Vanik amendment of 1974, Russia must undergo an annual review of its emigration policies to renew its trade privileges, a formality by now, but one Moscow considers demeaning. Bush hoped to lift that requirement in time for the summit, only to discover he could not gain congressional approval until the spring.
"There is much talk about a new alliance, but very little systematic work has been done within the administration in either country as to what kind of changes one needs," said Sergei Karaganov, chairman of the Council on Foreign and Defense Policy, a private group with close ties to the government. "There's a need for a bigger process, and very quickly, or the momentum will be lost."
"We have to change not only Russia's attitude toward the West but Western and particularly American attitudes toward Russia," former acting prime minister Yegor Gaidar said in an interview. "It's not easy, but I hope the American political elite will have the imagination to do this."
Russia's relationship with NATO suggests how difficult this could be. The issue will be one of several major items on the agenda at the Bush-Putin summit, but it's unlikely that "concrete down-to-earth plans that can be implemented will come out of it," said a NATO official familiar with the talks. Instead, the two leaders are likely to "confirm and re-stress that we should go down the road of cooperation, while leaving it up to creative thinkers on both sides to push through ideas which are still in the development stage."
In effect, both Russia and the West have already acknowledged that "the present relationship is unsatisfactory for both of them," the official said, but are not even close to producing a plan to change it. Indeed, the most promising development since Sept. 11 has simply been new interest by Putin and NATO in creating "an informal circuit" of communication to bypass the bureaucracy.
The prospect of Russian membership in NATO presents a host of hard questions, from the philosophical, such as redefining the mission of an alliance born out of the Cold War, to the practical, such as identifying what either side would be willing to give up. For instance, would Russia abandon lucrative arms deals with such countries as Iran, Iraq and China? And would the West make up the considerable funds that cash-strapped Russia would lose from its $4 billion-a-year arms trade?
Most officials and analysts agree Russia does not come close to meeting current NATO membership criteria, which require among other things a transparent military budget, firm civilian control over the armed forces and strong guarantees of democratic freedoms. While Russia might want an exemption, NATO would be hard-pressed to justify creating a different standard.
"We are in a deadlock right now," said the NATO official. "Russia doesn't want to [have to] apply to become a member, and NATO cannot hand them an open invitation without upsetting the nine other countries currently going through the application process."
As a result, instead of membership, most policymakers in Moscow and Washington and at NATO headquarters in Brussels are focused simply on reinventing Russia's ties to the alliance. But even with that, the cultural and political barriers remain formidable.
"On the one hand, people have recognized that the NATO-Russia relationship needs to be fixed, and there are a lot of ideas out there as to how to do that," said Robert Nurick, director of the Carnegie Endowment's Moscow Center. "But institutionally, these wheels grind slowly. If left up to the bureaucracy to do it, it would take forever."
Formally, Russia works with NATO through a body called the Joint Permanent Council, set up in 1997 to assuage Moscow when the alliance admitted former Soviet satellites such as Poland. However, many in Moscow view it as a figurehead, as Karaganov put it. Instead of being "19 plus one," as it was dubbed, Russians consider it "19 against one."
Vladimir Lukin, the deputy speaker of the lower house of parliament, said he favors a program under which Russia, while not necessarily becoming a member, "would have stature to participate in military and political planning a priori, before decisions are made. Discussions are no longer enough; we need to find a way to prepare common positions."
Russia may be closer to strengthening its economic ties with the West, as foreign investors begin trickling back after the 1998 financial crisis, and the WTO works to craft a membership deal in negotiations scheduled to begin next year. Even before the attacks on the World Trade Center and the Pentagon, Putin had impressed many foreign economists by pushing market reforms that eluded his predecessor, including a new land code allowing the sale and purchase of urban property and a flat-rate tax code for personal and corporate income.
The newfound friendship between Russia and the West has helped cement foreign business leaders' confidence that Putin is headed in the right direction. Just last week, ExxonMobil officials announced they would proceed with long-stalled plans to develop oil fields near Sakhalin Island off Russia's eastern coast, declaring themselves finally satisfied not only with regulatory and tax reforms but also with the improved spirit between Washington and Moscow. The oil giant intends to spend $4 billion over five years, the largest single investment in Russia's history and more than the $2.5 billion in total direct foreign investment in the first half of this year.
Yet the big deals have not overshadowed the continuing difficulties of other Western firms trying to operate in an environment without a reliable court system or corporate governance.
Sawyer Research Products, an Ohio-based crystal quartz producer, offers a cautionary tale. In the 1990s, Sawyer invested in a plant in Vladimir, not far from Moscow, but in recent months has seen its factory and $8.2 million investment seized by a partner allied with local government officials and local courts.
Gary Johnson, president and chief executive of Sawyer, said he supports greater Russian integration into the world economy. "However, we have to make sure there's a dose of reality that's brought to this," he said. "Saying that something's this way doesn't make it so."
Economists say they believe much unfinished business remains to bring Russia close to Western standards. A major problem is the country's primitive banking system; by and large, Russians cannot obtain mortgages, cannot withdraw money from a branch in a different city and do not trust banks enough to keep their savings there.
"They're not trying," said Tetsuya Uchida, chief Moscow representative of the Japan Bank for International Cooperation. "They're not making any effort to modernize the financial sector. So I think in order to integrate the Russian economy into the world economy, they have to make a lot more effort."
Russia's lack of a modern financial system would be a major issue for the WTO before admitting Russia. Others would be restructuring customs valuation, import licensing, value-added and excise taxes, industrial subsidies, technical trade barriers and regulation of anti-dumping measures.
"Despite the fact that the Cold War is already in the distant past and we have been political partners for some time, real barriers still remain in the economy," said Alexei Likhachev, who has helped lead the Russian parliamentary group on WTO. "Our hope is that the events of September 11 will break down many barriers, including these."
While Likhachev said he was preparing WTO-related proposals for Putin to take to the summit, he made clear that it is unrealistic for Russia to join before 2004, even with U.S. support. And joining the European Union is even more unrealistic. "They have much higher requirements," Likhachev said. "It's better for us to test our strength by trying to join WTO first."
But the international business community appears increasingly bullish on Russia. "We now know where Russia is heading, which is a very, very good signal and a strong signal," said Thierry Malleret of the World Economic Forum, the business group that usually meets in Davos, Switzerland. "Everybody knows it's going to take a long time. You don't put into motion such a radical shift overnight."
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