[Extensions of Remarks]
[Pages E2199-E2202]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

ADDRESS BY SECRETARY OF STATE MADELEINE ALBRIGHT TO THE U.S.-RUSSIA
BUSINESS COUNCIL

______

HON. LEE H. HAMILTON

of indiana

in the house of representatives

Thursday, October 15, 1998

Mr. HAMILTON. Mr. Speaker, I commend to Members' attention an
excellent speech on U.S. policy toward Russia given by Secretary
Albright on October 2, 1998. Secretary Albright correctly stresses the
importance of U.S-Russian relations and the fact that Russia's
evolution will be a long-term process. The Secretary rightly argues
that, while Russia must respect basic laws of economics, solutions to
Russia's problems will not work unless they have popular support. I
applaud Secretary Albright for a very insightful speech.

Secretary of State Madeleine K. Albright's Address to the U.S.-Russian
Business Council

Thank you Ambassador Strauss for that introduction. As our
nation's first Ambassador to a democratic Russia, the
experience, perspective and authority you bring to the
subject at hand are truly unmatched. I am glad to see Gene
Lawson here--he and I started our PhD's at Columbia on the
same day.
And I'm very glad to see in this audience some of the old
Russia hands who treated me to a stimulating dinner seminar
two nights ago. Today they're going to hear me cribbing their
ideas--shamelessly.
Ambassador Vorontsov, distinguished guests: I am happy to
be in Chicago and delighted to address a group that shared
President Clinton's conviction that what happens in Russia
matters profoundly to our security and prosperity. Let me now
invite you all to sit back, digest your lunch, and formulate
some polite, easy questions to ask me after my speech.
When I think about the situation in Russia today, I can't
help thinking about a story I

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first heard on one of my early visits to that country.
A train is going through Siberia when it runs out of track.
In Lenin's day, the leadership says: ``Our workers are strong
and brave; they will keep building.'' Stalin says: ``No,
they're lazy; threaten to shoot them and then they will
build.'' Krushchev says: ``Russia is going forward, not
backward, so we can use the rails we've passed over to finish
the track ahead.'' Brezhnev says: ``It's too much work; let's
close the blinds and pretend we're moving.'' Gorbachev says:
``Open the windows and let's see what happens.''
Then President Yeltsin and the Russian people get the train
going again. Except it's moving fast and he keeps changing
engineers. And now there are two tracks ahead. One looks
tempting, for it goes downhill; but it leads to the abyss.
Only the perilous track through the mountains will get Russia
to its destination.
As you can guess, that's an old story, but I made up the
ending. And the Russians keep writing new ones themselves.
These are, to use the Russian expression, smutnoye vremya,
troubled times. The Russian economy is expected to shrink
significantly in the coming year. A hard winter lies ahead.
To many Russians, it may seem as if the promise of a better
future has been betrayed once again. To many Americans, it
may seem that the greatest opportunity of the post-Cold War
era, building a genuine partnership with a stable, democratic
Russia is now a more distant possibility.
Of course, this is not the first crisis of post-Soviet
Russia. Tomorrow will mark the fifth anniversary of the
tragic showdown between President Yeltsin and the Supreme
Soviet. And it was only two years ago that Russians were
expected to reject Yeltsin in Russia's presidential election.
Each time, there were people eager to declare that Russia's
transition was over for good. Each time, some people were
ready to substitute soundbite for serious analysis, by asking
rhetorically: Who lost Russia?
But that has always been the wrong question. The drama of
Russia's transformation from a dictatorship and an empire to
a modern democratic state is far, far from over. We can not
say that Russia has lost its ways when in fact it has just
begun its journey. Nor can we say that Russia is ours to
lose. We can help Russia make tough choices, but in the end
Russia must choose what kind of country it is going to be.
The real question today is what will the new government of
Prime Minister Primakov choose? Will it take sensible steps
to stabilize the economy without triggering hyperinflation, a
currency meltdown, a collapse of the banking system, or
shortages of basic goods? Will it reconcile the political and
moral imperative of meeting human needs with the imperative
of economic revival? Will it recognize that, in fact, it
cannot fulfill either one of these imperatives without
fulfilling the other?
On the day he was confirmed by the Duma, Prime Minister
Primakov told me that the answer to these questions was
``yes.'' He also asked us to watch his actions and to wait
until his team assembled.
I cannot yet say we are reassured. We have heard a lot of
talk in recent days about printing new money, indexing wages,
imposing price and capital controls, and restoring state
management of parts of the economy. We can only wonder if
some members of Primakov's team understand the basis
arithmetic of the global economy.
So we cannot say with confidence that Russia will emerge
from its difficulties any time soon. Nor should we assume the
worst, for there are still plenty of people in Russia who
will fight against turning back the clock.
A true and lasting transition to normalcy, democracy, and
free markets in Russia is neither inevitable nor impossible.
It is an open question, the subject of a continuing debate
and struggle. That has been true ever since this great but
wounded nation began to awake from its totalitarian nightmare
and it will be true for years to come. That is why our policy
must continue to be guided by patience, realism and
perspective.
I want to talk today about the Administration's strategy
for responding to both the challenge and the opportunity that
Russia's transformation poses. I want to speak with you not
only as Secretary of State, but as someone who has spent much
of her life studying and teaching about the societies that
once fell on the far side of the Iron Curtain.
Over the years, my bookshelves filled with the literature
of the Cold War, with books about the Soviet Communist party,
about US-Soviet relations, about nuclear strategy. Nothing
gives me greater pleasure than the knowledge that so many of
them are now obsolete.
The books that still speak to us are those about Russian
history. They tell a story of countless efforts to transform
Russia, each leaving its mark, and yet each left unfinished.
Four hundred years ago, Peter the Great sought to open
Russia to the West. Yet not till today has Russia had a
chance to complete the journey it began when St. Petersburg
first rose on the Neva. More than 80 years ago, the Russian
monarchy was replaced not by a communist revolution but by a
constitutional democracy, which collapsed before its hopes
could be realized. A few years later, Stalin tried to move
his country in a radically different direction. He failed,
too; even his ruthless precision did not turn Russia into a
permanent prison.
Today's democratic reformers cannot afford to leave their
work half finished, because Russia cannot afford to be half
free. But to beat the odds, they must still beat the legacy
they inherited from the last failed effort to transform
Russia. And to understand their task, we need to understand
just how hard overcoming the legacy of communism has been and
will be.
We need to remember that a short time ago, Russia was a
country where enterprises competed to produce the biggest
piles of junk; a country where the dollar was at once illegal
and supreme; a country that did not care for its poor because
it did not acknowledge their existence; a country where crime
and graft were jealously guarded state monopolies; a country
where school books derided the rule of law as ``bourgeois
legalism.''
The task of rebuilding has been harder still because,
unlike the Czechs and Poles and Balts, Russians have no
living memory of political and economic freedom to guide
them; they are creating something new, not regaining
something they had before. What is more, precisely because
the collapse of the Soviet system was remarkably peaceful,
many responsible for the old order are now struggling over
the shape of the new one.
Seen from this perspective, it is remarkable that Russia is
as open to the world as it is today. It is remarkable that
power is devolving from Moscow to the regions. It is
remarkable that people who want to know what is going on
inside Russia can call up today's online edition of the St.
Petersburg Times or the New Siberia weekly or the Vladivostok
News.
It is remarkable that the leaders of American business can
gather here to discuss the stake in Russia's future that they
share with millions of workers and investors in Russia.
And it is remarkable that Russia is becoming a functioning
democracy, that its new government came into being because
the President and the Parliament played by the rules of its
post-Soviet constitution. That is not, to put it mildly, the
way Russia's politics worked in the past, but it is the way
most of the experts I've talked to expect it to be played in
the future.
I will not downplay Russia's present crisis or suggest
Russian reformers have made all the right choices. It's a
troubling fact that many Russians have come to equate reform
with theft. There is a danger many will come to see political
and economic freedom as just another Utopian promise that
never comes true.
I am deeply concerned about what is happening in Russia,
but I also agree with the motto that hangs in the office of
our Ambassador to Russia, Jim Collins, which says, ``Concern
is not a policy.''
My job as Secretary of State is not to describe the worst
possible outcome in Russia or anywhere else. It is to devise
policies that protect American interests and encourage the
best possible outcome. That has been our objective ever since
the Russian tricolor rose above the Kremlin in 1991. And
while none of our policies should be exempt from scrutiny or
criticism today, I believe it is a sound objective still.
Our policies towards Russia will continue to be guided by
several fundamental principles.
The first principle is that our most important priority in
dealing with Russia is to protect the safety of the American
people. That is an interest we pursue no matter who is up or
down in the Kremlin or which direction Russia is headed.
Our efforts have paid enormous dividends.
Today, there are no nuclear weapons in Belarus, Kazakstan
and Ukraine. Presidents Clinton and Yeltsin have agreed on
cuts to be made in the START III treaty that would reduce our
nuclear arsenals by 80 percent from their Cold War peak.
Russia has joined us in banning nuclear testing and in
ratifying the Chemical Weapons Convention. Our experts have
worked together to upgrade the security of nuclear weaponry
and materials.
Today, 75 percent of our assistance dollars to Russia are
devoted to programs that diminish the threat of nuclear war
and the danger that weapons of mass destruction will fall
into the wrong hands. Just last Week, our President announced
a program to help scientists and workers in Russia close
nuclear sites, start commercial, non-military ventures, so
that they are not tempted to sell their expertise to those
who wish us harm.
Today, there are no Russian troops in the Baltic states.
Instead, Russian troops are serving with ours in Bosnia.
Russian officers are working with our allies at NATO
headquarters. Our diplomats have been working together to
bring peace to the Caucuses and to Kosovo.
Yevgeniy Primakov and I worked closely together when he was
foreign minister. We each came to see the other as a
forceful, straight-talking advocate of a major power's
national interests. We have been able to advance our
cooperation where our interests' converge and to manage our
differences honestly and constructively.
The question now is whether that cooperation can continue.
There are many voices in Russia who want to shift the
emphasis in Russia's interaction with America and our allies
from one of partnership to one of assertiveness, opposition
and defiance for its own sake.
If that happens, it would be a double disaster for Russia.
First, because our ability to

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help Russians help themselves will go from being merely very,
very difficult to being absolutely impossible. Second,
because a shift of that kind some are advocating in Russian
foreign policy would be contrary to Russia's own interests.
After all Russia needs an effective non-proliferation
regime--and it does need to see that nations like Iran do not
acquire nuclear weapons or missiles that can hit its
territory. Russia needs strategic arms reduction and a treaty
limiting conventional arms in Europe. Russia needs peace in
the Balkans and an end to conflict on its borders. Russia
needs good relations with NATO. Russia needs neighbors in
central Europe and the New Independent States that are
secure, thriving models of market reform--for in a global
economy success and confidence are as contagious as failure
and panic.
Above all, Russia needs to project a preference for
cooperation to its partners in trade and investment around
the world. The confrontational policies that did Russia no
lasting good even in the nuclear age are certainly not going
to advance its interests in the information age.
Fortunately, in the last few weeks, we have welcomed signs
that the Russian leadership continues to see, as do we, that
there is a basis in mutual benefit for cooperative U.S.-
Russians relations. Just last week, for example, Russia
joined us in the UN Security Council to support a resolution
under the peace enforcement provisions of the UN Charter
demanding an end to the Serbian offensive in Kosovo. We have
a lot of hard work to do in the coming days to see Milosevic
gets the message.
I spoke to Foreign Minister Ivanov this morning about the
atrocities of recent days, about the need to see that
Milosevic understands our determination. We're continuing to
work with Russia throughout this crisis, but let me be clear:
if at the end of the day we disagree about whether force has
to be used, the United States and its allies must be prepared
to act.
Russian ratification of the START II treaty would further
confirm this positive trend. Prime Minister Primakov has said
this will be a priority. His government has, by recent
standards, unprecedented support in the Duma and therefore an
unprecedented opportunity to get this done.
At the same time, we need to recognize that the cash-
strapped Russian government is already hard pressed to slice
apart missiles, destroy chemical weapons stocks, and meet the
costs of other obligations. Over the long haul, arms control
saves Russia money; but in the short run, it carries costs we
and our partners must be ready to help Russia bear--not out
of charity, but because our national interests demand it.
That's why it's so important that Congress voted to increase
this year's Nunn-Lugar funding to $440 million.
The second principle guiding our policy is that we also
have an interest in standing by those Russians who are
struggling to build a more open and prosperous society. As
President Clinton made clear at the Moscow summit, we will
continue to do that in every way we can.
At the same time, we should acknowledge that helping Russia
will probably be harder for some time. And the best way to
help Russia now is not necessarily to send more money.
Much of the progress Russia has made in the last seven
years has come with the support of international institutions
such as the IMF and the World Bank. These institutions helped
Russia to conquer hyper-inflation, to liberalize prices and
to make the ruble convertible. They pressed policies designed
to encourage competition and discourage corruption.
At the same time, more big bailouts are not by themselves
going to restore investor confidence in Russia. Nor will they
help the Russian economy unless the Russian government is
committed to sound fiscal and monetary policies.
Foreign funds should continue to be used to help Russia
pursue credible reforms, but not to help delay them. They
should be used to support a policy of tax reform, not to make
up for tax revenues the government is unable or unwilling to
collect. They should be used to support a program that
strengthens banks lending money to entrepreneurs, not banks
set up to bet on current fluctuations. They should be used to
support policies that help the neediest Russians, not that
enrich off-shore bank accounts.
In the long run, the gap between Russia's needs and its
resources must be met not by foreign bailouts but by foreign
investment. Furthermore, what will truly help Russia now is
not more people betting on its T-Bills, but more people
betting on its factories, oil fields, and people.
We need to remember that Russia has tremendous inherent
wealth. Yet it has only attracted a trickle of outside
investment where there should have been a bonanza. Had the
conditions been right, it is estimated that investors could
have pumped more than $50 billion into Russia's oil and gas
sector alone. As it was, in 1997 energy investment didn't
even reach $2 billion.
Just think how much could have been done if investment on
this scale had been coming into Russia from the very
beginning of the 90's. Those who blocked it have a lot of
explaining to do to their people.
One of the obstacles has been Russia's inability to approve
adequate legislation on production sharing agreements, and to
create a stable, predictable tax system, which would create
an environment for attracting investment.
A related obstacle has been the sense among many Russians
that accepting foreign investment means selling their
country. President Clinton and I have been making the case
that this is a dangerously short sighted views. We have
pointed out that foreign investment has fueled growth in
every thriving emerging economy from Latin America to central
Europe, that it helped build America in the 19th century, and
that attracting foreign capital to America is one of our
highest priorities today.
By welcoming long-term, committed capital, Russia is not
giving away its national patrimony; it is gaining jobs,
growth and tax revenues. It is gaining advances in technology
that will allow it to market its resources at competitive
prices. It is gaining a corporate culture that will help it
to replace robber barons with responsible stewards of its
national treasure. It is gaining investors who will not fly
home or move their money to Switzerland at the first sign
of trouble. I gather that some of those who are beginning
to understand all this include Russia's governors--who
see, like our own governors, how much foreign investment
can do for them.
Let me acknowledge the many members of the US business
community who have had the guts to hang in there despite all
the difficulties you have suffered and uncertainty you have
faced. I thank you all for that.
As long as the Russian government is willing to play by
global rules, foreign governments and institutions will help
it to weather tough times. And whatever the policies of the
government, we will try to support programs that help the
Russian people and advance our shared interest in democracy.
In response to the current crisis in Russia, we have been
re-examining all our assistance programs, retargeting money
where it can be used effectively to support economic and
democratic reform. We will increase our support for small
business and the independent media, and try to bring a much
larger number of Russian students, politicians, and
professionals to live and learn in America.
And we intend to launch a lifeline to non-governmental
organizations whose funds have been frozen in Russia's
banking crisis.
Precisely because there are troubled times in Russia, these
programs are needed today more then ever. They are in our
nation's interest and they support the interest of the
business community. We asked the Congress to increase our
funding for 1999, and we need your support now, before this
year's session ends, to make that happen. This is no time to
cut programs that have had such an important payoff for us.
A third principle we need to keep in mind is that the
solutions to Russia's problems will not stick unless they
have popular legitimacy within Russia.
I do not want to suggest that there is any uniquely Russian
way to prosperity. If the Russian government prints too many
rubles, there is nothing inherent in Russian culture, nothing
imprinted in the Russian character, that will prevent
inflation from crushing its people's dreams. The laws of
economics may work in mysterious ways, but they do not vary
from culture to culture any more than the laws of physics.
But I do believe that even as we urge what is right, we
must not treat Russia as a ward of the international
community. Russia is too big, and too proud, for that. The
policies we would like the Russian government to pursue have
to be worked out democratically, with the support and
understanding of the Russian people, or they are going to
fail.
This means we need to be patient with the workings of the
democratic process in Russia. Under the best circumstances,
there will be compromises between economic orthoxody and
political reality. After all, democracy is not rule by
economist-kings. It is a system that allows pragmatic
politicians to build a consensus for policies that cause
short-term pain.
It also means we should not start each day by taking a
census of reformers in the Kremlin or hold our breath every
time there is a leadership change. We should be interested in
policies, not personalities.
In this respect, it is a good thing that Russia now has a
government with a mandate from both the Parliament and the
President. It is a good thing that Communists and Agrarians
in official positions have to face voters with the results of
what they do. They'll learn they have to do more than just
complain and denounce. It is a good thing that Russia will
hold parliamentary elections next year and presidential
elections in the year 2000. Far from fearing the outcome, we
should look forward to what should be the first peaceful,
democratic transfer of power in Russia's history.
The historian James Billington has written that many times
in their history, ``Russians have sought to acquire the end
products of other civilizations without the intervening
process of slow growth and inner understanding.'' Today's
reformers do not have much time to go through that process.
For in today's global marketplace, Russia will be vulnerable
to external shocks as long as basic market reforms remain
incomplete.
Russia's transition to true freedom, stability and
prosperity will take time, indeed it must to be lasting and
genuine. Meanwhile, we need to defend our interests and speak
clearly about the choices we hope Russia will make. And we
must be ready to stick with this effort for the long haul.
From the beginning of Russia's incredible journey toward
freedom, I've tried not to be too euphoric when things are
going well, or

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too discouraged when things are going badly. Everything I
know about transition from communism to democracy teaches me
to be a short-term realist when it comes to Russia. But it
also teaches me to be a long-term optimist.
This period is different from all the other periods of
change and reform in Russia's history in one important way.
Unlike the Peter the Great's time, Russia is not seeking to
enter a Europe of absolute monarchies in perpetual conflict.
Unlike in 1917, it does not need to escape from a Europe
engulfed in the senseless slaughter of a total war.
Yesterday, Europe was organized around alliances of
countries that knew what they were against. Today, the rest
of Europe and much of the world is coming together around a
consensus for open markets, for cleaner government, for
greater tolerance and peace. In the last 20th century, the
forces that pull Russia toward integration, and that
counteract the autarkic, self-isolating forces within Russian
itself--are more powerful than at any time in history.
It is our job--because it is in our interest--to manage the
aftermath of the Soviet Empire's disintegration, to help
Russia integrate into the community of which we are a part,
and eventually to help Russia thrive, not just muddle along.
And that means remaining steady in defense of our principles,
interests, and objectives. And it means standing with Russia
as it moves forward--as long as it is moving on the right
track.
I will continue to dedicate my best efforts to this hard-
headed, principled enterprise, and I solicit yours as well.
Thank you very much.

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