U.S.-Russia Relations in Transition

U.S.-Russia Relations in Transition

In an all-day conference at the Nixon Center, U.S. and Russian experts discussed the ups and downs of the U.S.-Russia relationship. Will transfers of power in Washington and Moscow lead to new opportunities for understanding?

When asked which of the U.S. presidential candidates Russia prefers, Pushkov declared McCain to be the worst choice and Obama to be the best. Medvedev prefers Obama because he seems "less tied" to the cold war and the two men are of the same generation.  Pushkov noted that "even Russian liberal papers" see McCain as a dangerous choice. The speaker described the perception of Clinton as a redux of the past, though she may be more prone to push a meddlesome human-rights agenda. He described her as "the Bush administration without the personal touch."

Mr. Merkel gave a more positive assessment of the relationship and reminded the audience to focus on actions, not rhetoric. Identifying the areas for improvement and the areas of tension is necessary for developing cooperation. Merkel also noted that in some cases where the United States and Russia strongly disagreed, in regard to Georgia for example, the European powers were in accordance with the U.S. position. Thus, it is a bit overly simplistic to view the formation of U.S. policy as a direct reaction to Russian interests.


Economics, Energy & Environment

The final session of the day addressed the Russian economy, the energy sector and potential for foreign investment in the context of U.S. involvement and cooperation. Igor Yurgens, the chairman of Renaissance Capital and the leader of a new think tank established as an advisory group to Dmitry Medvedev, summarized the current economic situation in Russia, the U.S.-Russia trade relationship and the economic challenges the country will face in the future. Robin West, a former assistant secretary of the Department of the Interior and the chairman of PFC Energy, described Russia's role in the global energy crunch and addressed the conditions for improving bilateral relations. Paul Saunders, the executive director of the Nixon Center and the associate publisher of The National Interest, moderated the discussion.

Mr. Yurgens began the session by saying, "We've never had it so good." The Russian economist then cited 8 percent economic growth in the past year, following 7 percent growth in the previous year. He noted that the Russian economy is now the seventh largest in the world and a Goldman Sachs model estimates it will be fifth by 2020. The economist then outlined the two main challenges to the Russian economy as the need for improved infrastructure (estimated in the trillions of dollars) and the demographic situation that is causing a shortage of labor. He explained that the labor problem stems from overall population decline, limited immigration and an erosion of the education system. To address the infrastructure problems, Moscow has implemented a four-year plan, but it needs more funding. He welcomed foreign investment and improved bilateral trade, particularly in the technology sector. "Whoever bring technology to Russia will have a ‘green corridor' from the very top," Yurgens declared. The speaker also highlighted a new foreign-investment advisory council to the president and drew a distinction between the animosity in the political arena and dealings in the business sector. Addressing U.S.-Russia energy collaboration, Yurgens explained the need for an institutional framework and a commercial dialogue. "There is a vested interest on both sides of the ocean," he asserted. Yurgens also noted that some "noises" have been made after Sochi, but much more needs to be done.

"The global economy is headed down a dark path," Mr. West declared. The global commodity and energy crunch foreshadow substantially higher prices ahead. Because of this, there is incredible pressure on meeting supply and efficient consumption. Russia has the potential to play a great role in energy supply, but international investors will not fund a capital intensive risky investment-quite simply the Russian energy sector needs reform. Russian production has stagnated and is heading for decline. This scenario is neither in Russian interests nor global interests. Improvements in transparency and contractual security as well as strengthening infrastructure and institutions would go a long way to reverse the trend. West also noted that Russian gas flares are an "environmental disaster" that must be addressed, along with its highly inefficient consumption. Yurgens responded to criticisms by explaining that improvement is a process. One of the essential reforms is the need for an independent judicial branch. Medvedev agrees that this reform is necessary and some progress has already been made, such as lifetime appointments for judges. "Give us ten years and we'll [Gazprom] be on the same ground as Exxon Mobil [or] Shell," Yurgens asserted.


The opening remarks of Nikolas Gvosdev, editor of The National Interest, best summarize the conclusions of the conference: "We may expect a bumpy road ahead-Russian priorities may conflict with U.S. priorities. But policy makers must be aware of the differences in order to be constructive in forming policy."