U.S. Resets to Give Russia Room to Expand

By William Hawkins l November 22, 2010

Vladimir Putin        Hugo Chavez           Mahmoud Ahmadinejad          Hu Jintao


There are two pending agreements with Russia that are central to President Barack Obama’s “reset” relations with Moscow. The one that has attracted the most attention is START (Strategic Arms Reduction Treaty) signed by Obama and Russian President Dmitry Medvedev in April. The treaty would restrict each nation to a maximum of 1,550 deployed warheads with only 700 launchers (long range ballistic missiles and heavy bombers), a cut of about 30 per cent from a limit set in 2002. The other agreement is in the latter stages of negotiation, the accession of Russia to the World Trade Organization. WTO membership would integrate the Kremlin into the global trade and investment network.Obama wants START ratified by the U.S. Senate during the lame duck session. Sen. Jon Kyl (R-AZ), the Republican Whip and point man on the treaty, has said he doubts a vote can be taken by the end of the year. Sen. Kyl has been critical of Obama’s attempts to “reset” relations with Russia, particularly when “the President abandoned commitments to build missile defenses in Poland and the Czech Republic” to appease Moscow. He has also criticized Russia for its continued support of Iran’s nuclear program and its sale of advanced weapons to the Tehran regime.

Senate ratification requires 67 votes out of 100. Republicans now hold 41 seats, and will have 47 next year. Even with a Democratic majority, the Senate Foreign Relations Committee added conditions to the draft resolution to ensure continued modernization of the American deterrent and to make clear that START does not interfere with the development of missile defense systems. In reaction, the counterpart committee in the Russian Duma withdrew its ratification of the treaty. Committee chair Konstantin Kosachev charged the Senate conditions ignored key Russian concerns.

Moscow opposes any U.S. or European missile defense program. It believes its influence depends on being able to devastate an undefended West with a nuclear strike; not the posture of a post-Cold War “partner” in peace. At the November NATO summit in Lisbon, President Medvedev threatened a new “arms race” to counter any defenses.

Whatever the fate of START ratification, letting Russia into the WTO could have the larger impact in the long run as membership will help Moscow access more Western capital and technology to support its strategic ambitions. In early October, the Kremlin announced that Russia and the U.S. had settled all outstanding bilateral issues relating to Russia’s accession. During a phone conversation with Medvedev on Oct. 1, Obama pledged to support Russia’s efforts to complete remaining steps in multilateral negotiations so that Russia could join the WTO as soon as possible.

Supposedly, the talks have centered on Russia opening its markets to American products, but the real point seems to be to assure corporations that their investments in Russia will be safe and covered by the rule of law. Projects posted at the White House website under the heading “Expanding Trade and Investment” on the “U.S.-Russia Relations Re-set Fact Sheet” is dominated by the establishment in Russia of new factories, not the export to Russia of U.S.-made products. Deere & Company will open a new manufacturing and parts distribution facility worth $500 million. GE will team with state corporations Russian Technologies and Inter RAO UES, to pursue a “strategic relationship” for the production and distribution of industrial products for infrastructure projects. Chevron Corp. will help Russia’s OAO Rosneft explore for oil and natural gas in the Black Sea. Cisco pledged $1 billion in investments over the next ten years in technology projects in Russia. And the White House hopes “U.S. angel investors in the high-tech sector” will be attracted to Russian start-up companies.

While some American corporations may profit from joint ventures in Russia, there will be few gains for the United States and its people from such deals. Instead, there will be a great deal of risk as Russian capabilities, wealth, and productive capacity expand.

George W. Bush noted in his presidential memoirs Decision Points, “Over the course of eight years, Russia’s newfound wealth affected [President Vladimir] Putin. He became aggressive abroad and more defensive about his record at home.” Putin, a former Soviet KGB officer, is now Prime Minister and remains the strong man behind his hand-picked successor Medvedev. Putin still remembers that it was President Ronald Reagan’s strategy to squeeze the Soviet Union economically until the system broke and the empire disintegrated.

Helping the current Kremlin regime generate economic growth will not tame its ambitions, it will empower them. This outcome has not only been seen in Russia, but also in China where trade and investment were once predicted to transform the Beijing regime into a “responsible stakeholder” in world affairs. China was admitted into the WTO in 2001. Since then, the U.S. trade deficit with Beijing has risen steadily, from $89 billion in 2001 to $264 billion in 2009, as corporations moved factories across the Pacific in joint ventures and outsourced orders to Chinese firms. During the same period, tensions have risen as China has used the gains from trade and development to support a foreign policy at odds with U.S. interests across the globe. Last summer was marked by a series of disputes all along the Pacific Rim from Korea to Southeast Asia where diplomacy was backed by competing military exercises.

Beijing and Moscow have often allied in support of rogue regimes and in the sponsoring of anti-American initiatives at the United Nations and other international organizations. At their September meeting in Beijing, Chinese President Hu Jintao and President Medvedev pledged to strengthen their strategic partnership and support each other’s core national interests.

The 2010 annual report to Congress by the U.S.-China Economic and Security Review Commission, a bi-partisan panel of civilian experts, was released Nov. 17. Among its conclusions, “Predictions that China’s WTO accession would lead to the transformation of China’s authoritarian government and enhance U.S. national security have not been borne out.” Even as a pure trade agreement, the Commission advised, “WTO dispute resolution may be a poor tool for addressing such issues as China’s currency manipulation and the trade-distorting aspects of China’s industrial policy.” The same disappointments will likely result from Russian accession to the WTO. The problem with the WTO is part of the larger issue of “resetting” basic U.S. policy towards Russia. The White House has argued that failure to improve relations will lead Moscow to increase its support for Iran. Yet, this line of argument only confirms that Russia’s foreign policy is not compatible with U.S. and allied security if working even more closely with Iran is an option. Indeed, only two months after START was signed, Russia watered down UN action against Iran over its nuclear program and successfully gained an exemption from sanctions for its trade with Tehran.

Iran is only one area where Russia has been showing a more assertive attitude. Moscow has been pushing claims in the Arctic Ocean, including a much-publicized planting of a Russian flag on the sea floor at the North Pole in 2007. Last summer, Russia conducted a major military exercises in the Far East to support its claim to disputed territories with Japan and to support North Korea. The exercises involved 20,000 troops, 70 combat aircraft, and 30 warships. President Medvedev, fresh from his “burger diplomacy” chat with President Obama in Washington, boarded the nuclear powered battlecruiser Pyotr Veliky (Peter the Great) to oversee the maneuvers.

In October, Russia signed an agreement to build Venezuela’s first nuclear power station when its radical strongman Hugo Chavez visited Moscow. As in the case of Iran, the claim is that the plant is strictly for civilian energy generation, but Venezuela’s interest in atomic development has raised concerns. President Medvedev told the press, “A deal in the atomic sphere has just been signed. I already know that it will make someone shudder.” That someone is the United States. The Kremlin leader said earlier that he would “spit” if the U.S. opposed Russia’s expansion in Latin America.

Chavez was one of the first to recognize the “independence” of South Ossetia and Abkhazia in September 2009. These two areas were taken from Georgia by a Russian invasion in 2008. President George W. Bush backed Georgia in that conflict. And while President Obama has called for Russia to end its occupation of the provinces, he has also indefinitely delayed consideration of the request by Georgia and Ukraine to join NATO. Moscow is trying to regain all the lost territory of the old Soviet Union, which it calls “the near abroad.” Russia’s push into Central Asia seeks control of major energy supplies and also threatens key U.S. bases that support operations in the Middle East.

In February 2007, then President Putin made a speech at a European security conference in Munich attacking the United States. He charged, “The United States has overstepped its borders in all spheres – economic, political and humanitarian, and has imposed itself on other states.” He accused Washington of going “from one conflict to another without achieving a fully-fledged solution to any of them.” Ironically, 13 months later, Putin would start his own war with Georgia. President Obama came into office condemning along with Putin the activist policies of the previous Bush administration. For Obama, it is not Russia that needs to reset its relations with the West, but the U.S. that needs to accept Russia’s reemergence as a major power and back away from opposing its ambitions. As Obama said after meeting with Medvedev on the sidelines of the Lisbon NATO summit, “We see Russia as a partner, not an adversary.”

In an earlier period, such a policy was not called a reset, it was called appeasement. It never works. Reducing the U.S. strategic deterrent in START and helping Russia improve its high-tech capabilities through its membership in the WTO are not moves to enhance peace. The only “reset” will be Moscow’s assessment of how far it can push its agenda against a back-peddling American administration.

William R. Hawkins, a former economics professor and Congressional staffer, is a consultant specializing in international economics and national security issues. He is a contributor to

SFPPR News & Analysis.