Order Code IB92089
CRS Issue Brief for Congress
Received through the CRS Web
Russia
Updated November 1, 2001
Stuart D. Goldman
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Post-Soviet Russia and Its Significance for the United States
Political Developments
Economic Developments
Economic Reform
Foreign Policy
Defense Policy
Fundamental Shakeup of the Military
Control of Nuclear Weapons
CFE Treaty: Flanks, Adaptation of CFE, and NATO Enlargement
U.S. Policy
U.S.-Russian Relations
U.S. Assistance

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Russia
SUMMARY
Vladimir Putin, who was catapulted into
Russian missile technology and nuclear reactor
the Kremlin following Boris Yeltsin’s resigna-
transfers to Iran, among others. After the
tion, was elected President on March 26, 2000
September 11 terror attacks, however, there
by a solid majority that embraced his military
has been a dramatic improvement in relations
campaign in Chechnya. Parties backing Putin
between the two states.
did well in the December 1999 Duma election,
giving Putin a stable parliamentary majority as
The military is in turmoil after years of
well. Putin has moved to strengthen the cen-
severe force reductions and budget cuts. The
tral government vis-a-vis regional leaders, to
armed forces now number about one million,
bring TV and radio under tighter state control,
down from 4.3 million Soviet troops in 1986.
and to modernize the armed forces. Federal
Weapons procurement is down sharply.
forces have suppressed large-scale military
Readiness, training, morale, and discipline
resistance in Chechnya, but face the prospect
have suffered. Following the war in Chechnya
of prolonged guerilla warfare.
and strained relations with the West over
Kosovo, Putin’s government increased defense
The economic upturn that began in 1999
spending sharply in 2000 and 2001. There is
is continuing. The GDP and domestic invest-
conflict within the military over resource
ment are growing after a decade-long decline,
allocation, restructuring, and reform.
inflation is contained, the budget is balanced,
and the ruble is stable. Major problems re-
After the collapse of the Soviet Union,
main: some 40% of the population live below
the United States sought a cooperative rela-
the official poverty line, foreign investment is
tionship with Moscow and supplied over $4
very low, crime, corruption, capital flight, and
billion in grant aid to encourage democracy,
unemployment remain high. Putin appears to
market reform, and strategic threat reduction
seek simultaneously to tighten political con-
in Russia. Early hopes for a close partnership
trol, introduce economic reforms, get major
waned, in part because Russians grew disillu-
debt forgiveness, and strengthen the military.
sioned with perceived U.S. disregard for
Russian interests, while Washington grew
Russian foreign policy has become more
impatient with Russia’s increasingly
assertive and anti-American in recent years,
adversarial stance on issues in which their
fueled in part by frustration over the gap
interests clash. Direct U.S. foreign aid to
between Russia’s self-image as a world power
Russia, under congressional pressure, fell over
and its greatly diminished capabilities. Rus-
the past decade. Indirect U.S. assistance,
sia’s drive to reassert dominance in and
however, through institutions such as the IMF,
integration of the former Soviet states is most
is very substantial. The United States has
successful with Belarus and Armenia but
imposed economic sanctions on Russian
arouses opposition in Georgia, Ukraine,
organizations for exporting military technology
Uzbekistan, and Azerbaijan. The CIS as an
and equipment to Iran and Syria. There are
institution is failing. Washington and Moscow
more restrictions on aid to Russia in the FY20-
clash over the such issues as missile defense,
01 foreign aid bill.
the ABM Treaty, strategic force reductions,
NATO enlargement, Chechnya, Iraq, and
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
September-October, Russia has provided intelligence information on Afghanistan,
cooperated with U.S. military deployments in Uzbekistan and Tajikistan, and provided arms
to the anti-Taliban Afghan opposition.
On October 17, Russia announced that it would close its large electronic intelligence
base in Lourdes, Cuba, as well as its naval base in Cam Ranh Bay, Vietnam.
On October 21, Presidents Bush and Putin at the APEC summit in Shanghai,
announced further cooperation against terrorism, and declared that they had narrowed their
differences on the issues of missile defense, the ABM Treaty, and strategic force reductions.
On October 24, Russian authorities announced that they would meet with Chechen
rebel representatives within ten days to discuss a possible political settlement.
On October 25, the Pentagon announced the postponement of two missile defense tests
earlier scheduled for November, that might have been viewed as violating the ABM Treaty.
On November 1, U.S. and Russian officials reportedly said that a breakthrough
agreement was near on a package deal including ballistic missile defense, the ABM Treaty,
strategic nuclear weapons ceilings, Russian WTO membership and debt rescheduling.
BACKGROUND AND ANALYSIS
Post-Soviet Russia and
Its Significance for the United States
Russia was by far the largest of the former Soviet republics. Its population of 146
million (down from 149 million in 1991) is about half the old Soviet total. Its 6.6 million
square miles comprised 76.2% of the territory of the U.S.S.R. and it is nearly twice the size
of the United States, stretching across Eurasia to the Pacific, across 11 time zones. Russia
also has the lion’s share of the natural resources, industrial base, and military assets of the
former Soviet Union.
Russia is a multinational, multi-ethnic state with over 100 nationalities and a complex
federal structure inherited from the Soviet period. Within the Russian Federation are 21
republics (including Chechnya) and many other ethnic enclaves. Ethnic Russians, comprising
80% of the population, are a dominant majority. The next largest nationality groups are
Tatars (3.8%), Ukrainians (3%), and Chuvash (1.2%). Furthermore, in most of the republics
and autonomous regions of the Russian Federation that are the national homelands of ethnic
minorities, the titular nationality constitutes a minority of the population. Russians are a
majority in many of these enclaves. Nevertheless, political confrontations between the
executive and legislative branches weakened the central government, allowing many of the
republics and regions to demand greater autonomy, and in some cases independence. Only
the Chechen Republic, however, has tried to assert complete independence. Some have seen
this trend as a threat to the cohesion of the Russian state. One of President Putin’s key
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policies is to reverse this trend and rebuild the strength of the central government vis-a-vis
the regions.
The Russian Constitution, designed by and for President Yeltsin in 1993, combines
elements of the U.S., French, and German systems, but with an even stronger presidency.
Among its more controversial features are the ease with which the president can dissolve the
parliament and call for new elections and the obstacles erected to prevent parliament from
dismissing the government in a vote of no confidence. The Constitution provides a four-year
term for the president and no more than two consecutive terms. The president, with
parliament’s approval, appoints a premier who heads the government. The president and
premier appoint government ministers and other officials. The premier and government are
accountable to the president rather than the legislature.
The bicameral legislature is called the Federal Assembly. The Duma, the lower (and
more powerful) chamber, has 450 seats, half chosen from single-member constituencies and
half from national party lists, with proportional representation and a minimum 5% threshold
for party representation. The upper chamber, the Federation Council, has 178 seats, two
from each of the 89 regions and republics of the Russian Federation. Deputies presently are
the regional chief executive and the head of the regional legislature. Legislation approved in
July 2000, however, will transform this chamber, replacing the regional leaders with Deputies
appointed by them who will serve as full-time legislators. (See p. 4, below.) The most recent
parliamentary election was in December 1999.
The judiciary is the least developed of the three branches. Reform has begun but some
of the old structure and personnel are still in place. Trial by jury is being introduced and to
become the norm by 2003. A major overhaul of the Soviet-era criminal code is nearing
approval in the Duma. Federal judges, who serve lifetime terms, are appointed by the
President and must be approved by the Federation Council. The Constitutional Court rules
on the legality and constitutionality of governmental acts and on disputes between branches
of government or federative entities. The Supreme Court is the highest appellate body.
Russia is not as central to U.S. interests as was the Soviet Union. With the dissolution
of the U.S.S.R. and a weaker, diminished Russia taking uncertain steps toward
democratization and market reform and limited cooperation with the West, much of the
Soviet military threat, especially to western Europe, has disappeared. Yet developments in
Russia are still important to the United States. Russia remains a nuclear superpower. It will
play a major role in determining the national security environment in Europe, the Middle East,
and Asia. Russia could be cooperative, passive, or disruptive, depending on internal
developments. Russia is central to the future of strategic arms control, national missile
defense, implementation of the Conventional Forces in Europe (CFE) Treaty, and dealing
with nuclear proliferation. Such issues as the U.S. budget deficit, the future of NATO, and
the U.S. role in the world will all be affected by developments in Russia. Also, although
Russia’s economy is still distressed, it is potentially an important market and trading partner.
Russia is the only country in the world that has more natural resources than the United States,
including vast oil and gas reserves. It has a large, well-educated labor force and a huge
scientific establishment. Furthermore, many of Russia’s needs — food and food processing,
oil and gas extraction, computers, communications, and transportation — are in areas in
which the United States is highly competitive.
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Political Developments
The ongoing political struggle in Russia has many aspects, including contests over
political ideology, the character of government, and the pace and character of economic
reform; institutional clashes between the executive and legislative branches and between the
central government and the regions; and personal rivalries among would-be leaders. The
political landscape is fluid, with parties and alliances forming, shifting, and dissolving. Some
argue that what appears on the surface to be “normal” competition among politicians and
parties of varying ideological hues masks a deeper underlying contest – an ongoing venal
competition among elites to seize ownership of vast, previously state-owned assets.
In 1999, Islamic radicals based in Russia’s break-away republic of Chechnya launched
armed incursions into neighboring Dagestan, vowing to drive the Russians out and build a
new Islamic state. A series of bombing attacks against apartment buildings in Moscow and
other Russian cities killed some 300 people. The new government of then-Premier Vladimir
Putin responded with a large-scale military campaign. Russian security forces may have seen
this as an opportunity to reverse their humiliating 1996 defeat in Chechnya. Russian forces
invaded and gradually occupied most of Chechnya. With Moscow keeping its (reported)
military casualties low and domestic media ignoring the suffering of the Chechen population,
the conflict enjoyed strong Russian public support, encouraging military and political leaders
to escalate the offensive, despite international criticism. After a grinding siege, Russian forces
took the Chechen capital in February 2000 and in the following months took the major rebel
strongholds in the mountains to the south. Russian forces are believed to have killed tens of
thousands of civilians and driven hundreds of thousands of Chechen refugees from their
homes. Many foreign governments and the UN and OSCE, while acknowledging Russia’s
right to combat separatist and terrorist threats on its territory, criticized Moscow’s use of
“disproportionate” and “indiscriminate” military force and the human cost to innocent
civilians. Although Moscow has suppressed large-scale Chechen military resistance, it faces
the prospect of prolonged guerilla warfare. Russia has lost over 10,000 troops in Chechnya
(1999-2001), comparable to total Soviet losses in Afghanistan (1979-1989). Russian
authorities deny there is a “humanitarian catastrophe” in the North Caucasus and strongly
reject foreign “interference” in Chechnya. On October 24, 2001, Russian authorities
announced that they would meet with representatives of the Chechen rebels within ten days
to discuss a possible political settlement.
In the December 1999 Duma election, the two parties associated with then-Premier
Putin, Unity and the Union of Rightist Forces, fared very well. The Fatherland-All Russia
bloc, led by former Premier Yevgenni Primakov and Moscow Mayor Yuri Luzhkov, did not
do well, as had earlier been predicted. The Communist Party, which lost about one quarter
of the seats it previously held and most of its parliamentary allies, remains the largest faction
in the Duma, but no longer controls a majority. Vladimir Zhirinovsky’s right-wing party and
Grigory Yavlinsky’s democratic, pro-market, Yabloko Party both lost over half the seats they
previously held.
Twelve days later, President Yeltsin’s surprise New Year’s Eve resignation propelled
Putin into the Kremlin, advanced the presidential election date from June 4 to March 26 and
increased Putin’s already strong election prospects. (See CRS Report RS20525, Russian
Presidential Election, 2000, March 24, 2000.)
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Putin’s meteoric rise in popularity was due to a number of factors: his tough policy
toward Chechnya; his image as a youthful, vigorous, and plain-talking leader; and massive
support from state-owned TV and other mass media. Putin’s political strength and popularity
reached such levels that three of his four chief rivals, Primakov, Luzhkov, and Lebed, decided
not to run in the presidential election. On March 26, Putin was elected president with 52.5%
of the vote in an 11-person field. His closest rival, Communist Party leader Gennady
Zyuganov, got just under 30%. All other candidates were in single digits.
Putin, who was a Soviet KGB foreign intelligence officer for 15 years and later headed
Russia’s Federal Security Service (domestic security), is, in contrast to Yeltsin, an intelligent,
disciplined statist. His priorities appear to be: strengthening the central government, reviving
the economy and integrating Russia into the global marketplace, strengthening the armed
forces, and asserting Russia’s status as a great power.
On the domestic political scene, Putin won several major victory over regional leaders,
reclaiming some authority for the central government that Yeltsin had allowed to slip away.
First, Putin created seven super-regional districts, each overseen by a presidential appointee.
Then he pushed legislation to change the composition of the Federation Council, the upper
chamber of parliament. That body is presently comprised of the heads of the regional
governments and regional legislatures of Russia’s regions, giving those leaders exclusive
control of that chamber and also parliamentary immunity from criminal prosecution. With
Putin’s changes, Federation Council Deputies will be appointed by the regional leaders and
legislatures, but once appointed, will be somewhat independent. A related bill gives the
president the right to remove popularly elected regional leaders who violate federal law. To
partly compensate the regional leaders, Putin created the State Council, a consultative body
comprised of the heads of Russia’s regions and republics.
The Putin regime has been steadily working to increase its control over the broadcast
media. The leading target was the media empire of Vladimir Gusinsky, which included
Russia’s only independent television network, NTV, which had been critical of Putin.
Gusinski, one of the so-called oligarchs who rose to economic and political prominence under
Yeltsin, was arrested in June 2000 on corruption charges. Many observers viewed this as an
act of political repression by the Putin regime. Gusinsky was soon released and allowed to
leave the country, but was rearrested in Spain on a Russian warrant and is being held there
pending extradition to Russia. NTV owed several hundred million dollars to the state-
controlled gas monopoly, Gazprom. On April 14, 2001, Gazprom took over NTV and
appointed Kremlin loyalists to run it. A few days later, Gusinsky’s flagship newspaper,
Segodnya, was shut down and the editorial staff of his respected newsweekly, Itogi, was fired.
The government has also forced the prominent oligarch Boris Berezovsky to give up
ownership of his controlling share of the ORT TV network, and has moved against the
independent radio network, Echo Moskvuy.
Two other developments are seen by observers as signs of authoritarianism in the Putin
regime. A new law on political parties introduced by the government and explicitly aimed at
reducing the number of parties gives the government the authority to register, or deny
registration to, political parties. In his address to the nation in April 2001, Putin suggested
that the Duma be stripped of it power to debate or vote on specific components of the budget
and instead either approve or reject the government’s proposed budget as a whole.
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Economic Developments
Since the collapse of the Soviet Union, Russia has experienced widespread economic
dislocation and a drop of about 50% in GDP. Conditions worse than the Great Depression
of the 1930s in the United States have impoverished much of the population, some 40% of
which is living below the government’s official poverty or subsistence level. Russia is also
plagued by environmental degradation and ecological catastrophes of staggering proportions;
the near-collapse of the health system; sharp declines in life expectancy and the birth rate; and
widespread organized crime and corruption. The population has fallen by 3 million in the past
decade, despite net in-migration from other former Soviet republics. The following table
highlights economic performance through the decade.
Table 1. Russian Economic Performance Since 1992
1992
1993
1994
1995
1996
1997
1998
1999
2000
GDP
Growth
-14.5%
-8.7%
-12.6%
-4.1%
-4.9%
0
-5.0%
3.2%
7.6%
Rates
Inflation
2,525%
847%
223%
131
%
11%
84%
36%
20.2%
Rates
Sources: PlanEcon, Inc. and Center for Strategic and International Studies.
By the end of 1997, Russia’s steadily declining GDP seemed to have bottomed out,
inflation was under control, and the ruble was stable. In mid-1998, however, there was a
sharp economic crisis triggered by government revenue shortfalls and a pyramid-type
government borrowing scheme, worsened by the Asian financial crisis and falling world oil
prices. In August, the government suspended payment on its debts to commercial and
government creditors and devalued the ruble, which promptly lost two-thirds of its value,
while the Russian stock market lost 88% of its value. Many peoples’ savings were wiped out.
The emerging middle class was hard-hit. The number of Russians living below the official
poverty line increased 25%. Some analysts warned of the danger of a total economic
collapse. Russia’s 1998 grain harvest was the worst in 40 years, raising fear of famine.
These dire predictions, however, were wrong. In 1999, the economy began to recover.
Inflation was held to 36% and the ruble was stabilized at about 25-28 to the dollar. Economic
output increased and the GDP grew by 3.2%, its best performance of the decade, due partly
to the sharp increase in the price of imports and increased price competitiveness of Russian
exports caused by the 74% ruble devaluation in 1998. The surge in the world price of oil and
gas also buoyed the Russian economy. The economic upturn accelerated in 2000, led by a
7.6% increase in GDP, 20% inflation, and a budget surplus. Economic performance remains
strong in 2001. Economists disagree as to whether this is a turning point marking the start
of real economic recovery, or a cyclical up-tick that will not be sustainable without further,
politically costly, systemic reform.
In August 1999, (before fighting in Chechnya flared) the Paris Club of official
government creditors provided a “framework agreement” reducing Russian interest payments
on its Soviet-era debt and deferring payment of principal until after 2001. In February 2000
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Russia reached an agreement with the London Club of commercial creditors, writing off
36.5% of Russia’s $32.8 billion Soviet-era commercial debt outright, with the remainder to
be converted into 30-year eurobonds with lower interest rates and an 8-year grace period.
This amounts to a total of 52% debt forgiveness in present net value terms. “Comprehensive”
Paris Club negotiations have begun, to determine whether western government creditors will
grant Russia more large-scale debt forgiveness, or offer debt rescheduling without
forgiveness. Germany, which holds 48% of that debt, is calling for full repayment. In January
2001, Moscow announced that it would not make a scheduled $1.5 billion payment to the
Paris Club for the first quarter of this year but later reversed itself. Russian officials now say
they will be able to meet future sovereign debt payments, as long as the world price of oil
does not sink too low. Some of Moscow’s critics contend that Russia’s recent substantial
increases in defense spending in should also be taken into account by western governments
considering further debt forgiveness for Russia.
Economic Reform. In January 1992, Yeltsin launched a sweeping economic reform
program developed by Acting Premier Yegor Gaidar. The Yeltsin-Gaidar program wrought
fundamental changes in the economy. Although the reforms suffered many setbacks and
disappointments, most observers believe they carried Russia beyond the point of no return as
far as restoring the old Soviet economic system is concerned. The Russian government
removed controls on the vast majority of producer and consumer prices in 1992. Many prices
have reached world market levels. The government also launched a major program of
privatization of state property. By 1994, more than 70% of industry, representing 50% of the
workforce and over 62% of production, had been privatized, although workers and managers
owned 75% of these enterprises, most of which have not still been restructured to compete
in market conditions. Critics charged that enterprises were sold far below their true value to
“insiders” with political connections. Land privatization, backed by the Yeltsin regime, was
stalled by the strong collective farm lobby in the Duma. The Putin government says that it
favors marketization and land reform. Putin has declared reviving the economy his top
priority. His liberal economic reform team has formulated policies that have won G-7 and
IMF approval. Skeptics charge that this may be more to impress western creditors than to
implement real economic reform. The test will be in its implementation.
Foreign Policy
In 1992 and early 1993, Yeltsin’s Russia gave the West more than would have seemed
possible even 2 or 3 years earlier under Gorbachev. Moscow cut off military aid to the
Communist regime in Afghanistan; ordered its combat troops out of Cuba; committed Russia
to a reform program and won IMF membership; signed the START II Treaty that would
eliminate all MIRVed ICBMs (the core of the Soviet Strategic Rocket Forces); and radically
reduced Russian force levels in many other categories. The national security policies of
Yeltsin and Foreign Minister Andrei Kozyrev came to be strongly criticized at home, not only
by hardline communists and ultranationalists but also by many centrists and prominent
democrats, who came to agree that the Yeltsin/Kozyrev foreign policy lacked a fundamental
sense of national interest and was too accommodating to the West — at Russia’s expense.
This criticism contributed to the erosion of Yeltsin’s support in the legislature. Since 1993,
Russian foreign policy has become increasingly more assertive and nationalistic in many areas,
while maintaining cooperation with the West in others. This shift may have had a number of
causes: a) a policy adjustment to “responsible” criticism; b) an attempt to woo some of the
hardline nationalists’ supporters; c) a reaction to the success of nationalists and communists
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in the 1993 and 1995 parliamentary elections; and d) resentment over the West’s “inadequate”
response to Russia’s earlier conciliatory approach, western “responsibility” for Russia’s
economic distress, and western indifference to Russian security concerns.
The victory of leftist and nationalist forces in the 1995 legislative elections pushed
Yeltsin to replace Kozyrev as Foreign Minister with Yevgenni Primakov, who was less
pro-Western but still pragmatic. Primakov opposed NATO enlargement, promoted
integrating former Soviet republics under Russian leadership, and favored closer links with
Islamic countries and with China. (See CRS Report 97-185, Russian-Chinese Cooperation:
Prospects and Implications.) When Primakov became Premier in September 1998, he chose
Igor Ivanov to succeed him as Foreign Minister. Ivanov has kept that position.
Increasing nationalism in Moscow is tempered by a desire not to be isolated from the
West, especially in view of Russia’s need for western-led economic assistance and debt relief.
The Kosovo crisis and the NATO air strikes against Yugoslavia in 1999 posed a serious
dilemma for Moscow: how to oppose NATO’s military action without provoking a
confrontation with the U.S. and NATO Europe. The response was a combination of
vehement rhetoric and limited action. Moscow relied on vigorous diplomacy to help defuse
the conflict and demonstrate its status as a world power. During much of the conflict, Russia
opposed NATO’s terms for peace as too severe, but in the end Russia joined U.S., NATO,
and EU representatives in persuading Yugoslavia to accept a cease fire on NATO’s terms.
In February 2000, the Putin government agreed to restore normal relations with NATO
(suspended by Russia in March 1999) and in March revived normal meetings of the NATO-
Russia Permanent Joint Council.
Moscow strenuously opposes NATO enlargement in Eastern Europe. Virtually the
entire Russian political spectrum supports this position. Nevertheless, Moscow grudgingly
accepted an agreement on Russia-NATO relations and NATO enlargement in May 1997. The
Russia-NATO Founding Act gives Russia a consultative voice in NATO deliberations but is
not a formal treaty. It repeats NATO’s assurances that it has no intention to deploy nuclear
weapons or substantial additional military forces on the territory of new members, but
contains no legally binding prohibitions against such moves. Many observers believe that
Russia is reconciled to the likelihood of further NATO enlargement in Central and Eastern
Europe. Several years ago, Moscow declared a “red line” for NATO enlargement, warning
that any attempt to bring former Soviet republics such as the Baltic states into NATO would
be an intolerable security threat leading to a rupture of relations with the alliance and strong
Russian counter measures. By mid-2001, however, Russian officials seemed to be moderating
their rhetoric even on the issue of Baltic accession to NATO.
Russia has also toughened its policy (some see it as imperialism or expansionism) toward
neighboring former Soviet republics. A consensus emerged in Moscow that reestablishing
Russian dominance in this region is its highest foreign policy priority. A September 1995
Yeltsin decree outlining Russian policy toward other CIS countries set the goal of further
economic integration under Russian leadership, including a customs union and a payments
union, with the Russian ruble as a reserve currency. The decree also said Russia should strive
for a CIS defense alliance and Russian military bases in the territory of other CIS states.
Another Russian goal is to get agreement to joint efforts to secure the CIS’s “external
borders.” The decree also said Russia would provide financial and other assistance to ethnic
Russians in other CIS states, and warned of retaliation if their rights are abused.
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There has been little progress toward overall CIS integration. Russia and other CIS
states impose tariffs on each others’ goods in order to protect domestic suppliers and raise
revenue, in contravention of an economic integration treaty. Recent CIS summit meetings
have ended in failure, with many of the presidents sharply criticizing lack of progress on
common concerns and Russian attempts at domination. The CIC appears to be foundering.
On October 11, 2000, however, the presidents of Russia, Belarus, Armenia, Kazakhstan,
Kyrgyzstan, and Tajikistan upgraded their 1992 Collective Security Treaty, giving it more
operational substance and de jure Russian military dominance.
Russia and Belarus have taken real steps toward integration. Belarusan President
Aleksandr Lukashenko is widely believed to covet a leading role in a unified state. But he
unconstitutionally removed the parliamentary opposition in 1996 and strongly opposes market
reform in Belarus, making economic integration difficult and potentially very costly for
Russia. In April 1997, Yeltsin and Lukashenko signed documents calling for a “union”
between states that are to remain “independent and sovereign.” On May 23, 1997, they
signed a Union Charter. Lukashenko minimized his and his country’s political subordination
to Moscow. Yeltsin avoided onerous economic commitments to Belarus. Decision making
was to be on the basis of one-side- one-vote, valid only if approved by both sides. On
December 25, 1998, Yeltsin and Lukashenko signed an agreement to “unify” the two
countries. After protracted negotiations, the two presidents signed a treaty on December 8,
1999, committing Russia and Belarus to form a confederal state. Although Moscow and
Minsk continue to differ over the scope and terms of union, the general idea of reunification
appears to enjoy broad public support in both countries.
Russian forces remain in Moldova against the wishes of the Moldovan government (and
the signature of a bilateral troop withdrawal treaty in 1994), in effect bolstering a
neo-Communist, pro-Russian separatist regime in the Transdniester region of eastern
Moldova. Russian forces intervened in Georgia’s multi-faceted civil strife, finally backing
the Shevardnadze Government in November 1993 — but only after it agreed to join the CIS
and allow Russia military bases in Georgia. (See CRS Report 97-727, Georgia [Republic]:
Current Developments and U.S. Interests, Nov. 14, 2000.)
Moscow has used the Armenian-Azerbaijani conflict over Nagorno-Karabakh to pressure
both sides and win Armenia as an ally. Citing instability and the threatened spread of Islamic
extremism on its southern flank as a threat to its security, Moscow intervened in Tajikistan’s
civil war in 1992-93 against Tajik rebels based across the border in Afghanistan. At the
OSCE summit in Istanbul, November 1999, Russia agreed to accelerate the withdrawal of its
forces from Moldova and Georgia, but has reneged on those commitments.
A major focus of Russian policy in Central Asia and the Caucasus is to gain more control
of natural resources, especially oil and natural gas, in these areas. Russia seeks a stake for
its firms in key oil and gas projects in the region and puts pressure on its neighbors to use only
pipelines running through Russia. This has become a contentious issue as U.S. and other
western oil firms have entered the Caspian and Central Asian markets and seek alternative
pipeline routes. (For more on Russian policy in these regions, see CRS Issue Brief IB93108,
Central Asia’s New States: Political Developments and Implications for U.S. Interests, and
CRS Issue Brief IB95024, Armenia, Azerbaijan, and Georgia: Political Developments and
Implications for U.S. Interests.)
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Of all the Soviet successor states, however, Ukraine is the most important, and most
difficult, for Russia. The Crimean Peninsula has been especially contentious. Many Russians
view it as historically part of Russia, and say it was illegally “given” to Ukraine by
Khrushchev in 1954. Crimea’s population is 67% Russian and 26% Ukrainian. In April
1992, the Russian legislature declared the 1954 transfer of Crimea illegal. Later that year
Russian and Ukrainian negotiators agreed that Crimea was “an integral part of Ukraine” but
would have economic autonomy and the right to enter into social, economic and cultural
relations with other states. In January 1994, Yuri Meshkov, an advocate of Crimean union
with Russia, was elected President of Crimea. Moscow and Kiev sought to avoid open
conflict over Crimea. Moscow distanced itself from Meshkov, allowing Kiev successfully
to use economic and political pressure against Crimean separatism.
However, relations between Kiev and Moscow were set back by presidential politics in
Russia. Throughout 1996, Yeltsin postponed a visit to Kiev to sign a friendship treaty, citing
Kiev’s refusal to cede full control of Sevastopol naval base in Crimea to Russia. Moscow
also stalled on the division of the Black Sea Fleet. In response, Ukraine pointedly increased
its cooperation with NATO. Finally, on May 31, 1997, Yeltsin and Ukrainian President
Leonid Kuchma signed a Treaty that resolves the long dispute over Sevastopol and the Black
Sea Fleet and declares that Russian-Ukrainian borders can not be called into question. This
agreement is widely viewed as a major victory for Ukrainian diplomacy. After heated debate,
the Russian Duma ratified the treaty in December 1998, as did the Federation Council
(parliament’s upper chamber), in February 1999. Instruments of ratification were exchanged
in April.
Moscow grudgingly treats the three Baltic states, which never joined the CIS, as
exceptions among the former Soviet states. Russian troops were withdrawn from Lithuania
in 1993 and from Estonia and Latvia in August 1994. In October 1997, Russia and Lithuania
signed a border delimitation treaty, Russia’s first such treaty with a former Soviet state.
However, Russia frequently and strongly states its objection to what it calls human rights
violations against the Russian-speaking population in Estonia and Latvia, particularly
concerning citizenship and language laws. In 1998, Moscow launched a sharp campaign
against Latvia, using propaganda, threats, and de facto economic sanctions to try to force a
change in Riga’s citizenship and language laws. Many believe that Russia fosters tension with
the Baltic states as a way of blocking their accession to NATO.
Defense Policy
Fundamental Shakeup of the Military
The Russian armed forces and defense industries are in turmoil. Their previously
privileged position in the allocation of resources has been broken, as has their almost
sacrosanct status in official ideology and propaganda. Hundreds of thousands of troops have
been withdrawn from Eastern Europe, the former Soviet Union, and the Third World.
Massive budget cuts and troop reductions forced hundreds of thousands of officers out of the
ranks into a depressed economy and probable unemployment. Present troop strength is about
1 million men. (The Soviet military in 1986 numbered 4.3 million.) Weapons procurement
is at historic lows. Readiness and morale are very low, and draft evasion and desertion are
widespread. (See CRS Report 97-820, Russian Conventional Armed Forces: On the Verge
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of Collapse?) In mid-1997, Yeltsin named General (later Marshal) Igor Sergeev, previously
Commander of the Strategic Rocket Forces, as Russia’s Defense Minister, declared military
reform a top priority, and signed a number of decrees to reorganize, consolidate, and further
downsize the armed forces.
But fundamental reform of the armed forces and the defense industries — which Russia
urgently needs if it is to solve its economic problems — is a very difficult, controversial, and
costly undertaking and was further set back by the economic and political crises of 1998-
1999. The Chechen conflict further delayed military reform. Putin, however, has pledged to
strengthen and modernize the armed forces, and appears determined to do so. At the same
time, he appears to be quite aware of Russia’s financial limitations. The decisions announced
in August and September 2000 to greatly reduce Russia’s strategic nuclear forces (from 6,000
to 1,500 deployed warheads), to shift resources from strategic to conventional forces, and to
reduce military manpower by 350,000, from 1,200,000 (authorized) to 850,000, may be
indications of a serious intent of effect military reform.
The conflicts in Kosovo and Chechnya, and the generally more hawkish, anti-western
atmosphere in Russia, led the government under Putin to make some other changes. A new
military doctrine and new national security and foreign policy “concepts” were adopted.
These documents retain the previous judgement that Russia’s main security threats are
internal rather than external, but assert that external military threats, particularly from NATO,
are growing, and call for greater military readiness and capability. This is the context for the
Putin government’s pledge to increase defense spending by 50%.
In March 2001, Putin made a series of changes in the military leadership that may
foreshadow major policy changes. Sergeev was replaced as Defense Minister by Sergei
Ivanov, a former KGB general very close to Putin, who had resigned his nominal intelligence
service/military rank and headed Putin’s Security Council as a civilian. Deputy Finance
Minister Lyubov Kudelina, a woman, was appointed Deputy Defense Minister in charge of
the defense budget. Putin explained that the man who had supervised the planning for military
reform (Ivanov) should be the man to implement reform as Defense Minister. He also said
these changes would increase civilian control of the military.
Despite its difficulties, the Russian military remains formidable in some respects and is
by far the largest in the region. Because of the deterioration of its conventional forces,
however, Russia relies increasingly on nuclear forces to maintain its status as a major military
power. Even Russia’s increased defense spending (up some 50% over last year, to $5.16
billion in 2000) is far below the levels of support of the 1970s or 1980s. There is sharp
debate within the armed forces about priorities between conventional vs. strategic forces and
among operations, readiness, and procurement. Russia is trying to increase security
cooperation with the other CIS countries. Russia has military bases on the territory of all the
CIS states except Azerbaijan and is seeking to take over or at least share in responsibility for
protecting the “outer borders” of the CIS. In the early 1990s, Russia, Armenia, Azerbaijan,
Belarus, Georgia, Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan, and Uzbekistan signed
a collective security treaty and/or an agreement on creating a common “military-strategic
space.” Implementation of these agreements, however, has been limited, although in the
proposed Russia-Belarus union, President Lukashenko pointedly emphasizes the military
dimension. On the other hand, Georgia, Ukraine, and Azerbaijan are shifting their security
policies toward a more western, pro-NATO orientation.
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Control of Nuclear Weapons
When the U.S.S.R. collapsed in 1991, over 80% of its strategic nuclear weapons were
in Russia. The remainder were deployed in Ukraine, Belarus, and Kazakhstan. Those three
states completed transfer of all nuclear weapons to Russia and ratified the Nuclear
Non-Proliferation Treaty as non-nuclear-weapon states by 1995-1996. All Soviet tactical
nuclear weapons, which had been more widely dispersed, reportedly were moved to Russia
by 1992 to be dismantled. The command and control system for strategic nuclear weapons
is believed to be tightly and centrally controlled, with the Russian President and defense
minister responsible for authorizing their use. The system of accounting and control of
nuclear (including weapons grade) material, however, is much more problematic, raising
widespread concerns about the danger of nuclear proliferation. There are growing concerns
about threats to Russian command and control of its strategic nuclear weapons resulting from
the degradation of its system of early warning radars and satellites. At the June 2000 Clinton-
Putin summit, the two sides agreed to set up a permanent center in Moscow to share near
real-time information on missile launches. (See CRS Issue Brief IB98038, Nuclear Weapons
in Russia: Safety, Security, and Control Issues.)
CFE Treaty: Flanks, Adaptation of CFE, and NATO Enlargement
In November 1990, the Conventional Forces in Europe (CFE) Treaty was signed,
requiring a phased reduction of tanks, armored fighting vehicles (AFVs), heavy artillery, and
combat aircraft and helicopters. Russia is well below those ceilings. The treaty also limits
how forces may be deployed in “flank zones” of the area covered by the treaty. Russian
officials admitted that Russia was in violation of the flank limits when the treaty came into
force in November 1995, because of the large forces it had deployed in Chechnya. In June
1996, Russia and NATO reached a compromise which froze the existing level of Russian
forces in the flank zone, but committed Russia to comply with CFE flank limits by May 1999.
In addition, the flank zones were redrawn, removing several Russian regions from the zones.
In return, Russia agreed to additional verification inspections and to provide more information
in the flank areas. In October 1999, Moscow notified the OSCE that it had exceeded the
(expanded) CFE flank limits on the southern flank in connection with its military campaign
in Chechnya and has pledged to reduce its forces there below the flank ceiling as soon as the
Chechen operation is over.
Moscow asserted that CFE was fundamentally flawed because its underlying goal was
to balance NATO and Warsaw Pact forces. But with the demise of the Warsaw Pact and the
U.S.S.R., while NATO remains and expands, Moscow says CFE ceilings put it at an unfair
disadvantage. On July 22, 1997, representatives of the United States, Russia, and the 28
other CFE states reached a framework agreement to modify CFE by replacing the old
bloc-to-bloc ceilings with national and territorial limits. This satisfied a basic Russian
demand. The specific limits required over two more years of negotiation and were signed at
the OSCE summit in Istanbul on November 19, 1999. Modification of the CFE Treaty will
require Senate approval.
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U.S. Policy
U.S.-Russian Relations
The spirit of U.S.-Russian “strategic partnership” of the early 1990s was replaced by
increasing tension and mutual recrimination in succeeding years. In the aftermath of the
September 11, 2001 attacks in New York and Washington, the two nations appear to be
reshaping their relationship on the basis of cooperation against terrorism.
Two sources of bilateral tension are Russia’s construction of nuclear reactors in Iran and
its role in missile technology transfers to Iran. Despite repeated pleas by President Clinton
and other U.S. officials, who believe Iran will use the civilian reactor program as a cover for
a covert nuclear weapons program, Russia has adamantly refused to cancel the project. In
1997, Israeli and U.S. critics charged that Russian enterprises were actively assisting Iran’s
missile development program. The Clinton Administration and the Congress made this a
high-priority issue in bilateral relations. In January 1998, Russia tightened export controls
on missile technology. On June 9, 1998, Congress passed H.R. 2709 (Title I of which was
the “Iran Missile Proliferation Sanctions Act”), that would have imposed economic sanctions
on foreign entities that contribute to Iran’s efforts to develop ballistic missiles. The President
vetoed this bill. Before the expected veto override attempt, Moscow brought criminal
charges against seven entities, alleging illegal exports to Iran. The Clinton Administration
promptly imposed economic sanctions against them. Congress took no further action on H.R.
2709. But in December 1998, press reports and Administration statements asserted that some
Russian entities continued to transfer missile technology to Iran.
On January 10, 1999, the Clinton Administration announced economic sanctions against
three more Russian institutions. It further threatened to curtail contracts worth hundreds of
millions of dollars for Russian launch of U.S. commercial satellites. Moscow denies these
allegations and protests the sanctions. Dissatisfied with Russia’s response and Clinton
Administration actions, the House unanimously passed the Iran Nonproliferation Act (H.R.
1883) on September 14, which would require the president to impose economic sanctions on
any entity or government that contributed to Iran’s development of weapons of mass
destruction or of ballistic missiles. The bill also targets U.S. payments to the Russian Space
Agency, in connection with the international space station, worth over $500 million. On
February 22, 2000, the Senate unanimously passed the bill. President Clinton signed it into
law (P.L. 106-178) on March 14. On November 3, the Russian Foreign Ministry notified the
State Department that as of December 1, it would no longer consider itself bound by the 1995
Gore-Chernomyrdin agreement limiting Russian conventional arms sales to Iran. On January
16, 2001, the Russian Atomic Energy Ministry announced that it had begun construction of
a second nuclear reactor at Bushehr. (See CRS Report RL30551, Iran: Arms and
Technology Acquisitions.)
Since late-1997, U.S. and Russian interests have clashed over Iraq. Russia strongly
opposes military action against Iraq in connection with the UN inspection regime. Yeltsin,
Primakov, and virtually all segments of the Russian political spectrum protested vehemently
against the U.S.-led missile and air strikes against Iraq in December 1998. Russia supports
Iraq’s call for an end to economic sanctions and seeks to replace UNSCOM, the UN weapons
inspection regime in Iraq, with a less intrusive arrangement. Moscow seeks to increase its
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influence in the region at U.S. expense. It also wants to expand economic relations with Iraq
and secure repayment of $7 billion of loans owed from the Soviet period.
In February 1999, the Clinton Administration threatened to cut $50 million of bilateral
aid to Russia if the latter went ahead with a reported sale of anti-tank missiles to Syria. On
April 2, 1999, the Administration imposed economic sanctions against three Russian entities
it said were involved in the sale to Syria, but did not act against aid to Russia in general.
There are sensitive security issues concerning the nexus of U.S. proposals for missile
defense, the future of the ABM Treaty, and ratification and implementation of START II.
The U.S.-Russian agreement (signed September 26, 1997) to extend by five years the period
during which the states are to destroy nuclear missiles eliminated by START II was meant to
facilitate Russian ratification of the Treaty. Another agreement signed that day, setting ABM
Treaty criteria for theater anti-ballistic missile systems, is opposed by some in Congress who
want to deploy a national missile defense. The Primakov government made some progress
in persuading the Duma that Russia really needs START II more than does the United States.
But in an angry response to U.S. air strikes against Iraq in December, the Duma postponed
action on the treaty. The Clinton Administration’s announcement in January 1999 of plans
for limited nationwide ballistic missile defense (NMD) and modification of the ABM Treaty
was strongly criticized in Moscow and denounced by all factions in the Duma as yet another
obstacle to ratification of START II.
In March 1999, Yeltsin complied with a Duma resolution calling for withdrawal of the
Treaty from consideration in response to NATO’s air strikes against Yugoslavia. On June
20, 1999, the last day of the G8 summit in Cologne, Presidents Clinton and Yeltsin announced
several surprise agreements on these issues. In an apparent concession to Washington,
Yeltsin agreed to begin talks on possible modification of the ABM Treaty. In a reciprocal
concession, Clinton agreed to new talks on a possible START III Treaty. Yeltsin also
pledged to do everything possible to get START II ratified quickly. A series of talks on
START III and the ABM Treaty began in Moscow in August 1999. The Russians, however,
strongly opposed even the incremental modification of the ABM Treaty sought by the Clinton
Administration. Senior Russian officials warned that any unilateral U.S. act to modify,
withdraw from, or violate the ABM Treaty would jeopardize and/or overthrow the entire
system of existing arms control agreements and would be met by “appropriate” Russian
responses.
The dynamics changed, however, with a strong new Russian president and a new Duma
with a pro-government majority. On April 14, 2000, the Duma approved the START II
Treaty, with the 5-year extension agreed to by Clinton and Yeltsin in September 1997. The
upper chamber concurred five days later. The Duma attached a non-binding resolution stating
Russia’s intention to withdraw from the treaty if the United States violates or abandons the
ABM Treaty, which was reiterated by Putin. At the same time, Putin said that the 1997
agreement delimiting strategic and theater missile defenses left room for possible agreement
on modifying the ABM Treaty. The Russian calculation seems to be that by (finally) ratifying
START II, they have gained leverage on the ABM Treaty/NMD issue. “The ball is now in
the U.S. court,” said Russian officials. Three days after the Duma approved START II,
formal START III negotiations opened in Geneva and a Clinton-Putin summit meeting was
announced for early June.
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Many in Congress oppose the 1997 agreement delimiting theater and national missile
defenses and the notion of circumscribing NMD on behalf of the START Treaties. On April
26, 2000, Senator Helms declared that he would block approval of any new arms control
treaty that Clinton might send to the Senate Foreign Relations Committee. The Clinton-Putin
Moscow summit (June 3-5, 2000) produced little if any progress on these issues. Immediately
afterward, Putin traveled to western Europe and announced vague proposals for Russian-
European-U.S. cooperation on a boost-phase anti-missile system to protect Europe. This is
viewed skeptically by many in the United States, who see it as a ploy to split NATO and/or
delay U.S. NMD plans. President Clinton’s announcement on September 1, 2000 deferring
a decision on NMD deployment to the next Administration continues the tension and
uncertainty over these issues. (See CRS Report RL30660, Arms Control After START II:
Next Steps on the U.S.-Russian Agenda.) Moscow reacted very negatively to early Bush
Administration assertions of its determination to press ahead vigorously with a more robust
NMD program, but the atmospherics, at least, changed markedly during the Bush-Putin
summit in Slovenia on June 16, 2001. During and immediately following their brief first
meeting, each leader praised the other and in strong personal terms. Putin expressed
willingness to consider some changes to the ABM Treaty – but later made clear that he saw
this in terms of theater missile defense for Europe, in which Russia would expect to
participate, a formulation not favored by the Bush Administration. At the G-8 meeting in
Genoa on July 22, Bush and Putin made the surprising announcement that senior officials
would begin consultations soon on the linked issues of missile defense and strategic nuclear
arms reductions. Some analysts see this as the opening phase of possibly serious negotiations.
Others emphasize the sharp differences in the two countries’ positions. After their October
21 meeting at the APEC summit in Shanghai, the two presidents announced that they had
narrowed their differences on these issues. They are scheduled to meet again in mid-
November in Washington and Texas. On October 25, the Pentagon announced the
postponement of two missile defense tests earlier scheduled for November, that might have
been viewed as violating the ABM Treaty. On November 1, the Washington Post and other
news media cited U.S. and Russian officials as saying that a breakthrough agreement was near
that would, inter alia, relax ABM Treaty restrictions on missile defense testing while
preserving the ABM Treaty and also sharply reduce strategic nuclear forces on both sides.
Both Washington and Moscow accuse one another of increased espionage activity. In
February 2001, the FBI arrested Robert Hanssen, one of its most senior counterintelligence
experts, on charges of spying for Russia between 1985 and 2001. On March 21, the United
States expelled four Russian diplomats for alleged espionage activity in connection with the
Hanssen case. At the same time, 46 other Russian diplomats believed to be intelligence
officers were ordered to leave the country by July, a move reportedly aimed at reducing the
heightened level of Russian espionage activity in the United States. This was the largest such
act since Washington expelled 80 Soviet diplomats in 1986. On March 22, Russia retaliated,
expelling four U.S. diplomats and announcing that 46 more would be ordered out of the
country by July. The expelled diplomats left both countries by July 1.
Moscow and Washington are cooperating on some issues of nuclear weapons reduction
and security. Since 1992, the United States has spent over $3 billion in Cooperative Threat
Reduction program (CTR or “Nunn-Lugar”) funds to help Russia dismantle nuclear weapons
and ensure the security of its nuclear weapons, weapons grade nuclear material, and other
weapons of mass destruction. During the September 1998 summit, both countries agreed
to share information when either detects a ballistic missile launch anywhere in the world, and
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to reduce each country’s stockpile of weapons-grade plutonium by fifty metric tons. In June
1999, U.S. and Russian officials extended the CTR program for another seven years. The
two sides also agreed to each dispose of an additional 34 tons of weapons-grade plutonium,
with the U.S. to seek international funding to help finance the $1.7 billion Russian effort. The
planned U.S.-Russian joint missile early warning information center in Moscow, however, has
yet to be established.
President Putin denounced the September 11 terror attacks in New York and
Washington in very strong terms, comparing them to Nazi atrocities. Some saw this as
preparing the Russian public for cooperation with the United States. Russia has facilitated
U.S. military force deployments to bases in Uzbekistan and Tajikistan, an unprecedented
development that requires not only Russia’s approval but its active support. Russia
reportedly is also sharing intelligence information with the United States and has pledged to
send arms, including tanks and other heavy weapons, to the anti-Taliban opposition forces in
northeastern Afghanistan. But after the Soviet Union’s long, bloody, military failure in
Afghanistan (1979-1989), there is strong public and military resistance to active Russian
military participation in operations in Afghanistan. Further Russian cooperation could
become highly desirable, depending on what options the United States chooses in its anti-
terrorism campaign. The interplay of what Washington might want from Moscow and what
Moscow might seek in return could involve some very high-stakes tradeoffs.
U.S. Assistance
(The following discussion draws heavily from CRS Issue Brief IB95077, The Former
Soviet Union and U.S. Foreign Assistance.) From FY1992 through FY1997, the U.S.
government obligated $4.5 billion in grant assistance to Russia, including $2.1 billion in
Freedom Support Act aid for democratization and market reform and $857 million for
Cooperative Threat Reduction (Nunn-Lugar assistance). But Russia’s share of the (shrinking)
NIS foreign aid account fell from about 60% in FY1993-FY1994 to 17% in FY1998 and has
been at or below 20% since then. The Administration allocated $179 million to Russia from
FY2000 appropriations, $61million of which is for the Extended Threat Reduction program,
and it has requested a level of $162 million for Russia programs in FY2001.
Both the FREEDOM Support Act and annual foreign operations appropriations bills
contain conditions that Russia is expected to meet in order to receive assistance. A restriction
on aid to Russia was approved in the FY1998 appropriations and each year thereafter,
prohibiting any aid to the government of the Russian Federation (i.e., central government; it
does not affect local and regional governments) if the President does not certify that Russia
has not implemented a law discriminating against religious minorities. The President has made
such determinations, most recently on May 26, 2000.
In addition to the conditions related to Russian nuclear reactor and ballistic missile
technology transfers to Iran, discussed above, Members of Congress proposed a number of
other conditions, which were debated during the 106th Congress (H.R. 4811) or Senate (S.
2522). These bills would have:
! required a reduction in assistance to Russia by an amount equal to any loan
or other financial assistance or energy sales provided to Serbia, required U.S.
opposition to international financial institution loans, and suspended
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Export-Import and OPIC loans or guarantees. Authored by Senator Helms
in response to Russia’s hosting of the Yugoslav Defense Minister, an indicted
war criminal, and its provision of a loan to Serbia, it was adopted as an
amendment to S. 2522, after being modified with a presidential waiver
authority.
! expressed the sense of the Senate that the United States should oppose
international financial institution loans to Russia if it delivered additional
SS-N-22 Moskit anti-ship missiles to China. This amendment by Smith (NH)
was added to S. 2522 during floor debate. H.R. 4022 (Rohrabacher),
prohibiting rescheduling or forgiveness of bilateral debt until Russia has
terminated sales of the missiles was approved by the House International
Relations Committee on April 13, 2000 with a presidential waiver authority
provision.
! prohibited the rescheduling or forgiveness of any bilateral debt owed to the
United States by Russia until the President certifies that Russia has ceased
operations and closed its intelligence facility at Lourdes, Cuba. H.R. 4118
(Ros-Lehtinen) was approved by the House (275-146) on July 19, 2000. The
International Relations Committee added presidential waiver authority that
would permit the rescheduling of debt, but the bill did not provide a waiver
for debt forgiveness. Further, the bill still would have required U.S.
opposition to rescheduling and forgiveness at the Paris Club, possibly making
the rescheduling waiver meaningless. In the Senate, a similar piece of
legislation was introduced (S. 2748, Mack) on June 16, 2000. (See CRS
Report RL30628.)
In addition to the above, the chairmen of the two congressional foreign policy
committees sought months to thwart rescheduling of Russian debt. On May 26, 2000, as
required by law thirty days prior to its taking effect, the Administration submitted to Congress
a report on a bilateral agreement with Russia to reschedule its 1999 and 2000 repayments of
Soviet-era debt. While Paris Club creditors have been adverse to total forgiveness, they have
favored rescheduling due to the burden the debt places on Russian efforts to reform its
economy. However, Chairmen Helms and Gilman in mid-June announced they would put the
agreement on “hold” due to Russian actions in Chechnya and support for Serbia. What made
this move particularly significant is that, of the roughly $485 million of U.S. debt that would
be rescheduled, $155 million was part of its Lend Lease debt, held from World War II. A
provision of the Trade Act of 1974 requires that arrears in this debt be punished by loss of
MFN (most favored nation/normal trade relations) status. Therefore, if the debt could not be
rescheduled, on July 1, when payment would otherwise be due, Russia would either be forced
to make the payment or stand to lose its MFN status.
On June 30, the Clinton Administration announced that it would proceed with the
rescheduling, regardless of the congressional leaders’ views. The Administration argued that
a refusal to reschedule would have no effect on Russian policy, would make it more difficult
for Russia to repay its debts, and would create problems with the Paris Club donors. In
response, a Gilman spokesman suggested that a “legislative remedy” would be sought.
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