Russian Political, Economic, and Security
Issues and U.S. Interests
Jim Nichol, Coordinator
Specialist in Russian and Eurasian Affairs
William H. Cooper
Specialist in International Trade and Finance
Carl Ek
Specialist in International Relations
Steven Woehrel
Specialist in European Affairs
Amy F. Woolf
Specialist in Nuclear Weapons Policy
Steven A. Hildreth
Specialist in Missile Defense
Vincent Morelli
Section Research Manager
July 27, 2009
Congressional Research Service
7-5700
www.crs.gov
RL33407
CRS Report for Congress
P
repared for Members and Committees of Congress
Russian Political, Economic, and Security Issues and U.S. Interests
Summary
Dmitry Medvedev, Vladimir Putin’s chosen successor and long-time protege, was elected
President of the Russian Federation on March 2, 2008 with about 70% of the vote. Medvedev,
formerly First Deputy Prime Minister, announced during the campaign that if elected, he would
propose Putin as Prime Minister. Medvedev was inaugurated as President on May 7; Putin was
confirmed as Prime Minister the next day. The Kremlin’s Unified Russia party had previously
swept the legislative election (December 2, 2007), winning more than two-thirds of the seats in
the Duma. U.S. and EU observers criticized both elections as unfairly controlled by the governing
authorities. Nevertheless, Putin’s widespread popularity in Russia led many to conclude that the
election results corresponded to Russian public opinion.
The sharp decline in oil and gas prices since mid-2008 and other aspects of the global economic
downturn put a halt to a Russian economic expansion that had begun in 1999, resulting in an
officially reported 9.5% drop in gross domestic product in 2008 and an estimated 5% drop in
2009. These declines exacerbate existing problems: 15% of the population live below the poverty
line; inadequate healthcare contributes to a demographic decline; foreign investment is low;
inflation hovers around 12%-14%; and crime, corruption, capital flight, and unemployment
remain high.
Russia’s military has been in turmoil after years of severe force reductions and budget cuts. The
armed forces now number about 1.2 million, down from 4.3 million Soviet troops in 1986.
Readiness, training, morale, and discipline have suffered. Russia’s economic revival allowed it to
substantially increase defense spending. Some high-profile activities were resumed, such as
multi-national military exercises, Mediterranean and Atlantic naval deployments, and strategic
bomber patrols. Stepped-up military efforts were launched in late 2007 to further downsize the
armed forces and emphasize rapid reaction and contract forces. The global economic downturn
and strong opposition within some segments of the armed forces may slow down force
modernization.
After the Soviet Union’s collapse, the United States sought a cooperative relationship with
Moscow and supplied almost $17 billion to Russia to support urgent humanitarian needs, to
encourage democracy and market reform, and to support WMD threat reduction. U.S. aid to
reduce the threats posed by the proliferation of weapons of mass destruction in recent years has
hovered around $700-$900 million per fiscal year, while other foreign aid to Russia has dwindled,
due in part to congressional conditions placed on such assistance. The United States at times has
imposed economic sanctions on the Russian government and on Russian organizations for
exporting nuclear and military technology and equipment to Iran and Syria.
The Russia-Georgia conflict of August 2008 was the most serious source of tensions between
Russia and the United States since the end of the Cold War. Despite rising tension on issues such
as NATO enlargement, Kosovo, and proposed U.S. missile defenses in Eastern Europe,
Washington and Moscow had found some common ground on Iranian and North Korean nuclear
issues and on nuclear non-proliferation in general. The Russia-Georgia conflict threatened such
cooperation. The Obama Administration has endeavored to “reset” relations with Russia to
reinvigorate and expand bilateral cooperation, including through a summit in July 2009. The 111th
Congress has held several hearings on Russia. This report will be updated regularly.
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Contents
U.S. Relations with Russia: Recent Developments ...................................................................... 1
Post-Soviet Russia and Its Significance for the United States....................................................... 1
Political Developments ............................................................................................................... 3
Instability in the North Caucasus........................................................................................... 5
Human Rights Developments ...................................................................................................... 7
Defense Reforms......................................................................................................................... 9
Trade, Economic, and Energy Issues ......................................................................................... 11
Russia and the Global Economic Crisis ............................................................................... 11
Russia’s Accession to the World Trade Organization (WTO) and PNTR for Russia.............. 12
Intellectual Property Rights (IPR) Enforcement in Russia.............................................. 13
Russian Energy Policy ....................................................................................................... 13
Foreign Policy........................................................................................................................... 15
Russia and the West ............................................................................................................ 15
NATO-Russia Relations ................................................................................................ 16
Russia and the European Union..................................................................................... 18
Russia and the Soviet Successor States ................................................................................ 19
U.S.-Russia Relations ............................................................................................................... 21
The Obama Administration Moves to “Re-set” Bilateral Relations ...................................... 22
Bilateral Relations and Iran ................................................................................................. 23
Bilateral Relations and Afghanistan..................................................................................... 24
Arms Control Issues............................................................................................................ 26
Cooperative Threat Reduction ....................................................................................... 27
Russia and Missile Defense........................................................................................... 28
U.S.-Russia Economic Ties ................................................................................................. 31
U.S. Assistance to Russia .................................................................................................... 32
Tables
Table 1. U.S. Merchandise Trade with Russia, 1992-2008 ......................................................... 31
Table 2. U.S. Government Funds Budgeted for Assistance to Russia, FY1992-FY2008 ............. 34
Contacts
Author Contact Information ...................................................................................................... 35
Acknowledgments .................................................................................................................... 35
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U.S. Relations with Russia: Recent Developments
Relations between the United States and Russia appeared to reach a nadir in 2007-2008 with
Putin’s increasingly harsh criticism of the United States, sharp disagreements over Kosovo’s
independence, the proposed U.S. missile defense deployments in Poland and the Czech Republic,
and Russia’s invasion of Georgia in August 2008.
The Obama Administration called for starting a dialogue with Russia from a fresh slate. A
February 2009 speech in Munich by Vice President Biden to “re-set” U.S.-Russian relations and
Secretary of State Clinton’s meeting in Geneva on March 6 with Russian Foreign Minister Sergey
Lavrov were early signs of the President’s intentions. At their first “get acquainted” meeting on
April 1, 2009, in London, Presidents Obama and Medvedev issued two joint statements. In their
joint statement on U.S.-Russia relations, the two presidents announced an “ambitious work plan
for our two governments.” They agreed to “deepen cooperation to combat nuclear terrorism” and
to “support international negotiations for a verifiable treaty to end the production of fissile
materials for nuclear weapons.” Also at the meeting, President Medvedev invited President
Obama to visit Moscow in July 2009.
At the July summit, President Obama stated that “the relationship between Russia and the United
States has suffered from a sense of drift” in recent years, and that the two presidents had
“resolved to reset U.S.-Russian relations.” He stressed that the United States wanted “to deal as
equals” with Russia, since both countries are nuclear superpowers, and that the United States has
recognized that its role “is not to dictate policy around the world, but to be a partner with other
countries” to solve global problems. Some observers have argued that these statements were
aimed at assuaging Russian sensitivities about the country’s status in the world. Russia’s
hyperbole about its role in the world, these observers have suggested, was evidenced by President
Medvedev’s statement that the United States and Russia are “powerful states [that] have special
responsibility for everything that is happening on our planet,” and that strengthened bilateral
cooperation “will ensure international peace and security.”
One achievement of the summit was the establishment of a U.S.-Russia Bilateral Presidential
Commission intended to strengthen consultations and diplomacy. President Obama highlighted
the commission as the “foundation” element in re-setting relations, since it would greatly expand
communications between the two countries. The presidents are the co-chairs, and the Secretary of
State and the Foreign Minister coordinate meetings. Thirteen working groups have been
established, and additional working groups will be created in the coming months, along with sub-
groups as necessary. Secretary Clinton will travel to Moscow in the fall for the first meeting of
the Commission coordinators.
Post-Soviet Russia and Its Significance for the
United States
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
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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. During Boris Yeltsin’s presidency, many of the republics and regions won greater
autonomy. Only the Chechen Republic, however, tried to assert complete independence. During
his term, President Putin reversed this trend and rebuilt the strength of the central government vis-
a-vis the regions.
The Russian Constitution combines elements of the U.S., French, and German systems, but with
an even stronger presidency. Among its more distinctive features are the ease with which the
president can dissolve the parliament and call for new elections and the obstacles preventing
parliament from dismissing the government in a vote of no confidence. Until it was amended in
2008, the Constitution provided a four-year term for the president and no more than two
consecutive terms. The president, with parliament’s approval, appoints a prime minister who
heads the government. The president and prime minister appoint government ministers and other
officials. The prime minister and government are accountable to the president rather than the
legislature. Dmitry Medvedev was elected president on March 2, 2008 and inaugurated on May 7.
On May 8, Putin was confirmed as Prime Minister. In November 2008, constitutional
amendments extended the presidential term to six years and the term of Duma Deputies from four
to five years.
The bicameral legislature is called the Federal Assembly. The State Duma, the lower (and more
powerful) chamber, has 450 seats. In previous elections, half the seats were chosen from single-
member constituencies and half from national party lists, with proportional representation and a
minimum 5% threshold for party representation. In May 2005, Putin’s proposal that all 450 Duma
seats be filled by party list election, with a 7% threshold for party representation, became law. In
the December 2007 legislative election, the pro-Kremlin United Russia Party won 315 seats,
more than the two-thirds majority required to amend the constitution. The upper chamber, the
Federation Council, has 166 seats, two from each of the 83 regions and republics of the Russian
Federation. Deputies are appointed by the regional chief executive and the regional legislature.
The judiciary is the least developed of the three branches. Some of the Soviet-era structure and
practices are still in place. Criminal code reform was completed in 2001. Trial by jury was
planned to expand to cover most cases, but recently was restricted following instances where state
prosecutors lost high-profile cases. The Supreme Court is the highest appellate body. The
Constitutional Court rules on the legality and constitutionality of governmental acts and on
disputes between branches of government or federative entities. Federal judges, who serve
lifetime terms, are appointed by the President and must be approved by the Federation Council.
The courts are widely perceived to be subject to political manipulation and control.
Although Russia may not be as central to U.S. interests as was the Soviet Union, cooperation
between the two is essential in many areas. Russia remains a nuclear superpower. It still plays a
major role in determining the national security environment in Europe, the Middle East, and Asia.
Russia has an important role in the future of arms control, the nonproliferation of weapons of
mass destruction, and the fight against terrorism. Such issues as the war on terrorism, the future
of NATO, and the U.S. role in the world will all be affected by developments in Russia. Also,
Russia is a potentially important trading partner. Russia is the only country in the world with
more natural resources than the United States, including vast oil and gas reserves. It is the world’s
second largest producer and exporter of oil (after Saudi Arabia) and the world’s largest producer
and exporter of natural gas. It has a large, well-educated labor force and a huge scientific
establishment. Also, many of Russia’s needs—food and food processing, oil and gas extraction
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technology, computers, communications, transportation, and investment capital—are in areas in
which the United States is highly competitive, although bilateral trade remains relatively low.
Political Developments
Former President Boris Yeltsin’s surprise resignation (December 31, 1999) propelled then-Prime
Minister Vladimir Putin into the Kremlin as acting President. Putin’s meteoric rise in popularity
was due to his being presented on state-owned TV and other mass media as a youthful, vigorous,
sober, and plain-talking leader; and to his aggressive launch of military action against the
breakaway Chechnya region. In March 2000, Putin was elected president in his own right. He
won a second term four years later. Putin was a Soviet KGB foreign intelligence officer for 16
years and later headed Russia’s Federal Security Service (the domestic component of the former
KGB). His priorities as president were strengthening the central government and restoring
Russia’s status as a great power.
Under Putin, the government took nearly total control of nation-wide broadcast media. A key
early target was Russia’s only independent television network, NTV, which had been critical of
Putin. The state-controlled gas monopoly Gazprom took over NTV and appointed Kremlin
loyalists to run it. The government then forced the controlling owner of the ORT TV network to
give up his shares. TV-6, the last significant independent Moscow TV station, was shut down
under government pressure in 2002. The government has also moved against the independent
radio network, Echo Moskvuy, and other electronic media. In 2006, the Russian government
forced most Russian radio stations to stop broadcasting programs prepared by the U.S.-funded
Voice of America (VOA) and Radio Liberty (RL). Journalists critical of the government have
been imprisoned, attacked, and in some cases killed with impunity. The highly respected
journalist and Chechen war critic Anna Politkovskaya was murdered in October 2006.
A defining political and economic event of the Putin era was the October 2003 arrest of Mikhail
Khodorkovski, CEO of Yukos, then the world’s fourth largest oil company. Khodorkovski’s arrest
was triggered by his criticism of some of Putin’s actions, his financing of anti-Putin political
parties, and his hints that he might enter politics in the future. Khodorkovski’s arrest was seen by
many as politically motivated, aimed at eliminating a political enemy and making an example of
him to other Russian tycoons. Many observers also saw this episode as the denouement of a long
power struggle between two Kremlin factions: a business-oriented group of former Yeltsin
loyalists and a group of Putin loyalists drawn mainly from the security services and Putin’s home
town of St. Petersburg. In May 2005, Khodorkovski was found guilty on multiple criminal
charges of tax evasion and fraud and sentenced to eight years in prison. A new trial on charges of
embezzlement, theft, and money-laundering could extend his imprisonment.1
1 S.Res. 189, introduced by Senator Roger Wicker on June 18, 2009, and a similar bill, H.Res. 588, introduced by
Representative James McGovern on June 26, 2009, express the sense of the chamber that the prosecution of
Khodorkovski is politically-motivated, calls for the new charges against him to be dropped, and urges that he be
paroled as a sign that Russia is moving toward upholding democratic principles and human rights. President Obama has
raised concerns about a new trial for Khodorkovski. The White House. Office Of The Press Secretary. Transcript of
President Obama’s Interview with Novaya Gazeta, July 6, 2009. In late 2009, the European Court of Human Rights
will hold hearings on a complaint by Khodokovski that the Russian government subjected him to inhumane and
degrading treatment, unlawful and politically motivated arrest and detention, and judicial persecution. In late July 2009,
Russia’s former Prime Minister Mikhail Kasyanov submitted a brief to the court in support of Khodorkovski’s
complaint.
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Yukos was broken up and its principal assets sold off to satisfy tax debts allegedly totaling $28
billion. The main oil production subsidiary of Yukos soon ended up as part of Rosneft, a wholly
state-owned Russian oil company. The deputy head of the Presidential Administration, Igor
Sechin, became the Chairman of Rosneft’s Board of Directors. Since then, the government has re-
nationalized or otherwise brought under its control a number of other large enterprises that it
views as “strategic assets.” These include ship, aircraft, and auto manufacturing, as well as other
raw material extraction activities. At the same time, the Kremlin has installed senior officials to
head these enterprises. This phenomenon of political elites taking the helm of many of Russia’s
leading economic enterprises has led some observers to conclude that “those who rule Russia,
own Russia.”
In September 2004, a terrorist attack on a primary school in the town of Beslan, North Ossetia,
resulted in hundreds of civilian casualties. President Putin seized the opportunity provided by the
crisis to propose a number of political changes he claimed were essential to quash such terrorism.
In actuality, the changes—which were rubber-stamped by the legislature—marked the
consolidation of his centralized control over the political system and the vitiation of the fragile
democratic reforms of the 1980s and 1990s, according to many observers. The changes included
abolishing the popular elections of regional governors (replacing such elections with the
appointment of presidential nominees that are confirmed by regional legislatures) and mandating
that all Duma Deputies be elected on the basis of national party lists, based on the proportion of
votes each party gets nationwide. The first measure made regional governors wholly dependent
on, and subservient to, the president. The second measure eliminated independent deputies,
further strengthening the pro-presidential parties that already controlled an absolute majority in
the Duma. In early 2006, President Putin signed a new law regulating non-government
organizations (NGOs), which Kremlin critics charged has given the government leverage to shut
down NGOs that it views as politically troublesome (see also below, “Human Rights
Developments”).
The Kremlin decided to make the December 2, 2007, State Duma election a referendum on Putin
and his style of government. Despite Putin’s apparent genuine popularity, his backers used myriad
official and unofficial levers of power and influence to ensure an overwhelming victory for
United Russia, the main Kremlin party. Putin’s October 2007 announcement that he would run for
a Duma seat at the head of the United Russia ticket made the outcome doubly sure. The state-
controlled media heavily favored United Russia and potentially popular opposition candidates
were bought off, intimidated, or barred from running. Russian authorities effectively prevented
the Organization for Security and Cooperation in Europe (OSCE) from sending an observer team
by delaying the issuance of visas until the last minute, thus blocking normal monitoring of the
election campaign.
United Russia won 64.3% of the popular vote and 315 of the 450 seats—more than the two-thirds
majority required to amend the constitution. Two other pro-Putin political parties won 78 seats,
giving the Kremlin the potential support of 393 of the 450 Duma members. The only opposition
party in the Duma is the Communist Party, which won 11.57% of the vote and 57 seats.2 Despite
some allegations of ballot-box stuffing, voter intimidation, and other “irregularities,” there is little
doubt that by dint of Putin’s genuine popularity, an honest vote count would still have given
United Russia a victory.
2 See CRS Report RS22770, Russia’s December 2007 Legislative Election: Outcome and Implications, by Jim Nichol.
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On December 10, barely a week after the Duma election, Putin announced that 42-year-old long-
time Putin protégé Dmitry Medvedev was his choice for president. Medvedev announced that, if
elected, he would ask Putin to serve as Prime Minister. This carefully choreographed arrangement
presumably was meant to ensure political continuity for Putin and those around him. Like Putin
and many of the Kremlin inner circle, Medvedev is a native of St. Petersburg. But unlike so many
of the inner circle, he did not have a background in the security services. His academic training is
as a lawyer.
The Putin regime manipulated election laws and regulations to block “inconvenient” candidates
for the prospective March 2, 2008, presidential election from getting onto the ballot. In the end,
the three candidates besides Medvedev included Vladimir Zhironovsky of the Liberal Democratic
Party (a party that is neither liberal nor democratic), Gennady Zyuganov of the Communist Party,
and Andrei Bogdanov of the tiny Democratic Party.3 Medvedev easily won the election, with 70%
of the vote. Television news coverage was skewed overwhelmingly in Medvedev’s favor. Like
Putin before him, Medvedev refused to participate in public debates with his rivals. As with the
Duma election, the OSCE refused to submit to restrictions demanded by Moscow and did not
send electoral observers.4
There has been considerable uncertainty about the future relationship between President
Medvedev and Prime Minister Putin. The dual power arrangement between the two leaders has
been viewed by some observers as inherently unstable, although so far it has appeared that the
“tandem” has worked. Strains in their relationship may increase as Russia feels the effects of the
global economic downturn and hard policy choices have to be made, some observers suggest.
Possible succession scenarios include Medvedev stepping down after his first term as president or
even resigning during his first term. In either case, Putin would be eligible to run, since he would
not have served more than two consecutive terms.
Instability in the North Caucasus
Some observers have argued that Russia’s efforts to suppress the separatist movement in its
Chechnya region have been the most violent in Europe in recent years in terms of ongoing
military and civilian casualties.5 In late 1999, Russia’s then-Premier Putin ordered military,
police, and security forces to enter the breakaway Chechnya region. By early 2000, these forces
occupied most of the region. High levels of fighting continued for several more years and resulted
in thousands of Russian and Chechen casualties and hundreds of thousands of displaced persons.
In 2005, then-Chechen rebel leader Abdul-Khalim Saydullayev decreed the formation of a
Caucasus Front against Russia among Islamic believers in the North Caucasus, in an attempt to
widen Chechnya’s conflict with Russia.
The high levels of conflict in Chechnya appeared to ebb markedly after mid-decade with the
killing, capture, or surrender of leading Chechen insurgents. However, Russian security forces
and pro-Moscow Chechen forces still contend with residual insurgency. Russia’s pacification
policy has involved setting up a pro-Moscow regional government and transferring more and
3 This party, seen by many as a Kremlin-backed pseudo-opposition group, won fewer than 90,000 votes nation-wide in
the December 2007 Duma election.
4 RFE/RL, Newsline, February 5, 20, 2008.
5 For background information, see CRS Report RL32272, Bringing Peace to Chechnya? Assessments and Implications,
by Jim Nichol.
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more local security duties to this government. An important factor in Russia’s seeming success in
Chechnya has been reliance on pro-Moscow Chechen clans affiliated with regional president
Ramzan Kadyrov. Police and paramilitary forces under his authority allegedly have committed
flagrant abuses of human rights, including by holding the relatives of insurgents as hostages
under threat of death until the insurgents surrendered.
In April 2009, the counter-terrorist operations regime in Chechnya (declared nearly 10 years ago
and later extended to other areas of the North Caucasus) was lifted. President Medvedev argued
that “the situation [in Chechnya] has to a substantial degree normalized, life there is becoming
normal.” Seeming to indicate that the formal lifting of the regime may not substantially alter the
human rights situation, he specified that security agencies could still impose “if need be
individual provisions of the counter-terrorist operation regime ... in Chechnya and the other
republics in southern Russia.”6 Reasons for Medvedev’s decision might have included budgetary
pressures associated with keeping sizable forces in Chechnya and Prime Minister Putin’s support
for force reductions, according to some observers. According to media reports, some of the
remaining 50,000 troops and police deployed in Chechnya began to be withdrawn. The NGO
Amnesty International has called for investigations to begin so that those responsible for human
rights violations during the Chechnya conflict are brought to justice.
In recent years, major terrorist attacks have abated in Russia’s North Caucasus—a border area
between the Black and Caspian Seas that includes the formerly breakaway Chechnya and other
ethnic-based regions—although small-scale attacks reportedly continue. The fall-off in major
terrorist attacks resulting in dozens or hundreds of casualties might in part be attributed to
government tactics, including over a thousand sweep operations (“zachistki”) carried out in the
North Caucasus. During these operations, security forces surround a village and search all the
citizens, ostensibly in a bid to apprehend terrorists. Critics of the operations allege that the
security forces frequently engage in pillaging and gratuitous violence and are responsible for
kidnapping for ransom and “disappearances” of civilians. Through these sweeps, as well as
through direct clashes, most of the masterminds of major terrorist attacks have been killed.
For the past two years, however, there reportedly have been frequent smaller-scale attacks in
several regions against government targets. Such attacks have appeared egregious in Dagestan
and Ingushetia. Additionally, many ethnic Russian and other non-native civilians have been
murdered or have disappeared, which has spurred the migration of most of the non-native
population from the North Caucasus.
The Center for Strategic and International Studies, a U.S. think tank, has estimated that violence
started to increase in the North Caucasus in early 2007 and was at an even higher level in early
2009.7 The incidents of violence have appeared recently to continue to be troubling. Among
prominent incidents, Dagestani Internal Affairs Minister Adilgerey Magomedtagirov was killed
on June 5, 2009, and the president of Ingushetia, Maj. Gen. Yunus-bek Yevkurov, was severely
wounded by a bomb blast on June 22, 2009. Partly in response to Magomedtagirov’s murder,
President Medvedev flew to Dagestan and convened a session of the Russian Security Council to
discuss regional counter-measures against terrorism. He stated that during the first half of the
6 President of Russia. Beginning of Working Meeting with Director of the Federal Security Service Alexander
Bortnikov, March 27, 2009, at http://www.kremlin.ru/eng/speeches/2009/03/27/2210_type82913_214418.shtml.
7 Center for Strategic and International Studies, Violence In The North Caucasus: Trends Since 2004, 2008; Violence
in the North Caucasus: Fall/Winter 2008, 2009.
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year, over 300 acts of terrorism had taken place in the North Caucasus (including over 100
bombings), that 75 police and other local government officials had been killed, that 48 civilians
had died, and that 112 terrorists had been “eliminated.” He appeared to claim that the level of
violence was about the same in 2009 as in 2008. He admitted that the “problems in the North
Caucasus ... are systemic. By saying that I am referring to the low living standards, high
unemployment and massive, horrifyingly widespread corruption.... No doubt, the situation is
partially influenced by certain outside factors such as extremism brought from abroad.” (See also
below, “Human Rights Developments.”)8
Human Rights Developments
According to the State Department’s Country Reports on Human Rights Practices for 2008
(released in February 2009), there were numerous reports of government human rights problems
and abuses during the year. The Russian government restricted media freedom through direct
ownership of media outlets, pressuring the owners of major media outlets to abstain from critical
coverage, and harassing and intimidating journalists into practicing self-censorship. According to
the Glasnost’ Defense Foundation, a Russian NGO, 69 journalists were physically attacked and 5
journalists were killed in Russia in 2008, a few under circumstances that may have indicated
government involvement. Local governments limited freedom of assembly, sometimes using
violence, and restricted religious groups in some regions. There were incidents of societal
discrimination, harassment, and violence against religious minorities, including anti-Semitism.
The government’s human rights record remained poor in the North Caucasus. In Chechnya,
Ingushetia, and Dagestan, security forces continued allegedly to be involved in unlawful killings,
torture, abductions, and other abuse, and to act often with impunity. One positive development
was the decline in the disappearance of citizens in Ingushetia and Chechnya, which formerly was
linked in many cases to extrajudicial killings by government security forces.
The Russian government’s accountability to its citizens lessened during 2008, because of
increased presidential power, decreased legislative power, a non-independent judiciary,
corruption, selective law enforcement, restrictions on media, and harassment of some NGOs. The
government restricted the ability of opposition parties to participate in the political process. It also
was hostile toward NGOs involved in human rights monitoring as well as those receiving foreign
funding. A decree from Prime Minister Putin in June 2008 removed tax-exempt status from the
majority of NGOs, including international NGOs, and imposed a potentially onerous annual
registration process. Trafficking in persons continued to be a significant problem.
In late 2008, President Medvedev proposed a number of political reforms that some observers
viewed as including both progressive and regressive elements. A proposal to make it easier to oust
mayors could increase centralization, they warned, while a proposal to give small political parties
more rights (see below) might facilitate their growth. Another proposal viewed as potentially
progressive was for annual government reports to the State Duma. One law finalized in late 2008
calls for legislative bills dealing with human rights to be vetted by the Public Chamber, a
grouping weighted with pro-government NGOs but which also includes some independent
groups.
8 President of the Russian Federation. Russian president addresses Security Council meeting on Caucasus, June 10,
2009, at http://www.kremlin.ru. See also CRS Report RL34613, Stability in Russia’s Chechnya and Other Regions of
the North Caucasus: Recent Developments, by Jim Nichol.
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During 2009, human rights conditions have continued to deteriorate in Russia, including physical
attacks against human rights advocates and reporters, according to the NGO Human Rights
Watch. In January 2009, human rights lawyer Stanislav Markelov and reporter Anastasiya
Baburova were killed in Moscow just after leaving a press briefing where Markelov had criticized
the early release of a former Russian officer in Chechnya who was convicted of murder. In late
March 2009, human rights advocate Lev Ponomarev was beaten by unidentified assailants just
after leaving a meeting on human rights with a representative of the Legislative Assembly of the
Council of Europe. Aleksey Sokolov, an advocate of prisoners’ rights, was arrested in
Yekaterinburg in mid-May 2009 on theft charges that other prominent Russian human rights
advocates viewed as politically motivated because of his recent reports on police torture. Natalia
Estemirova, a leading human rights defender in Chechnya and a member of the Memorial Human
Rights Center NGO, was kidnapped in Chechnya and murdered in mid-July 2009. She was killed
on the same day that a report she co-authored was released that called for Prime Minister Putin
and other officials to be tried for human rights crimes.
Among other problems, de facto censorship has continued if not increased in 2009, according to
some observers. They view President Medvedev’s creation in April 2009 of a “Commission
Under the Russian Federation President To Counter Attempts To Falsify History to the Detriment
of the Interests of Russia” as an ominous sign of his intent to further control freedom of
expression. In May 2009, Russian Constitutional Court Chairman Valeriy Zorkin warned that
“today, laws on many cardinal issues have been adopted by the parliament in the backroom
manner without discussion with the people,” and that these laws threaten to turn constitutional
law “into a fiction.” Genri Reznik, president of the Moscow Bar Association, similarly argued in
May 2009 that the presidential selection process for judges was a “mockery of justice,” and that
“the situation has become much worse in terms of judges’ independence” from political pressure.9
In a June 2009 journal article, prominent human rights advocate Lev Ponomarev alleged that
there are “about 40” prison facilities in Russia where torture techniques are routinely used, and
termed them “concentration camps.” He reported that some observers viewed these facilities as
worse than “during the Brezhnev and initial post-Stalinist eras.” Torture allegedly is carried out
by guards and trusted prisoners with impunity.10
Possibly a positive development, in February 2009 Medvedev revived a moribund “Presidential
Council to Promote the Development of Civil Society Institutions and Human Rights,” including
by replacing several pro-government members with prominent oppositionists. He met with the
Council in mid-April 2009 and, in a unprecedented move, ordered the verbatim proceedings to be
posted on the presidential website. At the Council meeting, criticism of the human rights situation
in Russia included that NGOs were being harmed by the 2006 NGO law. Medvedev admitted that
NGOs “face difficulties” in their work and that “the law has been interpreted in such a way that
many officials are now under the impression that all NGOs are enemies of the state.”11 In
response to the criticism, in mid-May 2009 Medvedev established a Working Group on Nonprofit
Organization Law to consider amendments to the NGO law. On June 17, 2009, Medvedev
submitted amendments proposed by the Council for consideration by the legislature. Proposed
changes include easing some reporting requirements and limiting the ability of bureaucrats to
inspect NGO facilities. Restrictions on foreign-based NGOs are only slightly eased, however, as
well as a decision made in mid-2008 to tax most foreign funding of NGOs. The amendments to
9 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), May 6, 2009, Doc. No. CEP-4003.
10 CEDR, June 12, 2009, Doc. No. CEP-21002.
11 CEDR, April 17, 2009, Doc. No. CEP-950334.
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the NGO law were passed by the legislature and signed into law on July 20, 2009. Some critics
viewed the approved amendments as mainly cosmetic.12
Perhaps a sign of a future broadening of political accountability, the Federal Assembly approved a
Medvedev proposal in April 2009 for political parties that get between 5%-7% of the vote in
future Duma elections (presently, a party must get 7% or more of the vote to gain seats) to win
one or two seats. Subsequently, Medvedev suggested that the 7% hurdle might be lowered. In
June 2009, Medvedev met with unrepresented party leaders for discussions on how the
government might improve the environment in which the parties operate, such as making media
access more available and abolishing signature-gathering as a requirement for the registration of
candidates.
On July 6, 2009, the Russian Ministry of Communications ordered the Russian postal service to
facilitate the inspection of private mail and packages upon the demand of the Federal Security
Service or other government security agencies. The privacy of Internet correspondence also is
vitiated, with providers required to grant the security services access to e-mails. No provision for
court approval for searches is provided. Human rights advocates decried the order as an open
warning to the public that free speech is circumscribed.13
Defense Reforms
Despite the sizeable reduction in the size of the armed forces since the Soviet period—from 4.3
million troops in 1986 to 1.2 million at present—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
power. There is sharp debate within the Russian armed forces about priorities between
conventional versus strategic forces and among operations, readiness, and procurement. Russia is
trying to increase security cooperation with the other Soviet successor states that belong to the
Commonwealth of Independent States (CIS).14 Russia has military bases on the territory of all the
CIS states except Azerbaijan and is seeking to take over or share in responsibility for protecting
the external borders of the CIS. Resisting this, Georgia, Ukraine, Moldova, and Azerbaijan have
shifted their security policies toward a more western, pro-NATO orientation. Many observers
warn, however, that the August 2008 Russia-Georgia conflict demonstrated that in certain
circumstances, Moscow will use military force to reinforce the “lesson” that small countries
adjacent to Russia may disregard Moscow’s interests and warnings only at their peril.
The improvement of Russia’s economy since 1999, fueled in large part by the cash inflow from
sharply rising world oil and gas prices, enabled Russia to reverse the budgetary starvation of the
military during the 1990s. Defense spending has increased substantially in each of the past few
years. The 2009 proposed defense budget was 1.279 billion rubles ($38.8 billion), a 25% increase
12 Michael Allen, “Obama Trip Prompts Token NGO Reform, but Kremlin Incapable of Real Change,” Democracy
Digest, July 6, 2009.
13 Yuri Zarakhovich, “Russian Intelligence Granted New Powers over Citizens,” Eurasia Daily Monitor, July 21, 2009;
Valeriy Shiryayev, “Opening Demonstrates Unprofessionalism,” Novaya gazeta, BBC Worldwide Monitoring, July 21,
2009.
14 Members include Armenia, Azerbaijan, Belarus, Moldova, Russia, Kazakhstan, Kyrgyzstan, Tajikistan,
Turkmenistan, Ukraine, and Uzbekistan. Georgia withdrew following the August 2008 Russia-Georgia conflict.
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from the previous year. If one adds the funds planned for security, border, and defense-related
law-enforcement activities; the emergencies ministry; and military pensions to the total defense
budget, spending on defense reaches around 1.9 billion rubles ($57.6 billion).15 Even factoring in
purchasing power parity, Russian defense spending still lags far behind current U.S. or former
Soviet levels. The efficacy of the larger defense budgets is reduced by systemic corruption. But
Russia is beginning to resume serial production of major weapons systems, albeit at rates very far
below Soviet Cold War levels. Some high-profile military activities have been resumed, such as
large-scale multi-national military exercises, show-the-flag naval deployments to the
Mediterranean and the Atlantic, and strategic long-range bomber patrols that approach U.S. and
NATO airspace.
In February 2007, then-President Putin appointed Anatoly Serdyukov as defense minister. With a
career outside the military establishment, many observers suggest that Serdyukov was chosen to
carry out the painful restructuring of the armed forces. In October 2008, Serdyukov announced
that planned cuts in the officer corps would be accelerated, so that the 355,000-strong officer
corps would be reduced to 150,000 within three years. The non-commissioned officers’ ranks of
warrant officer and midshipman in the Russian Army and Navy would be abolished, and the bulk
of these 140,000 NCOs would retire. He called for reducing the number of personnel at the
Defense Ministry and General Staff, slashing the number of higher military schools, disbanding
most of the combined arms divisions, and setting up over 80 service branch brigades (as in the
U.S. military). He also endorsed further revamping of the four-tier troop control system of
military districts, armies, divisions, and regiments into a three-tier system of military districts,
tactical commands, and brigades. The total size of the armed forces would be reduced from 1.2
million to under 1 million. At the same time, a major rearmament effort would be accelerated.
During the first half of 2009, it has appeared that the defense reform effort has faltered—perhaps
at least in part because of decreasing state revenues due to falling energy prices—at providing for
military pensions, retraining for civilian occupations, housing, and rearmament efforts. The total
size of the armed forces was planned to be reduced to under 1 million troops by 2012, but
Russia’s economic problems caused President Medvedev to decree a revised deadline of 2016.
Reportedly, officers of some units launched demonstrations against the reforms, including a rally
in Vladivostok in April 2009 by about 300 military officers and retirees.16
At the July 2009 U.S.-Russia Summit, the two sides agreed to the resumption of military-to-
military activities, which had been suspended since the August 2008 Russia-Georgia conflict. The
two sides agreed in their work plan to conduct nearly 20 exchanges and operational events before
the end of 2009, and to plan a more ambitious work plan for 2010. The two sides also agreed to
renew the activities of the Joint Commission on POW/MIAs and the four working groups that
seek to account for personnel from World War II, the Korean War, the Vietnam War, and the Cold
War, including Soviet military personnel unaccounted for in Afghanistan. The Commission’s
work had been disrupted since 2004, when Russia downgraded the status of its representatives
and failed to appoint a co-chair in the face of cooling U.S.-Russia relations.17
15 “Russia,” The Military Balance, February 1, 2009, p. 215.
16 “Moscow Reconsidering Military Reform Plans,” RIA Novosti, January 5, 2009; Roger McDermott, “Russian
Military Reform Delayed by Financial Crisis,” Eurasia Daily Monitor, January 28, 2009; Lt. Col. Erik Rundquist,
Russian Federation Armed Forces, The ISCIP Analyst, April 30, 2009.
17 U.S. Department of Defense. U.S.-Russia Joint Commission on POW/MIAs, at http://www.dtic.mil/dpmo/
sovietunion/jcsd.htm; Bill Gertz, “Inside the Ring,” Washington Times, July 9, 2009.
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Trade, Economic, and Energy Issues
Russia and the Global Economic Crisis18
As is the case with most of the world’s economies, the Russian economy has been hit hard by the
global financial crisis and resulting recession that became readily apparent in the last quarter of
2008. Even before the financial crisis, Russia was showing signs of economic problems when
world oil prices plummeted sharply around the middle of 2008, diminishing a critical source of
Russian export revenues and government funding.
The financial crisis brought an abrupt end to about a decade of impressive Russian economic
growth that helped to raise the Russian standard of living and brought economic stability that
Russia had not experienced for more than two decades. Russia had experienced strong economic
growth over the past 10 years (1999-2008), during which time its GDP increased 6.9% on
average per year in contrast to an average annual decline in GDP of 6.8% during the previous
seven years (1992-1998).
In 2008, however, Russia faced a triple threat with the financial crisis coinciding with a rapid
decline in the price of oil and the costs of the country’s military confrontation with Georgia.
These events exposed three fundamental weaknesses in the Russian economy: substantial
dependence on oil and gas sales for export revenues and government revenues, a rise in foreign
and domestic investor concerns, and a weak banking system. The economic downturn is showing
up in Russia’s performance indicators. Although Russia’s real GDP increased 5.6% in 2008 as a
whole, it increased more slowly than it did in 2007 (8.1%) and grew only 1.2% in the last quarter
of 2008.19 Among various estimates, the International Monetary Fund (IMF) projects that
Russia’s real GDP will decline over 6% in 2009,20 while INS Global Insight, a private economic
forecasting firm, projects a decline of 4.7%.21
The decline in world oil prices has hit Russia hard and has been a major factor in the overall
decline in Russia’s economy. Oil, natural gas, and other fuels account for about 65% of Russia’s
export revenues. In addition, the Russian government is dependent on taxes on oil and gas sales
for more than half of its revenues. As of July 10, 2009, the price of a barrel of Urals-32 (the
Russian benchmark price) oil was $61.53, a 55.3% drop from its July 4, 2008, peak of $137.61.
Russian government revenues are expected to be adversely affected because of the drop in oil
revenues, but also because of the decline in income tax revenues, which will cause the Russian
government to incur a budget deficit for the first time in 10 years.22
The ruble has been declining in nominal terms because foreign investors have been pulling capital
out of the market to shore up their domestic reserves, putting downward pressure on the ruble.
The ruble had declined as much as 45.6% between July 29, 2008 and April 21, 2009; it has
recovered somewhat, but remains below its peak value. Russian official reserves have declined
18 Prepared by William H. Cooper, Specialist in International Trade and Finance.
19 INS Global Insight. June 3, 2009.
20 IMF. Statement of IMF Mission to the Russian Federation. June 1, 2009.
21 INS Global Insight. June 3, 2009.
22 Moscow Times. March 11, 2009.
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substantially in part because the Russian Central Bank has intervened to defend the ruble. Russian
foreign currency reserves declined from $597 billion at the end of July 2008 to $368 billion at the
end of April 2009, for a decline of 38.4%. 23
Russia’s Accession to the World Trade Organization (WTO) and
PNTR for Russia
Russia first applied to join the General Agreement on Tariffs and Trade (GATT—now the World
Trade Organization [WTO]) in 1993. For many years, Russia’s accession process seemed to move
slowly, but in the last few years, Russia had accomplished some critical steps, including the
completion of bilateral agreements with the European Union (EU), the United States, and most of
the other WTO members that sought such agreements. At the beginning of 2009, Russia was in
the process of completing negotiations with a WTO working party (WP), which includes
representatives from about 60 WTO members, including the United States and the EU.
Throughout this process, WP members have raised concerns about Russia’s intellectual property
rights enforcement policies and practices, sanitary and phytosanitary (SPS) regulations that may
be unnecessarily blocking imports of agricultural products, and Russia’s demand for large
subsidies for its agricultural sector, among other issues. The United States has raised objections to
Russia’s imposition of restrictions on imports of some U.S. pork products in response to the
outbreak of swine flu.
However, in what has been largely considered a stunning announcement, Prime Minister Putin
stated on June 9, 2009, that Russia would be abandoning its application to join the WTO as a
single entity, and instead would seek to join as a member of a yet-to-be-formed customs union
with Belarus and Kazakhstan. It is not clear at this time why Russia’s leaders decided to change
substantially the country’s application status. Belarus and Kazakhstan have also applied to join
the WTO, but neither country was as far along as Russia was in the process. At the least, the
change could further delay Russia’s accession to the WTO. It is also unclear whether the three
countries would be allowed to join as one entity. Russian leaders have still maintained that they
will proceed with acceding to the WTO and that the United States should support their
application.
The WTO requires that each member grant to all other members “unconditional” most-favored-
nation (MFN), or permanent normal trade relations status (PNTR). Not granting PNTR usually
requires a WTO member to invoke, upon accession of a new member, a provision of the WTO
that makes WTO rules inapplicable in their bilateral trade relationship.
NTR is used to denote nondiscriminatory treatment of a trading partner compared to that of other
countries. Russia’s NTR status is governed by Title IV of the Trade Act of 1974, which includes
the so-called Jackson-Vanik amendment (section 402). Under Title IV, Russia currently receives
NTR on the condition that the President continues to determine that Russia complies with
freedom-of-emigration criteria under section 402 subject to a semiannual review and to a
congressional resolution of disapproval. In order for Russia to receive unconditional or
“permanent” NTR (PNTR), Congress would have to pass and the President would have to sign
legislation indicating that Title IV no longer applies to Russia. To date, no such legislation has
been introduced in the 111th Congress. Russian leaders consider the absence of PNTR an affront
23 Economist Intelligence Unit. June 8, 2009.
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and Jackson-Vanik a relic of the Cold War that should no longer apply to U.S.-Russian trade
relations, especially since such still ostensibly communist countries as China and Vietnam have
PNTR.
Intellectual Property Rights (IPR) Enforcement in Russia
The apparent lack of adequate intellectual property rights protection in Russia has tainted the
business climate in Russia for U.S. investors for some time. The Office of the United States Trade
Representative (USTR) consistently identifies Russia in its Special 301 Report as a “priority
watch list” country, as it did in its latest April 30, 2009, report. This report cites industry estimates
that online piracy and other copyright infringements cost U.S. intellectual property owners more
than $2.8 billion in losses in 2008. While the USTR report acknowledges some improvement in
IPR protection, it also finds that implementation of laws has been slow and enforcement weak. In
particular, the report cites the failure of Russia to fulfill its commitments to improve IPR
protection made as part of the 2006 bilateral agreement that was reached as part of Russia’s WTO
accession process.24
Russian Energy Policy 25
A January 2009 standoff between Russia and Ukraine over natural gas supplies and the resulting
two-week cutoff of Russian gas to Europe delivered through Ukrainian pipelines have again
raised the issue of Russia’s energy policy toward Europe. In early January 2009, the state-
controlled Russian natural gas firm Gazprom halted all gas supplies transiting Ukraine after the
two sides failed to reach agreement on several issues, including a debt allegedly owed by Ukraine
to Gazprom and the price that Ukraine would pay for gas supplies for 2009. About 80% of
Europe’s natural gas imports from Russia transit Ukrainian pipelines. An increasingly angry EU
threatened to reevaluate its whole relationship with the two countries unless the impasse was
resolved. Finally, on January 18, Russia and Ukraine reached an agreement, and gas supplies to
Europe resumed on January 20.
Concerns about the reliability of gas supplies and transit have caused Russia and some European
countries to propose new pipeline projects. Gazprom has started work on the North European Gas
Pipeline (NEGP, also often referred to as Nord Stream), which would transport natural gas from
Russia to Germany via a pipeline under the Baltic Sea starting in 2012, bypassing pipelines
running through the states of central and eastern Europe. Nord Stream will have a planned
capacity of 55 billion cubic meters (bcm) per year, as compared to the Ukrainian pipeline
system’s 120 bcm per year. However, Russian officials have expressed frustration with delays in
the Nord Stream project caused by objections from Sweden and other Baltic countries due to
environmental concerns.
Another pipeline project favored by Moscow is South Stream. In November 2007, Gazprom and
the Italian firm ENI signed an agreement to build South Stream, which would run from Russia
under the Black Sea to Bulgaria, then through the Balkans, with branches to Austria, Italy, and
Greece. Serbia, Greece, and Hungary have also signed on to the project. Russia hopes to complete
South Stream in 2015. Like Nord Stream, South Stream would bypass Belarus, Ukraine, Poland,
24 Office of the United States Trade Representative. Special 301 Report. April 30, 2009. p. 16.
25 Prepared by Steven Woehrel, Specialist in European Affairs.
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and other central European countries. In May 2009, Russia and Italy announced that the pipeline
would have a capacity of 63 bcm per year.
Some Members of Congress, U.S. officials, and analysts have pointed to a potential long-term
threat to transatlantic relations arising from European dependence on Russian energy and Russia’s
growing influence in large segments of Europe’s energy infrastructure. Both Bush and Obama
Administration officials have called for European countries to reduce their dependence on
Russian supplies and have promoted the building of alternative pipelines from Central Asia and
the Caspian region that bypass Russia, chief among them the Nabucco gas pipeline. In April
2009, the Obama Administration appointed Richard Morningstar as State Department Special
Envoy for Eurasian Energy.
In May 2009, the EU held a summit in Prague with leading transit and supplier nations in
Transcaucasia and Central Asia. The summit agreed to expedite the creation of Nabucco, which
could have a capacity of 31 bcm per year. It would get its supplies primarily from Azerbaijan
through pipelines in Georgia and Turkey. Nabucco received a boost on July 13, 2009, when
Austria, Hungary, Romania, Bulgaria, and Turkey signed an intergovernmental agreement on the
project. It is hoped that work on the pipeline could begin by the end of 2010, with the first gas
supplies available by 2014 and full capacity reached in 2019.
It is uncertain whether Azerbaijan’s existing and future production alone could justify building
Nabucco. The participation of producers from the Middle East and Central Asia, particularly
Turkmenistan, with its huge gas reserves, could be key to Nabucco’s success. Turkmenistan has
expressed readiness to sell gas through the Nabucco pipeline, but Russia continues to press
Turkmenistan to continue to sell as much of its gas as possible through Russia’s pipeline system.
In addition to possible competition from Europe for Central Asian energy supplies, Russia also
faces a challenge from China. A pipeline from Turkmenistan to China will open later in 2009,
delivering 30 bcm of gas per year. China is also helping develop South Yoloten, one of
Turkmenistan’s biggest gas fields.
In another development, Prime Minister Putin sharply criticized as “ill-considered and
unprofessional” a March 23, 2009, agreement between the EU and Ukraine that would provide
EU assistance to help modernize Ukraine’s gas pipeline system in exchange for greater
transparency by Ukraine in how the system is run. Additional funding for the project is expected
to come from the World Bank, European Investment Bank, and the European Bank for
Reconstruction and Development. Russian officials said that any agreement about Ukraine’s
pipelines should include Russia. Russia has long sought a controlling stake in Ukraine’s pipeline
system. In the wake of the Ukraine-EU deal, Russian and Gazprom officials have threatened to
expand development of liquefied natural gas facilities that could divert more Russian gas away
from European consumers.
During a visit to Ukraine on July 22, 2009, Vice President Joseph Biden warned Ukrainian
leaders that their country’s economic freedom depended more on its energy freedom than any
other factor. Biden said that Ukraine needs to move to market pricing for domestic energy
supplies, improve energy efficiency, and diversify its energy supplies. He said that a working
group of the U.S.-Ukraine Strategic Partnership Commission would begin discussions this fall on
ways to improve Ukraine’s energy security.
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Foreign Policy
Russia and the West
Soon after the collapse of the Soviet Union and the turmoil associated with the Yeltsin period, a
consensus began to emerge in Moscow on reestablishing Russia’s global prestige and dominance
in “the former Soviet space.” As the Putin era began, Russia’s foreign policy seemed to focus on
three priorities: to once again be respected as a “great power”; supporting continued economic
growth through the energy sector; and effectively demonstrating Russia’s ability through
economic and diplomatic power to pursue its highest policy priorities. The pursuit of these goals
by then-President Putin and his closest policy advisors seemed to be driven by the belief that the
West, and in particular the United States, took advantage of Russia’s political turmoil and overall
weakness during the Yeltsin years. Putin and his advisors were determined to restore what they
believed to be Russia’s rightful place as a significant influence on the world stage. Fueled in part
by the massive inflow of petro-dollars, Moscow’s self-confidence grew over the several years
prior to the late 2008 global economic and financial crisis, and its actions became less restrained.
Against a background of growing East-West tensions, officials and observers in Europe and the
United States had expressed growing concerns about what has been perceived as an increasingly
authoritarian character of the Russian government, Moscow’s new-found foreign policy
assertiveness, and its quest for influence in the Russian “near abroad.” This is most clearly
evident in Russia’s recent sharp political struggles with Estonia and Ukraine, its opposition to a
U.S. missile defense system in Eastern Europe, the suspension of compliance with the
Conventional Forces in Europe Treaty, and its strong opposition to NATO membership for
Ukraine and Georgia.
On February 10, 2007, at the 43rd annual Munich Security Conference, President Putin delivered a
speech harshly attacking Bush Administration policies and condemning U.S. conduct in world
affairs in general.26 He railed against the “unipolar” world he alleged the United States was
creating. For some, this speech was not a bolt from the blue. Russia’s—and Putin’s—anti-U.S.
rhetoric had been growing sharper for several years, as frustrations with the United States—and
petrodollars—mounted in Moscow. The United States was not the only target of this rhetorical
escalation. NATO, the EU, and the OSCE came in for their share of criticism. But the United
States was the main target.
President Medvedev, considered more liberal than Putin and not a product of the cold war KGB,
was seen as a potentially pragmatic leader who could potentially shift Russia’s attitudes more
positively toward the United States and the West. However, until recently, Russia’s relations with
the west continued to grow increasingly tense, with numerous issues serving as points of irritation
and contention. In September 2008, at the annual meeting of the Valdai Discussion Club, which
brings together Russian experts from around the world with Russia’s leaders, Medvedev
articulated a set of guiding principles for Russian foreign policy, including a privileged sphere of
influence. “Russia, just like other countries, has regions where it has its privileged interests,” he
said. Asked if he was referring to neighboring countries, Medvedev replied, “Certainly the
regions bordering [on Russia], but not only them.”27 Under Medvedev, Russia continued to voice
26 The full text of Vladimir Putin’s speech at the 43rd Munich Conference on Security Policy, February 10, 2007 can be
found at http://www.securityconference.de.
27 Dmitriy Medvedev, “We Did Everything Right, and I'm Proud of It,” Russia Today, September 13, 2008.
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strong opposition to NATO enlargement to Georgia and Ukraine; refused to recognize Kosovo’s
independence; opposed missile defenses in Europe and threatened to deploy Russian missiles in
Kaliningrad; cut off energy supplies in a dispute with Ukraine; travelled to Cuba and Venezuela to
show the length of Russia’s foreign policy reach; and, in part influenced the use of airbases in
Central Asia by the United States and NATO. In the aftermath of its August 2008 conflict with
Georgia, relations between Russia and the West reached want many considered to be the lowest
point in relations since the end of the cold war.
Russia’s apparent obsession with restoring its global prestige and being viewed as a powerful
nation with great influence on the world stage, promoted in part through intimidation and political
assertiveness, has worried many in Europe and may clash with the Obama Administration’s
efforts to defuse tensions and set a new course for relations between Russia and the west through
cooperation on a very practical level.
NATO-Russia Relations28
Russia’s overall cooperation with NATO on issues such as the mission in Afghanistan, the
implementation of the Conventional Forces in Europe Treaty (CFE), missile defense,
enlargement, and even cyber and energy security represent security-related issues of critical
importance to the Alliance.
The principal mechanism for NATO’s ongoing relations with Russia is the NATO-Russia Council
(NRC), founded in May 2002. Recognizing that both NATO and Russia faced many of the same
global challenges and shared similar strategic priorities, Russian and NATO leaders structured the
NRC as a “consensus” forum of equals with a goal of “political dialogue, common approaches,
and joint operations.”
While the NRC has recorded some achievements since its inception, Russia, according to many,
has never really shed its suspicion of NATO since the end of the Cold War and has become
increasingly concerned about NATO’s intentions. In particular, the enlargement of NATO in
2004—to include six former Eastern bloc nations—heightened Russian concerns by bringing the
Alliance up to Russia’s borders. The subsequent decision by the United States to establish, albeit
non-permanent, military facilities in Bulgaria and Romania and the establishment of a large
U.S./NATO military base in Central Asia to support the war in Afghanistan, were viewed by some
in Moscow as an encirclement of Russia by NATO and the United States. The refusal of NATO to
establish relations with the Russian-led Collective Security Treaty Organization (CSTO, formed
in 2002 and including Armenia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan)
has led Moscow to fear that NATO will not recognize a Russian “zone of influence” along its
border and intends to strengthen its own influence in the Caucasus and Central Asia. In addition,
Moscow has been critical of those who have suggested a more formal role for NATO in the
debate over European energy security.
For its part, recent actions taken by Moscow have caused uncertainty and unease within NATO
that has resulted in a division among the Allies on Russia’s intentions. In 2007 Russia suspended
its compliance with the CFE Treaty, signed in 1990 by 22 members of NATO and the Warsaw
Pact to limit non-nuclear forces in Europe. The CFE agreement was designed to limit troop and
equipment levels; provide for the exchange of data on equipment and training maneuvers; provide
28 Prepared by Vincent Morelli, Section Research Manager.
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procedures for the destruction of equipment; and permit on-site inspections to verify treaty
compliance. Moscow claimed that NATO countries were taking too long to begin the ratification
of the CFE Treaty. NATO claims that Russia has failed to live up to its agreed “Istanbul
Commitments” to remove its military forces from Georgia and Moldova.
NATO’s (and the United States’) relations with Russia marked a new low in 2008. Following
Russia’s decision to suspend compliance with the CFE Treaty and the January 2008 shut off of
gas to Ukraine, then-President Putin, at the NATO Bucharest summit in April 2008, strongly
warned NATO against offering Membership Action Plans (MAPs) to Georgia and Ukraine.
Although NATO, after serious internal debate, deferred the decision to extend MAPs at the
summit, Moscow still appeared to be disappointed with NATO’s concluding statement that both
Georgia and Ukraine would eventually become members of the Alliance.
Also, at the summit Putin warned against the deployment of a U.S. missile defense system in
Poland and the Czech Republic, and intimated that this decision could make those two countries
targets of Russia’s nuclear arsenal. Later in the year, new Russian President Medvedev threatened
to place short-range missiles in Kaliningrad as a counter to the U.S. missile defense system—a
threat he seemed to have reiterated after the recent July meeting with President Obama.
An issue that has caused much alarm in Europe, and NATO, was the August 2008 war between
Russia and Georgia. Many observers believe that it was NATO’s statement of eventual
membership for Georgia and Ukraine, made at the Bucharest Summit, that in part prompted
Russia to act against Georgia. The swift invasion of Georgia by Russian troops, the subsequent
recognition of both Abkhazia and South Ossetia as independent states by Russia, the deployment
of additional Russian troops in those two regions, and Russia’s announcement that it would build
a naval base in Abkhazia caused NATO-Russia Council meetings to be placed on hold. The
conflict also initiated an entirely new debate among the Allies over the implications for Europe of
what many termed Russia’s new, more aggressive and assertive foreign policy intended to carve
out a Russian “sphere of influence” along its border with Europe, and how NATO should
respond. Some Allies have called for a complete review of NATO’s mission and a return to an
Alliance that emphasizes and prepares for the territorial defense of Europe. Russia also
introduced a plan for a new “European security structure” that in their view would serve to ease
tensions and restore positive relations with the West but which could spell the end of NATO.
Up until the Russia-Georgia conflict, the NRC met regularly at the Ambassador level and twice
yearly at the foreign and defense minister level. During the remainder of 2008 and the beginning
of 2009, NATO’s relations with Russia were generally limited to low-level technical discussions.
Following on the heels of the Obama Administration’s public statements that the United States
intended to “re-set” relations with Moscow, NATO leaders, despite strong dissenting views
among several Allies, agreed at their April 2009 summit in France to re-start the NATO-Russia
Council “as soon as possible.” On April 29, 2009, the NATO-Russia Council did resume its
normal meetings at the ambassadorial level and on June 27, the first meeting of the NRC at the
foreign minister level took place on Corfu. The ministers also agreed to restart military
cooperation within the NRC as well.
President Obama’s July summit meeting with Medvedev and Putin was seen as setting a new tone
in the relationship that many hoped would spill over to the NATO-Russia relationship. However,
no apparent new ground was made on missile defense, the CFE Treaty, or Georgia and Ukraine.
Perhaps one positive note came with respect to Afghanistan, when Russia agreed to allow the
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resupply of the U.S./NATO mission to travel over Russian land territory and through its airspace.
Russia also agreed to consider providing training for Afghan police forces and to provide
financial assistance for reconstruction projects in Afghanistan. Russian helicopters, operated by
civilian crews, are already providing transport in Afghanistan.
While Russia’s relations with the West may slowly return to normal, what seems to have become
more problematic is the concern among some NATO allies that as U.S.-Russia bilateral relations
improve, Russia will not feel the need to also improve Russia-NATO relations and that the
unresolved issues of Georgia’s territorial integrity, NATO membership for Georgia and Ukraine,
the unratified CFE treaty, and the debate over missile defense will continue to plague NATO-
Russia relations. While not NATO-specific, a recent “open letter” to President Obama from seven
former leaders of Eastern European (and NATO) countries expressed the hope that the United
States, in its determination to improve relations with Moscow, will not abandon a large portion of
Europe to Russian influence and political pressure, suggesting that NATO remains divided over
how to deal with Moscow.
Russia and the European Union
Russia’s May 2009 National Security Strategy calls for strengthening cooperation with the EU in
the economic, foreign and domestic security, educational, scientific, and cultural spheres, and
states that the negotiation of a Euro-Atlantic collective security treaty “meets Russia’s long-term
national interests.”29
Russia is the EU’s third biggest trade partner. Trade turnover in 2008 was approximately 278
billion euros. Russian oil and gas constitute a large part of the EU’s imports from Russia,
although other aspects of EU-Russian trade have declined during the current global economic
downturn.
In the wake of the August 2008 Russia-Georgia conflict, the European Parliament (EP) reacted
sharply and approved a resolution on September 3 that—while not imposing sanctions on
Russia—did provide that consultations on a new Partnership and Cooperation Agreement (PCA;
to replace an expired PCA) would be postponed until Russia immediately and completely
withdrew its troops from Georgia. Talks on a new PCA were resumed after the EU-Russia
Summit in November 2008. EU relations with Russia were further roiled in January 2009, with
Russia’s cut off of gas shipments transiting Ukraine, which affected many countries in Eastern
Europe. The EU was active in both cases in mediating the conflicts.30
A May 2009 EU-Russia summit appeared to reflect continuing contention between the EU and
Russia on several issues. President Medvedev objected to the EU’s launch of an “Eastern
Partnership” of enhanced trade, aid, and other relations with Armenia, Azerbaijan, Belarus,
Georgia, Moldova, and Ukraine, raising concerns that it might become a “partnership against
Russia.” He also demanded that talks begin on a new energy charter to replace an existing
European treaty that Russia rejects as requiring Russian pipelines and other energy infrastructure
to be open to foreign commercial investment and use. Russia has moved to further limit foreign
investment in the automotive, energy, finance, and telecommunications sectors.
29 Russian Federation Security Council. Russian Federation National Security Strategy Until 2020, May 12, 2009.
30 “The EU-Russia Relationship at a Turning Point,” DGAPaktuell, German Council on Foreign Relations, February
2009.
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Russian President Dmitriy Medvedev has called for opening trans-Atlantic talks on a new
European security architecture, which he views as augmenting (if not replacing) the NATO-
Russia Council, the OSCE, and the PCA. He has stated that a legally binding Treaty on European
Security (TES) be formulated that “should include the basic principles for developing arms
control regimes, confidence building measures, and measures on restraint and reasonable
sufficiency in military development.”31 At the Munich Security Conference in February 2009,
French President Nicolas Sarkozy called for rapprochement between the EU and Russia, to
include discussion of a new European security architecture. In late June 2009, OSCE foreign
ministers met in Corfu to discuss how to address new challenges to European security and
considered Russia’s proposal. Criticism of the Russian proposal includes that it appears vague,
calls for Russia to be considered an equal partner to the United States and the EU, and discounts
the human rights aspect of security, among other concerns.
Just after the July 2009 U.S.-Russia summit, prominent former politicians and others from
Central European EU states (and NATO)—including former Polish President Lech Walesa and
former Czech President Vaclav Havel—-issued an open letter to the Obama Administration
calling on it to consider regional security concerns as part of its reset of relations with Russia.
They also raised concerns that Russia’s proposal for a new European security system was an
effort to gain influence over Europe and to exclude the United States. The Obama Administration
has pointed to Vice President Biden’s July visit to Ukraine as part of the effort to reassure the
region of U.S. commitments. The letter was considered curious by some observers who wondered
why the Central Europeans might feel that an improvement in U.S.-Russia relations would result
in the decline of U.S. interest in trans-Atlantic relations. The participation of the countries in both
the EU and NATO is not harmed by improved ties between Russia and the United States, these
observers argue. In the case of NATO, all members are guaranteed protection from aggression by
Article V of the North Atlantic Treaty, and no nation such as the United States can unilaterally
declare certain Members of the Alliance ineligible for Article V protection.
Russia and the Soviet Successor States
Russia’s May 2009 National Security Strategy hails cooperation within the CIS as “a priority
foreign policy direction,” and proclaims that the Collective Security Treaty Organization (CSTO)
is “the main interstate instrument” to combat regional military threats.32 Despite this emphasis,
however, there has been little progress toward overall CIS integration. 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 CIS as an institution appears to be
foundering, and in March 2005, Putin called it a “mechanism for a civilized divorce.”
The CSTO was formed in 2002 with a headquarters in Moscow. Members include Russia,
Belarus, Armenia, Kazakhstan, Kyrgyzstan, and Tajikistan. An airbase at Kant, Kyrgyzstan, was
designated in 2002 to provide support for CSTO rapid reaction forces, but these force plans were
unrealized, and the base has housed three Russian air squadrons and about 700 troops. Appearing
to signal an intention to raise the significance of the CSTO, President Medvedev called in early
31 President of Russia. President Dmitry Medvedev: Speech at Helsinki University and Answers to Questions from
Audience, April 20, 2009; European Security and Russian-US Relations, June 5, 2009, at http://www.kremlin.ru.
32 Russian Federation Security Council. Russian Federation National Security Strategy Until 2020, May 12, 2009.
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2009 for forming sizeable CSTO rapid reaction forces, which he claimed will rival those of
NATO. Some of these forces may be based at Kant and another airbase in Kyrgyzstan.
In early June 2009, Russia suddenly banned imports of dairy products from Belarus—Russia is
the main importer—on the grounds that some paperwork had not been completed. In response,
Belarusan President Alexander Lukashenko boycotted a session of the CSTO, even though
Belarus was to chair the session. Lukashenko also asserted in early June that he had rejected a
Russian demand that Belarus extend diplomatic recognition to Abkhazia and South Ossetia as a
condition for receiving a $500 million loan from Russia, an allegation that Russia denied.33
Russian forces remain in the Transnistria region of Moldova against the wishes of the Moldovan
government (and in violation of Russia’s commitment under the adapted CFE Treaty to withdraw
the forces), in effect bolstering a neo-Communist, pro-Russian separatist regime in the
Transnistria region of eastern Moldova. Russian-Moldova relations warmed, however, after the
election of a communist pro-Russian government in Moldova in 2001, but even that government
became frustrated with Moscow’s manipulation of the Transnistrian separatists. The United States
and the EU call upon Russia to withdraw from Moldova. Russian leaders have sought to
condition the withdrawal of their troops on the resolution of Transnistria’s status, which is still
manipulated by Moscow.34
Moscow has used the Armenian-Azerbaijani conflict over Nagorno-Karabakh to pressure both
sides, maintain Armenia as an ally, and otherwise exercise regional influence. 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 1992-1996 against Tajik rebels. Russia’s policy of
trying to exclude U.S. influence from Central Asia as much as possible was temporarily reversed
by President Putin after the September 11, 2001, attacks, but appeared to be back in place after
2005. On July 29, 2005, the Uzbek government directed the United States to terminate its
operations at the Karshi-Khanabad (K2) airbase within six months. Tashkent is believed to have
acted not only in response to Russian and Chinese urging but also after the United States
criticized the Uzbek government’s repression in Andijon in May 2005. In February 2009,
Kyrgyzstan accepted a large loan proffered by Russia and simultaneously requested that the
United States wind up operations at the Manas airbase by August 2009. After reportedly intense
U.S.-Kyrgyz talks, Kyrgyzstan reversed course in late June 2009 and agreed to permit U.S. and
NATO cargoes to transit through Manas.35
The international community condemned Russia’s military incursion into Georgia in early August
2008 and President Medvedev’s August 26, 2008, decree officially recognizing the independence
of South Ossetia and Abkhazia. Russian officials announced in September 2008 that two army
brigades, each consisting of approximately 3,700 troops, would be deployed to new military bases
in Abkhazia and South Ossetia (the brigades were reduced to a reported 1,700-1,800 troops each
in mid-2009, allegedly because of Russia’s budgetary problems). A part of the Black Sea Fleet
also was deployed to Ochamchire in Abkhazia. The United States and others in the international
33 See also CRS Report RL32534, Belarus: Background and U.S. Policy Concerns, by Steven Woehrel.
34 See also CRS Report RS21981, Moldova: Background and U.S. Policy, by Steven Woehrel.
35 For more on Russian policy in these regions, see CRS Report RL33453, Armenia, Azerbaijan, and Georgia:
Political Developments and Implications for U.S. Interests; CRS Report RL33458, Central Asia: Regional
Developments and Implications for U.S. Interests; and CRS Report R40564, Kyrgyzstan and the Status of the U.S.
Manas Airbase: Context and Implications, all by Jim Nichol.
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community have called for Russia to reverse these deployments. Some officials in Georgia have
raised concerns that these Russian troop deployments are a sign that Russia plans another
invasion of Georgia later this year.
Some observers have expressed concern about the possibility of increased Russian pressure on
Ukraine in the near future. One current issue is natural gas supplies. Russian officials have
warned that Ukraine may not be able to meet its monthly bill for Russian natural gas in the near
future, raising the possibility of a new gas shut-off later this year, similar to the ones that occurred
in 2006 and 2009. Ukraine denies the Russian charges. However, Ukrainian Prime Minister
Yuliya Tymoshenko has sought a loan from Russia to pay for gas supplies, so far without success.
Ukraine has also unsuccessfully sought funding from the United States and the EU. Given
Ukraine’s economic vulnerability due to the global economic crisis, some believe Russia could
use the gas supplies and the prospect of a loan to extract political and economic concessions from
Kiev. Another possible avenue for Russian pressure is political. Ukraine is scheduled to hold
presidential elections in January 2010, and several leading candidates for the post may be angling
for Moscow’s support, which could help them in pro-Russian eastern Ukraine. Finally, some have
expressed concern that Russia, following the model of its actions in Georgia in 2008, may attempt
to provoke conflict in Ukraine’s Crimea region, where pro-Russian sentiment is high and part of
the Russian Black Sea Fleet is based.
At the U.S.-Russia summit in July 2009, President Obama stated that one area where the two
presidents “agreed to disagree” was on Georgia, where he stressed that “Georgia’s sovereignty
and territorial integrity must be respected.” Michael McFaul, the Senior Director for Russian and
Eurasian Affairs on the National Security Council, reported that President Obama stated that the
United States would not recognize South Ossetia and Abkhazia as independent states and also
argued that the Russian idea of a “sphere of influence” in the Soviet successor states does not
belong in the 21st century. The two presidents did agree, however, that “no one has an interest in
renewed military conflict.” They also discussed the Armenia-Azerbaijan conflict over
Azerbaijan’s breakaway Nagorno Karabakh (NK) region, according to McFaul, and agreed to
continue cooperative efforts to resolve the conflict. At his talk at the New Economic School in
Moscow, President Obama reiterated that the sovereignty and independence of nations such as
Georgia and Ukraine should be respected. Apparently in reference to Ukraine and Georgia as
among countries that wanted to join NATO, he emphasized that the United States would “never
impose a security arrangement on another country.”
Some analysts in Ukraine and Georgia have expressed concern that the “reset” in U.S.-Russian
relations could lead the United States to downgrade ties with these countries, or even make
concessions to Russia at their expense. Perhaps in order to calm these fears, Vice President Joseph
Biden visited Ukraine and Georgia on July 20-23, 2009. In both countries, he expressed strong
U.S. support for their aspirations to join NATO and rejected the idea of a Russian sphere of
influence over other Soviet successor states. He said that the reset in ties with Russia would not
come at the expense of ties with Ukraine and Georgia. He added that, on the contrary, the reset
could help the countries by defusing “zero-sum” thinking in Moscow about U.S. relations with
Russia’s neighbors.
U.S.-Russia 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,
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attacks, the two nations reshaped their relationship on the basis of cooperation against terrorism
and Putin’s goal of integrating Russia economically with the West.36 Since 2003, however,
tensions reemerged on a number of issues that again strain relations. Although cooperation
continued in some areas, and then-Presidents Bush and Putin strove to maintain at least the
appearance of cordial personal relations, there appeared to be ever-growing discord in U.S.-
Russian relations. In the wake of the August 2008 Russia-Georgia conflict, bilateral ties reached
their lowest point since the Cold War.
The Obama Administration Moves to “Re-set” Bilateral Relations
The Obama Administration called for starting a dialogue with Russia from a fresh slate. A
February 2009 speech in Munich by Vice President Biden to “re-set” U.S.-Russian relations and
Secretary of State Clinton’s meeting in Geneva on March 6 with Russian Foreign Minister Sergey
Lavrov were early signs of the President’s intentions. At their first “get acquainted” meeting on
April 1, 2009, in London, Presidents Obama and Medvedev issued two joint statements on
opening nuclear weapons talks (see below, “Arms Control Issues”) and on U.S.-Russia relations.
In their joint statement on U.S.-Russia relations, the two presidents announced an “ambitious
work plan for our two governments.” They agreed to “deepen cooperation to combat nuclear
terrorism” and to “support international negotiations for a verifiable treaty to end the production
of fissile materials for nuclear weapons.” President Obama confirmed his commitment to work
for U.S. Senate ratification of the Comprehensive Nuclear Test Ban Treaty. Both sides also
pledged to bring into force the bilateral Agreement for Cooperation in the Field of Peaceful Uses
of Nuclear Energy, which former President Bush had withdrawn from consideration in the U.S.
Senate following the August 2008 Russia-Georgia conflict. Russia agreed to assist the United
States and the international community in responding to terrorism and the insurgency in
Afghanistan and Pakistan, and to drug trafficking from Afghanistan. The two sides called for the
continuation of the Six-Party Talks and for the verifiable denuclearization of the Korean
Peninsula. They also pledged to strengthen Euro-Atlantic and European security, including
through the OSCE and NATO-Russia Council.37
Reflective of Russia’s views of the bilateral relationship, its May 2009 National Security Strategy
states that Moscow strives to establish “an equal and full-fledged strategic partnership” with the
United States. The Strategy claims that the two countries have “key” influence in the world and
should work together on arms control, on confidence-building measures, on the nonproliferation
of weapons of mass destruction, on counterterrorism, and on the settlement of regional conflicts.
The Strategy proclaims that Russia will work to maintain parity with the United States in strategic
offensive weapons even if the United States deploys a global missile defense system. The
maintenance of global and regional stability will be “substantially reduced” by the U.S.
deployment of “elements of global” missile defense in Europe.38
Before the July 2009 summit, there were positive and negative developments in bilateral
relations. An announcement by the Russian foreign ministry in March 2009 that Russia had not
36 For the change in Russian policy toward integration with the West and cooperation with the United States, see CRS
Report RL31543, Russian National Security Policy After September 11, by Stuart D. Goldman.
37 The White House. Office of the Press Secretary, Remarks By President Obama and Russian President Medvedev
after Meeting, April 1, 2009.
38 Russian Federation Security Council. Russian Federation National Security Strategy Until 2020, May 12, 2009.
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delivered S-300 antiaircraft missile systems to Iran raised U.S. hopes of Russian restraint in
selling advanced weaponry to Iran. However, Prime Minister Putin stated that Russia would
postpone efforts to gain membership in the World Trade Organization (WTO), even though the
United States had been working to facilitate such membership. Ostensibly to lower some public
hopes for the summit, Michael McFaul, the Senior Director for Russian and Eurasian Affairs on
the National Security Council, stated that “we are not going to reassure or give or trade anything
with the Russians regarding NATO expansion or missile defense,” two of the main issues that
Russia wanted to discuss at the summit.39
During their July 6-8 summit meeting, the two presidents and other officials signed six accords
and issued three joint statements (details on significant decisions and deliberations at the summit
are discussed below). According to McFaul, the main topics at the summit were Iran, a major
U.S. concern, and missile defense, a major Russian concern. The statement on missile defense
cooperation had not been completely worked out before the summit and was finalized at the
summit to meet Russian concerns, McFaul reported.
President Obama stated that he found President Medvedev “to be straightforward [and]
professional.... I trust President Medvedev to not only listen and to negotiate constructively, but
also to follow up.” Although Obama stated on July 2 that Prime Minister Putin still “has one foot
in the old ways,”40 an un-named Administration official reported that Obama was convinced after
his meeting with Putin that “the Prime Minister is a man of today and has got his eyes firmly on
the future as well.” Indicating that there were some tensions at the Obama-Putin meeting, it was
described as “a very frank, honest conversation,” and as “very candid, very forthright.” An un-
named Administration official stated that “President Obama did not always agree with the logic
that Prime Minister Putin laid out,” but that there was some agreement that the two countries
faced common terrorism and proliferation threats.41
Bilateral Relations and Iran
Russian perceptions of the Iranian nuclear threat and its policies toward Iran are driven by a
number of different and sometimes competing factors. Russia signed the agreement to build a
nuclear power plant at Bushehr and provide other assistance to an Iranian civilian nuclear
program in January 1995. Although the White House and Congress have argued that Iran will use
the civilian nuclear reactor program as a cover for a clandestine nuclear weapons program, Russia
refused to cancel the project. Moscow maintains that its cooperation with Iran’s civilian nuclear
program is legal, proper, and poses no proliferation threat, arguing that Iran is, after all, a
signatory of the Nuclear Non-Proliferation Treaty, and the light water reactors that Russia is
building are not well-suited for producing weapons-grade fissionable material.
Russia agrees with the United States and many other nations that a nuclear-armed Iran would be
destabilizing and undesirable. After Iran’s clandestine program to master the entire nuclear cycle,
including uranium reprocessing, was revealed, Russia took steps to head off this development.
Moscow withheld delivery of nuclear fuel for the Bushehr reactor, pending agreement with
39 Peter Baker and Ellen Barry, “Russia to Open Airspace to U.S. for Afghan War,” The New York Times, July 4, 2009.
40 “Obama: Putin has ‘One Foot in the Old Ways,’” Associated Press, July 2, 2009.
41 The White House. Office of the Press Secretary. Background Briefing on the President’s Meetings with Prime
Minister Putin and Former President Gorbachev by Senior Administration Officials, July 7, 2009.
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Tehran about return of spent fuel to Russia for reprocessing. Russia joined the United States and
the “EU-3” group (Great Britain, France, and Germany) in approving a series of limited U.N.
Security Council sanctions related to Iran’s nuclear infrastructure, including asset freezes and
trade bans targeting certain Iranian entities and individuals.42 Moscow temporarily withdrew most
of its technicians and scientists from the unfinished Bushehr reactor in 2007. However, Russia
soon resumed construction and shipment of nuclear fuel to Bushehr. Fuel delivery was completed
in January 2008. On June 15, 2009, Russia’s Atomstroyexport state firm announced that final
reactor testing work was underway and that Bushehr was on schedule for initial operational
capability in September 2009.
In a joint statement issued at their meeting on April 1, 2009, Presidents Obama and Medvedev
“urged Iran to ... address the international community’s concerns” about its civilian nuclear
energy program. They stressed that Iran had pledged as a signatory of the Treaty on the Non-
Proliferation of Nuclear Weapons to retain its status as a state that does not possess nuclear
weapons, and called on Iran to fully cooperate with the International Atomic Energy Agency. At a
subsequent speech in the Czech Republic on April 5, President Obama stated that “as long as the
threat from Iran persists, we will go forward with a missile defense system that is cost-effective
and proven. If the Iranian [nuclear weapons] threat is eliminated, we will have a stronger basis for
security, and the driving force for missile defense construction in Europe will be removed.”43
At the U.S.-Russia summit, nuclear and missile proliferation by Iran was the dominant topic,
according to Michael McFaul, the Senior Director for Russian and Eurasian Affairs on the
National Security Council. President Obama warned that “in the Middle East, there is deep
concern about Iran’s pursuit of nuclear weapons capability not simply because of one country
wanting nuclear weapons, but the fact that ... we would then see a nuclear arms race in perhaps
the most volatile part of the world.” Another concern, he stated, was “the possibility that those
nuclear weapons could fall into the hands of non-state actors.” He also stressed that Iran’s
ballistic missile program could also pose a threat to the broader region. President Medvedev did
not mention Iran by name at the summit press conference, but he did admit that some countries
“have aspirations to have nuclear weapons and declare so openly or, which is worse, [build them]
clandestinely.... These are areas where we should concentrate our efforts together with our
American partners. It is quite obvious that the situation in the Middle East [and] on the Korean
Peninsula will affect the ... globe.”
Bilateral Relations and Afghanistan
In a meeting with Afghan President Hamid Karzai in August 2008, Russian President Medvedev
called for “opening a new page in relations” between the two countries, “because, unfortunately,
our countries are coming up against similar threats and problems.” Russia provides some foreign
assistance and investment to Afghanistan, although it has rejected sending military forces. In
March 2009, Russian Foreign Minister Sergey Lavrov stated that Russia supported the U.S. plan
to augment troops in Afghanistan and would assist the International Security Assistance Force
(ISAF) in Afghanistan by making its territory available for the overland transport of non-lethal
cargoes to Afghanistan.44 Russia hosted a Shanghai Cooperation Organization conference on
42 See CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
43 The White House. Remarks By President Barack Obama, Hradcany Square, Prague, Czech Republic, April 5, 2009.
44 Ministry of Foreign Affairs of the Russian Federation. Information And Press Department. Transcript of Remarks
and Response to Media Questions by Russian Minister of Foreign Affairs Sergey Lavrov at Joint Press Conference
(continued...)
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Afghanistan, counter-terrorism, and counter-narcotics in late March 2009, which was attended by
U.S. and NATO observers. The conference communique praised the efforts of ISAF but offered
no substantive assistance to Afghanistan. In a May 2009 letter to the U.N. Secretary General,
Russian Ambassador to the U.N. Vitaliy Churkin called for ISAF to step up counter-narcotics
operations in Afghanistan.
At the U.S.-Russia summit, a joint statement on assistance to Afghanistan called for enhancing
cooperation within the U.S.-Russia Counter-Terrorism Working Group (established in 2000);
further implementing the Russia-NATO Council’s counter-narcotics project; supporting
Afghanistan-related activities of the Organization for Security and Cooperation in Europe;
increasing training for the Afghan National Army, police, and counter-narcotics personnel; and
greatly increasing cooperation to halt illicit financial flows related to heroin trafficking in
Afghanistan. The two sides also called for enhancing counter-terrorism cooperation between
Afghanistan and Pakistan. President Obama stated that the new Bilateral Presidential Commission
would discuss U.S.-Russian cooperation on training and other assistance for Afghanistan.
Alternative Supply Routes to Afghanistan
In late 2008, the United States and NATO stepped up efforts to develop supplemental air and land
routes into Afghanistan because of growing problems in sending supplies through Pakistan. The
new Obama Administration’s plan to increase the number of troops in Afghanistan also spurred
the search for alternate supply routes. A “northern supply route” was envisaged for transits
through Russia or the South Caucasus to Central Asia and then to Afghanistan. The U.S. Manas
airbase in Kyrgyzstan, established in late 2001, was to be a key part of this route. In February
2009, however, Kyrgyzstan announced that it intended to close the airbase, but an agreement was
reached in late June 2009 to keep it open in exchange for higher U.S. rent and other payments.
As early as the April 2008 NATO summit, Russia’s then-President Putin had offered to permit the
shipment of non-lethal NATO goods through Russia to Afghanistan. NATO reached agreement
with Russia on rail-transit in February 2009, and all the Central Asian states except neutral
Turkmenistan also agreed to permit overland shipments. The first railway shipment from the
Baltic states reached Afghanistan—after transiting Russia, Kazakhstan, and Uzbekistan—in late
March 2009. In terms of air flights, Uzbekistan’s president announced in May 2009 that the
United States and NATO had been permitted to fly non-lethal supplies to the Navoi airport
(located between Samarkand and Bukhara in east-central Uzbekistan) for follow-on land transport
to Afghanistan. The extension of the lease on the Manas airbase ensured another air route.
At the U.S.-Russia summit meeting in early July 2009, Foreign Minister Lavrov and
Undersecretary of State William Burns signed an agreement allowing up to 4,500 annual air
flights of troops and lethal supplies through Russia to Afghanistan. Lauded by McFaul as
“historic,” the agreement complements the NATO-Russia arrangement reached in early 2009,
under which the U.S. non-lethal equipment has been transiting Russia by land. The
Administration reports that the new transit routes will save the United States government up to
$133 million annually in fuel, maintenance and other transportation costs, and this agreement is
free of any air navigation charges.
(...continued)
Following Talks with Afghanistan Minister of Foreign Affairs Rangin Dadfar Spanta, March 16, 2009.
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Arms Control Issues45
In 2001, the former Bush Administration conducted a Nuclear Posture Review and determined
that strategic forces could be reduced to between 1,700 and 2,000 “operationally deployed
nuclear warheads.” Although President Bush at first planned to make these reductions
unilaterally, others in the Administration convinced him to negotiate with Russia on mutual
reductions. Then-President Putin also called for a formal arms control agreement.46 These
negotiations bore fruit in May 2002 with the conclusion of the Strategic Offensive Reductions
Treaty (also known as the Moscow Treaty). The Treaty achieved all the Administration’s key
goals: deployed strategic nuclear warheads were to be reduced to 1,700-2,200 by 2012, with no
interim timetable; there were no limits on the mix or types of weapons; and there was no
requirement for destroying rather than storing warheads. On June 13, 2002, the U.S. withdrew
from the Anti-Ballistic Missile (ABM) Treaty, which President Bush had termed a “Cold War
relic” that constrained the Administration’s plans for national missile defenses. On the same day,
Moscow announced that it would no longer consider itself bound by the provisions of the
(unratified) START II Treaty, which had become a dead letter. In June 2002, the commander of
Russia’s Strategic Rocket Forces announced that in response to the U.S. withdrawal from the
ABM Treaty, Russia would prolong the life of its MIRVed ICBM force, which, he said, could be
extended another 10-15 years. On June 1, 2003, then-Presidents Bush and Putin exchanged
instruments of ratification allowing the Treaty of Moscow to enter into force.
In 2006, in advance of the impending December 2009 expiration of the 1991 Strategic Arms
Reduction Treaty (START), the United States and Russia began to discuss options for the future
of their arms control relationship. Many analysts had expressed concern that the two nations
would not be able to monitor compliance with the 2002 Moscow Treaty without START, as the
newer Treaty lacked any verification provisions. They, and others who saw arms control as a key
feature of U.S.-Russian relations, hoped the two sides would agree to either extend or replace
START. Others suggested the two sides no longer needed to regulate their competition with arms
control agreements, and favored a posture that would allow START to lapse and allow both sides
to pursue nuclear force postures that met their own national security needs. When the discussions
began in 2006, Russia sought to replace START with a new, formal treaty that would include
many of the same definitions, counting rules, and restrictions as START, albeit with lower levels
of nuclear forces. The Bush Administration rejected this approach and offered, at most, to attach
an informal monitoring regime to the 2002 Moscow Treaty. When the Bush Administration
ended, the two sides had not agreed on whether or how to advance their arms control relationship.
The Obama Administration came into office with a pledge to pursue arms control negotiations
with Russia and to, specifically, negotiate a new treaty to replace START. In April 2009,
Presidents Obama and Medvedev agreed that their nations would pursue stepped-up negotiations
toward this end, and that they would discuss progress in reaching such an agreement at a summit
in Moscow in early July. The presidents agreed that a new treaty would address deployed
strategic offensive nuclear forces, leaving discussions on nonstrategic nuclear weapons and
warheads in storage to a future agreement, and to reduce their deployed forces to levels below
those set by the 2002 Moscow Treaty.
45 Prepared by Amy Woolf, Specialist in Nuclear Weapons Policy.
46 For details, see CRS Report R40084, Strategic Arms Control After START: Issues and Options, by Amy F. Woolf.
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At their summit in July 2009, the Presidents signed a joint understanding that identified the
general form that the new treaty would take. They agreed to reduce their forces to between 500
and 1,100 deployed delivery vehicles, with between 1,500 and 1,675 deployed warheads on those
vehicles. They noted that the Treaty would also contain provisions for calculating these limits and
provisions on “definitions, data exchanges, notifications, eliminations, inspections, and
verification provisions.” This joint understanding indicates that the new treaty will contain far
more detail than the 2002 Moscow Treaty, but the scope and impact of its limits will not be
evident until the two sides establish these many provisions. As a result, it is not yet clear that they
will be able to complete a new treaty before START expires in December 2009.
Cooperative Threat Reduction
Since 1992, the United States has spent over $8 billion to help Russia and the other former Soviet
states dismantle nuclear weapons and ensure the security of nuclear weapons, weapons-grade
nuclear material, other weapons of mass destruction, and related technological know-how. This
funding supports the Cooperative Threat Reduction Program (CTR) managed by the Department
of Defense, along with nonproliferation programs managed by the Departments of Energy and
State. These programs have made significant progress over the years, helping to eliminate nuclear
weapons and delivery vehicles in Ukraine, Belarus, and Kazakhstan, and helping to transport,
store, and eliminate weapons in Russia. During the Bratislava Summit in 2005, Presidents Bush
and Putin agreed to enhance their cooperation and move more quickly in securing weapons and
materials. As a result, the Department of Energy has nearly completed its efforts to secure nuclear
warheads in storage in Russia and nuclear materials at a number of critical sites. The two sides
have also cooperated to construct a chemical weapons destruction facility in Shchuch’ye, which,
after overcoming congressional concerns between 2000 and 2002, is nearing completion.
The focus of U.S. threat reduction and nonproliferation assistance has changed over the years.
Initially, many in Congress saw U.S. assistance as an emergency response to impending chaos in
the Soviet Union. Even after the sense of immediate crisis passed in 1992 and 1993, many
analysts and Members of Congress remained concerned about the potential for diversion or a loss
of control of nuclear and other weapons. Now, much of the work on strategic offensive arms
reductions has been completed, and the United States has allocated a growing proportion of its
funding to projects that focus on securing and eliminating chemical and biological weapons and
securing storage sites that house nuclear warheads removed from deployed weapons systems.
Further, in recent years, the United States has increased funding for projects that seek to secure
borders and track materials, in an effort to keep weapons of mass destruction away from
terrorists. This has directed a growing proportion of the funding to nations other than Russia.
Many analysts in the United States see the U.S. threat reduction and nonproliferation programs in
Russia as a model for U.S. nonproliferation and anti-terrorism assistance to nations around the
world. Some who support this expansion of U.S. threat reduction assistance argue, however, that
the United States should not increase funding for other nations at the expense of funding for
programs in Russia because Russia is still home to large stocks of insecure nuclear materials.
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Russian Political, Economic, and Security Issues and U.S. Interests
Russia and Missile Defense47
Successive U.S. governments have supported the development of a missile defense system to
protect against long-range ballistic missile threats from adversary states. The Bush Administration
believed that North Korea and Iran represented strategic threats and questioned whether they
could be deterred by conventional means. In 2007, the Bush Administration proposed deploying a
ground-based mid-course defense (GMD) element of the larger Ballistic Missile Defense System
in Europe to defend against a possible Iranian missile threat. This “European Capability” (EC)
system would include 10 interceptors in Poland and a radar in the Czech Republic. Both countries
signed agreements with the Bush Administration permitting GMD facilities to be stationed on
their territory; however, the two countries’ parliaments decided to wait to ratify the accords until
after the Obama Administration clarified its intentions on missile defense policy.
The Duncan Hunter National Defense Authorization Act for FY2009 provided $618 million for
the EC program and placed several restrictions on it. There is a general limitation on all EC
procurement, site activation, construction, preparation of equipment and deployment until the
Czech Parliament has first ratified the radar basing agreement. Funding for the interceptor site
will only be available after both the Czech and Polish parliaments ratify their respective ballistic
missile defense agreements. Additionally, no funds can be expended on the acquisition and
deployment of operational interceptors (except for initial long-lead procurement) until the general
limitations on host nation ratification are met and the Secretary of Defense (after receiving views
of the Director of Operational Test and Evaluation) certifies to Congress that the proposed
interceptor has successfully demonstrated operationally realistic flight testing and a high
probability of working in an operationally effective manner.
Because neither host nation has ratified their ballistic missile defense agreements, the only
activities currently funded are ongoing facilities design and planning for the 2-stage ground-based
interceptor. Additionally, implementing arrangements to iron out actual work details between the
countries remains on hold until the formal agreements have been ratified by Poland and the Czech
Republic. The Missile Defense Agency has said that the current lull will not adversely affect the
EC program until about May 2010, when ratification delays will become problematic.
The EC program has significantly affected U.S.-Russia relations. At the February 2007
Wehrkunde security conference in Munich, former President Vladimir Putin strongly criticized
the Bush Administration’s proposal, maintaining that it would lead to “an inevitable arms race.”
Russia has threatened to abrogate the 1987 Intermediate-Range Nuclear Forces Treaty, and also
announced that it had suspended compliance with the Conventional Forces in Europe Treaty. In
August 2008, following the signing of the U.S.-Poland agreement, Russia once more vociferously
objected to the missile defense plan; a Russian general stated that Poland’s acceptance of the
interceptors could make it a target for a nuclear attack.
Some analysts argue that Russia has other motives for raising alarms about the U.S. missile
defense system: to foment discord among NATO member states, and to draw attention away from
Russia’s suppression of domestic dissent, its aggressive foreign policy actions, and its nuclear
technology cooperation with Iran. Observers point out that Russian acceptance of NATO
enlargement in 2004 was conditioned on a tacit understanding that NATO or U.S. military
47 Prepared by Carl Ek, Specialist in International Relations, and Steve Hildreth, Specialist in Missile Defense.
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expansion into the new member states would not occur. The European GMD in this regard is seen
as unacceptable to Russia.
On November 5—the day after the 2008 U.S. presidential elections—President Medvedev stated
that Russia would deploy short-range Iskander missiles to the Russian exclave of Kaliningrad,
which borders Poland and Lithuania, if the EC was built. In late January 2009, however, the
Russian media reported that Moscow had “suspended” plans to move short-range missiles to
Kaliningrad because the Obama Administration was not “pushing ahead” with the EC
deployment. However, there were reports that President Medvedev at the July 2009 G-8 (Group
of eight highly industrialized nations) summit may have intimated that the Iskander deployment
was still an option.
On February 7, at the 2009 Wehrkunde security conference in Munich, Vice President Biden
stated that “we will continue to develop missile defenses to counter a growing Iranian
capability…. We will do so in consultation with our NATO allies and Russia.”48 However, the
Obama Administration has indicated that it is prepared to open talks with Tehran if it is willing to
shelve its nuclear program and renounce support of terrorism. During a February 10 visit to
Prague, Secretary of State Hillary Clinton said that any change in U.S. policy on missile defense
would depend on Iran, but that “we are a long, long way from seeing such evidence of any
behavior change” in Iran.49
In early March 2009, media reported that President Obama had sent a letter to President
Medvedev offering to stop the development of the EC if Russia cooperated to halt Iran’s nuclear
weapons and missile programs. President Obama denied such a quid pro quo, stating that “what I
said in the letter was that, obviously, to the extent that we are lessening Iran’s commitment to
nuclear weapons, then that reduces the pressure for, or the need for a missile defense system. In
no way does that diminish my commitment to [the security of ] Poland, the Czech Republic and
other NATO members.”50
In a joint statement issued at their “get acquainted” meeting on April 1, 2009, Presidents Obama
and Medvedev acknowledged that differences remained in their views toward the placement of
U.S. missile defenses in Europe, but pledged to examine “new possibilities for mutual
international cooperation in the field of missile defense.” Later that month, however, Russian
Deputy Foreign Minister Sergey Ryabkov charged that “[U.S.] work in the missile defense has
intensified, including in the NATO format.” Shortly thereafter, in a Russian media interview,
Ryabkov was asked to comment on U.S.-Russia-NATO cooperation on missile defense through
the use of Russian radar installations. He explained that the Russian offer was predicated on the
fulfillment of “certain preliminary stages,” including the U.S. cancellation of the EC program,
followed by a threat assessment, and then by political and economic measures to eliminate the
threat.51
48 Vice President Joseph Biden’s speech at the 45th Munich Security Conference, http://www.securityconference.de/
konferenzen/rede.php?menu_2009=&menu_konferenzen=&sprache=en&id=238&
49 “Clinton Says Missile Shield Hinges in Part on Iran,” Reuters, February 10, 2009; “Obama Seen Unlikely to Hedge
on Missile Defense,” Associated Press, February 13, 2009.
50 The White House. Office of the Press Secretary. Remarks By President Obama and British Prime Minister Gordon
Brown After Meeting, March 3, 2009.
51 “President Obama, Russian President Medvedev Commit To Reduce Nuclear Arms, Reset Relationship,” US Fed
News, April 11, 2009; “Russia Warns U.S. Stepping Up Shield Plans – Agency,” Reuters, April 21, 2009; Russian
Ministry of Foreign Affairs. Interview of Russian Deputy Minister of Foreign Affairs Sergey Ryabkov on Disarmament
(continued...)
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In May 2009, the East-West Institute, a joint U.S.-Russian research organization, released a report
which concluded that (1) Iran likely would not be able to acquire both nuclear weapons and
delivery systems within the next five years, and (2) the missile defense system proposed by the
Bush Administration for deployment in central Europe would be ineffective against eventual
Iranian missiles outfitted with decoy devices and other countermeasures. Critics, however, point
to Iran’s mid-May missile test launch and to other evidence as proof that Teheran is actively
developing ICBMs.52
In early June 2009, a Russian official indicated that Moscow would not likely be willing to
reduce its nuclear weapons arsenal unless the United States were to scrap plans to establish its
missile defense site in Poland and the Czech Republic. The Obama administration has
emphasized that it has not abandoned the Bush Administration’s missile defense plan, and has
denied that it might use the program as a bargaining chip with the Russians on other issues, such
as arms control. The Russian government also indicated that it might deploy Iskander missiles to
Kaliningrad if the United States were to transfer Patriot missile batteries to Poland. 53
In mid-June testimony before Congress, Deputy Defense Secretary William Lynn stated that the
administration regarded the EC program as one of several possible options for defense against
ballistic missiles; a review of those options is expected to be complete by summer’s end.54
Another Defense official testified that, while the administration appreciates Russia’s offer to share
the use of radar in Azerbaijan and/or southern Russia, such facilities would be “viewed as a
complement to a third site in Europe.” At the end of the month, Admiral Mike Mullen, Chairman
of the Joint Chiefs of Staff, was dispatched to Moscow to discuss missile defense prior to the
President’s visit.55
At the July 2009 U.S.-Russia summit, the two presidents declared in a joint statement that their
governments “plan to continue the discussion concerning the establishment of cooperation in
responding to the challenge of ballistic missile proliferation,” and that both countries would task
experts “to work together to analyze the ballistic missile challenges of the 21st century and to
prepare appropriate recommendations, giving priority to the use of political and diplomatic
methods.” One day after the meeting, however, Russian Foreign Minister Sergey Lavrov stated
that if the Obama administration decided to pursue missile defense unilaterally, Russia might be
reluctant to reduce its nuclear arsenal.56
(...continued)
Issues, April 23, 2009.
52 U.S.-Russian Team Deems Missile Shield In Europe Ineffective. Washington Post. May 19, 2009. See also Iran’s
Nuclear and Missile Potential. EastWest Institute. May 2009. http://docs.ewi.info/JTA.pdf
53 Russian General Links Arms Cuts To Missile Shield. Associated Press. June 5, 2009. Russian Source: Patriot
Missiles To “Cloak” Strategic Effort. Interfax: Russia & CIS Military Newswire. May 22, 2009.
54 A Russian news service quoted a “military diplomatic source” as suggesting that alternate locations might include
Turkey or the Balkans. Interfax Russia & CIS Military Daily. July 13, 2009.
55 US Military Chief To Talk Missile Defense In Russia Visit. Agence France Presse. June 24, 2009.
56 Joint Statement By Dmitry A. Medvedev, President of the Russian Federation, and Barack Obama, President of the
United States, On Missile Defense Issues. Targeted News Service. July 6, 2009. Russia Warns US Over Missile Shield.
AP. July 7, 2009.
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Russian Political, Economic, and Security Issues and U.S. Interests
U.S.-Russia Economic Ties57
U.S.-Russian trade and investment flows have increased in the post-Cold War period, reflecting
the changed U.S.-Russian relationship. Many experts have suggested that the relationship could
expand even further. U.S. imports from Russia have increased substantially, rising from $0.5
billion in 1992 to a peak of $26.8 billion in 2008. The large increase in U.S. imports reflects not
so much an increase in the volume of trade but the rise in world prices of raw materials,
particularly oil, that comprise the bulk of those imports (64% in 2008). U.S. exports have
increased from $2.1 billion in 1992 peaking at $9.3 billion in 2008. Major U.S. exports to Russia
consist of machinery, vehicles, and meat (mostly chicken).58
Table 1. U.S. Merchandise Trade with Russia, 1992-2008
(in billions of dollars)
U.S.
U.S.
U.S.
U.S.
Trade
U.S.
U.S.
Trade
Year
Exports
Imports
Balances Year Exports
Imports
Balances
1992
2.1 0.5 1.6
2001
2.7 6.3 -3.5
1993
3.0 1.7 1.3
2002
2.4 6.8
-4.4
1994
2.6 3.2 -0.6
2003
2.4 8.6 -6.2
1995
2.8 4.0 -1.2
2004
3.0 11.9 -8.9
1996 3.3
3.6
-0.3
2005
3.9
15.3
-11.3
1997 3.4
4.3
-0.9
2006
4.7
19.8
-15.1
1998 3.6
5.7
-2.1
2007
7.4
19.4
-12.0
1999 2.1
5.9
-3.8
2008
9.3
26.8
-17.5
2000 2.1
7.7
-5.6
Major U.S. exports: machinery; vehicles; meat; aircraft. Major U.S. imports: mineral fuels; inorganic chemicals
aluminum; steel.
Source: Compiled by CRS from U.S. Department of Commerce, U.S. Census Bureau data. FT900.
Despite the increase in bilateral trade, the United States and Russia still account for small shares
of each others’ trade. In 2008, Russia accounted for about 0.7% of U.S. exports and 1.3% of U.S.
imports. It was the 17th largest source of imports and 28th largest export market for the United
States. The United States accounted for 3.4% of Russian exports and 5.4% of Russian imports. It
was the fifth largest source of imports and 10th largest export market for Russia.59
According to Russian government data, by the end of 2008, the United States accounted for 3.3%
of total accumulated foreign direct and portfolio investments in Russia and was the eighth largest
source of foreign investment. However, the first three countries were Cyprus (21.5%), the
57 Prepared by William H. Cooper, Specialist in International Trade and Finance.
58 CRS calculations based on data from the Department of Commerce, Bureau of the Census. Global Trade Information
System.
59 Global Trade Information Systems, Inc. World Trade Atlas.
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Russian Political, Economic, and Security Issues and U.S. Interests
Netherlands (17.5%), and Luxembourg (13.0%), suggesting that at least 50% of the investments
night have been repatriated Russian funds.60
Russia and the United States have never been major economic partners, and it unlikely that the
significance of bilateral trade will increase much in the near term. However, in some areas, such
as agriculture, Russia has become an important market for U.S. exports. Russia is the largest
foreign market for U.S. poultry. Furthermore, U.S. exports to Russia of energy exploration
equipment and technology, as well as industrial and agricultural equipment, have increased as the
dollar has declined in value. Russian demand for these products will likely grow as old equipment
and technology need to be replaced and modernized. Russia’s significance as a supplier of U.S.
imports will also likely remain small given the lack of international competitiveness of Russian
production outside of oil, gas, and other natural resources. U.S.-Russian investment relations
could grow tighter if Russia’s business climate improves; however, U.S. business concerns about
the Russian government’s seemingly capricious intervention in energy and other sectors could
dampen the enthusiasm of all but adventuresome investors.
The greater importance of Russia’s economic policies and prospects to the United States lies in
their indirect effect on the overall economic and political environment in which the United States
and Russia operate. From this perspective, Russia’s continuing economic stability and growth can
be considered positive for the United States. Because financial markets are interrelated, chaos in
even some of the smaller economies can cause uncertainty throughout the rest of the world. Such
was the case during Russia’s financial meltdown in 1998 and more recently with the 2008-2009
crisis. Promotion of economic stability in Russia has been a basis for U.S. support for Russia’s
membership in international economic organizations, including the IMF, the World Bank, and the
WTO. As a major oil producer and exporter, Russia influences world oil prices that affect U.S.
consumers.
Bilateral economic issues appeared to be placed in the background at the July 2009 U.S.-Russia
Summit agenda in Moscow, at least for the time-being. Nevertheless, some economic issues
received mention during the course of President Obama’s visit. For example, a business
development and economic relations working group, co-chaired by Minister of Economic
Development Elvira Nabiullina and Commerce Secretary Gary Locke, and an agriculture working
group, chaired by Agriculture Minister Yelena Skrynnik and Secretary of Agriculture Tom
Vilsack, were established as part of the U.S.-Russia Bilateral Presidential Commission announced
during the summit. In addition, President Obama stressed at a meeting of U.S. and Russian
business leaders that the United States and Russia should increase economic cooperation to allow
bilateral trade and investment to increase to their potential.61
U.S. Assistance to Russia
From FY1992 through FY2008, the U.S. government budgeted almost $17 billion in assistance to
Russia, including for democratization, market reform, and humanitarian needs. The bulk of
assistance (over one-half) went for CTR (Nunn-Lugar) and other security-related programs. (See
60 Tendentsii I perspectiva (Trends and Outlook). Russian Economic Report. April 2006. p. 24..
61 White House. Remarks by the President at Parallel Business Summit. July 7, 2009.
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Russian Political, Economic, and Security Issues and U.S. Interests
Table 1.) But Russia’s share of assistance fell from about 60% in FY1993-FY1994 to 17% in
FY1998 and has been between 15%-22% since then.62
Annual foreign operations appropriations bills have contained 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) unless the President certifies that Russia has not implemented a
law discriminating against religious minorities. Former Presidents Clinton and
Bush made such determinations each year.
• Since FY1996, direct assistance to the government of Russia has hinged on its
continuing sale of nuclear reactor technology to Iran. As a result, in most years as
much as 60% of planned U.S. assistance to the federal Russian government has
been cut.
• The FY2001 foreign aid bill prohibited 60% of aid to the central government of
Russia if it was not cooperating with international investigations of war crime
allegations in Chechnya or providing access to NGOs doing humanitarian work
in Chechnya. Possibly as a result of Russian cooperation with the United States
in its war on terrorism, the war crime provision was dropped.
62 See CRS Report RL32866, U.S. Assistance to the Former Soviet Union, by Curt Tarnoff.
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Table 2. U.S. Government Funds Budgeted for Assistance to Russia, FY1992-FY2008
(million dollars)
Fiscal
Year/
Program
2008
Area 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Prelim. Total
Economic
Growth
84.68 137.21 1,187.92 231.37 72.69 39.35 51.21 74.01 58.65 60.13 60.62 54.47 33.93 9.54
7.71 3.41
0.01
2,166.9
Governing
Justly &
33.93
66.13 242.86 74.15
50.68
38.45
69.58
85.64 68.26 82.06
79.89 79.98
64.31
63.8 78.7 55.96 65.21 1,299.57
Democr.
Humanit.
Asst.
167.89
1,060.4
39.49 48.44
35.34
0.93 6.34 1,167.34
243.1 92.37
23.83 26.1 19.97
1.5 13.23
0.0 0.0 2,946.27
Investing
in People
13.1 8.31 79.85 12.67
10.98
10.59
10.55
15.42 15.88 26.1 27.41 24.36
24.02
35.47 28.3 23.95 21.79 388.76
Peace &
Security
28.81 182.71 361.69 203.19
323.18
456.29
461.36
790.05 667.52 694.86
822.79 727.59
802.43
897.75 854.8 926.11 752.8 9,953.84
Program
Support
0.0
0.0 4.0 0.44
0.0
0.0
0.0
0.0 0.0 0.0
0.0 0.0
0.0
0.0 0.0
1.24 1.1 6.78
Total
328.42 1,454.75 1,915.79 570.26 492.86 545.52 599.04 2,132.47 1,053.41 955.52 1,014.54 912.5 944.67 1,008.06 982.74 1,010.66 840.91 16,762.12
Source: U.S. Department of State, Office of the Coordinator of U.S. Assistance to Europe and Eurasia.
CRS-34
Russian Political, Economic, and Security Issues and U.S. Interests
Author Contact Information
Jim Nichol, Coordinator
Amy F. Woolf
Specialist in Russian and Eurasian Affairs
Specialist in Nuclear Weapons Policy
jnichol@crs.loc.gov, 7-2289
awoolf@crs.loc.gov, 7-2379
William H. Cooper
Steven A. Hildreth
Specialist in International Trade and Finance
Specialist in Missile Defense
wcooper@crs.loc.gov, 7-7749
shildreth@crs.loc.gov, 7-7635
Carl Ek
Vincent Morelli
Specialist in International Relations
Section Research Manager
cek@crs.loc.gov, 7-7286
vmorelli@crs.loc.gov, 7-8051
Steven Woehrel
Specialist in European Affairs
swoehrel@crs.loc.gov, 7-2291
Acknowledgments
Some portions of this report are based on the work of former Specialist in Russian and Eurasian Affairs
Stuart Goldman.
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